Week in Review

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Week in Review

03/19/2022

For the week 3/14-3/18

[Posted 9:00 PM ET, Friday]

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Edition 1,196

In the first days of Putin’s War, CNN’s Matthew Chance had a report from a bridge where Ukrainian forces had successfully beaten back the Russians, and it was the first time we saw dead Russian soldiers, two of them.  Every day I’m thinking of the mothers of those two young men, their bodies not recovered by their compatriots, which Americans at war do such a heroic job of.  It’s about dignity and respect, a sacred duty to never leave a brother behind.

But I’m guessing those two mothers may not even know yet what has happened to their boys.  And as the reported death toll of Russian soldiers soars well into the thousands, in less than a single month, that’s thousands of mothers not knowing what has happened, very few of them at this point, is a good guess.

At the same time, you know the truth is leaking out, and the victims’ friends and comrades are getting through to people back home, and the mothers are all talking, and they are crying and at the same time developing a pure hatred for that rat-like figure in the Kremlin.  This is all the work of one man, and those mothers, in short order, will be rising up.

They say that Putin’s riot police are highly paid, which is the only way he can maintain their loyalty, but the protests will be growing and should there be a massacre, in Moscow, or in St. Petersburg, that will be it for Vlad.  He’ll be taken out.  The people, even the believers, will understand the man had gone too far.  It also doesn’t help Putin when the Russian people are now seeing that the store shelves are suddenly bare.

In the meantime, in literally the coming days, maybe two weeks, the cornered rat is capable of doing anything.  I told you of how in Putin’s childhood, an experience with a rat was a formative lesson for him. 

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Pope Francis issued his toughest condemnation yet of the invasion of Ukraine, saying on Sunday the “unacceptable armed aggression” must stop.  Speaking to thousands in St. Peter’s Square for his Sunday blessing, Francis also said that the killing of children and unarmed civilians was “barbaric” and with “no valid strategic reason.”

He called the besieged city of Mariupol a “martyred city” and again appealed for “truly secure humanitarian corridors” to allow residents to evacuate.

“In the name of God I ask you: stop this massacre!” the pope said, adding that Ukrainian cities risked “being reduced to cemeteries.”  The pope has not used the word “Russia” in his condemnations of the war, but his choice of words, such as “armed aggression” and “no valid strategic reason,” appear aimed at contesting Moscow’s justification for the invasion.

Francis and Patriarch Kirill of the Russian Orthodox Church held their first phone call since the start of the conflict on Wednesday. The Vatican said the pope told Kirill: “The ones who pay the price of war are the people, the Russian soldiers and the people who are bombarded and die.”

But the Moscow Patriarchy only said the two discussed the “humanitarian aspects of the ongoing crisis” and the importance of peace talks.

Again, Kirill is a Putin lackey.  His full-throated blessing for Moscow’s invasion has splintered the worldwide Orthodox Church and unleashed an internal rebellion that experts say is unprecedented.  In Amsterdam, for example, the war convinced priests at the leading Orthodox church there to stop commemorating Kirill in services.

The acting Secretary General of the World Council of Churches (WCC), Rev. Ian Sauca, wrote to Kirill asking him to “intervene and mediate with the authorities to stop this war.”  Kirill responded that “forces overtly considering Russia to be their enemy came close to its borders” and that the West was involved in a “large-scale geopolitical strategy” to weaken it.  The WCC released both letters.  [Philip Pullella / Reuters]

Kirill would never have the guts to condemn the dictator.  The Russian mothers will.

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Wednesday, Putin delivered a stark warning to Russian “traitors” who he said the West wanted to use as a “fifth column,” with “one aim – the destruction of Russia.”

“I am convinced that this natural and necessary self-cleansing of society will only strengthen our country, our solidarity, cohesion and readiness to meet any challenge.”

The message was chilling.  A law passed on March 4 makes public actions aimed at “discrediting” Russia’s army illegal and bans the spread of “fake news.”

Putin assailed Russians who he said were more mentally in tune with the West than Russia, and said the Russian people would quickly be able to tell the difference between traitors and patriots.

“Of course they (the West) will try to bet on the so-called fifth column, on traitors – on those who earn their money here, but live over there.  Live, not in the geographical sense, but in the sense of their thoughts, their slavish thinking,” he told government ministers.

“Any people, and especially the Russian people, will always be able to distinguish the true patriots from the scum and the traitors, and just to spit them out like a midge that accidentally flew into their mouths.”

The venomous tone was ominous, even for Putin, who for years has been cracking down on domestic opponents and delivering bitter tirades against the West.

Russian opposition politician Mikhail Kasyanov, who served as Putin’s first prime minister in the early 2000s, condemned the remarks on Twitter.

“Putin is intensifying his actions to destroy Russia and is essentially announcing the start of mass repressions against those who don’t agree with the regime,” he said.  “This has happened in our history before, and not only ours.”

American investor Bill Browder, a longtime nemesis of Putin’s for exposing corruption in the Kremlin, called Putin’s speech “very, very scary.  The language is unbelievable.”

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President Biden and Chinese President Xi Jinping held their first phone conversation since November today and Biden sought to prevent Beijing from giving new life to Russia’s invasion of Ukraine, as Vladimir Putin pressed on with bombardments that have taken the place of military advances.

With Russia trying to regain the initiative in a stalled campaign, the Russians bombed an airport near Lviv, a city where hundreds of thousands of refugees, and residents, thought they had a refuge from Ukraine’s battlefields.  Sunday, Russia launched a missile barrage that struck a Ukrainian military base just 11 miles from Poland’s border, killing 35, in yet another in a growing list of provocative steps towards NATO.

The Russian defense ministry said it was “tightening the noose” around the besieged southern port of Mariupol, where officials said more than 1,000 people may still be trapped in the basement of a theater, Ukrainian President Volodymyr Zelensky saying today that 130 had been rescued after the building was flattened by Russian airstrikes two days ago.

[Sunday, prior to the theater bombing, the city council of Mariupol said 2,187 residents had been killed since the start of the invasion.]

But China has yet to condemn Russia’s assault and the White House says it fears Beijing may be considering giving financial and military support, something that both Russia and China deny.

Xi said the Ukraine crisis was something China did not want to see, and that Beijing and Washington should guide bilateral relations along the right track, Chinese state media said after he and Biden began their call.  “State-to-state relations cannot advance to the stage of confrontation, and conflicts and confrontations are not in the interests of anyone,” Xi said.  “The Ukraine crisis is something that we don’t want to see.”

Xi also said, “The top priorities now are to continue dialogue and negotiations, avoid civilian casualties, prevent a humanitarian crisis, cease fighting and end the war as soon as possible.”

But Xi did not assign blame to Russia for the invasion.

The White House said the call had lasted just under two hours.  Biden supposedly described to Xi the “implications and consequences” if Beijing provides material support to Russia.

But targeting Beijing with the sort of extensive economic sanctions imposed on Russia would have potentially dire consequences for the United States and the world, given that China is the world’s second-largest economy and the largest exporter.

What’s clear is that the U.S.-Chinese relationship is at its worst level in decades. Hours before the call between Biden and Xi, China sailed an aircraft carrier through the sensitive Taiwan Strait – shadowed by a U.S. destroyer.

After over three weeks, Russian forces have not captured a single big city, but Putin used a rally before a packed (80,000) stadium in Moscow today to justify the invasion, promising tens of thousands of people waving Russian flags that it would succeed.

“We know what we need to do, how to do it and at what cost.  And we will absolutely accomplish all of our plans,” Putin said, adding that, when needed, Russian soldiers “shield each other from bullets with their bodies like brothers.”

The stage was decked out with slogans such as “For a world without Nazism” and “For our president.”

Putin said the operation in Ukraine was necessary because the United States was using the country to threaten Russia and Russia had to defend against the “genocide” of Russian-speaking people by Ukraine.

But Russian troops have taken heavy losses while blasting residential areas, with U.S. estimates ranging from 3,000 to 10,000 dead, and the Ukrainians saying 14,000 Russian troops have been killed.

The United Nations’ World Food Program said Ukraine’s “food supply chain is falling apart.  Movements of goods have slowed down due to insecurity and the reluctance of drivers,” the agency said.

Peace talks stepped up this week, with Kyiv demanding a Russian ceasefire and withdrawal, but both sides accused each other on Friday of dragging out the talks.

With the above in mind, China is Russia’s last big economic lifeline.  Putin and Xi signed a “no limits” friendship pact three weeks before the invasion, in an event held on the morning of the opening ceremony for the Beijing Winter Olympics.  The document repeated some of Russia’s grievances over Ukraine.

But China has so far been treading a careful line, abstaining in votes over UN resolutions condemning Russia.

This week, however, the Biden administration announced $800 million in new military aid to Kyiv, Biden calling Putin a “murderous dictator” and “war criminal.”

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--In a new Quinnipiac University poll, Americans approve 54-32 percent of NATO’s decision not to enforce a no-fly zone.  Three-quarters of American say the U.S. should do whatever it can to help Ukraine, without risking a direct war between the U.S. and Russia, while 17 percent say the U.S. should do whatever it can to help Ukraine, even if it means risking a direct war between the U.S. and Russia.

A majority of Americans (60%) think Vladimir Putin is mentally unstable, while 24% say he is mentally stable.

In a new Wall Street Journal survey, a wide majority of voters, 89%, said they were closely following events in Ukraine. Among those who said they were paying the most attention to the conflict, approval of Biden’s handling of the situation was at 54%, to 43% disapproval.

But in the Quinnipiac poll, Americans give Biden a negative 42-49 percent approval rating on his handling of the response to Russia’s invasion.

--The White House announced President Biden will travel to Europe for NATO and European Union summits next week, the NATO summit slated for Thurs., March 24.

--In an emotional video address to Congress on Wednesday, President Zelensky invoked the Sept. 11 terror attacks and Pearl Harbor as he sought to build further support for his embattled nation.

Zelensky told a crowded auditorium of bipartisan lawmakers that Russia has turned Ukraine into a killing field as terrorists did to the Twin Towers and Pentagon on 9/11.

“Just remember Sept. 11…when innocent people were attacked from the air like nobody could expect it,” he said from Kyiv.  “Every night for three weeks, Russia has turned Ukrainian skies into a source of death for thousands.”

“Right now, the destiny of our country is being decided: Whether Ukraine will be free, whether we will be able to maintain our democracy,” Zelensky said.

Switching to English, Zelensky pulled no punches as he closed by pleading for President Biden to lead the global struggle to roll back the Russian invasion and give Ukraine more help.

“Being the leader of the world means to be the leader of peace. It depends on those who are next to you,” he said. “Being strong is to be brave and ready to fight for the right to live freely.”

Zelensky also repeated his call for a no-fly zone over Ukraine, a step that Biden and lawmakers have rejected.  He also asked for new anti-aircraft defenses.

Tuesday, he stepped up criticism of NATO following Russia’s invasion of his country, questioning the alliance’s commitment to its Article 5 collective defense clause.  Zelensky said in a video address that Article 5 had never looked “as weak as it is today.”

NATO has not sent troops to defend Ukraine, which is not a member of the Western military alliance, and Zelensky suggested NATO would react “in the same way” to one of its members being attacked by Russia. 

That’s not true.

--Senate Republican leader Mitch McConnell urged Biden to expand Ukraine’s air defenses, bolster the presence of U.S. forces on NATO’s eastern flank and visit European countries.

Citing Biden’s plans for a trip to Europe next week, McConnell added: “President Biden should go to countries like Poland, Romania or Lithuania to meet with NATO eastern flank allies, and he should look beyond NATO to deepen our diplomatic and security cooperation with important American partners like Finland and Sweden.”

--Wednesday, President Zelensky said the positions of Ukraine and Russia were sounding more realistic, but time was needed.  Russian Foreign Minister Sergei Lavrov said that peace talks were showing “some hope of reaching a compromise.”  The two sides discussed giving Kyiv, Ukraine’s capital, neutral status.

Zelensky said the war would end “with disgrace, poverty, years-long isolation” for Russia.  Earlier he suggested his country was unlikely to ever join NATO, hinting at a possible compromise; Russia has long demanded a guarantee that Ukraine would not join the alliance.

The Kremlin said that a demilitarized Ukraine with its own army along the lines of Austria or Sweden was being looked at as a possible compromise.

The Financial Times reported that significant progress on a tentative 15-point peace plan had been made, but Kremlin spokesman Dmitry Peskov said it was too early to disclose any potential agreements.

Late Wednesday, Putin said Moscow was ready to discuss neutral status for its neighbor, but he also said Russia would achieve its goals in Ukraine and would not submit to what he called a Western attempt to achieve global dominance and dismember Russia. 

The military operation was “going to plan,” he said in a televised address.  But three weeks into the conflict, Russian troops have been halted at the gates of Kyiv, having taken heavy losses and failing to seize any of Ukraine’s biggest cities in a war Western officials said Moscow expected to win within days.

After a Thursday call between Putin and Turkish President Recep Tayyip Erdogan, the Turkish leader’s top adviser told the BBC that Russia’s demands fall into two categories.

The first four demands are, according to the adviser, Ibrahim Kalin, not too difficult for Ukraine to meet.

Chief among them is an acceptance by Ukraine that it should be neutral and should not apply to join NATO.  Zelensky has already conceded this.

But there were other demands in this category which seemed to be mostly face-saving elements for the Russian side.  Ukraine would have to undergo a disarmament process to ensure it wasn’t a threat to Russia.  And then, de-Nazification, which while deeply offensive to Zelensky, Turkey believes he could accept if it was enough for Ukraine to condemn all forms of neo-Nazism and promise to clamp down on them.

Putin told Erdogan, however, that he would require face-to-face negotiations with Zelensky, which Zelensky has already said he’s prepared to do, but this would involve the status of the Donbas, Crimea and other issues, with the assumption being that Putin will demand that the Ukrainian government should give up territory in eastern Ukraine, which is highly contentious, to state the obvious.  Zelensky has not altered his stance that his country’s borders must be recognized as the frontiers it had at the time of the Soviet Union’s collapse in 1991.

--Thursday, Zelensky, in a strident video address to the Bundestag, read German politicians the riot act, accusing them of putting their profits before his people.

The Ukrainian leader accused his audience of hypocrisy for their post-1945 “no more wars” mantra while allowing Russia to prepare a war against his country.

“We are separated by a wall, not a Berlin Wall but a wall is stretching through Europe between freedom and unfreedom,” Zelensky said.

The president said Germany had consistently prioritized its economic interests in the region, such as the Nord Stream gas pipeline, over warnings from Kyiv.

“We warned that Nord Stream was preparation for war,” he said.  “The answer, we noted, was ‘It’s just business.’  Business, business, business – that was the mortar for the new wall.”

But Germany, under new Chancellor Olaf Scholz, has stepped up in a big way since the invasion, sending military equipment and totally changing its defense posture.

Zelensky was out of hand in his criticism.

--Friday, Foreign Minister Lavrov said Russia has lost all illusions about relying on the West and Moscow will never accept a view of the world dominated by a United States that wants to act like a global sheriff.

--German Foreign Minister Annalena Baerbock warned that supply shortfalls due to the war will be severe and could lead to further conflicts in already vulnerable countries.

--The World Bank on Wednesday said a number of developing countries face near-term wheat supply shortages due to their high dependence on Ukrainian wheat exports that have been curtailed by Russia’s invasion.  The World Bank said in its latest Trade Watch report that Gambia, Lebanon, Moldova, Djibouti, Libya, Tunisia and Pakistan are the most exposed to the disruptions of wheat exports from Ukraine, which make up roughly 40% or more of their wheat imports.

--Britain’s defense ministry said that the Russian army is struggling to get to grips with Ukraine’s terrain, and that by being tied to the road network they were suffering heavy losses.  It said that Ukraine’s blowing up of bridges and Russia’s continued failure to gain control of the air have also helped stall the invaders’ advance.

--Ukraine said it had killed a fourth Russian general, Maj. Gen. Oleg Mityaev, Tuesday during the storming of Ukraine’s most devastated city, Mariupol.  According to Ukraine, Kremlin officials are calling the invasion a complete “clusterf—k.”

Pictures of Mityaev’s body were released by Ukraine’s interior ministry.  The Russian defense ministry did acknowledge his death.

--Leaders from the Czech Republic, Poland and Slovenia vowed to support Ukraine during a visit to Kyiv.  Poland suggested an international peacekeeping mission with military capability should be sent to Ukraine.

The prime ministers of the three nations traveled by train in a highly-risky mission.

--China would have tried its best to prevent the war in Ukraine if it had known about it, said Qin Gang, Chinese ambassador to the United States, in the latest statement from Beijing denying collusion with Russia over the war.

Qin made the remarks in an opinion piece he wrote for the Washington Post on Wednesday, explaining China’s stance on the crisis, two days after China’s top diplomat Yang Jiechi met U.S. national security Jake Sullivan in Rome.

Media reports earlier this month said China had prior knowledge of Russia’s military action and demanded Russia delay it until the Winter Olympics were over.  A more recent report said Moscow had asked Beijing for military and financial aid in the war.

Qin said assertions that China knew about, acquiesced in or tacitly supported this war were “purely disinformation” and “serve only the purpose of shifting blame to and slinging mud at China.”

“Had China known about the imminent crisis, we would have tried our best to prevent it,” Qin said.

--Russia responded to sanctions imposed by the West by barring President Biden and other senior American officials from entering the country. Earlier America announced sanctions on 11 Russians working in the army and defense industry.

--Finland and Sweden countered Russian warnings of retaliation should the Nordic nations join NATO.

“We reject that kind of statement. Swedish security policy is determined by Sweden,” said Ann Linde, Sweden’s minister for foreign affairs.

Finland “as a sovereign state makes its own security policy decisions based on our own interest,” said Marja Liivala of Finland’s ministry for foreign affairs.  “It’s very important for Finland that the NATO Open Door policy remains.”

Recent opinion polls show an increasing number of Swedes and Finns are in favor of joining the NATO defense bloc.

--Russia opened at least three criminal cases against people for spreading what it called fake news about the Russian army on Instagram and other social media, the country’s investigative committee said Wednesday.  Russia’s parliament earlier this month passed a law making public actions aimed at “discrediting” Russia’s army illegal and banning the spread of fake news.

--A video journalist for Fox News was killed in Ukraine when the vehicle he was traveling in outside of Kyiv with another reporter was struck by incoming fire, the network said on Tuesday.

The slain videographer, Pierre Zakrzewski, 55, had covered conflicts in Iraq, Afghanistan and Syria for Fox. Also killed was Ukrainian journalist Oleksandra Kuvshynova, working as a consultant for Fox.

Fox News correspondent Benjamin Hall was in the vehicle and suffered serious injuries.

Two days earlier, Brent Renaud, a documentary filmmaker and another veteran of covering war zones, died after Russian forces opened fire on his vehicle.

--An employee of the main state TV channel stood behind an anchor during a news broadcast on Monday and held up an anti-war sign, “NO WAR. Stop the war. Do not believe propaganda they tell you lies here,” it read. 

Marina Ovsyannikova was quickly arrested.  The Kremlin called her protest “hooliganism” and RIA news agency later reported she had been fined 30,000 rubles ($280) for flouting protest legislation.

Ovsyannikova said she has no plans to leave the country, but I can virtually guarantee that she will be re-arrested on new charges.  It’s a formula Russia has used on opposition leader Alexei Navalny.

Ovsyannikova invoked a phrase popularized by Navalny: “Anyone interested in the bright future of this country needs to be here – even if for 15 years behind bars.”

Tuesday, Russian prosecutors asked a court to move Navalny to a maximum security prison after they sought an additional 13 years in prison for him on fraud and contempt of court charges, the RIA news agency reported.  Navalny is already serving a 2 ½-year sentence at a prison camp east of Moscow for parole violations related to charges he says were trumped up to thwart his political ambitions.

In line with the above, a Russian court handling the investigation into WNBA star Brittney Griner’s drug charges extended the American’s detention until May 19, according to TASS. With no indication whether she could be released then, the latest news means Griner, 31, will have spent more than three months, at least, in Russian custody.

Griner was arrested on Feb. 17, a week before the invasion of Ukraine, after Russian officials said they found vape cartridges containing hash oil in her luggage at an airport outside Moscow, an offense that could carry a sentence of up to 10 years in prison.

Some commentary….

Bret Stephens / New York Times

“The Biden administration now faces the question of whether it wants to bring this cycle to an end.  The answer isn’t clear. Sanctions have hurt the Russian economy, arms shipments to Ukraine have helped to slow the Russian advance, and Russia’s brutality has unified NATO. This is to the president’s credit.

“But the administration continues to operate under a series of potentially catastrophic illusions.

“Sanctions may devastate Russia in the long term.  But the immediate struggle in Ukraine is short term. Insofar as one of the main effects of sanctions has been to send tens of thousands of middle-class Russians into exile, they actually help Putin by weakening a potent base of political opposition. As for the oligarchs, they might have lost their yachts, but they’re not about to pick up their guns.

“Arming Ukraine with Javelin and Stinger missiles has wounded and embarrassed the Russian military.  Providing Kyiv with MiG-29 fighter jets and other potentially game-changing weapon systems could help turn the tide.  Refusing to do so may only prolong Ukraine’s agony.

“Frequent suggestions that Putin has already lost the war or that he can’t possibly win when Ukrainians are united in their hatred for him or that he’s looking for an offramp – and that we should be thinking up ingenious ways to provide him with one – may turn out to be right.  But they are grossly premature.  This war is only in its third week; it took the Nazis longer to conquer Poland.  The ability to subdue a restive population is chiefly a function of the pain an occupier is willing to inflict.  For a primer on that, look at what Putin did to Grozny in his first year in office.

“Refusing to impose a no-fly zone in Ukraine may be justified because it exceeds the risks NATO countries are prepared to tolerate. But the idea that doing so could start World War III ignores history and telegraphs weakness. Americans squared off with Soviet pilots operating under Chinese or North Korean cover in the Korean War without blowing up the world.  And our vocal aversion to confrontation is an invitation, not a deterrent, to Russian escalation.

“There is now a serious risk that these illusions could collapse very suddenly.  There’s little evidence so far that Putin is eager to cut his losses; on the contrary, to do so now – after incurring the economic price of sanctions but without achieving a clear victory – would jeopardize his grip on power.

“Bottom line: Expect him to double down. If he uses chemical weapons, as Bashar al-Assad did, or deploys a battlefield nuclear weapon, in keeping with longstanding Russian military doctrine, does he lose more than he gains?  The question answers itself. He wins swiftly.  He terrifies the West.  He consolidates power.  He suffers consequences only marginally graver than the ones already inflicted.  And his fellow travelers in Beijing, Tehran and Pyongyang take note.

“How does the next world war begin?  The same way the last one did.”

David Ignatius / Washington Post

“The West yearns (for a) democratic reconstruction of Russia.  But it’s unobtainable through force of arms, for a simple reason: Putin has signaled his willingness to use nuclear weapons if attacked by the United States and its NATO partners.  Biden has said (and perhaps over-said) from the beginning that he will avoid direct military conflict with Russia. That’s why no-fly zones and MiG transfers are unwise.

“But the United States doesn’t need to fight World War III to destroy Russian power.  Putin is destroying himself.  The longer the war goes on, the less will remain of Russia’s military and economic might.  Putin’s regime is self-liquidating, if the United and its allies can help Ukraine stay in the fight.  Ukraine doesn’t need to win; like Gen. George Washington in the Revolutionary War, it just needs to survive.

“The Biden administration shouldn’t take extreme risks in the weeks ahead – simply do more of what’s working: Transfer more antitank and antiaircraft missiles through the four NATO countries that border Ukraine.  Provide bigger, more advanced antiaircraft missiles, not just shoulder-fired Stingers. Send more of the Turkish-made drones that have been so deadly. Deliver anti-ship missiles to blunt Russian dominance of the Black Sea coast. Send more fuel and ammunition.  As long as Russia chooses to keep fighting, make the war as painful as possible.

“This war has been horrific for Ukraine, but it’s been very costly for Russia, too.  One U.S. estimate is that in the first three weeks, Russia may have suffered 5,000 dead.  That would be more than the U.S. military lost in all the years of fighting in Iraq, and more than double the U.S. death toll in 20 years of combat in Afghanistan.  And Russia’s losses are just beginning.

“We’re at a potential tipping point now, where each side sees some advantage in a negotiated peace.  Paradoxically, that’s the time when the United States should redouble its support for Ukraine, until the last guns of the Russian invaders go silent.”

Peggy Noonan / Wall Street Journal

“To move the world as Mr. Zelensky has, to become a David figure, an international icon of liberty and guts, is more than a human achievement, it is a true strategic fact of the conflict.  If two weeks ago he had fled for London and were now making spirited Zoom speeches to his countrymen back home, would Ukraine have stood and fought as it has?  He gambled his courage would be contagious, and could be leveraged.

“Things are certain to become more full of feeling as the war shifts into a sustained phase of brutality.  Civilian populations targeted, hospitals and apartment buildings shelled, the dead buried in trenches, food shortages, more than two million refugees, a number that will grow far higher if they can get out, though Russia seems less interested now in letting them out than leaving them trapped.  All this in the first real-time war, being delivered moment by moment to your phone.  People think the gruesome pictures function as helpful propaganda for Ukraine, but in time they will function as well as propaganda for Vladimir Putin: You think I’m losing?  Look at your winners, digging mass graves.

Talk of providing Mr. Putin a face-saving ‘off-ramp’ strikes me as absurd.  He doesn’t want an off-ramp; he wants to stay on the highway, and Russian diplomats aren’t acting as if they’ve lost face or even been embarrassed.  Central Intelligence Agency Director William Burns is surely right: On Tuesday he told the House Intelligence Committee that Mr. Putin will likely ‘double down and try to grind down the Ukrainian military with no regard for civilian casualties.’  He’s going for the rubble….

“Here is where the figure of Mr. Zelensky and all he means, all his power to move and persuade, can become a different kind of factor.  His great and primary mission is to save his country.  That is his job and his purpose.  It isn’t, and probably can’t be in human terms, seeing to the broader security and safety of ‘the world.’  He is simultaneously running a government, commanding his military, addressing his people to keep up their morale, and talking to the world to stoke its support. All while being bombed.

“To put it crudely, it isn’t bad for his purposes if the war escalates, as long as escalation means more allies giving Ukraine what it needs.  He won’t mind broadening the conflict if it protects Ukraine.  It is his allies who have to worry about broadening the conflict….

“So while we are being moved by Mr. Zelensky, we must keep all these questions in mind.  Mr. Putin has stated that if he is impeded in Ukraine the world will be shocked by his response.  At the beginning of the war he put his nation’s nuclear forces on high alert.  Director of National Intelligence Avril Haines told House Intelligence that Moscow hasn’t made such a pronouncement since the 1960s.

“Mr. Putin’s threats can be understood as a bluff or as a clear and factual warning of intent.  It’s possible he himself doesn’t know how far and how low he’d go.  But I’m struck by the assertion of the justly confident Fiona Hill, the diplomat and Putin scholar, in an interview with Politico last week: ‘The thing about Putin is, if he has an instrument, he wants to use it.’

“Obviously if Mr. Putin decided at some point to use a battlefield tactical nuclear weapon, it would be a catastrophe for the world. But it’s even more than that.  What must be said is that once something like that starts, it doesn’t stop.  The taboo is broken.  It is extremely important for the world that the taboo not be broken.  Once a nuclear weapon is used, the use of nuclear weapons is ‘on the table’ in human history – a possibility, another move open to leaders when a war begins.  And we can’t let that happen in a world full of monsters who’d use such weapons in a shot but so far haven’t quite felt permitted to break the taboo and usher in a new, dark age.

“Even in times of high Western passion – the Soviet suppression of Hungary in 1956 and Czechoslovakia in 1968, the invasion of Afghanistan in 1979, and during the brilliant Polish freedom movement called Solidarity in the 1980s – America maintained a spirit of responsive restraint, of judicious engagement, that got us through without missiles flying. We don’t know that ‘stick with what worked’ guarantees anything now, but that it worked in the past is its own encouragement.

“We must do what we can without sparks flying, and Lord knows we should be talking to Russia about Ukraine’s 15 nuclear reactors.  It’s not only a matter of ‘don’t hit them,’ it is that human beings have to work there to keep them safely operating – showing up each day during a war, sustaining their professionalism, not being unnerved and making mistakes while they’re being shelled.

“The West must feel what it feels and not let it compromise our judgment.  You probably know this without someone saying it, but I’m getting the impression not everybody does.”

Biden Agenda

--In a new Monmouth University poll, less than half (46%) of the American public says the state of the union is strong (8% very and 38% somewhat).  Another 27% say it is not too strong and 24% say it is not at all strong.  The result is more negative than in a poll taken after former President Trump’s first year in office (55% strong in January 2018) although that number declined by the following year (48% strong in January 2019).

--A new Wall Street Journal poll found that 52% of Americans don’t think Joe Biden will run for re-election in two years, while 29% do expect him to pursue a second term.  Nineteen percent are undecided about his future.  Among Democrats, 41% said they think Biden will run again, while 32% said they didn’t think he would.  The poll found 26% of those Democrats unsure.

I said last year there is no way Biden runs for re-election and he’s going to make that announcement at year end, after the midterm elections.  And he won’t endorse Kamala Harris, which shouldn’t be surprising.  He’ll just say, ‘I’m going to stay out of the primary process.’  But at the same time, he will have given Harris ample opportunities in the coming months to establish herself on the international stage, where she’ll sink her chances for 2024, or enhance them.

My favorite in 2020 among the Democrats was Sen. Amy Klobuchar.  I hope she runs again.  Commerce Secretary Gina Raimondo also has potential. 

--Peggy Noonan / Wall Street Journal, Part II

“I think Joe Biden has got a lot right so far, especially his warnings of the war, his determination to get the West and Ukraine to focus, and his adroit sharing with the world of U.S. intelligence on the massing of Russian forces and Mr. Putin’s intentions. But he could probably be quieter and maintain more distance.  He doesn’t have to answer every shouted question.  He shouldn’t talk like this, as he did to House Democrats at a March 11 retreat in Philadelphia: ‘But look, the idea – the idea that we’re going to send in offensive equipment and have planes and tanks and trains going in with American pilots and American crews, just understand – and don’t kid yourself, no matter what you all say – that’s called World War III.  OK?  Let’s get it straight here, guys.  That old expression – ‘Don’t kid a kidder.’’

“Presidents can’t speak in public on this subject in such a casual, colloquial manner, and a tone of calming down his caucus.

“Leaders are grave in Ukraine.  We should be grave here, too.

“As for President Volodymyr Zelensky’s speech this week to a joint session of Congress, he was really speaking to America.  Before he spoke he received a standing ovation with cheers, but afterward the members, who stood and applauded again, looked more subdued.  They all insisted afterward that it was beautiful, powerful, they were all so moved – they really like their emotions up there on the Hill – but it wasn’t, really.  Three weeks ago he was a poignant figure bravely beseeching.

“Now he is bolder.  ‘I am addressing President Biden…Being the leader of the world means being the leader of peace.’  There was a sense he has the American president over a barrel – if Mr. Biden is sincere and strong, he will do as Mr. Zelensky request.  I don’t much like it when foreign leaders, even great ones, think they have the American president over a barrel.  My impression is the vast political center in America is highly sympathetic toward Ukraine and greatly admires Mr. Zelensky, and members don’t want to get on the wrong side of that.

“A House member worth listening to is Mike McCaul of Texas, ranking member of the House Foreign Affairs Committee, who is just back from Poland.  Wednesday at the Center for Strategic and International Studies, he said we have to give Ukraine what it needs to defend itself and protect its people. But, he implied, we also have to think.  ‘We don’t want a miscalculation or an escalation that will put us into a world war.’ Mr. Putin has a lot of different weapons, including chemical ones.  ‘I would say also these short-range tactical nukes that Putin – Russia has many more of them than we do.  If he gets pushed into a corner like a scorpion, and he’s in a desperate situation, he could very well sting with a short-range tactical nuke, which would really wake up the eyes of the world.  I can’t see the world just standing back and allowing that to happen without further involvement.’

“He has a sense of how the Ukrainian military is thinking.  They might have refrained from taking out the famous long Russian convoy because they’re conserving so that when Kyiv is ‘encircled they will unleash everything they have.’  They have put signs near the capital that say in Russian, ‘Welcome to Hell.’ ‘They’re going to give them everything they have and all the weapons we’ve given them, and you’re going to see quite a fight take place.’”

--Michael Goodwin / New York Post

“Sometimes a newspaper story is just a story about someone. And sometimes the story inadvertently reveals far more about the newspaper itself.

“That’s the case of The New York Times’ Thursday piece on Hunter Biden. What the discerning reader learns about the Times is far more important than anything disclosed about the president’s scheming son.

“The one bit of actual news is that Hunter Biden took out a loan to pay the federal government as much as $1 million in back taxes as part of a continuing criminal probe about his business ventures with foreign corporations and individuals.

“But that fact, which comes in the very first paragraph, is dwarfed by the Times’ bombshell acknowledgement later on.  Much later on.

“It’s not until the 24th paragraph that the story mentions e-mails involving Hunter Biden and his associates in those deals, followed by these two sentences: ‘Those emails were obtained by the New York Times from a cache of files that appears to have come from a laptop abandoned by Mr. Biden in a Delaware repair shop. The emails and others in the cache were authenticated by people familiar with them and with the investigation.’

“Heart be still.  It took the Gray Lady nearly 17 months to grudgingly concede even a fraction of what New York Post readers learned in October 2020.  Of course, Times readers would have learned all that too if their paper was still in the news business instead of being a running dog for Democrats….

“The reason for (the) coverup was simple: Many of the e-mails to and from Hunter Biden implicated Joe Biden in the international influence-peddling business run by Hunter and Joe’s brother, Jim Biden.

“If the whole country knew then that Joe Biden was corruptly using his office to help his family cash in, we would now be in the second year of Donald Trump’s second term.  That’s a fact because 8% of Biden voters told pollsters they would have supported Trump had they known about the bombshell contents of the laptop.”

Here’s what I know.  When Hunter is indicted, as seems inevitable, Joe Biden will handle it terribly, as he has since day one when the topic of his son has come up.

--Sarah Bloom Raskin on Tuesday withdrew as President Biden’s nominee to become the top bank regulator at the Federal Reserve, one day after Democratic Sen. Joe Manchin and moderate Republicans said they would not back her, leaving no path to confirmation by the full Senate.

Raskin, in her letter of withdrawal to the White House, cited “relentless attacks by special interests” in her decision to step aside.  She had become the most contentious of Biden’s five nominees to the Fed’s Board of Governors, generating strong opposition from the outset from Republicans who said she would use the post to steer the Fed toward oversight policies that would penalize banks who lend to fossil fuel companies.

--Harold Hamm / Wall Street Journal…Mr. Hamm founder and chairman of Continental Resources…

“Gasoline prices are higher than we have ever seen. The government reported a year-over-year inflation rate of 7.9% for February, the highest since 1982. Americans need relief, and one thing stands in the way: President Biden’s unwillingness to reverse course on his administration’s commitment to put the American oil-and-gas industry out of business at the consumer’s expense.

“In the year since the administration froze new drilling leases on 26% of federal land and more than a third of the nation’s resources in productivity, the U.S. has been falling further from energy independence, putting national security at risk. There is no good reason for America to become more reliant on energy imports. It constrains our policy choices, forces us to cede our national security to foreign players and enriches those who would do us harm. This administration is working with the Saudis, Venezuela and even Iran to come to the rescue. Why?

“The U.S. needs domestically produced oil and natural gas.  In 2019 the U.S. became energy-independent, a net exporter.  Gas and electricity prices were low, and the U.S. was the largest producer of energy on the planet. Thanks to the abundant and affordable clean-burning natural gas, brought to us by horizontal drilling, the reduction in greenhouse-gas emissions was the most successful in the industrialized world.

“Modern life is predicated on cheap, abundant and reliable energy. This administration has manufactured scarcity and mandated insecurity around the globe.  Energy prices are rising everywhere, and releasing a couple of days’ supply from our strategic reserves is a temporary patch.  The largest strategic reserve in the world is under our feet.

“The solution lies in three simple actions: First, make it official U.S. policy to restore energy-independence by using all sources of available energy. Announce the intent to bring on more supply of oil and gas in the U.S.  This provides certainty for producers to bring new capital and supplies to the market, meeting current world demand.

“Second, open federal lands for energy development. The 9,000 permits the White House keeps touting is misleading at best. Thousands of those sites can’t be developed as they are held up in litigation.  Others require new permits and leases to make a full unit.

“Thousands more await approval.  Conservatively, our data tells us the number of available permits ready for production today stands closer to 1,500, and many of those are already drilling.  No leases have been issued for federal land since 2020.

“Third, support energy infrastructure, including pipelines to transport natural gas, oil and CO2 safely. Projects such as the Mountain Valley Pipeline would increase energy availability and enhance our ability to export to our allies.

“Last week we heard for the first time that Energy Secretary Jennifer Granholm is ready to work with ‘everyone and anyone who is willing to take a lead into the future by diversifying your energy portfolios to add clean fuels and technologies.’ The American oil-and-gas industry has done just that.  My message to the administration is this: The people of American oil and gas stand ready to work with you on U.S. energy development.”

---

Wall Street and the Economy

As expected, the Federal Reserve on Wednesday raised its benchmark lending rate for the first time since 2018, citing continued inflation pressures and saying the economic outlook remains “highly uncertain” amid the ongoing war between Russia and Ukraine.

The central bank raised the federal funds rate to a range of 0.25% to 0.5% from its prior range of zero to 0.25%, with the Fed indicating this was the first rate increase of many.

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures,” the bank’s Federal Open Market Committee said in a statement after its two-day meeting.

The Fed said Russia’s invasion of Ukraine and related events are expected to create “additional upward pressure on inflation and weigh on economic activity” in the near term.

On a positive note, the bank said economic activity and employment indicators have continued to gain strength, jobs gains have been solid in recent months, and the unemployment rate has fallen notably.

The committee also said it expects to start cutting its holdings of Treasury securities and agency debt and mortgage-backed securities at a coming meeting.

“The committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run,” the FOMC said.  “With appropriate firming in the stance of monetary policy, the committee expects inflation to return to its 2 percent objective and the labor market to remain strong,” it added.

Separately, the committee also projected rate increases at each of the six remaining meetings this year, pointing to a consensus funds rate of 1.9% by the end of 2022.  It sees four more increases in 2023, boosting its benchmark rate to 2.8%, which would be the highest level since March 2008.

Tuesday, we had a report on February producer prices and the market took solace in the figures being a little below expectations, 0.8%, ex-food and energy 0.7%; but still 10.0% from a year ago on headline, 8.4% on core.

February retail sales came in a little light, 0.3%, while industrial production, up 0.5%, was as expected.

New home sales for the month were stronger than expected, 1.769 million annual pace, with existing home sales for February falling by the most in a year, down 7.2% from January to a 6.02 million pace.  Sales still remained above their pre-pandemic level, but are off 2.4% from a year ago.  The median existing home price increased 15% from a year earlier to $357,300, with sales remaining concentrated in the upper-price end of the market.

Mortgage rates in the U.S. have soared, surpassing 4% for the first time in almost three years, with the average for a 30-year fixed rate loan at 4.16%, up from 3.85% last week and the highest since April 2019, Freddie Mac said in a statement Thursday.  That’s clearly cooling demand and a further reduction in sales activity can be expected.

The Atlanta Fed’s GDPNow barometer for first-quarter activity is at 1.3%.

Editorial / Wall Street Journal

“The Federal Reserve on Wednesday finally began to move to control the worst inflation in 40 years, and Chairman Jerome Powell almost sounded like a born-again inflation fighter.  But the measure of the Fed’s problem is that even 11 projected interest-rate increases in the next two years would keep rates well below the level of inflation.

“ ‘We have to restore price stability,’ Mr. Powel said more than once during his press conference.  His tone was markedly more hawkish than we’ve heard before, and it sounds like he and the rest of the Federal Open Market Committee (FOMC) have been mugged by price reality.  The central bank’s year-long illusion that inflation will quickly subside has vanished.

“The Fed’s action Wednesday to raise the fed funds rate by 25 basis points was modest and expected.  The surprise was in the forecast for the next two years.  In December the median prediction of Fed governors and bank presidents was four 25-point increased by the end of this year.  Now it’s seven, plus another four rate hikes in 2023.

“The Fed also climbed down from the fence on when to start shrinking the $9 trillion balance sheet it has built up to ease financial conditions.  The FOMC says it will begin to reduce its holdings of Treasurys and mortgage-backed securities ‘at a coming meeting.’  This sounds like sooner rather than later….

“The Fed’s problem is that it has already let inflation run free, as the governors and bank presidents all but admit….

“Even with the 11, 25-point rate hikes anticipated by the Fed, the fed-funds interest rate would be only 2.8% at the end of 2023.  That would still be lower than the likely inflation rate, which means real rates would be negative for all of 2022 and 2023.  The long experience of monetary policy is that inflation doesn’t fall until interest rates exceed the inflation rate.  There’s no reason to expect this time would be an exception, barring a recession.

“At his press conference, Mr. Powell declared that the U.S. economy ‘is very strong.’  But it’s notable that the Fed sages downgraded their median forecast for economic growth this year to 2.8% from 4% in December.  It’s also notable that, for the first time in perhaps two years, the FOMC statement didn’t warn about the economic risks of the pandemic.  The Chairman cited the war in Ukraine several times as a risk to both growth and inflation.

“Every canny Fed Chairman needs an ‘exogenous’ explanation other than monetary policy for economic problems.  Mr. Powell has switched seamlessly from pandemic to war and oil prices.  It’s still not enough to absolve the Fed from the inflation mess it helped to cause and now must find a way to clean up.”

Europe and Asia

The European Central Bank will be in no hurry to raise interest rates and any move will be gradual, ECB President Christine Lagarde said on Thursday. Speaking just a week after accelerating the ECB’s exit from unconventional stimulus, Lagarde said the decision gives the ECB “extra space” between the planned end of its money-printing program this summer and the first interest rate hike in more than a decade.

Inflation in the eurozone hit 5.9% last month* after spending most of the last decade below the ECB’s 2% target.  But, in a repeat of last week’s message, Lagarde said that any increase in the ECB policy rate will be gradual and come only “some time” after its bond-buying program ends, now slated for sometime in the third quarter.

*Germany 5.5% annualized, France 4.2%, Italy 6.2%, Spain 7.6%.

The ECB’s chief economist, Philip Lane, said core inflation, which came in at 2.9% in February, would likely fade over time as fuel costs level off.

Meanwhile, the Bank of England raised interest rates a third time in a row (for the first time since 1997) to their highest level since the pandemic started, and warned that war in Ukraine means inflation is poised to rise further this year.  The rate-hike takes borrowing costs to 0.75%.  At 1%, the BoE will consider the unprecedented sale of some $1.1 trillion of government bonds it bought up over the past decade; part of a program to fight inflation by withdrawing monetary stimulus, a la the Federal Reserve Bank.

Brits are getting slammed by soaring energy bills and the pressure on household budgets was likely to be much bigger than the record 30-year squeeze which the BoE predicted last month.

Brexit:  Former U.K. Brexit minister David Frost struck a warm tone about his outlook for relations with the EU.  Speaking at the University of Zurich, Frost suggested a reset and admitted that the U.K. had been “too purist” on immigration.  He wants closer cooperation on foreign and defense policy.  At the same time, he suggested Brexit was about long-term benefits, not just economic ones, and that “a bit more paperwork at the borders” is a small price to pay.

But, the extra paperwork is hurting.  Trade data for the first month since post-Brexit paperwork demands increased at the start of the year showed exports to the EU plunged in January.  The British Chambers of Commerce said the extra red tape was having a “major effect” on trade.

Turning to Asia…China’s economic numbers starting off 2022 were better than expected, with Jan.-Feb. industrial production up 7.5% year over year, retail sales 6.7%, and fixed asset investment rising 12.2%, all well above forecasts.  The unemployment rate for February was 5.5%.

But no one expects the strong start to the year to continue, especially as these figures reflected economic activity prior to the Russian invasion of Ukraine, as well as new Covid lockdowns of major metropolitan areas in China.

Japan reported February exports rose 9.6% from a year ago, but this was well below consensus, while imports surged 39.6%.

January industrial production was up 2.7% Y/Y, while February inflation increased 0.9% from a year ago, and up 0.6% on core, which was actually the highest in two years.

A powerful earthquake off Japan’s northeast coast left thousands of homes without water and power on Thursday and forced factories to suspend operations, adding to supply chain woes, but it could have been far worse and most factories were getting back on line today.  The quake struck in the same area that suffered Japan’s biggest quake 11 years ago at Fukushima.

Street Bytes

--After a putrid five-week stretch, stocks rallied bigly for their biggest gains since Nov. 2020 (specifically Election Week that year), with the Dow Jones gaining 5.5% to close at 34754, while the S&P 500 surged 6.2% and Nasdaq 8.2% (10% the last four days after a rough Monday).

It’s all about the Federal Reserve and confidence that Chair Powell et al have a handle on inflation, while the Fed expressed optimism over the health of the economy.

Of course oil is still over $100 and Vlad the Impaler is a rage machine. I will be eagerly watching this weekend’s developments on the Ukraine front because I might get back into my ‘short’ trade that I closed out two weeks ago.  I like Chair Powell a lot, but the Fed is way behind the curve.

--U.S. Treasury Yields

6-mo. 0.78%  2-yr. 1.94%  10-yr. 2.15%  30-yr. 2.42%

The spread between the 2-year and 10-year has narrowed considerably over the course of the year, a major economic warning sign if it flips. [Yield on the two- greater than on the ten-.]

On Dec. 31, the yield on the 2-year was 0.73%...1.51% on the 10-year.  As in the spread has narrowed from 78 basis points to 21.

--Oil prices hit a 14-year high on March 7 on supply fears. Then they crashed, to about $92 on West Texas Intermediate from a high of $129.

Wednesday, oil rallied back some on easing worries about slowing Chinese demand, while signs of progress in Russia-Ukraine peace talks limited gains.

Three million barrels per day of Russian oil and products may not find their way to market beginning in April in the wake of the invasion of Ukraine, the International Energy Agency said on Wednesday, as sanctions bite and buyers hold off.

“These losses could deepen should bans or public censure accelerate,” the IEA said in its report, which also cut its oil demand forecast for 2022.

Thursday, oil continued its rally, with WTI rising nearly $8 to $103, as the market focused again on supply shortages in the coming weeks.

--The major U.S. airlines raised their forecasts for current-quarter revenue on Tuesday, highlighting a recovery in air travel as the Omicron variant loosens its grip on the country.  You see how the TSA #s have been improving.

Delta, United and Southwest said demand for air travel was strong, allaying investor concerns about a hit to profit from rising fuel costs due to the Russia-Ukraine war.  Delta said it was expecting first-quarter adjusted revenue to be about 78% of pre-pandemic level, compared with 72% to 76% it had forecast earlier.

Southwest said it was expecting revenue to fall 8% to 10%, better than its previous estimate of a 10% to 15% fall.

United Airlines said it expects a fall in first-quarter operating revenue to be at the “better” end of its prior forecast of a 20% to 25% drop, compared with pre-pandemic levels.  The airline, though, cut its full-year capacity forecast due to rising fuel prices and aircraft delivery delays.  United now expects 2022 capacity to be down in high single digits versus 2019.

American Airlines then raised its Q1 revenue guidance to a 17% decline from Q1 of FY19 from prior guidance of a decline of 20%-22%.

JetBlue then added its voice to the discussion, saying its first-quarter revenue would drop 6% to 9% compared with Q1 2019, compared with its prior guidance of a revenue drop between 11% and 16% for the period.

The air carrier cited “a very strong demand environment,” according to a regulatory filing.

Additionally, JetBlue said it continues to expect the cost per available seat mile, excluding fuel, for Q1 to rise in a range of 13% to 15%, year-over-year.

Higher oil prices are set to lead to a 10% increase in air fares, according to Delta CEO Ed Bastian, who told the BBC the final impact “really depends where fuel prices settle.”

Bastian said that on a domestic U.S. flight the rise in fuel prices “is probably about $25 on a ticket.”

Separately, Delta announced it will raise pay by 4 percent for all its employees globally.

--TSA checkpoint travel numbers vs. 2019….

3/17…88 percent of 2019 levels
3/16…86
3/15…85
3/14…89
3/13…90
3/12…88
3/11…87
3/10…87

--Meanwhile, as the New York Times’ Niraj Chokshi reported, “Hope has faded quickly for a handful of Western companies eager to recover planes leased to airlines in Russia, with the authorities there intent on keeping foreign-registered aircraft within the country and President Vladimir Putin openly discussing nationalizing the assets of foreign businesses.

“As of Thursday (last week), there were 523 aircraft leased to Russian carriers by companies outside the country, according to IBA, a consulting firm.  Of those, 101 are on lease to S7 Airlines and 89 to Aeroflot.  Both airlines have stopped flying internationally, eliminating any chance of repossessing the planes on foreign soil….

“AerCap, the world’s largest leasing company for commercial aircraft, has 142 leased planes in Russia, more than any other company, according to IBA.”  Supposedly, this is about 5 percent of AerCap’s fleet.

The leasing companies are scrambling to figure out if there is a viable way to recover the planes, but it’s highly unlikely.

A key is the maintenance records of every aircraft, which are often stored by airlines themselves, and the longer a plane is stuck in Russia, work on the jet’s body, engines and flight systems won’t get done, causing the value to plummet.

“Unless you have those records, the aircraft is virtually worthless,” said Quentin Brasie, the founder and chief executive of ACI Aviation Consulting.  “They’re literally more important than the asset itself.”

As for the financing of the aircraft, it’s another nightmare.  Insurers and reinsurers are on the hook, too, in most cases.

--Intel picked Germany as the site for a huge chipmaking complex, the first details of its planned $88 billion investment in Europe, as the region scrambles to boost output and fix a supply crisis that has dogged the car industry.  The chipmaker also said it would boost its existing factory in Ireland, set up a design and research facility in France, and a packaging and assembly site in Italy.

With an initial investment of $36 billion, including about $18 billion for the German plans, the spending will help meet surging demand for chips used in computers, cars, smartphones and other gadgets, as well as reduce in the long run Europe’s reliance on Asian suppliers.

Intel will build two factories in Magdeburg, Germany, creating 7,000 construction jobs, 3,000 permanent jobs at the company, and tens of thousands of additional jobs across suppliers and partners, it said.

The research hub in France will create 1,000 new high-tech jobs.

--FedEx Corp.’s revenue rose 10% in the fiscal third quarter, as higher shipping rates made up for shipping fewer packages overall.

The delivery giant’s profit rose 25% from a year earlier to $1.1 billion, with the company saying all its division were helped by the company adding fuel surcharges on shipments at a faster pace than fuel costs rose.

Thursday, FedEx said it is raising its fuel surcharge fee across all shipping services starting April 4.

Overall, FedEx shipped on average 16.8 million parcels a day in the three months ended Feb. 28, compared with 17.6 million in the prior-year quarter, as the boom in package shipments from the pandemic wanes.

Labor costs in the latest quarter grew by $350 million year over year, primarily due to its Ground division.  Revenue came in at $23.6 billion overall.

Across the package-delivery space, the peak shipping season between Thanksgiving and Christmas turned out to be lighter than expected, as retailers offered promotions earlier than normal and shoppers also returned to stores to do holiday shopping.  [UPS had noted an unexpected slowdown in shipping volume in December, and said last month it dismissed temporary workers to preserve profits as the shipping levels slowed down.]

FedEx shares fell 4% after the earnings news on concerns over shrinking profit margins.

--Tesla CEO Elon Musk said both his electric carmaker and rocket company SpaceX are facing significant inflation pressure in raw materials and logistics.

--Starbucks CEO Kevin Johnson will retire next month after holding the top post for five years, while founder Howard Schultz steps in on an interim basis as the coffee chain faces a growing unionization push.

Schultz will become interim CEO on April 4 as Johnson serves as special consultant through September.

“A year ago, I signaled to the board that as the global pandemic neared an end, I would be considering retirement from Starbucks,” Johnson said in a statement.  “I feel this is a natural bookend to my 13 years with the company.”

Johnson, 61, joined the Starbucks management team in 2015 as chief operating officer.  He became CEO in 2017, succeeding Schultz.

The CEO change comes as unionization efforts among Starbucks’ employees grow.  Starbucks Workers United said about 140 stores across 26 states have petitioned the National Labor Relations Board to unionize, according to CNBC.

Earlier in the week, the federal labor board filed a complaint against Starbucks over alleged retaliation against two employees seeking to unionize in Phoenix, Ariz., according to media reports.

The board plans to announce a permanent CEO by the fall.

“Although I did not plan to return to Starbucks, I know the company must transform once again to meet a new and exciting future,” said Schultz, 68. “With the backdrop of Covid recovery and global unrest, its critical we set the table for a courageous reimagining and reinvention of the future Starbucks experience for our partners and customers.”

Starbucks shares jumped 5% on the news Schultz was returning, even if briefly.

--Disney workers are planning walkouts during their breaks to protest CEO Bob Chapek’s slow response in publicly criticizing Florida legislation that critics have dubbed the “Don’t Say Gay” bill.

The bill bars instruction on “sexual orientation or gender identity” in kindergarten through grade 3.

As the state’s largest private-sector employer, Walt Disney World with more than 75,000 workers before the pandemic, Disney has contributed huge amounts of money to Florida’s political parties and politicians and has wielded incredible influence on the state’s government.

At the beginning of last week, Chapek sent a message to Disney workers affirming the company’s support for LGBTQ rights but also saying that corporate statements often don’t do much to change minds and can be “weaponized” by either side.

With his public responses being panned by some Disney workers and supporters, Chapek last Friday apologized and said the company was pausing all political donations in Florida.

--The 1,780-room Sheraton Times Square recently traded hands for $356 million, nearly $400 million less than it was purchased for in 2006, according to Crain’s New York Business.

Hospitality firm MCR bought the building, which is the third-largest hotel in the city, from Host Hotels & Resorts.  This is a trend in the New York City hotel business.  Some of the smaller hotels being sold off will be converted to apartments.  A few of them will be turned into housing for the homeless.

--Dr. W. said the cost of his mulch for his garden areas doubled.  Personally, while it’s early, my Dollar Tree, which raised its prices to $1.25, does seem to be getting slightly better products in the canned goods section.

Meanwhile, Mark R. takes advantage of his special coupons on Newman’s Own frozen pizza, a quality product.

--In its second weekend of release, Warner Bros.’ “The Batman” easily remained the No. 1 movie in North American theaters with $66 million in ticket sales, while a BTS concert broadcast was a one-day-only blockbuster.

“The Batman” has now done $238.5 million domestically, and nearly the same overseas for $463.2 million globally thus far.

But last Saturday, packing theaters was “BTS Permission to Dance on Stage: Seoul.”  The live broadcast Saturday of the band’s first stage concert in South Korea since 2019 grossed $6.8 million in 797 North American theaters.  Globally, it made $32.6 million, with tickets to the event going for as much as $35.

Good for them. I’m jealous of these guys because I can’t dance.

The Pandemic

--The World Health Organization said on Wednesday that a global rise in Covid-19 cases could be the tip of the iceberg as some countries also report a drop in testing rates. New infections surged 8% globally last week, compared to the previous week.

“Surges are to be expected particularly in areas where measures to prevent transmission have been lifted.  However, there are unacceptably high levels of mortality in many countries,” WHO head Tedros Adhanom Ghebreyesus told reporters.

A combination of factors was causing the increases, including the highly transmissible Omicron variant and the lifting of public health and social measures.

“We completely understand that the world needs to move on from Covid-19, wants to move on, but this virus spreads very efficiently between people.”

--Hong Kong is in the midst of a true crisis. In just a matter of weeks, the city of more than 7 million has transformed from one of the safest places during the pandemic to having what’s believed to be the highest rate of Covid-19 deaths in the world.  On Feb. 18, Hong Kong had a total of 259 Covid deaths since the pandemic began.  A month later, the number had soared to nearly 4,600 – on par with the reported total in China, a country of 1.4 billion.

I told you long ago the Hong Kong healthcare system couldn’t handle a surge.  Now, there are reports of nurses being responsible for 150 patients…a single nurse responsible for 150.  Let that sink in.  There are further stories of patient beds in lobbies and carparks.

--China has recorded more than 10,000 new cases of what it dubs the “stealth Omicron” variant in the first two weeks of March, far exceeding previous flare-ups, but it hasn’t been reporting any new deaths. That said, it put several of its industrial hubs under lockdown, further threatening to disrupt global supply chains.

--Israeli healthcare workers who were boosted with a fourth shot of Covid-19 vaccine at the height of the Omicron wave were only marginally more protected against reinfection than their peers who had received three jabs of vaccine, researchers reported Wednesday.

Compared to getting two initial does and one booster shot of Pfizer and BioNTech’s vaccine, adding a second booster shot reduced the rate of coronavirus infection by just 30%.

The fourth dose was somewhat more effective at preventing Covid symptoms, according to a study published in the New England Journal of Medicine.  The healthcare workers who got the second booster shot were 43% less likely to show signs of illness than were those who hadn’t.

--The BA.2 variant now accounts for 39% of all cases in New Jersey and New York, according to the CDC, with cases doubling since the week ending March 5.  Experts aren’t overly worried, but they are monitoring the strain.

Vaccines remain effective against BA.2, experts say, and those who contracted Omicron also have some immunity.

--Moderna asked the Food and Drug Administration to authorize a fourth shot of its Covid vaccine as a booster dose for all adults.  The request is broader than rival Pfizer’s request for the regulator to approve an additional booster shot for all seniors, people 65 and older.

It’s not clear how long the FDA will take to review the request or whether it will even convene its expert panel to review it.

Meanwhile, the White House said on Tuesday that the government will run out of supplies of treatments for Covid known as monoclonal antibodies as soon as late May and will have to scale back orders for more unless Congress provides more funding.

--Canada announced this week that travelers entering the country will no longer have to take a pre-arrival Covid test. Canada will be removing the testing requirements at airports and land border crossings, adding that the requirements will be dropped by the end of March.

--Second gentleman Doug Emhoff and former President Obama both tested positive this week, with both also reporting mild symptoms.  Vice President Harris has tested negative.

--Lastly, researchers at the University of Washington’s Institute of Health Metrics and Evaluation found an estimated 18.2 million people may have died by the end of 2021 due to the pandemic, more than three times the official toll of 5.9 million, according to the study published Thursday in The Lancet.

The IHME team obtained weekly or monthly data on deaths from 74 countries and 266 states or provinces using government website from 2020 to 2021, and compared that with death data going back 11 years.

South Asia had the highest number of estimated excess deaths from Covid-19 at about 5.3 million, followed by North Africa and the Middle East, both at 1.7 million.  Eastern Europe had about 1.4 million excess deaths from Covid, the study found.

The seven countries with the highest number of excess deaths accounted for more than half of the estimated global toll…India, the U.S., Russia, Mexico, Brazil, Indonesia and Pakistan.

Although the U.S. has yet to officially record one million Covid deaths, the IHME study estimated the nation may already have reached 1.1 million by the end of 2021.

Countries that had fewer to no excess deaths followed a pandemic strategy in 2020 that included hard lockdowns, mask mandates and aggressive testing, experts say.

When vaccines were rolled out, these same countries launched rigorous vaccination campaigns that removed obstacles to get the shot, while increasing barriers for those who were unvaccinated.  In the wealthy city-state of Singapore, more than 92% of the total population is fully vaccinated, according to Our World in Data.

Covid-19 death tolls, as of early tonight….

World…6,093,047
USA…997,040
Brazil…656,487
India…516,312
Russia…363,039
Mexico…321,619
Peru…211,691
UK…163,386
Italy…157,442
Indonesia…153,212
France…140,729
Iran…139,387
Colombia…139,386
Argentina…127,363
Germany…127,072
Poland…113,980
Ukraine…107,412
Spain…101,608

Canada…37,150

[Source: worldometers.info]

U.S. daily death tolls…Mon. 408; Tues. 1,225; Wed. 1,022; Thurs. 1,009; Fri. 684.

The U.S. figures are coming down.  But the reporting is also not as rigorous as the state’s have rescinded their ‘emergency orders.’

Foreign Affairs

Iran: Russia’s foreign ministry said on Tuesday the remaining points of an agreement aimed at reviving the Iran nuclear accord were being “polished,” and again denied U.S. suggestions that Moscow was blocking a deal, the TASS news agency reported.

Earlier, Foreign Minister Sergei Lavrov said after meeting his Iranian counterpart that Russia had received written assurances from Washington that sanctions against Moscow over Ukraine would not hinder cooperation within the framework of the deal. RIA news agency quoted the ministry as saying these points were being added to the treaty.

Meanwhile, 49 of the 50 Republican U.S. senators said on Monday they will not back a new nuclear deal between Iran and world powers, underscoring the party’s opposition to attempts to revive a 2015 accord amid fears talks might collapse.

Citing press reports about a new deal, which has yet to be finalized and could be torpedoed by Russian opposition, the lawmakers said in a statement that Biden administration might reach a deal to weaken sanctions and lessen restrictions on Iran’s nuclear program.  They pledged to do everything in their power to reverse an agreement that does not “completely block” Iran’s ability to develop a nuclear weapon, constrain its ballistic missile program and “confront Iran’s support for terrorism.”

Senator Rand Paul was the only Republican member of the Senate who did not sign Monday’s statement. In an emailed statement, he said: “Condemning a deal that is not yet formulated is akin to condemning diplomacy itself, not a very thoughtful position.”

Sen. Paul is spot on.

But at the same, Republicans are in a total state of denial when it comes to the fact that after Donald Trump withdrew the United States from the 2015 accord in 2018, by 2019, Iran was breaking all the restrictions in place from the original deal and drastically ramping up its nuclear program.  They are close to being able to test a nuclear weapon.  Period.

All the parties to the original deal, the P5+1, know this.  Britain, France and Germany have all said if there is no agreement, literally in the next 2-3 weeks, the whole process is meaningless. It will be too late.

The White House has also said Washington would start exploring alternatives to the deal over the next week if Russia didn’t back away from its demands for written guarantees exempting Russia from Ukraine-related sanctions that could curtail its future trade with Iran.  Such guarantees could undercut the West’s punishing array of sanctions leveled at Russia over the Ukraine invasion.

Meanwhile, Iran’s Revolutionary Guard Corps took responsibility for a missile attack near a U.S. consulate under construction in northern Iraq early Sunday on what it claimed were Israeli targets.  Luckily, no one was killed, and the IRGC said the strike was in response to recent Israeli actions in the region, which included an airstrike last week in Syria that killed two of the group’s commanders.

American, Iraqi and other world leaders condemned Sunday’s missile strike as a destabilizing act, with the French foreign ministry warning that the strike could imperil talks over the nuke deal.

China: Taiwan’s air force scrambled again on Monday to warn away 13 Chinese aircraft that entered its air defense zone.  Taipei’s armed forces are currently in a heightened state of alert due to fears China could use Russia’s invasion of Ukraine to make a similar military move on the island, though Taiwan’s defense ministry has not reported any unusual Chinese movements.

North Korea:  Pyongyang launched a suspected ballistic missile that appeared to explode shortly after liftoff in the skies over the capital on Wednesday, South Korea’s military said, amid reports that the nuclear-armed North was seeking to test-fire its largest missile yet.

The United States and South Korea have warned that North Korea may be preparing to launch an intercontinental ballistic missile (ICBM) at full range for the first time since 2017.

I have written for months on how worrisome it’s been that North Korea hasn’t had an apparent failure in any of its recent missile tests, so this is the first one, with debris falling in or near Pyongyang, the projectile being fired from Sunan Airport just outside the capital.  The airport has been the site of several recent launches, including on Feb. 27 and March 5, which we learned later were part of the testing for the North’s new ICBM.  Those were successful.

The U.S. and South Korea also said last week that the government appeared to be restoring some tunnels at its shuttered nuclear test site.

Syria:  The New York Times has gathered evidence that sheds new light on one enduring mystery of the war: What happened to the bodies of the many thousands who died or were killed in government detention centers?

“Interviews over the past several months with four Syrian men who worked at or near secret mass graves led to an examination of satellite images. Together, those clues revealed the locations of two sites. Each one holds thousands of bodies, according to the men who worked there. They could also contain powerful evidence of war crimes committed by (Bashar) al-Assad’s forces, according to human rights group, including the systematic torture and the killing of detainees.

Saudi Arabia: On Saturday the kingdom executed 81 people in what was its largest mass execution in years, despite recent promises to curb its use of the death penalty.

A statement from the Ministry of the Interior said the crimes of those executed included murder; pledging allegiance to foreign terrorist groups, including the Islamic State and Al Qaeda; and traveling to join such groups, as well as the vaguely worded offense of “targeting residents in the Kingdom.”

Random Musings

--Presidential approval ratings….

Gallup: 41% approve of Biden’s job performance, 55% disapprove; 35% of independents approve (Feb. 1-17). New #s next week.

Rasmussen: 38% approve, 60% disapprove (Mar. 18)

A Monmouth University national poll had Biden with a 39% approval rating, 54% disapproving, which is unchanged from January.  Donald Trump had an identical 39-54 split at the same point in his term (March 2018).

When he took office, Biden had a positive 54-30 approval rating split.

Just 38% of Americans feel optimistic about the policies Biden will pursue over the next few years, which is down significantly from 61% who felt optimistic as he took office last year.  by comparison, 50% were optimistic about Trump’s policy agenda when he first took office and a year into his term.

Only 21% approve of the job Congress is doing, compared with 35% in January 2021.

A new Wall Street Journal poll has Biden with a 42% approval rating, 57% of voters disapproving, virtually unchanged from a Journal poll in mid-November.

On the key question, “If the election for Congress were held today, who would you be more likely to vote for?” 46% of registered voters said Republican, 41% Democrat (the rest unsure/undecided), which is virtually unchanged from November’s 44-41 split for Republicans. 

Fifty percent of voters said inflation and the economy was the top issue they want the federal government to address, with 25% saying the Ukraine conflict was the most important.

In a hypothetical rematch with Donald Trump in 2024, voters were split, 45% to 45%.

The above-mentioned Quinnipiac poll gave Biden only a 38% approval rating, 53% disapproving, similar to a recent survey.  [It’s 40-53 percent among registered voters.]

Separately, the Quinnipiac survey has Americans by a 52-24 margin saying the Senate should confirm President Biden’s nominee Ketanji Brown Jackson to the Supreme Court.

--A new Marist College poll found that New York City’s new mayor, Eric Adams, has a 61% approval rating among city residents, with 40% of registered voters believing Adams is doing an excellent or good job.  The 40% is actually the same as former Mayor Bill de Blasio received after taking office, but below the 50% former Mayor Bloomberg got after stepping into City Hall.

Marist pollster Lee Miringoff said of Adams: “He’s not particularly polarizing.  The support is wide, but not necessarily very deep.”

That’s a perfect description, as I see it.  It’s all about the crime rate, especially in the high-profile, and critical to the City’s success, subway system.

--Detected deforestation in the Brazilian Amazon reached a record high for the month of February, following a similar record the prior month.

Satellite alerts of deforestation in February corresponded to 77 square miles, the highest indicator for that month in seven years of record-keeping and 62% more than in the same month in 2021, according to preliminary data from the Brazilian space agency’s Deter monitoring system that was released last weekend.

Some have argued the uptick could be a worrisome sign for months to come, with loggers and legislators eager to make headway before a possible handover of presidential power next January.

Deforestation has soared under President Jair Bolsonaro, who has been an outspoken champion of development in the Amazon and whose administration has defanged environmental authorities. Early polls show him trailing his rival Luiz Inacio Lula da Silva in the October presidential election.

--Meanwhile, the multiyear, mega-drought that’s drained western U.S. reservoirs and parched croplands across California’s fertile valleys shows no signs of easing, forecasters say.

According to an outlook released Thursday by the National Oceanic and Atmospheric Administration, the region faces another spring and summer of dwindling water resources and rising temperatures.

From April to June, chances remain high that little rain or snow will fall from Northern California and Oregon across a wide swath of the Rocky Mountain states to Texas and the U.S. Gulf Coast, according to NOAA’s Climate Prediction Center.

“With nearly 60% of the continental U.S. experiencing minor to exceptional drought conditions, this is the largest drought coverage we’ve seen in the U.S. since 2013,” said Jon Gottschalck, a director at NOAA.

--The U.S. Senate passed legislation that would make daylight saving time permanent starting in Nov. 2023, a move promoted by supporters advocating brighter afternoons and more economic activity.  The Senate approved the measure by voice vote.

The House must still pass the bill before it can go to the president for his signature.  The White House has not said whether Biden supports it.

The holdoff until Nov. 2023 is because airlines have already set their schedules up well ahead of time and it’s difficult to change them.

So the good thing is that instead of going through a period of about two months where in many parts of the country the sun sets before 5:00 p.m., you have more daylight, enabling children to play outdoors later and reduce seasonal depression, so the experts say.

But others say children shouldn’t be going to school in the dark. Heck, the sun won’t rise until after 9:00 a.m. in some parts of the country.

On the other hand, losing the hour of sleep in the spring isn’t the healthiest thing.  There is, for example, a small increase in the rate of heart attacks and strokes soon after a time change.  And there are economic benefits to permanent daylight saving time.  Golf courses could get in a few more tee times.

A 2019 poll found 71% of Americans prefer to no longer switch their clocks twice a year.

A new Monmouth University poll found that 61% would do away with the nation’s twice-a-year time change, while 35% want to keep the current practice.

I like things the way they are.

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

God bless America.

Pray for Ukraine.

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Gold $1919
Oil $105.42

Returns for the week 3/14-3/18

Dow Jones  +5.5%  [34754]
S&P 500  +6.2%  [4463]
S&P MidCap  +5.3%
Russell 2000  +5.4%
Nasdaq  +8.2%  [13893]

Returns for the period 1/1/22-3/18/22

Dow Jones  -4.4%
S&P 500  -6.4%
S&P MidCap  -4.8%
Russell 2000  -7.1%
Nasdaq  -11.2%

Bulls 30.6
Bears 36.5

Hang in there.

Brian Trumbore

 

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