Week in Review

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Week in Review

04/02/2022

For the week 3/28-4/1

[Posted 9:30 PM ET, Friday]

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Edition, 1,198

As I go to post it appears that Ukrainian helicopter pilots carried out a brazen, incredibly heroic cross-border strike on an oil depot inside Russia last night, verified, in part, by videos.  Ukrainian authorities, including President Zelensky tonight, refuse to confirm the operation or discuss details.  There are questions whether Russian negligence (not a false-flag operation, as some have offered) may be to blame.

But a Russian governor in the border region said that early on Friday, two Ukrainian Mi-24 helicopters crossed the border at low altitude before firing rockets at an oil facility 40 km from the border in the militarized city of Belgorod.  The governor said there were no victims.

An explosion also took place earlier on Thursday at the site of an arms depot in the area, raising speculation that saboteurs were targeting the city.

Belgorod has been a massive staging area, and hundreds of tanks and artillery pieces poured across the border on Feb. 24 and the days after from there for the assault on Kharkiv and surrounding areas.

British military intelligence said the destruction of the oil tanks and the arms depot will clearly add to Russia’s already stretched logistics chains, particularly affecting those forces encircling Kharkhiv.

Separately, tonight, there are reports of missiles striking the Odesa region.

Vladimir Putin authorized a new conscription of 134,000 troops this week.

On a different issue, NATO says the Black Sea is now awash with drifting mines.  It’s an example of what is faced on land once the guns have been silenced.  Picture all the mines laid down by both sides, and the dangers of all the unexploded ordinance.  Think about how they are still clearing mines in the likes of Southeast Asia.

Down below, I have a piece by author David Satter, who penned an op-ed in the Journal this week discussing the import of the 1999 Moscow apartment bombings that I’ve been harping on these past five weeks (and going back 23 years in this space).  Satter is a true expert on the topic.

This was also a week, going back to last Saturday, where we had Joe Biden’s titanic gaffe, covered in great detail below as well.

I’ve said since last fall that Biden will not run in 2024 and he will make the announcement after the midterm elections, which will be a disaster for the Democrats when it comes to the House, at least.  It is very hard to see how things will get better between now and November for the president.  And ‘Hunter’ is not going to make things any easier for Papa Joe.

For now, I try to chronicle the week’s key events on the war front. 

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Last week, Russia’s military signaled it would concentrate on expanding territory held by the separatists in the east, a month after having committed the bulk of its huge invasion force to a failed assault on the capital Kyiv.  But Ukraine said it saw no sign Russia had given up a plan to surround the capital.

But Russia’s armored columns are bogged down, with trouble resupplying and making little or not progress.

Tuesday, Russia announced it would sharply scale back military activity around Kyiv and the northern city of Chernihiv, in what some saw as a sign of progress towards a peace deal.

But Deputy Defense Minister Alexander Fomin gave the undertaking after talks between delegations from the two countries in Istanbul.

“In order to increase mutual trust and create the necessary conditions for further negotiations and achieving the ultimate goal of agreeing and signing (an) agreement, a decision was made to radically, by a large margin, reduce military activity in the Kyiv and Chernihiv directions,” Fomin told reporters.

He did not refer to the eastern and southern parts of Ukraine where Russian forces are also conducting major offensives but have struggled to make headway.

Russia’s chief negotiator, Vladimir Medinsky, said this was one of two steps Moscow was taking to de-escalate the conflict.  He said the other was that Russia would agree to a meeting between presidents Vladimir Putin and Volodymyr to take place simultaneously if and when a peace treaty was initialed by their foreign ministers.  Previously, Moscow had said that a presidential meeting could only take place at a later point.

Ukraine proposed adopting neutral status in exchange for security guarantees at the talks, meaning it would not join military alliances or host military bases, Ukrainian negotiators said.  The proposals would also include a 15-year consultation period on the status of annexed Crimea and could come into force only in the event of a complete ceasefire, Ukraine said.

But Western officials said Tuesday that Russia had not demonstrated it is serious about peace talks and appeared to be using negotiations as a tactic to play for time.

The Pentagon warned later Tuesday that Russia’s announcement that it was “drastically reducing hostilities” in Kyiv and Chernihiv is not a real withdrawal and said Putin still hopes to take all of Ukraine.

“Nobody should be fooling ourselves by the Kremlin’s new recent claim that it will suddenly just reduce military attacks near Kyiv, or any reports that it’s going to withdraw all its forces,” spokesman John Kirby told reporters.

Kirby said the Pentagon has seen Russia pull back a “small number” of forces, “but we believe this is a repositioning, not a real withdrawal.”

In its initial invasion, Russia had come at Ukraine from three axes: from the north, targeting Kyiv; from the east, to include the separatist regions; and from the south, coming out of Crimea, where some forces went west to Mykolaiv and Kherson, and others went east to Mariupol.

But the northern advance stalled, best exemplified by the 40-mile convoy that was stuck, and the Pentagon said the southern advance had stalled, with even Mariupol still resisting despite a weeks-long, catastrophic siege.

John Kirby said: “Mr. Putin’s goals stretch far beyond the Donbass.  Russia’s (recent talking points) may be an effort to move the goalposts, moderating Russia’s immediate goals and spinning its current lack of progress as part of what would be next steps,” Kirby said.

The governor of Ukraine’s northern Chernihiv region announced Tuesday that he saw no let-up in Russian attacks despite Moscow’s promise to scale down military operations.

Late Tuesday, President Zelensky, in a video address, said Moscow’s assurances “do not silence the explosion of Russian shells.”

Wednesday, White House and European official said Vladimir Putin was being misled by advisers who were too scared to tell him how poorly the war was going and how damaging Western sanctions have been.

“We have information that Putin felt misled by the Russian military, which has resulted in persistent tension between Putin and his military leadership,” Kate Bedingfield, White House communications director, told reporters during a press briefing.

The head of Britain’s GCHQ spy service said that new intelligence showed some Russian soldiers in Ukraine had refused to carry out orders, sabotaged their own equipment and accidentally shot down one of their own aircraft.

GCHQ chief Jeremy Fleming said Putin had “massively misjudged” the capabilities of Russia’s once mighty armed forces while underestimating both the resistance of the Ukrainian people and the resolve of the West, which has punished Moscow with largely coordinated sanctions.

In a speech in Canberra (Australia), Fleming said Russian soldiers had low morale and were poorly equipped.

Thursday, President Zelensky thanked his Turkish counterpart Tayyip Erdogan for Turkey’s readiness to provide security guarantees to Ukraine in a call yesterday. Zelensky tweeted that the two leaders “agreed on further steps towards peace.”

Ukraine has proposed a system of security guarantees by several third countries, including Turkey.

Erdogan reiterated his proposal to bring together Zelensky and Putin at a meeting in Turkey, but no way Putin will agree to that.

Friday, Ukraine said it had pushed back Russian forces around Kyiv, retaking control of some areas near the capital amid fierce battles.  So much for Russia scaling down operations in the capital.

An adviser to President Zelensky said Russia was also carrying out a partial troop rotation and sending some of its forces to fight in eastern Ukraine.

Kyiv Mayor Vitali Klitschko urged residents not to head back to Kyiv yet because “huge” battles were being fought to the north and east of the capital.  “The risk of dying is pretty high, and that’s why my advice to anyone who wants to come back is: Please, take a little bit more time,” he said.

Earlier in the week, the mayor of Irpin, in Kyiv’s suburbs, said up to 300 civilians and 50 soldiers had been killed there before it was taken back from Russian forces.

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During a speech in Warsaw on Saturday, President Biden cast Russia’s invasion of Ukraine as a battle in a much broader conflict between democracy and autocracy.

“The battle for democracy could not conclude and did not conclude with the end of the Cold War,” Biden said.  “Over the last 30 years, the forces of autocracy have revived all across the globe.”

He pledged that NATO would defend “every inch” of its member states’ soil.  He also promised continued support for Ukraine, although he noted that the U.S. military would not engage with Russian forces there.

It was a confrontational, but measured speech – well in line with what U.S. officials, from Secretary of State Antony Blinken on down, have been saying for months.

But then right near the end, Biden ad-libbed, “For God’s sake, this man cannot remain in power.”

Uh oh.  Immediately we had the walk-backs.

“The president’s point was that Putin cannot be allowed to exercise power over his neighbors or the region,” one Biden administration official said.  “He was not discussing Putin’s power in Russia, or regime change.” 

Secretary of State Antony Blinken, speaking to reporters in Jerusalem: “We do not have a strategy of regime change in Russia, or anywhere else, for that matter.  In this case, as in any case, it’s up to the people of the country in question, it’s up to the Russian people.”

Kremlin spokesman Dmitry Peskov told Reuters, “That’s not for Biden to decide.  The president of Russia is elected by Russians.”

Of course it was the lead topic on the Sunday talk shows.

Sen. Rob Portman (R-OH) on “Meet the Press”, when asked by Chuck Todd what he thought of the president’s remarks.

“Well, first, I think all of us believe the world would be a better place without Vladimir Putin.  But second, that’s not the official U.S. policy. And by saying that, that regime change is our strategy eventually, it plays into the hands of the Russian propagandists and plays into the hands of Vladimir Putin.  So it was a mistake.  And the president recognized that and the White House walked it back.  By the way, they had to walk back three other comments he made as well. But look, we’re in a crisis.  We’re in a war situation.  And so clarity is incredibly important.  And we need to be sure that we are also clear with our NATO allies because that’s how we are stronger….

“I thought the president’s speech was very strong, despite the ad lib at the end – the gaffe at the end.  But it was a powerful speech that does not match the action.  So there was a mismatch between rhetoric and what we’re actually doing… So we need to do more. We need to do it more quickly.”

Sen. James Risch (R-ID), when asked by CNN’s Dana Bash on “State of the Union” if the president’s trip to NATO was a success.

“He gave a good speech at the end.  But, as you pointed out already, there was a horrendous gaffe right at the end of it.  I just – I wish he would stay on script. Whoever wrote that speech did a good job for him. But, my gosh, I wish they would keep him on script.

“I think most people who don’t deal in the lane of foreign relations don’t realize that those nine words that he uttered were – would cause the kind of eruption that they did.  But any time you say or even, as he did, suggest that the policy was regime change, it’s going to cause a huge problem. 

“This administration has done everything they can to stop escalating.   There’s not a whole lot more you can do to escalate than to call for regime change.”

On Monday, Biden said his weekend comments that Putin “cannot remain in power” reflected his own “moral outrage” at his behavior in Ukraine and did not represent a major policy change by the White House.

Speaking at a news conference, Biden said: “No one believes we’re going to take down Putin.”  The president said he was “not walking anything back” by clarifying the ad lib remarks.

“I wasn’t then nor am I now articulating a policy change.  I was expressing moral outrage that I felt and I make no apologies,” he said.

Gerard Baker / Wall Street Journal

“At what point does Joe Biden’s verbal incontinence start to become a mortal threat to Americans?

“Until now we’ve mostly had the luxury of observing the president’s many rhetorical infelicities with a mixture of mild puzzlement and gentle concern, as one might watch an again relative struggle to remember the name of one’s children.

“But some words have larger consequences than others – especially when you’re the president of the United States.  It’s one thing to misidentify your vice president as the first lady, quite another to call for the ouster of an autocratic and bellicose leader of a nation with nuclear weapons.  That is the kind of thing that can trigger wars that could result in the annihilation of much of humanity.

“It’s a sign of the rising alarm the presidential blunders must be causing in diplomatic circles that the White House communications shop has stopped attempting to correct the gaffes that come flying like grapeshot from a cannon.  Instead they take the Humpty Dumpty approach.  Instead of issuing corrections or clarifications of Mr. Biden’s words, they simply invoke Humpty’s philosophy on the president’s behalf: ‘Whenever I use a word…it means just what I choose it to mean – neither more nor less.’….

“We can’t go on like this.  Credibility is essential to the effective and safe conduct of national security.  No amount of hasty cleanup will erase the words that come from the lips of a commander in chief.  And no, it is not a defense of the president to note – accurately – that his immediate predecessor was as notorious for his verbal indiscipline as Mr. Biden is.

“For now, we have an immediate and escalating problem with this presidency.  We can certainly hope that Russians understand as well as we do that, at 79, Mr. Biden is prone to saying things he doesn’t mean. But we can’t be sure.  What we can be sure of is that Mr. Putin, who has already whipped up his compatriots into a frenzy of paranoia about the ‘real’ intentions of the U.S. in arming Ukraine – to wit, an attempt to weaken and destroy Russia itself – will seize on every piece of evidence he can find to bolster his case.

“Diplomacy is a subtle activity that combines artful deception with necessary candor. States convey to each other only what they want or need to convey; they willfully mislead each other about some aspects of their objectives and capabilities while drawing bright red lines around their nonnegotiable truths.

“Strategic ambiguity helps induce in allies and adversaries alike a distinct uncertainty about intentions.  But clarity is essential when the stakes are existential. Decoding these complex messages, sifting the signal from the noise, is the essence of successful statecraft.

“Mr. Biden’s penchant for reckless language simply bludgeons through this delicate diplomatic infrastructure.  It compromises the ability of the U.S. and its allies to achieve our objectives, while significantly increasing the risk of a miscalculation on either side.

“John F. Kennedy said that during World War II, Winston Churchill ‘mobilized the English language and sent it into battle.’  Mr. Biden seems intent on doing the same – only he may be sending it into battle on the wrong side.”

I have the domestic politics angle of the gaffe heard ‘round the world down below.

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--In a new NBC News poll, 71% of Americans say they have “just some” or “very little” confidence in Biden’s ability to respond to the war – including 43% of Democrats.

An overwhelming number – 82% - also say they are concerned that the war will ultimately result in the use of nuclear weapons, 74% fear U.S. troops will end up fighting in Ukraine, and 83% worry the war will continue to cause price hikes for gasoline and other goods and services.

Biden algo got poor marks for his handling of foreign policy, with 51% of Americans expressing disapproval and 42% approving.

--In a new Associated Press-NORC Center for Public Affairs Research survey, close to 6 in 10 Americans say they are very concerned that Russia would directly target the U.S. with nuclear weapons, and an additional 3 in 10 are somewhat concerned about that.

[At least 8 in 10 are somewhat concerned North Korea could do the same thing.]

--The United Nations said the number of Ukrainians fleeing abroad had crossed the 4 million mark on Wednesday.  Overall, 13 million Ukrainians have been displaced.  This is causing huge problems, for all the feel-good stories you see.  Ireland, for example, committed to taking in 100,000 and they already realize they have nowhere to put them, and finding the housing and shelter will cost great sums of money.  This was part of Putin’s original scheme, in terms of causing turmoil in the West.

--Last Sunday, Pope Francis said the threat of a global conflict spawned by Russia’s invasion should convince everyone that the time has come for humanity to abolish war before it abolishes humanity.

“More than a month has passed since the invasion of Ukraine, since the start of this cruel and senseless war, which, like every war, is a defeat for everyone, for all of us,” he said to thousands of people in St. Peter’s Square for his Sunday blessing.  “We must repudiate war, a place of death where fathers and mothers bury their children, where men kill their brothers without even seeing them, where the powerful decide and the poor die.”

Citing a statistic that half of Ukraine’s children had to flee the country, Francis said: “That is the bestiality of war, something that is barbarous and sacrilegious,” urging his listeners not to consider war as inevitable or something to get used to.  “If we emerge from this (war) the same as we were before, we will all be in some way guilty.  Faced with the danger of self-destruction, humanity must understand that the time has come to abolish war, to cancel it from the history of man before it cancels man from history.”

--Russia has repeatedly fired hypersonic missiles at Ukrainian military targets, the top U.S. military commander in Europe, Air Force General Tod Wolters, told a Senate hearing on Tuesday.

“Most of those strikes have been designated at specific military targets,” Wolters said.  Russia announced on March 19 that it used hypersonic Kinshal (Dagger) missiles to destroy a large weapons depot in the western part of Ukraine.

--The Russian-backed self-proclaimed Donetsk People’s Republic in eastern Ukraine may consider joining Russia once it controls all of the Donetsk region, its news outlet cited separatist leader Denis Pushilin as saying on Tuesday.  “But now the main task is to reach the constitutional borders of the republic.  Then we will determine that,” he said.

The comments came two days after the leader of the other Russian-backed eastern Ukrainian rebel region Luhansk said it may hold a referendum on joining Russia.

Kyiv said any such vote would have no legal basis and would trigger a stronger international response.

Three days before ordering the Feb. 24 invasion of Ukraine, President Putin recognized the breakaway territories in Luhansk and Donetsk as independent states, though the rest of the world considers them part of Ukraine.

Ukraine has repeatedly said it will never agree to Russia’s annexation of its territory – the hardest part of peace talks with Moscow.

--People in besieged Mariupol are beginning to starve to death, the U.S. maintains, and the U.S. warned the UN Security Council on Tuesday of a potential food security crisis in some parts of north Africa, the Middle East and Asia as a result of disruption to food exports as a result of the war in Ukraine.

[The mayor of Mariupol on Monday said at least 5,000 residents had been killed and 160,000 remained trapped without power and with dwindling food. That was early in the week. Today, he told CNN the death toll was in the “tens of thousands.”]

About 30 percent of the world’s wheat exports typically comes from the Black Sea region, as well as 20 percent of the world’s corn and 75 percent of the sunflower oil.  Combining all of Ukraine and Russia, these numbers are higher.

Russia has bombed at least three civilian ships carrying goods from Black Sea ports to the rest of the world, including one chartered by an agribusiness company.  The Russian Navy is blocking access to Ukraine’s ports, essentially cutting off exports of grain.  They are reportedly preventing approximately 94 ships carrying food for the world market from reaching the Mediterranean.

Food prices are skyrocketing in low- and middle-income countries as Russia chokes off Ukrainian exports.  In the Middle East and Africa, prices for staple commodities, including wheat, are up 20 to 50 percent this year.

The pandemic had already pushed many families in vulnerable nations into poverty.  Throw in drought and other disasters and it’s a massive crisis.

--Ukraine’s state nuclear company Energoatom said on Thursday that most of the Russian forces that occupied the Chernobyl nuclear power station after invading Ukraine had left the defunct plant, and only a “small number” remained.

After the Russians seized control of Chernobyl soon after the Feb. 24 invasion, the plant’s Ukrainian staff continued to oversee the safe storage of spent nuclear fuel and supervise the concrete-encased remains of the reactor that exploded in 1986.

The story emerged that the Russians may have been forced to leave because many of their soldiers were exposed to excessive levels of radiation when they dug trenches, disturbing still-highly-radioactive ground in what is known as the “Red Forest.”

--At least 31 people have been confirmed killed as a result of Tuesday’s rocket strike on the regional administration building in Ukraine’s southern city of Mykolaiv, local emergency services said in an online post on Friday.  It’s been excruciating work trying to pull victims from the rubble after Tuesday’s attack blasted a hole through the side of the building.

--Negotiators at the peace talks in Istanbul on Tuesday were told not to eat or drink anything, after reports surfaced that those attending talks in Kyiv on March 3rd had been poisoned.  Members of Ukraine’s negotiating team, including Russian billionaire Roman Abramovich, who was there on behalf of Ukraine, experienced skin inflammation and piercing eye pain during the night and the following day.

--German Chancellor Olaf Scholz on Monday said the need to guarantee security in Europe is one of the core insights of the post-war period that everyone including Russia agreed on after 1990, Scholz said in a news conference.  “There can only be one answer to that. First, we call on Russia to stop the war.  Second, we make ourselves so strong that an attack on EU or NATO countries does not take place, because we are strong enough to answer that.”

--Friday, Kremlin spokesman Dmitry Peskov said Russia would strengthen its western borders so that “it wouldn’t cross anyone’s mind to attack,” RIA news agency reported.

--Russia has staged military drills engaging S-400 surface-to-air missiles in its western Kaliningrad exclave, Interfax reported on Saturday, citing the Baltic Fleet.  This is the area I have long warned could be a real hot spot.  No doubt Poland and the Baltic States took note.

Russia has also conducted drills on islands claimed by Japan.

--President Zelensky, in an impassioned video address late Saturday, angrily warned Moscow that it is sowing a deep hatred for Russia among his people.

“You are doing everything so that our people themselves leave the Russian language, because the language will now be associated only with you, with your explosions and murders, your crimes.”

--Novaya Gazeta, the Russian newspaper that helped define fearless journalism in the post-Soviet era and whose editor shared the Nobel Peace Prize last year, suspended publication on Monday, leaving Russia without any major media outlets critical of the Kremlin as it wages war in Ukraine.

The newspaper, led by Dmitri Muratov, the Nobel-winning editor, said it would cease publishing in print and online until the end of the fighting – or what it called, in keeping with Russia’s new wartime censorship law, “the special operation on the territory of Ukraine.”  Earlier in the day, the paper received a second warning from Russia’s telecommunications regulator that threatened to shut it down or revoke its license, Muratov said.

His newspaper, which has suffered the murders of six of its journalists in its three-decade existence, held out longer than any other independent media outlet based in Russia under Putin’s brutal crackdown on what remained of the country’s free press.

Some commentary….

Editorial / The Economist

“Bringing Ukraine’s governance in line with the European Union’s will necessarily be lengthy and bureaucratic. The risk is that Brussels string Ukraine along, as if Europe is deigning to let it join. Instead, the EU should welcome Ukraine eagerly, as eastern Europe was welcomed when it shook off Soviet domination in the early 1990s. That calls for generous aid to rebuild the economy, as well as political support and patience.

“The other worry is Mr. Macron’s: that NATO will provoke Russia. From the start of this war, when he spoke of ‘consequences…such as you have never seen in your entire history,’ Mr. Putin has hinted that Western involvement could lead to the use of nuclear weapons. Wisely, the West has therefore been clear that NATO will not fight against Russian forces – because, if they did, the war could spin out of control, with catastrophic results.

“Yet backing away from Mr. Putin’s nuclear-tinged threat entails risks, too.  Limiting Ukrainian aid would abet Russia in imposing an unstable – and hence temporary – peace on Mr. Zelensky. It would reward Mr. Putin for his threats, setting up his next act of atomic aggression.  By contrast, more powerful weapons and sanctions would mark a change in the degree of aid, but not its kind.  And this week, facing Ukrainian success, Russia paused the campaign in the north, rather than escalate. For all those reasons, the best deterrence is for NATO to stand up to Mr. Putin’s veiled threat, and make clear that a nuclear or chemical atrocity would lead to Russia’s utter isolation.

“Conflict is unpredictable.  History is littered with wars that were meant to be short but which dragged on for years.  Ukraine has won the first phase of this one simply by surviving. Now it needs to advance, and so Mr. Zelensky needs redoubled Western help.  It would be terrible if what stood between a bad peace and a good one was a failure of imagination in the capitals of Europe.”

Editorial / Wall Street Journal

“As Russia’s war on Ukraine enters its sixth week, the script has flipped. Russia’s advance has stalled, and Ukraine now wants to go on offense and push back Russian forces from the land they’ve taken. But the country needs U.S. and NATO help to do it, and it seems the Biden Administration is reluctant to provide those weapons and intelligence.

“In her Wednesday press briefing, White House communications director Kate Bedingfield said no fewer than eight times that Vladimir Putin had committed a ‘strategic blunder’ or ‘mistake’ or ‘error’ by invading.  That’s the White House line to suggest that the West is winning against the Russians.

“But that sure sounds like a premature declaration of victory. His forces are still bombing Ukraine’s cities and they have grabbed more territory.  Mr. Putin could still emerge with a strategic advantage in the medium- to long-term if he strikes a truce that leaves Russia in control of a large chunk of Ukraine.

“The peace terms Russia is demanding in negotiations suggest that such a consolidation in Ukraine’s east and a long-term occupation is now Russia’s goal. He’ll have won the long-sought ‘land bridge’ between the Crimea and the Donbas.  Mr. Putin could claim a victory, pause for some years while he re-arms, continue trying to assassinate Ukrainian President Volodymyr Zelensky, and otherwise make political, cyber and other trouble for a Western-leaning Ukraine government.

“That’s why Mr. Zelensky wants to go on the offensive.  The more territory his forces can win back, the stronger position his country will have at the bargaining table.  The experience of Russia’s behavior in Georgia in 2008 and eastern Ukraine in 2014-15 is that Mr. Putin doesn’t give up territory once his troops occupy it.  The result is another ‘frozen conflict,’ with the country he has invaded weaker than before and more vulnerable to more Russian mayhem.

“The Ukrainians need heavier weapons to go on offense, including tanks and fighter aircraft like the MiG-29s that Poland wants to provide under the political cover of NATO. It also needs intelligence on Russian troop movements and vulnerabilities in the east.

“Now is the time to help Ukraine take the offensive.  Reports of demoralized Russian forces are more frequent, including defectors who have taken their equipment with them….

“Throughout this conflict, the Biden Administration has been slow and reluctant to give Ukraine the weapons and intelligence support it needs.  Pressure from the public and Capitol Hill has forced its hand.  Now, with Russia on the defensive, is the time to keep the pressure on to truly achieve a strategic victory for Ukraine and NATO.”

David Satter / Wall Street Journal

“President Biden has called for Vladimir Putin to be removed from power.  But only Russians can remove Mr. Putin.  That is why, in addition to supplying arms to Ukraine, the U.S. needs to take steps to reach the Russian people.

“Mr. Putin understands that to prevail in Ukraine he must maintain the support of the Russian public. He uses state television to inundate Russians with reports of supposed atrocities by U.S.-backed Ukrainian Nazis against ethnic Russians, particularly in the Donetsk and Luhansk republic which the Russian army is said to be defending.

“The Putin regime, however is isolated in its own country.  According to Karen Dawisha, author of ‘Putin’s Kleptocracy,’ 110 people control 35% of the country’s assets.  It is this group that is waging war against Ukraine and manipulating Russians.

“America may have more power to influence Russians than we realize.  The U.S. should begin by creating a database, independent of the existing Ukrainian site, to help Russians learn the fate of missing soldiers…. Valentina Melnikova, secretary of the Soldiers’ Mothers Committee, has said that Russian commanders often don’t retrieve the bodies of soldiers and list them as ‘missing in action.’ This provides an excuse for not paying compensation to families and lowers the official death toll.

“Many parents don’t know what happened to their sons and are told by the Defense Ministry there is no information.  Death notices sporadically appear in the regional Russian media.  A U.S. database, accessible through Radio Liberty and other sites, wouldn’t be exhaustive, but it could provide more information than is available from Russian officials.

“The U.S. and its allies should also announce that proceeds from the property confiscated from oligarchs linked to corruption will be returned to the Russian people… The Russian oligarchy has its roots in the 1995 ‘loans for shares’ auctions, in which Russia’s giant resource companies were transferred to corrupt businessmen in return for support for President Boris Yeltsin’s 1996 re-election campaign….

“Finally, and most important, the U.S. should reveal everything it knows about the September 1999 apartment bombings that brought Mr. Putin to power.  The four bombings were blamed on Chechens and used to justify a new Chechen war.  Mr. Putin, who had just been named prime minister, was put in charge of the war and catapulted into the presidency on the basis of early success.

“But a fifth bomb was discovered in the basement of a building in Ryazan, southeast of Moscow, and the bombers were captured. They weren’t Chechen terrorists but agents of the Federal Security Service.  In another incredible development, Gennady Seleznev, speaker of the State Duma, announced on Sept. 13, after a building was blown up in Moscow, that a building had been blown up in Volgodonsk. That building was actually blown up three days later.

“The story of the apartment bombings is critical because the signs of official involvement are the most powerful evidence of the Putin regime’s true attitude toward the Russian people. The bombings are Russia’s most taboo subject, but interest is strong. An interview with Vladimir Zhirinovsky, a Duma deputy, about the Volgodonsk incident received 15 million views on YouTube.

“Despite the regime’s attempts to stifle thought in Russia, the signs of dissent are unmistakable.  Maria Ovsyannikova, an editor at Channel One television, staged an on-air protest denouncing the station’s lies.  In the North Caucasus on March 20, soldiers’ mothers blocked a bridge demanding to know the fate of their sons. Most important, there is opposition in the Russian military, which alone can remove Mr. Putin from power.

“Shortly before the invasion, Gen. Leonid Ivashov, who leads a group of retired officers, warned that an attack on Ukraine would be the end of Russia.  He said the planned invasion was the attempt of a corrupt regime to hold on to power.  He called on Mr. Putin to resign. His statement was supported by a majority of the board of his organization.

“One month into the war, Russia’s generals are almost certainly unsettled by the mass deaths of Russian soldiers.  After 15 months of war in Chechnya in 1996, Gen. Alexander Lebed said that 30% of the Russians soldiers were ready to turn their guns on the people who sent them.

“Despite the regime’s attempts to isolate Russians, information is still getting through with the help of cellphones, Telegram, YouTube and word of mouth. That creates an opening for the West. Besides aid to Ukraine, we have to engage the Russian people.  Despite the grimness of the present situation, opinion can shift dramatically in Russia, as it has in the past.”

Biden Agenda

--A new Kaiser Family Foundation poll finds more than half of Americans (55%) say inflation and rising prices is the biggest problem facing the U.S. right now, more than three times the share who say the same about any other issue included in the survey.  About one in five (18%) say the Russian invasion of Ukraine is the biggest problem, followed by six percent each who say the same about Covid-19, crime, and climate change.

--Maine Sen. Susan Collins said Tuesday she will vote to confirm Ketanji Brown Jackson, giving Democrats at least one Republican vote and all but assuring that Jackson will become the first Black woman on the Supreme Court.

Collins said in a statement that she met with Jackson a second time after four days of hearings last week and decided that “she possesses the experience, qualifications, and integrity to serve as an Associate Justice on the Supreme Court.”

“I will, therefore, vote to confirm her to this position,” Collins said.

Her support gives Democrats at least a one-vote cushion in the 50-50 Senate and likely saves them from having to use Vice President Kamala Harris’ tie-breaking vote.

--President Biden on Monday submitted a $5.79 trillion budget plan to Congress that calls for record peacetime military spending and further aid for Ukraine, while raising taxes for billionaires and companies and lowering government deficits.

Biden’s budget proposal for the 2023 fiscal year starting Oct. 1, lays out his administration’s priorities, including campaign promises to make the wealthy and companies pay more tax.

But it is merely a wish list as lawmakers on Capitol Hill make the final decisions on budget matters and so I will spend virtually zero time on it.  It is, indeed, dead on arrival, just like all other presidents’ budgets are.

It does, however, give each side talking points for the midterm election.  As in no way will a budget be approved before then, spending already approved by a recent move by Congress through the current fiscal year (Sept. 30).

The bill does call for $773 billion for the Department of Defense, plus another $40 billion for defense-related programs at the FBI, Department of Energy and other agencies, which sounds like a lot, but as the Wall Street Journal opines:

“(Even) defense officials say the Pentagon would see only a 1.5% real increase over last year’s funding after inflation.  Defense spending will still be about 3.1% of the economy, close to post-Cold War lows and heading lower over the next decade….

“(The) overall budget picture is that the Biden team is betting on weapons that don’t yet exist for a war they hope arrives on someone else’s watch. They want to save money now in order to spend on what they say will be a more modern force in a decade….

“A decades-long decline in American military power is an under-appreciated reason the world’s authoritarians are on the march.  We never thought we’d write this given its penchant for military pork, but Congress can do a lot to improve the Pentagon request, which should be a baseline.  Republicans are suggesting the military budget needs to grow 5% in real terms. Congress should set a goal of returning the U.S. to its deterrent strength of the Cold War years, when defense spending was 5% or more of the economy.

“If lawmakers don’t intervene, the U.S. might not be ready for the next war until a decade after we lose it.”

--Karl Rove / Wall Street Journal

“Rarely have nine words caused such global consternation as President Joe Biden’s impromptu reference to Russian leader Vladimir Putin in Poland Saturday.  Mr. Biden’s declaration that ‘For God’s sake, this man cannot remain power!’ unsettled allies, fed Mr. Putin’s paranoia, buried the president’s intended message, and complicated an already grave situation.

“Mr. Biden’s blooper is only the latest in a long string of jarring misstatements.  He makes them worse with his unwavering denial in the aftermath.  For example, his Putin regime-change announcement was preceded on his trip by a presidential threat that if Russia used chemical weapons, America ‘would trigger a response in kind’ (the U.S. doesn’t have such weapons and signed a treaty pledging not to use them) and a suggestion to troops from the 82nd Airborne that they were going to Ukraine (they aren’t). Asked by Fox News’ Peter Doocy about this triple gaffe Monday at a White House rollout of his 2023 budget, the president replied, ‘None of the three occurred.’

“Really? Asking Americans to believe Mr. Biden instead of their own eyes isn’t a winning tactic in the era of instant replay.  He would’ve been better off if he’d simply repeated ad nauseam the words on his pocket card that photographers captured with an over-the-shoulder close-up: ‘I was expressing the moral outrage I felt.’

“All the gaffes, cleanups and disavowals have undercut Mr. Biden’s standing with American voters.  The president’s misstatements that must be ‘clarified’ by White House staff have undermined confidence in his competence.

“This pattern has likely affected Mr. Biden’s approval numbers.  After his inauguration, he was at 56% approve to 36% disapprove in the Real Clear Politics average, but the president’s figures quickly began declining.  His numbers went underwater around Aug. 21 during the Afghanistan debacle and then rose modestly from late November to mid-December. But his numbers were still not good and soon began dropping again.  He’s now settled in at a dangerously low 41% approve, 53% disapprove.

“Worse, Mr. Biden’s gaffes appear to have hurt his image as a strong leader – something important to U.S. standing abroad and critical to any president’s effectiveness moving his agenda at home. In October 2020, shortly before his election, a Fox News poll found 49% of voters said Mr. Biden was a strong leader, while 45% said he wasn’t.  This was hardly a great start as president.  It’s gotten worse: A Fox News poll that came out Feb. 22, 2022, found that only 36% now see the president as a strong leader while 61% don’t.  Mr. Biden’s standing as a leader has dropped 13 points among suburbanites, who were a big part of swinging the 2018 midterms and 2020 presidential election in the Democrats’ favor.  His image as a strong leader has also dropped 13 points among white men, 14 points among rural voters, and 15 points among whites with no college degree and among moderates – whose support could provide critical to GOP gains this fall and Democratic losses, especially to the latter’s dwindling ranks of congressional moderates….

“Going forward, if Mr. Biden manages to act competent and presidential – say he backs a successful resolution to the Ukraine war and passes a major piece of domestic legislation – his approval ratings still may not change much.  It’s difficult to move numbers in a good direction once a president is viewed as weak and ineffective… Mr. Biden is trapped in a vicious circle in which each wave of gaffes and corrections makes him look weaker and less effective.

“Mr. Biden and his aides face enormous challenges. He’s been verbally undisciplined for decades and isn’t going to change now.  That means more misstatements are coming.  The best Team Biden can hope for is more discipline in the cleanups….

“White House staffers should remember each time there’s such an incident, it becomes even harder to see Mr. Biden as a candidate for re-election.  In 2024, voters from both parties may be looking for candidates who are more disciplined with their words and younger in years.  The GOP and Democrats would be wise to offer candidates who can meet those expectations.”

Wall Street and the Economy

The Federal Reserve received all the ammunition it needed for a ½-point (50 basis point) hike in the benchmark funds rate when the Open Market Committee next gathers May 3-4, and now most Fed watchers see a second 50-bp hike in June (June 14-15), as Chairman Jerome Powell and Co. play catch up on inflation.

But before I get to today’s jobs report, we had the numbers for housing values in the U.S. for the month of January, via the S&P CoreLogic Case-Shiller data, which found the 20-city index rising 1.8% month-over-month, 19.1% from a year ago, vs. December’s 18.6%, with Phoenix, Tampa and Miami up 32.6%, 30.8%, and 28.1%, respectively, over the year.

The Chicago PMI figure on manufacturing in this key region was a solid 62.9 for March (50 the dividing line between growth and contraction), vs. 56.3 in February.

The national ISM manufacturing figure came in at 57.1 vs. 58.6 prior.

Construction spending in February rose 0.5%, in line.

Personal income in February rose 0.5%, as expected, but consumption (spending) rose only 0.2%, less than forecast and -0.4% inflation adjusted…a telling figure.

The key core personal consumption expenditures index came in at 5.4%, this being the Fed’s preferred inflation barometer, the Fed having a 2% target.  It was the highest core reading since 1983.

And we had a final look at fourth-quarter GDP, 6.9%, annualized, with consumption at 2.5%.

So the last four quarters, GDP )ann.)

Q4 2021…6.9
Q3 2021…2.3
Q2 2021…6.7
Q1 2021…6.3

But the Atlanta Fed’s GDPNow barometer for first-quarter growth is at 1.5%, after this week’s data.

Finally, March nonfarm payrolls rose 431,000, slightly below consensus, but February was revised upward to 750,000 from 678,000.  The unemployment rate fell to 3.6%, lowest since Feb. 2020, with the underemployment rate (U6) down to 6.9%, a post-Covid low.

The key figure, average hourly earnings, rose 0.4% and a record 5.6% from a year ago, but, Americans are still losing purchasing power given inflation, the CPI being 7.9% in February.

At least jobs continue to flow back to the leisure & hospitality sectors, 112,000 in the month, an ongoing sign of reopening, though this figure is still 1.5 million from the levels of Feb. 2020.

Lastly, we have this growing issue of rapidly rising mortgage rates, 4.67% for a 30-year fixed rate mortgage, per Freddie Mac on Thursday, the highest since Dec. 2018.

Europe and Asia

We had the final March PMI manufacturing data for the eurozone (courtesy of S&P Global, formerly IHS Markit), 56.5 vs. February’s 58.2 and a 14-month low.

Germany 56.9…18-mo. low
France 54.7…5-mo. low
Italy 55.8…14-mo. low
Spain 54.2…13-mo. low
Ireland 59.4…2-mo. high
Netherlands 58.4…15-mo. low
Greece 54.6…11-mo. low

UK 55.2…13-mo. low

Chris Williamson / S&P Global:

“Just as the fading of the latest pandemic wave was creating a tailwind for the eurozone manufacturing recovery, with economies re-opening and supply chain bottlenecks easing, the war in Ukraine has created an ominous new headwind.

“While the boost to demand from the further relaxation of Covid-19 containment measures helped ensure a sustained expansion of manufacturing order books and output in March, rates of growth have cooled markedly amid sanctions, soaring energy costs and new supply constraints linked to the war.  Heightened risk aversion among both manufacturers and their customers due to the uncertainty caused by the invasion, combined with an intensifying cost of living crisis, meanwhile threatens to pull growth even lower in the coming months, as reflected in the slumping of manufacturers’ growth expectations for the coming year.

“Business optimism in the goods producing sector has collapsed to a level indicative of manufacturing output declining in the second quarter and adding to the risk of the manufacturing sector sliding into a new recession.”

Ugh.

Separately, Eurostat reported the unemployment rate for February in the EA-19 was 6.8% vs. 6.9% in January.

Germany 3.1%, France 7.4%, Italy 8.5%, Spain 12.6%, Netherlands 3.4%, Ireland 5.2%.

And a flash estimate for March inflation in the euro area was 7.5%, up from 5.9% in February.  It was 1.3% a year earlier.  Ex-food and energy, the figure is 3.2% vs. 1.0% for March 2021.  Yup, the same problem everywhere.

Germany 7.6%, France 5.1%, Italy 7.0%, Spain 9.8%, Netherlands 11.9% (yikes), and Ireland 6.9%.

France: The first round of voting in France’s presidential election takes place April 10, with President Emmanuel Macron in the lead in the latest polling, probably headed to a second round against far-right candidate Marine Le Pen, who would then lose for a third time.

But a large majority of French oppose raising the legal retirement age, an opinion poll published by Les Echos newspaper showed, which could be a big issue for Macron, who has made that a key proposal.

Macron would push the legal age at which one can receive a full pension to 65 from 62, while Le Pen would bring it down to 60 for some workers.

Macron has long been viewed as being on a safe track to re-election, but the boost he received for his active diplomacy over Ukraine has been fading and Le Pen has been narrowing the gap.

According to the survey, 70% of respondents were opposed to raising the retirement age, half of whom were “very opposed.”  Instead, the Elabe poll found that 63% of respondents favored higher taxes for richer households to bolster the pension system.

But Macron, in stressing his pro-business reform agenda, is up against a public feeling the squeeze from rising prices.

If no candidate crosses the 50% vote threshold in the first round April 10, and Macron won’t come anywhere near that, the two candidates with the most votes progress to round two on April 24, which is where Le Pen has had her butt kicked in two prior attempts for the presidency.

Turning to Asia…China’s PMI data was awful.  The National Bureau of Statistics reported the manufacturing figure for March was 49.5 vs. 50.2 in February; 48.4 services vs. 51.2.  The Caixin private manufacturing number was equally poor, 48.1 for March vs. 50.4 prior.

Japan’s March PMI manufacturing number was a solid 54.1.

February retail sales, though, were -0.8% year-over-year, worse than expected; February industrial production rose 0.2% Y/Y; and the February unemployment rate was 2.7%.

South Korea’s March manufacturing PMI was 51.2 (vs. 53.8 in Feb.), and Taiwan’s was 54.1.

Street Bytes

--We closed out the worst quarter in two years on Thursday, with the Dow Jones losing 4.6% for the three months, the S&P 500 -4.9%, and Nasdaq -9.1%.  As the Wall Street Journal’s Gunjan Banerji wrote, it was a “head-spinning” quarter.

On the week, though, stocks were mixed, with the Dow falling 0.1% to 34818, while the S&P gained 0.1% and Nasdaq 0.7%.

--U.S. Treasury Yields

6-mo. 1.05%  2-yr. 2.46%  10-yr. 2.38%  30-yr. 2.43%

The yield curve inverted this week, with the yield on the 2-year rising above the benchmark 10-year for the first time since September 2019.  An inversion between the two is viewed by many as a signal a recession is likely to follow, though this doesn’t mean recession is imminent.  The last eight recessions have been preceded by an inversion of the curve.  Yes, others say there are better measurements than the 2- and 10-year spread.  The yield on the 2-year exceeding the 30-year, by the way, hasn’t happened since 2007.

For now, the short end of the curve will continue to rise, as long as talk continues of rapid Fed rate hikes, while the longer end will respond more to inflation expectations and geopolitics (risk on/risk off).

--Oil tanked on Wednesday and Thursday after President Biden announced the administration is planning to release roughly a million barrels a day from its Strategic Petroleum Reserve (SPR) to combat rising gasoline prices and supply shortages after Russia’s invasion of Ukraine.  This would be the biggest release ever, potentially 180 million barrels being freed over several months.

Some feel this could help the market rebalance this year, if the administration carries through with the plan.

In the past I’ve pooh-poohed such releases, rightly so.  In some cases the impact has lasted for, oh, about three hours.

But this would potentially be different, especially if allies act in a similar fashion*, though it won’t address a persistent supply shortage and it’s unlikely to make up for the losses of Russian oil exports.  And the release would mean the SPR would be heavily drawn down by the time the summer driving season rolls around.  Those reserves also eventually have to be built back up and you’re counting on doing so at greatly reduced prices that may not exist when the government is doing so, let alone you could run up against the same supply shortages.

*Member countries of the International Energy Agency, such as Japan, did agree to their second coordinated oil release in a month today, but they did not agree on volumes or the commitments of each country at an emergency meeting.

Around the world, inventories are low, while the oil market is still trying to sort out just how severe the loss of Russian exports will be. Pre-sanctions, Russia exported 7.5 million barrels a day, a figure currently expected to drop about 3 million.  From April to December, that would be 825 million barrels.  The SPR is currently at an estimated 575 million barrels, and is about to shrink a lot.

Thursday, Putin demanded foreign buyers pay for Russian gas in rubles from Friday or else have their supplies cut, a move European capitals rejected and which Berlin said amounted to “blackmail.”

Putin’s move, via a decree signed on Thursday, leaves Europe facing the prospect of losing more than a third of its gas supply.

Germany, the most heavily reliant on Russia, has already activated an emergency plan that could lead to rationing in Europe’s biggest economy.  Energy exports are Putin’s most powerful weapon as he tries to hit back against the sweeping Western sanctions imposed on Russian banks, companies, businessmen and associates of the Kremlin.

Putin, in televised remarks, said buyers of Russian gas “must open ruble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting from tomorrow,” or April 1.  “If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences. Nobody sells us anything for free, and we are not going to do charity either – that is, existing contracts will be stopped,” he said.

The decision to enforce ruble payments has boosted the Russian currency, which fell to historic lows after the invasion.  The ruble has since recovered much of the lost ground.  No doubt the Russian Central Bank is supporting it.

Western companies have rejected any move to change their gas supply contracts to change the payment currency.  Most European buyers use euros.

Payment in rubles blunts the impact of Western curbs on Moscow’s access to its foreign exchange reserves.

Putin said the switch to rubles would strengthen Russia’s sovereignty, saying the Western countries were using the financial system as a weapon, and it made no sense for Russia to trade in dollars and euros when assets in those currencies were being frozen.

“What is actually happening, what has already happened?  We have supplied European consumers with our resources, in this case gas. They received it, paid us in euros, which they then froze themselves.  In this regard, there is every reason to believe that we delivered part of the gas provided to Europe practically free of charge,” Putin said.  “That, of course, cannot continue.”

“We comply and will continue to comply with obligations under all contracts, including gas contracts, we will continue to supply gas in the prescribed volumes.  I want to emphasize this, and at prices specified in existing, long-term contract,” Vlad added.

Whether the West pays for Russian gas in euro or rubles, Moscow gains a stash of foreign currency, which is useful for buying imports or for propping up the ruble.  But European companies don’t want to violate sanctions.

This week, crude stocks, including those in the SPR, fell by 6.5 million barrels in the week ended March 25, following a decrease of 6.7 million barrels in the previous week.

Excluding inventories in the SPR, commercial crude oil stocks declined by 3.4 million barrels after a 2.5 million decline in the previous week, per a survey compiled by Bloomberg.

Earlier this week, new Covid-19 restrictions in China dragged oil prices further below recent highs, with oil falling 7% to $106, continuing their recent decline from a recent closing high of $123.70 reached earlier in March on West Texas Intermediate.

China’s poor PMI figures above certainly don’t bode well for the country’s demand for oil either. 

Meanwhile, OPEC+, as expected, stuck to its modest deal to slowly ramp up output, like 432,000 barrels a day.

In the end, crude finished the week at $99.42 on WTI.

Editorial / Wall Street Journal

“President Biden knows inflation and gasoline prices are killing Democrats in the polls, and he’s scrambling to show he’s doing something about it.  Except he still won’t do what would really make a difference: Take his foot off the neck of the U.S. oil and gas industry.

“His latest gambit on Thursday was to say he’ll release 180 million barrels from the Strategic Petroleum Reserve in the next six months.  This would be the biggest release in history and reduce the reserve to its lowest level since 1984. But the oil will need to be replaced, which will push up future demand.

“This is one reason markets responded with a yawn. Crude prices fell a mere 4.9%.  Markets don’t respond only to short-term demand and supply fluctuations. They also take into account long-term expectations and policy signals. And the Administration continues to signal that its goal is to bankrupt oil and gas producers.  But before shooting them, Mr. Biden wants their political help.

“The White House underscored Thursday that it wants to ‘immediately increase supply’ while accelerating the ‘clean energy’ transition.  The President also said he wants to make companies pay fees on wells from leases that they haven’t used in years and on acres of public land that ‘they are hoarding without producing.’  But the law already requires companies to produce oil or gas on leases to the government.

“Producers aren’t hoarding land.  Many are waiting for government permits for pipelines and rights of way. Some can’t find equipment and workers.  Yet the Administration vilifies U.S. producers as enemies of the state for making ‘extraordinary profits and without making additional investment to help with supply’ – even as financial regulators tell banks not to lend for fossil fuels.

“Meantime, the Administration is seeking to ease sanctions on America’s enemies in Venezuela and Iran, though neither oil producer can compensate for reduced Russian oil exports in the short term.  Easing sanctions would merely give their regimes more money to create problems for the U.S. and its allies.

“Mr. Biden’s rapprochement with Iran’s mullahs is further alienating the Saudis and United Arab Emirates, which are already upset by the Administration’s lack of support against the Iran-backed Houthis in Yemen.  White House press secretary Jen Psaki last month said the President stood by his view during the 2020 campaign that Saudi Arabia should be treated like a ‘pariah’ state.

“Is it any surprise the Saudi Crown Prince won’t take Mr. Biden’s calls? If it’s any consolation to our Mideast allies, he treats U.S. oil and gas producers like pariahs too.  If the President really wanted to reduce oil prices, he would give a speech announcing a complete halt to his Administration’s war on the U.S. industry. Prices might drop $20 per barrel.

“He could also strike a deal in Congress to remove regulatory obstacles to U.S. oil and gas production in return for more green-energy spending, as Sen. Joe Manchin (D-W.Va.) has suggested.  The 2015 deal between Paul Ryan and Barack Obama to lift the 40-year ban on oil exports in return for extending renewable-energy tax credits provides a template.

“But markets are reacting as if they simply don’t take Mr. Biden’s pleadings seriously.  That’s a dominant theme across his Presidency, and Americans are paying the price.”

--One thing I don’t disagree with the president on was his invoking the Defense Production Act to support the production and processing of minerals and materials used for large capacity batteries used in electric vehicles – such as lithium, nickel, cobalt, graphite, and manganese.

--General Motors said Friday its U.S. sales totaled 512,846 vehicles in the first quarter, down 20% from a year earlier.

The automaker said supply chain disruptions have persisted but added that “we expect to continue outperforming 2021 production levels, especially in the second half of the year.”

GM said its production in North America has gained sequentially since the end of September, with the company ending Q1 with 273,760 vehicles in dealer inventory, up from 199,662 at year-end and 128,757 at the end of Q3.

--Toyota Motor North America said its March U.S. sales fell nearly 24% year-over-year to 194,178 units, while Q1 sales slid 15% to 514,592 units.

Electrified vehicle sales for Q1 were 132,938 units, accounting for about 26% of the overall volume, up from 23% a year earlier.

--Tesla Inc. on Monday said it would seek to split its stock for the second time in two years.  Stock splits themselves don’t change the value of a company or the worth of shareholders’ investments, but investors often interpret such plans as signals of confidence by management, and normally news of such a split gives the stock a boost, as was the case with Tesla on Monday, the shares rising from last Friday’s close of $1,010 to $1,091 by the close on Monday.

TSLA shares have been on quite a ride this year.  They hit a cycle high of $1,208 on Jan. 4, fell to an intraday low of $700 on Feb. 24, and finished this week at $1,086.

Tesla has yet to report deliveries for the first quarter (though they could come tonight).

--FedEx Corp. said Monday that Fred Smith will step down on June 1 as CEO of the package-delivery company that he founded and be succeeded by the company’s president and chief operating officer, Raj Subramaniam.  Smith will become executive chairman.

Smith, 77, started FedEx in 1973, delivering small parcels and documents more quickly than the post office could.  Over the next half-century, he oversaw the growth of a company that combined air and ground service and became something of an economic bellwether because of its service to other companies.

“FedEx has changed the world by connecting people and possibilities for the last 50 years,” Smith said in a statement that also praised Subramaniam’s ability to guide the company.  Smith said he will focus on global issues including sustainability, innovation, and public policy.

Subramaniam, 56, joined the company in 1991 and served in several marketing and management jobs in Asia and the United States, before rising to chief marketing and communications officer.  He became president and COO in 2019.

It’s amazing to think about FedEx’s start…14 planes, 389 employees, who delivered 186 packages on the first day of operations.

Recently, FedEx was hurt by the trade war with China, and Smith frequently used forums such as the quarterly earnings call to rail against tariffs, making him one of the few CEOs of a large U.S. corporation to challenge then-President Trump’s trade policies.

The company earned $5.2 billion on revenue of $84 billion in its most recent full fiscal year, which ended last May 31.

Smith and a firm bearing his name own more than 19.2 million shares, which are worth about $4.3 billion at Friday’s close.

--JetBlue Airways Corp. said on Monday it would add 5,000 jobs in all sections of its operations in New York this year, as U.S. carriers ramp up their hiring plans amid the rebound in travel.

Earlier, American Airlines said it planned to hire another 18,000 employees this year after adding 16,000 in 2021. Delta Air Lines said it planned to hire 3,000 to 5,000 people in 2022.

--The second “black box” has been recovered from the crash of a China Eastern Boeing 737-800 that killed 132 people on board last week, Chinese state media said Sunday.

Firefighters taking part in the search found the flight data recorder, an orange cylinder, on a mountain slope about 5 feet underground, which is rather remarkable.  The impact of the crash scattered debris widely and created a 65-foot-deep pit in the side of the mountain.

Earlier, searchers found the cockpit voice recorder.

Thursday, Chinese state media said the cause of the crash must be determined as soon as possible, following a meeting of China’s highest decision-making body helmed by President Xi.  Information about the crash must be released in an open, timely and transparent manner, state media said in a report on the meeting of the seven-person Standing Committee of the Communist Party’s politburo, China’s top leadership.

--TSA checkpoint travel numbers vs. 2019….

3/31…91 percent of 2019 levels
3/30…88
3/29…86
3/28…90
3/27…92
3/26…92
3/25…90
3/24…90

--According to data from the Commerce Department, corporate profits surged 35% last year, making 2021 the most profitable year for American corporations since 1950.  In all four quarters, the overall profit margin stayed above 13%, a level reached in just one other three-month period during the past 70 years.

--In the latest sign that the housing market is cooling off, luxury furniture maker RH (formerly Restoration Hardware) badly missed fourth-quarter 2021 revenue expectations and issued downside fiscal ’22 guidance, citing a softening in recent demand.

The company associated the downturn with Russia’s invasion of Ukraine, which created volatility in the market. Since RH’s high-end customer base heavily relies on the stock market’s performance and outlook to make large scale purchasing decisions, analysts believe the assessment is plausible.

But RH’s mixed results also come on the heels of a revenue miss from rival Williams-Sonoma, a disappointing earnings report from KB Home last week and a weak February new home sales report.

The industry had largely been able to navigate around supply chain issues until recently.  And now affordability concerns, rising interest rates, and waning consumer sentiment are also weighing on the housing market.

Revenue in the FY Q4 rose 11% to $902 million, missing estimates for $931 million. The company forecast fiscal 2022 net sales growth of between 5% and 7% when the Street had forecast 10%.

RH shares fell 13% on the bleak earnings guidance.

CEO Gary Friedman added the following gloomy comment on the earnings conference call.  “I don’t think anybody really understands how high prices are going to go, everywhere, in restaurants, in cars, in everything. And I think it’s going to outrun the consumer and I think we’re going to be in some tricky space.”

Personally, we have an RH outlet in The Mall at Short Hills and I think the last time I went in was about 20 years ago, whereupon I looked at a price tag and mused, “Holy (Toledo)!”

--The Mall also has a Lululemon Athletica store, which is always packed, and this week the company reported fiscal Q4 adjusted earnings of $3.27, up from $2.58 a year ago and above expectations.

The athletic apparel maker posted revenue of $2.13 billion, up from $1.73 billion, in line with forecasts.  Comparable sales rose 22%, less than expected.

But the company issued a fiscal Q1 revenue and earnings forecast exceeding the Street’s consensus, ditto for the full year, and the shares surged on the news.

--Walgreens Boots Alliance Inc. posted higher sales growth for the most recent quarter as demand for Covid-19 tests and vaccines continued to drive growth.

Executives said Thursday they are looking for further ways how the company’s drugstores can continue playing a key role in providing diagnostic and other health services beyond the current pandemic.

The Deerfield, Ill., drugstore chain said it administered 11.8 million Covid-19 vaccinations in the latest quarter, which ended Feb. 28, and provided 6.6 million Covid-19 tests, including over-the-counter at-home tests.

Demand for at-home Covid tests helped drive an increase of more than 43% in U.S. health and wellness sales. Comparable retail sales increased 14.7% in the U.S. from the year-ago period, the most in more than two decades, the company said.

Walgreens, like rival CVS Health Corp., has been pushing further into healthcare as it looks to sustain a bump in business through the pandemic.

Overall, Walgreens posted sales of $33.76 billion for the fiscal second quarter, up from $32.78 billion in the same period the year before and above expectations.

The company posted net income of $883 million, compared with $1.03 billion a year earlier.  But adjusted for one-time items, earnings were $1.59 a share, far better than the Street was calling for.

The stock, however, fell 6% as some investors saw the company’s move to not upgrade its earnings outlook after the strong quarter as a sign executives expect the business to weaken going forward.

--Amazon.com workers at a New York warehouse voted to join an upstart labor union, a historic victory that gives organized labor its first foothold in the company’s U.S. operations.

The election at a fulfillment center in Staten Island wasn’t close.  With only a few hundred ballots left to count, the Amazon Labor Union led with 2,300 yes votes versus 1,855 no votes for Amazon.

The company has managed to keep unions out of its U.S. operations for more than a quarter-century.  Unless Amazon can get the result overturned, it will have to start contract negotiations that potentially could hamper its ability to adjust work requirements and scheduling on the fly.  Needless it to say, the outcome emboldens other workers and labor activists to organize other Amazon facilities and could spill over into other industries.

--Some U.S.-listed Chinese stocks rallied a bit on Friday on a report Chinese authorities, including the China Securities Regulatory Commission, or CSRC, are planning to provide U.S. regulators complete access to auditing reports of the majority of the 200-plus U.S.-listed companies as early as mid-year, according to Bloomberg.

--Sunday’s Oscars telecast drew an average of 15.4 million viewers, up 56% from last year’s pandemic-dampened show.  Still, while this looks impressive, the show still ranks as the second-lowest-rated Oscars ever.  Just eight years ago, the Oscars brought in more than 40 million viewers.  I have some comments below on the whole Will Smith / Chris Rock incident.

The Pandemic

--The U.S. hit a big milestone this week, a record low in hospitalizations for Covid-19.

At the same time the FDA approved a second booster shot for those Americans aged 50 and older and those who are immunocompromised.  President Biden then received his second booster on Wednesday.

Of course there are some experts who say it is too early for a second booster and as I’ve said, personally, I kind of want to time my own second shot for when it would be most effective, assuming we get a little surge in the fall.

On the other hand, I know where I can receive a free shot that is very close to home and that availability may be shut off in the near future, as an expert there told me at the facility the other day.  [Psst…it’s the same place where you re-up your membership for the local par-3 golf course.  “Say, my good friend…how much longer will they be giving booster shots here on Saturdays…”  “It doesn’t sound like much longer, old man.”]

--Today, the CDC announced it is ending a policy that limited asylum at the U.S.-Mexico border to prevent the spread of Covid-19/

The use of public health powers had been widely criticized by Democrats and immigration advocates as an excuse for the United States to shirk its obligations to provide haven to people fleeing persecution.  The policy went into effect under President Trump in March 2020.  Since then, migrants trying to enter the U.S. have been turned away more than 1.7 million times.

The policy, known as the Title 42 authority, will end on April 1, but it will not take effect until May 23, to allow border officials time to prepare.  Yet another talking point heading into the midterms. This is big stuff…Republicans are licking their chops.

--At the same time, China’s commercial hub of Shanghai has ground to a halt after the government locked down most of the city’s 26 million residents to stop the spread, even as officials said local cases fell for a second day in a row. The “zero-Covid” strategy is being severely tested.

Fresh official guidance indicated that many in China’s most populous city will now be required to stay home as long as it takes to control the outbreak – instructed not to cross their doorsteps even to dispose of rubbish or walk their dogs.  Think about that.

The lockdown, designed to stop an outbreak of the highly transmissible Omicron variant that started about a month ago, began on Monday and was originally due to last 10 days in total.  But the city government said it would lift the curbs in east Shanghai in stages instead.

This means the majority of districts are now under a lockdown that covers the office towers of the Lujiazui district, China’s answer to Wall Street, and factories including Volkswagen’s joint venture with SAIC Motor and Tesla’s plant.

While China’s outbreak is small by global standards, Shanghai is accounting for three out of every four local asymptomatic cases across the country.

Here’s what we know.  China continues to vastly underreport deaths due to Covid, and its homegrown vaccines suck.

And some residents have expressed skepticism about the daily tally, questioning how quickly positive cases are registered in the system.  One report I read said cases were being included on a daily list of addresses days after neighbors had tested positive – or not included at all.

--South Korea, on the other hand, despite still high Covid case levels and deaths, is allowing fully vaccinated travelers from all countries to enter quarantine-free starting Friday, as the country relaxes coronavirus restrictions.

International travelers who have been fully vaccinated and registered their vaccination status can now enter the country without a seven-day quarantine period.  A negative PCR test is still required for entry.

Incheon International Airport, the main gateway to Seoul and the rest of South Korea, said its passenger traffic on Friday is set to surpass 20,000 for the first time in nearly two years.  Daily traffic at the airport, one of Asia’s busiest, used to be 200,000 a day on average but plummeted to as low as 3,000 after the pandemic restrictions were imposed.

--Key Senate lawmakers said Thursday they had agreed on a framework to continue funding coronavirus vaccines, antiviral treatments and other supplies for Americans, but that would drastically cut plans to help vaccinate millions of people around the world.

“We’ve reached an agreement in principle on all the spending and all of the offsets,” said Sen. Mitt Romney (R-Utah), who has led negotiations for Republicans after they balked at the need for $15 billion in new funds, and House Democrats raised concerns about a planned compromise.

If passed in its current form, the $10 billion deal would represent a significant disappointment for the White House, which has been campaigning for $22 billion in new funds and would probably force it to scale back elements of the planned response.  But lawmakers are facing a rapidly approaching deadline, with Congress soon to take a two-week break, and administration officials warning that they are effectively out of cash for urgent coronavirus needs, i.e., covering the costs of health-care providers that give Covid tests, treatments and vaccinations to uninsured Americans, an initiative that officials said has cost about $2 billion per months.

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

World…6,170,319
USA…1,007,835
Brazil…660,065
India…521,293
Russia…369,064
Mexico…323,016
Peru…212,2222
UK…165,570
Italy…159,537
Indonesia…155,164
France…142,407
Iran…140,240
Colombia…139,636
Germany…130,342
Argentina…128,052
Poland…115,247
Ukraine…107,980
Spain…102,541
South Africa…100,042

Canada…37,671

[Source: worldometers.info]

U.S. daily death tolls…Mon. 232; Tues. 912; Wed. 741; Thurs. 526; Fri. 376.

Foreign Affairs

Iran:  Over a month ago we were told time was short for cutting a deal with Iran on restoring the 2015 nuclear accord, or any such deal would essentially be worthless, given the advances in Iran’s nuclear program.

But here we are, still nothing.  Thursday, the U.S. State Department said a small number of outstanding issues remain in talks, adding that the onus is on Tehran to make those decisions.  State Department spokesperson Ned Price also told reporters the United States has “tactical differences” with Israel on Iran, but no strategic disagreement.

Last Sunday, the U.S. Special Envoy for Iran Robert Malley said he was not confident that a nuclear deal between world powers and Iran was imminent.

“I can’t be confident it is imminent… A few months ago we thought we were pretty close as well,” Malley told the Doha Forum international conference.  “In any negotiations, when there’s issues that remain open for so long, it tells you something about how hard it is to bridge the gap.”

An Iranian advisor to Supreme Leader Khamenei said a deal was “imminent.  It depends on the political will of the United States.”

But the adviser, Kamal Kharazzi, said in order for the deal to be revived, Washington must remove the foreign terrorist organization designation against Iran’s Islamic Revolutionary Guard Corps (IRGC).

“IRGC is a national army and a national army being listed as a terrorist group certainly is not acceptable,” Kharrazi said.

Malley said regardless of what happens, many sanctions on the IRGC will remain.  Israeli Prime Minister Naftali Bennett urged the U.S. to heed calls against any removal of the Revolutionary Guards from the U.S. terrorism blacklist.

Israel: A gunman on a motorcycle opened fire in an ultra-Orthodox city outside of Tel Aviv late Tuesday, methodically gunning down victims as he killed at least five people in the third such street attack in a week. The shooter was killed by police.

Israeli media said the attacker was a Palestinian from the West Bank, the third Arab assailant to launch an attack ahead of the Muslim holy month of Ramadan, as well as Passover and Easter. The previous two attacks, carried out by Arab citizens of Israel inspired by the Islamic State have raised concerns of further violence.

Israel “stands before a wave of murderous Arab terrorism,” declared Prime Minister Bennett.  He pledged to combat it “with perseverance, stubbornness and an iron fist.”

Eleven have been killed overall in the attacks, with ISIS claiming responsibility in at least two of them.  Back during the second intifada, a Palestinian uprising from 2000 to 2005, the wave of violence killed more than 1,000 Israelis and 3,000 Palestinians.

North Korea: It seems we were partially sold a bill of goods, initially, regarding North Korea’s launch last week of an intercontinental ballistic missile (ICBM), when Pyongyang said it was the most formidable test yet and of a new missile system, the Hwasong-17 ICBM.

But upon further analysis, South Korea’s military and U.S. officials say the March 24 launch was not the Hwasong-17 (the ‘monster’), but rather the older and slightly smaller Hwasong-15 – an ICMB last tested in 2017.

However, this doesn’t mean the significance of the test should be discounted, pointing out it still demonstrated a weapon with the theoretical ability to hit all of the continental United States.

The ICBM fired by the North did still fly to an altitude of 3,728 miles and a distance of 671 miles with a flight time of 71 minutes before splashing down in waters off Japan’s western coast last Thursday, according to Japan’s Defense Ministry.  Japan is sticking to its assessment that it is a “new type of ICBM.”

South Korean experts said further analysis of images in North Korean state media gave two potential clues relating to Pyongyang’s alleged subterfuge.

The South Koreans asses the ICBM only had two engine nozzles, like Hwasong-15, whereas Hwasong-17 has four.

Jeffrey Lewis, one of the premier experts on nuclear weapons, said the KCTV video appears to have been made during a failed launch on March 16, in which a North Korean missile exploded soon after liftoff at an altitude of 12.5 miles.

“The video is of the (previous) test that failed.  That strongly suggests the other test was something different that they don’t want us to see.”

Another expert, Ankit Panda of the Carnegie Endowment for International Peace, said Pyongyang may have altered the Hwasong-15 to make it look like a more powerful missile.

Lewis said regardless of which missile was fired last Thursday, the test showed a powerful offensive capability that U.S. defense officials have to be wary of. The Hwasong-15 can hit anywhere in the United States.

Meanwhile, I told you a few weeks ago North Korea was reconstructing its main nuclear-test site, clearly in preparation for a big boom.  That’s coming, and will rattle the world even further.

China / Taiwan: The head of Taiwan’s National Security Bureau said the Russian experience in Ukraine has made it unlikely that Beijing will send forces to the self-ruled island during the remainder of President Tsai Ing-wen’s term.

But Chen Ming-tong warned legislators that the island must not let down its guard, because any attack from the mainland would be an all-out operation.

Chen was responding to questions during Monday’s legislature session on whether the People’s Liberation Army would follow Russia’s lead in Ukraine to attack Taiwan.

Beijing has been ramping up pressure on the island since Tsai refused to accept the one-China principle.  Warplanes fly towards Taiwan almost daily and PLA exercises have been staged near the island.

Wen Yu-hsia, from the main Taiwanese opposition party Kuomintang (KMT), demanded that Chen evaluate the chances of an attack.

“Even the U.S. Indo-Pacific commander does not rule out the possibility. Do you think there would be a cross-strait war soon?” he asked.

Recently, in an interview with the Financial Times, Admiral John Aquilino said the Russian invasion showed Asian nations must take the possibility of a PLA attack on Taiwan seriously.

Aquilino said he was concerned about Beijing’s increasing pressure on the island, and the need to be prepared for any eventuality.  “As of five months ago, nobody would have predicted the war in Ukraine, and the number one lesson from it should be that anything could happen.”

But Chen said Beijing had definitely learned from Russia’s experience and would not “rashly” send forces to Taiwan.

Chen added the Ukraine war had certainly allowed the Communist Party to understand it should not make any move without careful consideration – and once it decided to strike, it must be an all-out operation.

He said Russia had made a lot of mistakes, which included starting its invasion without an organized plan, and that Beijing would do all it could to avoid making the same errors if it chose to attack the island.

I remain in the camp that Xi Jinping will attack Taiwan and it does not have to be an all-out offensive.  Declining economic fortunes on the mainland may make it even more realistic for Xi to act, to rally the nation and divert attention from the big slowdown, which could hurt his chances for an unprecedented third term.

Separately, according to an unclassified fact sheet released Monday evening by the Defense Department, China is the No. 1 priority in the new National Defense Strategy.

The fact sheet lists the Pentagon’s top four defense priorities, but makes clear that China is “our most consequential strategic competitor and the pacing challenge for the department.”

“Defending the homeland, paced to the growing multi-domain threat posed by the [People’s Republic of China],” is the top defense priority.  The third priority is also aimed at China, saying that the department will focus on “deterring aggression, while being prepared to prevail in conflict when necessary,” with an emphasis placed on the potential for conflict with Beijing.

Though Russia “poses acute threats,” as evidenced by Vladimir Putin’s invasion of Ukraine, hostilities with Moscow are a secondary priority for the Pentagon, according to the fact sheet.  The Pentagon must also remain ready to counter other “persistent threats,” such as those posed by North Korea, Iran and violent extremist groups.

Other priorities on the fact sheet are deterring strategic attacks against the United States and its allies, and “building a resilient joint force.”

Central America: The government of El Salvador said Monday that it had arrested more than 1,000 gang suspects after a wave of killings over the weekend.  President Nayib Bukele ordered food for gang members held in Salvadoran prisons be reduced to two meals per day, seized inmates’ mattresses and posted a video of prisoners being frog-marched through corridors and down stairs.

Then government declared a state of emergency and locked down prisons after 87 killings were committed Friday, Saturday and Sunday.

Authorities blamed the killings on gang members and soldiers and police then raided gang strongholds around San Salvador.

In Western Mexico, gunmen killed 19 people on Sunday night in an attack on a clandestine cockfighting venue, authorities said, in one of the worst mass shootings under the current government.

The killings took place in the state of Michoacan, where the powerful Jalisco New Generation Cartel has been fighting local gangs for control of drug routes.

I’m assuming the New Generation Cartel at one point took out the Old Generation Cartel, but what do I know.

Well, as my mom used to say, “Nothing good ever happens at a cockfight.” Or was it, “Nothing good ever happens after 2:00 a.m.”?

Random Musings

--Presidential approval ratings….

Gallup: 42% approve of Biden’s job performance, 54% disapprove; 38% of independents approve (Mar. 1-18).

Rasmussen: 40% approve, 58% disapprove (April 1).

In a new NBC News poll, Biden’s job approval rating plummeted to the lowest of his presidency, 40%, with 55% disapproving.  Only 62% of black respondents give Biden a positive grade.

Only 33% approve of his handling of the economy, 63% disapprove.

--White House records show a gap of more than seven hours in former President Donald Trump’s official phone calls the day of the deadly Jan. 6, 2021, attack on the U.S. Capitol, the Washington Post and CBS News reported on Tuesday.

Logs turned over to the House panel investigating the attack showed no calls placed to or by Trump between 11:17 a.m. and 6:54 p.m. while his supporters violently rioted at the Capitol as lawmakers were set to certify Trump’s 2020 election loss, the news outlets reported.

The 11 pages of records turned over to lawmakers showed Trump talked to at least eight people by phone before the riot and 11 afterward, the Post and CBS said.

Extensive public reporting also cites multiple conversations Trump had on Jan. 6 with allies and lawmakers, prompting lawmakers to probe whether he communicated that day through unofficial back channels, the report said.

House leader Kevin McCarthy last year described talking to Trump during the rioting, saying he urged the president to call off his supporters and accept his defeat.

“I was very clear with the president when I called him,” McCarthy told CBS at the time.  “This has to stop, and he has to go to the American public and tell them to stop this.”

The House panel on Monday voted unanimously to seek “contempt of Congress” charges against Peter Navarro, a former trade adviser to Trump, and Daniel Scavino, who was Trump’s deputy chief of staff.

--Separately, U.S. District Judge David Carter ruled Monday that former President Trump likely “corruptly attempted to obstruct” Congress from certifying the 2020 election, in a case over whether a House committee will receive a lawyer’s emails while investigating the attack on the Capitol. 

“The illegality of the plan was obvious,” Judge Carter in California wrote in approving the transfer of John Eastman’s emails to the committee.  “Based on the evidence, the Court finds it more likely than not that President Trump corruptly attempted to obstruct the Joint Session of Congress on January 6, 2021.”

The ruling bolsters the committee’s investigation by providing access to the legal thinking behind how Trump’s flawed election challenges were wielded to slow down or prevent Joe Biden from taking office. 

The ruling also adds another facet to myriad legal challenges Trump faces.  Lawmakers on the committee suggested criminal charges might be warranted for the Capitol attack, potentially for a conspiracy to prevent the peaceful transfer of power and to defraud the United States.

But the Justice Department – rather than the committee – would determine whether to charge Trump and the committee has become very impatient when it comes to the lack of action by the DOJ.

Committee leaders called Carter’s decision a victory for the rule of law.

“The Court found that the then-President likely than not committed multiple federal crimes in his attempt to overturn the election,” Reps. Bennie Thompson, D-Miss., and Liz Cheney, R-Wyo., said in a joint statement.

One of Eastman’s lawyers issued a statement saying Eastman intends to comply with the decision.

A Trump spokesman called the decision “absurd” and “baseless.”

Eastman is the lawyer who wrote a six-page memo for Trump explaining a potential strategy for overturning the election.  Eastman had sued the committee to prevent the release of his emails.

The plan basically was to have then-Vice President Pence refuse to recognize Electoral College votes from states with contested results, which would have thrown the race to the House of Representatives, where Trump might have won.

“I’m here asking you to reject the electors,” Eastman said at a meeting with Pence’s staff Jan. 5, 2021.

But Pence, who oversaw the count as president of the Senate, repeatedly refused to participate.

--The loathsome Rep. Madison Cawthorn (R-N.C.) Wednesday walked back blockbuster drugs-and-sex claims about fellow lawmakers in a brutal tongue-lashing from GOP leaders.

Cawthorn admitted to House Minority Leader Kevin McCarthy that he made up claims that he saw lawmakers doing cocaine and that they invited him to orgies.

“He changes what he tells and that’s not becoming of a congressman,” McCarthy said. “He did not tell the truth and that’s unacceptable.”

Cawthorn, who I’ve heavily criticized since he entered Congress, a firebrand supporter of Donald Trump, did not immediately comment after the 30-minute dressing-down from McCarthy and No. 2 GOP leader Rep. Steve Scalise.

McCarthy said Cawthorn could face further disciplinary action.

“He’s lost my trust and is gonna have to earn it back,” McCarthy told reporters.  “And I laid out to him everything that I find is unbecoming.”

Cawthorn is in hot water because he made the claims without naming names, and that left fellow lawmakers facing questions from constituents about whether they could be the culprits.

--The White House said on Wednesday that now is clearly not the time to enter into a scheme with Vladimir Putin, when asked about Donald Trump’s calling on Putin to release information about Hunter Biden and an alleged $3.5 million wire transfer from Russian billionaire Elena Baturina to Hunter’s investment firm that was outlined in a report by Senate Republicans made public ahead of the 2020 election.

“So now I would think Putin would know the answer to that,” Trump said on “Just the News” airing on Real America’s voice network.  “I think he should release it.  I think we should know that answer.”

The investigation into Hunter and the tax probe by all indications is heating up.  On Monday it was revealed that Hunter received a $142,000 plug-in hybrid sports car from a Kazahstani banking oligarch in 2014.  His infamous laptop was entered into the Congressional record on Tuesday.

--Chris Wallace, starting a new gig as part of the new CNN+ streaming service, said in an interview with the New York Times, “I just no longer felt comfortable with the programming at Fox.”

When asked why he left, Wallace said: “I’m fine with opinion: conservative opinion, liberal opinion.  But when people start to question the truth – Who won the 2020 election? Was Jan. 6 an insurrection? – I found that unsustainable.”

Wallace added, “I can certainly understand where somebody would say, ‘Gee, you were a slow learner, Chris.’”

--At Sunday’s Oscars, comedian Chris Rock, one of my faves, was presenting an award and made a joke about Jada Pinkett Smith’s buzzed haircut.  Pinkett Smith has spoken publicly about her diagnosis of alopecia, which can cause baldness.

“Jada, I love you.  ‘G.I. Jane 2,’ can’t wait to see it,” Rock said, comparing Pinkett Smith to Demi Moore’s ‘G.I. Jane’ character, who had a buzz cut in the 1997 film.

Will Smith at first laughed, then when he realized his wife wasn’t, he stood up from his seat at the front of the stage, walked up to Rock and slapped him across the face before sitting back down and yelling profanities at Rock to keep his wife’s name out of his mouth.

Rock was amazingly composed and simply said, “Oh Wow! Wow! Will Smith just smacked the shit out of me.”

The audience initially thought Smith’s indignation was feigned, part of the act.  It was only after he returned to his seat and shouted that the audience went silent and audibly gasped.

Forty minutes later, Smith received a standing ovation as he received an Oscar for best actor.

In his acceptance speech, Smith cast himself as a protector/victim and said he was “overwhelmed by what God is calling on me to do and be in this world.”

Once again I feel compelled to remind the clueless that God couldn’t give a damn about the likes of Will Smith.

Smith didn’t apologize to Chris Rock in the speech, and then said, “Love will make you do crazy things.”  As the Wall Street Journal opined, “Try that line sometime at the local police precinct and see how it works.”

I watched the entire broadcast and was shocked like anyone else watching live (I never thought it was fake), and it was amazing Smith was allowed to stay.

Monday, Smith issued an apology to the comedian, the academy and viewers at home, saying he was “out of line” and that his actions are “not indicative of the man I want to be.”

“Violence in all of its forms is poisonous and destructive,” said Smith.  “My behavior at last night’s Academy Awards was unacceptable and inexcusable.  Jokes at my expense are a part of the job, but a joke about Jada’s medical condition was too much for me to bear and I reacted emotionally.  I would like to publicly apologize to you, Chris.  I was out of line and I was wrong. I am embarrassed and my actions were not indicative of the man I want to be. There is no place for violence in a world of love and kindness.”

Smith added apologies to the film academy, producers of the telecast, attendees, viewers and the Williams family. [Smith winning his Oscar for his portrayal of Richard Williams, father of Serena and Venus Williams, in the film “King Richard.”]

What we didn’t know until Wednesday, when the Academy’s Board held an emergency meeting on the matter, was that Smith had been asked to leave and refused.

But then this report was false. The show’s producer, Will Packer, told “Good Morning America” that police in Los Angeles were “prepared” to arrest Will Smith on battery charges.  Packer said Rock was in his office shortly after the smackdown when the LAPD officers showed and offered to take action against Smith.

Packer said, “[The officers] said, ‘We will go get him, we are prepared to get him right now,” he recalled, referring to Smith. “You can press charges and we can arrest him,” the cops added.

But Packer said Rock was “dismissive” of the options and refused to press charges.  So Packer says that’s why he did not ask for Smith to leave.

Wanda Sykes, who co-hosted the Oscars with Amy Schumer and Regina Hall, said she felt physically ill after Smith slapped Rock.  In an interview with Ellen DeGeneres, Sykes said letting Smith stay and accept his award should not have happened.

Needless to say, Smith’s behavior overshadowed some historical wins at an Oscars.

Chris Rock then performed in public Wednesday in Boston, where he was opening a series of shows and he commented for the first time.

Greeted by thunderous applause, Rock told the audience “I’m still kind of processing what happened.”  He then tamped down any expectations that he would talk at length about the slap, telling them: “If you came to hear that, I’m not…I had like a whole show I wrote before this weekend.”

And this just in…Will Smith resigned from the Academy of Motion Picture Arts and Sciences tonight, saying in a statement his actions “were shocking, painful and inexcusable.”

--A NASA astronaut caught a ride back to Earth on Wednesday after a U.S. record 355 days at the International Space Station, returning with two cosmonauts in a Russian capsule to a world in turmoil.

Mark Vande Hei landed in a Soyuz capsule in Kazakhstan alongside the Russian Space Agency’s Pyotr Dubrov, who also spent the last year in space, and Anton Shkaplerov.

Despite escalating tensions between the two countries, Vande Hei’s return followed customary procedures and he was greeted by a small NASA team of doctors and other staff, who planned to return immediately to Houston with the 55-year-old astronaut.

Even before Russia’s Feb. 24 invasion of Ukraine, Vande Hei said he was avoiding the subject with his two Russian crew mates. Despite getting along “fantastically…I’m not sure we really want to go there,” he said.

--Speaking of space, in a report published Wednesday in the journal Nature, a team of astronomers asserts that the Hubble Space Telescope has discovered the most distant individual star ever seen.

When the galaxies were still forming not long after the first stars had ignited and lit up the heavens, the light from a single blue star traveled through space for billions of years, and then one day a few thin beams crashed into a polished mirror – the light bucket of the Hubble.

The astronomers describe it as 50 to 100 times more massive than our sun, and roughly 1 million times brighter, with its starlight having traveled 12.9 billion years to reach the telescope.

The lead author on the report, Brian Welch, a 27-year-old doctoral candidate at Johns Hopkins University, had the honor of giving the star a name: Earendel. It’s an Old English word, meaning “morning star,” he said.

Found in the constellation Cetus near the star Mira (named after actress Mira Sorvino), Earendel’s light was emitted about 900 million years after the universe began its expansion – the big bang.

I wish our Dr. Bortrum was still around to explain all this to me, and us.  No doubt he’d correct me on the derivation of the star Mira, though I stand by my explanation.

---

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

God bless America.

We pray for Ukraine.

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Gold $1928
Oil $99.42

Returns for the week 3/28-4/1

Dow Jones  -0.1%  [34818]
S&P 500  +0.1%  [4545]
S&P MidCap  -0.1%
Russell 2000  +0.6%
Nasdaq  +0.7%  [14261]

Returns for the period 1/1/22-4/1/22

Dow Jones  -4.2%
S&P 500  -4.6%
S&P MidCap  -4.6%
Russell 2000  -6.9%
Nasdaq  -8.8%

Bulls 37.7
Bears 34.1

Hang in there.

Brian Trumbore

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