Week in Review

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Week in Review

04/16/2022

For the week 4/11-4/15

[Posted 9:00 PM ET, Friday]

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Edition 1,200

The Battle of the Donbas has begun in eastern Ukraine and after Russia’s command-and-control issues in the first weeks of the war, Moscow tapped Gen. Alexander Dvornikov to oversee the invasion.  Dvornikov earned the moniker the “butcher of Syria” for his brutal assaults on cities like Aleppo.

Pentagon spokesman John Kirby, speaking of Dvornikov’s appointment, said the fighting would intensify with the fighting shifting east.

“Sadly we all expect those same brutal tactics (that Dvornikov employed in Syria), that same disregard for civilian life and for civilian infrastructure will probably continue as they now focus in a more geographically confined area in the Donbas,” Kirby said.  “This could augur in for a more protracted and a very bloody next phase of this conflict.”

Thus far, the Ukrainians have put up a stiff, effective, and heroic resistance.  They took out Russia’s flagship missile cruiser in the Black Sea, though they know Putin will retaliate for this and he already is.

Ukrainian President Volodymyr Zelensky said in an interview that the “world should prepare for Putin to use nukes.”

Russian forces have redeployed for the new offensive and the bombing of second-city Kharkiv has intensified, while the siege on Mariupol has grown more dire for those Ukrainians still inside that key southern strategic port. 

What has been confirmed is Russia’s use of cluster munitions in attacks on Kharkiv that have left a trail of casualties.

Russia’s defense ministry said 1,026 Ukrainian soldiers had surrendered in Mariupol in a battle over the Ilich Iron and Steel Works.  The U.S. has yet to confirm whether Russia has used chemical weapons in the city.

Zelensky said in his nightly video address, Wednesday, “Russian forces are increasing their activities on the southern and eastern front, attempting to avenge their defeats,” adding, “We have destroyed more Russian weapons and military equipment than some armies in Europe currently possess.  But this is not enough.”

A wounded Russia is using ominous rhetoric through state television, as pundits talk of the need for concentration camps, and worse.

Eugene Finkel, an expert on genocide at Johns Hopkins University in Bologna, Italy, told the Washington Post that the rhetoric isn’t just “a few crazy hard-liners” spouting off.  It’s coming from prominent government officials, showing up in the press, being heard on state television – and is “clearly genocidal.”

“They’re talking about destroying Ukrainians as a group, Ukraine as a state and as an identity community,” Finkel said.  “The argument is we are going to destroy this national community as it exists and create something new that we like instead, no matter how many people we will kill in the process.”

Robyn Dixon / Washington Post

“The chances that Russian President Vladimir Putin, a man with no history of reversing course when cornered, might back down as his military’s effort faltered were never very great, and U.S. officials have questioned Russia’s seriousness about peace talks. Yet after Moscow’s failure to take Kyiv, the shift to a harder line in state media suggests that the Kremlin is girding the population for a tough and potentially long fight in Ukraine’s east, one that could see even greater destruction and casualties.

“It also hints at a punitive path should Russia win: potentially partitioning Ukraine, crushing its military and civil society, and occupying it for years.

“A former Kremlin adviser, Sergei Karaganov, has said that the country would be left as a rump state – or perhaps as nothing at all – after Moscow is done. Russia, he made clear in an interview with the New Statesman, ‘cannot afford to lose.’”

Daniel Henninger / Wall Street Journal

“Vladimir Putin’s scorched-earth tactics resurrect the possibility in the world of an evil that is pure, compelling and undeniable….

“Years of defining evil down have disabled the political system’s ability to act decisively when evil appears.  And that puts us at personal, public and national risk.

“The importance of the war in Ukraine is that it is forcing a re-evaluation of evil and our response to it, and our willingness to admit its reality.

“A ‘distancing’ theme of the Ukraine war is that the West provoked it by moving the North Atlantic Treaty Organization eastward.  But NATO has little to do with the reality that Mr. Putin himself has spent years murdering his political opponents or demolishing cities like Grozny (1999-2000) and Aleppo (2016).

“The essential reality of the Putin evil is that whatever historical grievances have been coursing through Mr. Putin’s brain, they have taken form as the mass killing of innocent human beings and the conscious destruction of the pedestrian, physical order of Ukrainians’ daily lives.  For this, no sophistical rationalization is possible.  It is evil.

“If the leader of China, Xi Jinping, is willing to put members of the Uyghur minority in concentration camps or imprison dissidents after sham trials, we should recognize that politics alone is an insufficient explanation for his intentions and what he’s willing to do.

“As justification, both Messrs. Putin and Xi have put into play ideas about national destiny and an offending Western liberalism.  But the Xi-Putin partnership announced in February isn’t just about ideological or economic competition.  It’s about a shared, proven willingness to pursue anti-human policies, including murder, to achieve their ends.

“Opinions on the nature of evil have differed since at least the Garden of Eden.  But I’m pretty sure that the events since Feb. 24 in Ukraine have taught us this: If you give the devil a chance, he will try to destroy you.”

This week, Russia sent a formal diplomatic note to the United States warning that U.S. and NATO shipments of the “most sensitive” weapons systems to Ukraine were “adding fuel” to the conflict there and could bring “unpredictable consequences.”

“Unpredictable consequences”….a phrase that everyone in the State and Defense Departments is studying.  Formal diplomatic notes are important, and taken seriously.  The diplomatic demarche came as President Biden approved a dramatic expansion in the scope of weapons being provided to Ukraine, including long-range artillery to match Russian systems.

All seem to be pointing to May 9, Victory Day for Russians for their remembrance of their defeat of the Nazis, as something Putin wants to celebrate this year for a different reason.

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As the week unfolded….

--In a rather dramatic move, British Prime Minister Boris Johnson met with President Zelensky in Kyiv on Saturday, the two walking openly in the center of the city, a show of solidarity, the visit not announced in advance.

Johnson pledged that the UK would send more defensive weapons, including 120 armored vehicles and new anti-ship missile systems, and work with G7 partners to target every pillar of the Russian economy.

--Sunday night in his nightly address, President Zelensky warned that the coming week would be as crucial as any in the war and accused Russia of trying to evade responsibility for war crimes.

“When people lack the courage to admit their mistakes, apologize, adapt to reality and learn, they turn into monsters.  When the world ignores it, the monsters decide that it is the world that has to adapt to them. Ukraine will stop all this,” Zelensky said.  “The day will come when they will have to admit everything.  Accept the truth.”

In an interview on CBS’ “60 Minutes,” Zelensky expressed skepticism that the United States would deliver the weapons he said are needed.  Whether Ukraine can beat back the Russian incursion “depends on how fast we will be helped by the United States.  To be honest, whether we will be able to survive depends on this,” Zelensky said.  “I have 100% confidence in our people and in our armed forces, but unfortunately I don’t have the confidence that we will be receiving everything we need.”

--Monday, Austrian Chancellor Karl Nehammer described a “direct” and “tough” conversation with Putin, the first time a Western leader had met with the Russian president since Moscow launched its invasion.

Nehammer defended what he conceded was a contentious decision, but said he felt the need to leave “no stone unturned” in efforts to halt the fighting or make humanitarian progress.  He said he pushed for humanitarian corridors and an immediate ceasefire.

--President Zelensky said Monday, in a video address to South Korean lawmakers:

“Mariupol has been destroyed, there are tens of thousands of dead, but even despite this, the Russians are not stopping their offensive.”

While the accuracy of Zelensky’s estimate of those killed could not be independently verified, the mayor of Mariupol has been using the figure 10,000 for the past week.  The city is indeed largely destroyed.  The head of the Russia-backed self-proclaimed Donetsk People’s Republic, Denis Pushilin, told Russia’s RIA news agency on Monday that more than 5,000 may have been killed in the city.  He said Ukrainian forces were responsible.

Russia has consistently hampered efforts for civilians to evacuate a city that pre-invasion had 430,000 residents.

--President Biden, in a virtual meeting with Indian Prime Minister Narendra Modi, told Modi it is not in India’s interests to increase Russian energy imports.  While the meeting was described as “productive” and not “adversarial,” at the same time, White House press secretary Jen Psaki said Biden “made clear that we would be happy to help them in diversifying” their energy imports.  India imports about 1 to 2 percent of its energy from Russia and about 10 percent from the United States.

--Vladimir Putin was very chatty on Tuesday, in an appearance with Belarusian President Alexander Lukashenko at a new spaceport in Russia.

Putin said peace talks with Ukraine had reached a “dead end” and he falsely called the evidence of Russian atrocities in the Kyiv suburb of Bucha “fake,” using his first extended remarks about the war in nearly a month to insist that Russia would persist in its “noble” military campaign.

Putin first compared the “alleged atrocities” to U.S. attacks on cities like Raqqa in Syria.

Putin pledged Russia’s “military operation will continue until its full completion.”

“We have again returned to a dead-end situation for us,” Putin told a news briefing.  He added Russia had no choice but to fight because it had to defend the Russian speakers of eastern Ukraine and prevent its former Soviet neighbor from becoming an anti-Russian springboard for Moscow’s enemies.

But the operation’s goals, he said, centered on the Donbas region in eastern Ukraine, where pro-Russia separatists have been fighting since 2014.  It was the first time that Putin himself had effectively defined a more limited aim for the war, focusing on control of the Donbas – and not all of Ukraine, which Vlad and his subordinates have said should not even be an independent country.

Putin said: “Our goal is to help the people who live in the Donbas, who feel their unbreakable bond with Russia.”

Vlad the Impaler’s assertion of more limited aims cannot necessarily be taken at face value.

On the economic situation, Putin said Russia has withstood the West’s sanctions “blitzkrieg,” citing the recovery of the ruble.

--The Kremlin said Wednesday that it categorically disagreed with President Biden’s description of Russia’s actions in Ukraine as “genocide.” 

“We consider this kind of effort to distort the situation unacceptable,” Kremlin spokesperson Dmitry Peskov said on a call with reporters. “This is hardly acceptable from a president of the United States, a country that has committed well-known crimes in recent times.”

Biden, speaking at an event in Iowa on Tuesday, said, “Yes, I called it genocide because it has become clearer and clearer that Putin is just trying to wipe out the idea of being able to be Ukrainian. The evidence is mounting.”

“True words of a true leader,” President Zelensky tweeted in reference to Biden’s remarks.  “Calling things by their names is essential to stand up to evil.”

U.S. officials have accused Putin’s forces of war crimes and atrocities, but have explicitly said they do not necessarily constitute “genocide.”

--Putin said Russia can easily redirect exports of its vast energy resources away from the West to countries that really need them while increasing domestic consumption of oil, gas and coal.  The U.S., Canada, Britain and Australia have imposed bans on Russian oil imports, while the European Union remains divided on the issue.

Putin said the West was to blame for the energy crunch it was experiencing because it would not cooperate with Russia.  “The refusal of several Western countries to cooperate (with Russia) normally, including with regards to Russian energy resources…has already hit millions of Europeans, provoked a real energy crisis,” he said.

Putin also said that “unfriendly countries” had destroyed supply chains in Russia’s Arctic regions and some nations were not fulfilling their contractual obligations.

--Russia will view U.S. and NATO vehicles transporting weapons on Ukrainian territory as legitimate military targets, Deputy Foreign Minister Ryabkov told the TASS news agency in an interview on Wednesday.  “We are warning that U.S.-NATO weapons targets across Ukrainian territory will be considered by us as legal military targets.”

--Thursday, CIA Director Williams Burns said the threat of Russia potentially using tactical or low-yield nuclear weapons in Ukraine cannot be taken lightly, but the CIA has not seen a lot of practical evidence reinforcing that concern.

In a speech at Georgia Tech, Burns referred to the “potential desperation” and military setbacks that Putin and his government have suffered since Feb. 24.  For those reasons, “none of us can take lightly the threat posed by a potential resort to tactical nuclear weapons or low-yield nuclear weapons,” Burns said.

But, despite “rhetorical posturing” by the Kremlin about putting the world’s largest nuclear arsenal on high alert, “We haven’t seen a lot of practical evidence of the kind of deployments or military dispositions that would reinforce that concern.”

Burns made his comments in response to a question from former Senator San Nunn, a leading arms control advocate, at the end of his first speech since taking the helm of the spy agency in March 2021.

Burns said that U.S. spy agencies began last fall collecting “disturbing and detailed” intelligence on a plan by Putin for a “major new invasion” of Ukraine.  Putin has “stewed” in grievance, ambition and insecurity and saw the “window was closing for shaping Ukraine’s orientation” away from the West, said Burns, who called Vlad an “apostle of payback.”

Burns said the “crimes” Russian forces committed in the town of Bucha are “horrific.”

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--Pope Francis on Sunday called for an Easter truce in Ukraine, leading to negotiations and peace.  “Put the weapons down!” he said at the end of a Palm Sunday service for about 50,000 people in St. Peter’s Square.  “Let an Easter truce start.  But not to rearm and resume combat but a truce to reach peace through real negotiations,” he said.

In an apparent reference to Russia, Francis said, “In fact, what kind of victory would be one that plants a flag on a heap of rubble?”

Francis earlier evoked the horrors of war in his homily, speaking of “mothers who mourn the unjust death of husbands and sons…refugees who flee from bombs with children in their arms…young people deprived of a future…soldiers sent to kill their brothers and sisters.”

But today, there was some controversy as a Ukrainian and a Russian woman, two friends, took part in the pope’s Good Friday “Way of the Cross” service at the Colosseum, but the meditation they wrote was scrapped after Ukrainians protested, saying the war made it inopportune.

This is a tough week physically for the 85-year-old pontiff, with all the events of Easter testing his stamina.

There has been a lot of talk of the pope going to Ukraine.  That nation is predominantly Orthodox and Orthodox Christians celebrate Easter a week later, on April 24.

Meanwhile, at a sermon in Moscow on Sunday, Patriarch Kirill, head of Russia’s Orthodox Church and Putin butt-boy, called on people to rally around the authorities.  Kirill will not enjoy what awaits him upon his death.

--Finland and Sweden could apply for NATO membership as early as this summer, and the Kremlin is not happy.  Dmitry Peskov warned the two against such a move, saying NATO “remains a tool geared toward confrontation.”

Dmitry Medvedev, deputy chairman of Russia’s Security Council, said that should Sweden and Finland joni NATO then Russia would have to strengthen its land, naval and air forces in the Baltic Sea. Medvedev also explicitly raised the nuclear threat by saying that there could be no more talk of a “nuclear free” Baltic – where Russia has its Kaliningrad exclave sandwiched between Poland and Lithuania.

Medvedev said he hoped Finland and Sweden would see sense.  If not, he said, they would have to live with nuclear weapons and hypersonic missiles close to home.

But as Lithuania pointed out, and as your editor told you before, Moscow has deployed nuclear weapons to Kaliningrad long before the war in Ukraine.  It’s why I’ve said it’s a hot spot that, I imagine, literally only one percent of Americans are aware of.  Back in 2018, Russia said it had deployed nuclear-capable Iskander missiles, which have an official range of 500 km (Berlin), though some Western military sources suspect it may be much greater (London and Paris being 1,400 km from Kaliningrad).

--U.S. Treasury Secretary Janet Yellen on Wednesday appealed to China and other countries to help end Russia’s “heinous war,” warning in a speech at the Atlantic Council in Washington that those who seek to undermine Western sanctions face consequences.

Yellen said she “fervently” hoped that China would make something positive out of its “special relationship” with Russia and said Beijing’s standing in the world would suffer if it fails to do so.

China cannot expect the global community to respect any future appeals on sovereignty and territorial integrity if it fails to respect these principles in Ukraine “now when it counts,” she said.

“The world’s attitude towards China and its willingness to embrace further economic integration may well be affected by China’s reaction to our call for resolute action on Russia,” Yellen said.

“Rest assured, until Putin ends his heinous war of choice, the Biden administration will work with our partners to push Russia further towards economic, financial, and strategic isolation,” she said.

Yellen warned those countries that were still “sitting on the fence, perhaps seeing an opportunity to gain by preserving their relationship with Russia and backfilling the void left by others” that their motivations were short-sighted.  “The future of our international order, both for peaceful security and economic prosperity, is at stake.  And let’s be clear, the unified coalition…will not be indifferent to actions that undermine the sanctions we’ve put in place.”

--Also Wednesday, a report from the Organization for Security and Cooperation in Europe determined that Russia broke international humanitarian law by deliberately targeting civilians during the invasion, and those who ordered attacks on a maternity hospital and theater turned shelter in Mariupol committed war crimes.

“Taken as a whole, the report documents the catalogue of inhumanity perpetrated by Russia’s forces in Ukraine,” Michael Carpenter, U.S. ambassador to the OSCE, said in a speech.  “This includes evidence of direct targeting of civilians, attacks on medical facilities, rape, executions, looting, and forced deportation of civilians to Russia.”

The report tracked alleged abuses from Feb. 24, the day Russia invaded, to April 1.  It did not include a missile strike last week on a train station in the eastern city of Kramatorsk that killed at least 57, including children, or atrocities reported in Bucha.

--Ramzan Kadyrov, the powerful head of Russia’s republic of Chechnya, said on Monday that there will be an offensive by Russian forces not only on the besieged port of Mariupol, but also on Kyiv and other Ukrainian cities.  “There will be an offensive…not only on Mariupol, but also on other places, cities and villages.  Luhansk and Donetsk – we will fully liberate in the first place…and then take Kyiv and all other cities.”

--But Thursday, we learned that a Russian missile cruiser Moskva, the flagship of Russia’s Black Sea fleet, was hit by two Ukrainian missiles and sunk, as the U.S. confirmed Friday.  As Ukrainian officials had said, the U.S. also confirmed it was two Neptune anti-ship missiles that did the job.

The Moskva certainly would have been heavily involved in any potential amphibious landing in the port of Odesa that has not happened yet because of resistance from Ukrainian forces.

Russia claimed all 500 sailors were evacuated, after saying the ship caught fire and ammunition had exploded, which was absurd, and then had to admit later the ship sunk.  The U.S. believes there were casualties, the number unknown.  Just a big win for Kyiv, though everyone knew Russia would then retaliate.

The Moskva featured in one of the landmark early exchanges of the war, when Ukrainian border guards on Snake Island told the ship to “Go fuck yourself” after it demanded they surrender.

--The Russian siege on Mariupol intensified this week and while Russian forces have taken parts of the critical city, it hasn’t completely fallen.

--Ukrainian officials announced today that more than 900 civilian bodies have been discovered in the region surrounding Kyiv following the withdrawal of Russian forces – most of them fatally shot, police said, an indication that many people were “simply executed.”

More bodies are being found every day, under rubble and in mass graves.

The number of victims in Bucha is more than 350.

--Ukraine’s traders union UGA expects the country’s wheat and corn harvest and exports to fall sharply because of the Russian invasion.  The wheat harvest could slump by almost 45% to 18.2 million tons while corn output could decline by 38% to 23.1 million tons, the union said.  But the levels could be even far worse than this.

--The World Bank said last Sunday that it expected Ukraine’s economic output will likely contract by a staggering 45% this year as the invasion has shuttered businesses, slashed exports and destroyed productive capacity.  The WB also forecast Russia’s 2022 GDP will fall 11.2% due to punishing sanctions imposed by the West on Russia’s banks, state-owned enterprises and other institutions.

The World Bank estimates that half of Ukraine’s businesses are closed, while others still open are operating at well under normal capacity.  The closure of Black Sea shipping from Ukraine has cut off some 90% of the country’s grain exports and half of its total exports.

--I didn’t have a chance last time to note an important story…Russia shuttering the local offices of more than a dozen international nonprofit organizations (NGOs) that accuse Russian troops of committing war crimes in Ukraine, including Amnesty International and Human Rights Watch.

A week ago, Thursday, the UN General Assembly had voted to suspend Russia from the 47-member Human Rights Council and this was the Kremlin’s way of retaliating, though the rights groups would have eventually been shuttered.

Among the other groups whose offices Russia is shutting down are the Carnegie Endowment for International Peace and the Friedrich Naumann Foundation for Freedom.

Agnes Callamard, the secretary general of Amnesty International, wrote on Twitter that the organization is “just the latest in a long list of organizations that have been punished for defending human rights and speaking the truth to the Russian authorities.”

--Friday, jailed Kremlin critic Alexei Navalny called on Western leaders and tech giants to fight Russian state propaganda with a massive social media campaign about Russia’s war in Ukraine.

Navalny’s plea comes as government data showed Russia tripling funding for state media to $210 million in January-march compared with the same time last year.

Russia has been shutting down all independent media, blocking Facebook and Instagram and criminalizing any criticism of Russia’s invasion under a broad law on “fake news.”

“We need ads.  Lots of ads.  A huge national anti-war campaign will start with an advertising campaign,” Navalny said in a series of Twitter posts, addressing U.S., British and EU leaders alongside Meta and Google CEOs Mark Zuckerberg and Sundar Pichai.

“The fact is that most Russian citizens have a completely distorted view of what is happening in Ukraine.”

Navalny said the campaign should target the Russian audience with “monstrous real losses of the army,” sanctioned officials’ and oligarchs’ assets, rising prices and “how we would all be better off without this war.”

Around the time of Navalny’s tweets, Russia’s communications watchdog blocked access to the Russian language website of The Moscow Times, a newspaper I love that has covered Russia for three decades since the collapse of the Soviet Union.  Russia also blocked the website of French public broadcaster Radio France Internationale.

Some commentary….

Rich Lowry / New York Post

“For the last 100 years, Russia has been a brutalized and brutalizing country. It suffered nearly 3.5 million deaths in World War I, another 8 million dead in the Russian Civil War and then 27 million more in World War II.

“The founder of the Soviet state, Lenin, was a theorist and practitioner of ‘mass terror.’  After the revolution, the civil war between the Bolsheviks and their opponents was a series of atrocities. Then came the cataract of unspeakable violence in the death struggle with the Nazis.

“The Red Army’s decisive march to Berlin at the end of the war was one long, pitiless war crime.  The Russians raped 2 million German women.  According to Antony Beevor, author of a book on the fall of Berlin, one doctor believed that of 100,000 women raped in the city, 10,000 died as a consequence, many by suicide.

“The English-speaking world features its share of shameful and brutal acts but nothing on the mind-numbing scale of such atrocities.  And the crimes in the United States and elsewhere are looked back on with shame, whether slavery or the expropriation of indigenous people.  In contrast, in the 21st century, when more civilized practices are supposed to have prevailed, Putin is adding more shameful blots to Russia’s woeful record.

“What kind of force considers a hospital a legitimate military target?  Terrorist groups – and the Russian military.

“In Syria a few years ago, the Russians bombed four hospitals in the course of 12 hours, a savage performance forecasting the treatment they’d mete out to Ukraine.  According to the New York Times, Syrian health-care workers believed that a United Nations deconfliction list containing the locations of hospitals was used as a target list by Russian forces.

“Of course, Russia leveled the city of Grozny in the late 1990s, killing thousands of civilians, its soldiers raped and tortured.

“What Russia lacks in planning and proficiency, it makes up for in barbarity and utter disregard for humanity.  War is hell, but almost all advanced nations try to keep it within some bounds of decency.  Russia is an outlier.  For it, the cruelty is the point – and the reflexive practice.”

Editorial / Wall Street Journal

“Ukraine won the battle of Kyiv in heroic fashion, but the war is set to enter a bloody new phase as Vladimir Putin prepares an offensive in the east.  The question is whether President Biden will summon the mettle to make sure America’s friends win….

“The Biden package this week promises more Switchblades, which may be helpful in the east because they can strike targets from a distance. But they’ll be less useful if they arrive in a month. And it’ll take much more effort to get heavier stuff like artillery to the front fast.

“More broadly, the U.S. and NATO need to shift from sending Ukraine whatever is on the shelf to a more coordinated effort to train and equip a Ukrainian military that may be fighting for years.  This means training the Ukrainians on more complex NATO weapons, such as Patriot missile defenses and fighter aircraft.

“The Ukrainians need to prevent Russian domination of the skies.  The American military trains plenty of foreign military pilots, and starting now means the Ukrainian pilots could fly NATO aircraft as the war drags on.

“Western training since Russia’s seizure of Crimea in 2014 has been crucial in helping the Ukrainians mount the impressive defense they have so far, and this is no time to slow down.  That ought to include setting up maintenance and repair shops in NATO countries, as facilities in Ukraine are Russian targets.

“The paradox of President Biden’s response in Ukraine is that he has been too casual with words like ‘genocide,’ as he was again this week, while he’s also too hesitant to offer the lethal weapons Ukrainians need to win.

“Mr. Putin could still succeed in swallowing parts of Ukraine, and he’ll use his gains to keep threatening the country’s existence.  The fastest end to the human suffering is to confront the Russian dictator with the gradual destruction of his military if he continues this war of conquest.  Mr. Putin cares more about that than he does moral denunciations.”

Editorial / Washington Post

“Vladimir Kara-Murza, a Russian opposition politician who has been a strong critic of President Vladimir Putin and his disastrous war against Ukraine, arrived at his Moscow apartment building Monday evening, hours after saying in a CNN interview that Mr. Putin’s government is ‘not just corrupt, it’s not just kleptocratic, it’s not just authoritarian, it is a regime of murderers.’  He added that he felt ‘it is important to say it out loud.’

“Mr. Kara-Murza, a Post opinion contributor, didn’t make it as far as his front door. He was still in his car at about 6:30 p.m. when five policemen approached him.  He asked them to show identification, which they refused, at which point he was immediately detained on charges of disobedience of the police.  On Tuesday, Mr. Kara-Murza was taken to court and sentenced to 15 days in jail on this spurious charge.  What is abundantly clear is that Mr. Putin has once again put a critic in his crosshairs, every day sinking Russia deeper into totalitarianism, intolerant of free thought or dissent. The word ‘totalitarian’ was coined in the 20th century, but the practice lives on.

“In the interview broadcast shortly before his detention, Mr. Kara-Murza, a longtime journalist and political activist, said Mr. Putin has often used violence against his opponents, including poisoning them, as was attempted in 2020 against prominent opposition leader Alexei Navalny, who was nearly killed by a military nerve agent and now remains imprisoned on phony charges.  Mr. Kara-Murza himself knows about that brutal means; in 2015 and 2017, he was subjected to apparent poisoning attempts.  ‘This is not the only method,’ he added in the interview, recalling how his mentor and Russian opposition democrat Boris Nemtsov was fatally shot in the back near the Kremlin walls in February 2015.  Nemtsov had been surveilled for months by the Federal Security Service, a successor to the KGB that Mr. Putin once headed, and by a squad of Chechen thugs.  Anna Politkovskaya, another journalist and critic of Mr. Putin, was gunned down, too, while Alexander Litvinenko was poisoned with polonium in his teacup.

“Three decades ago, Russian society blossomed into an irreverent democracy, emerging from seven decades of imprisonment by Soviet dictatorship.  With good reason, Russians hoped and believed they were finally free from secret police who seized people in the middle of the night, arrested them for placards in the square, suppressed public displays of dissent and encouraged them to inform on each other.  But now Russia under Mr. Putin is becoming more and more like that nightmarish past.”

Biden Agenda

--In a new Quinnipiac University national survey, 39% of Americans approve of President Biden’s handling of the response to Russia’s invasion of Ukraine, while 48% disapprove.

More than 8 in 10 (82%) think Putin is a war criminal.

Roughly 7 in 10 (71%) think Putin ordered Russian troops to kill civilians.

About two-thirds (68%) think the United States has a moral responsibility to do more to stop the killing of civilians in Ukraine, while 24% do not think the U.S. has a moral responsibility to do more.

About three-quarters (74%) think the U.S. has a moral responsibility to help refugees fleeing Ukraine.  Independents say so by a 75-21 margin.

--A CBS News/YouGov poll gives Biden just a 37% approval rating on his handling of the economy, 63% disapproving; with 31% approving of his handling of inflation, 69% disapproving.

Only 38% approve of the president’s handling of immigration, 62% disapproving.

Forty-five percent approve of his handling of the situation with Russia and Ukraine, 55% disapprove.

--Marc A. Thiessen / Washington Post

“Democrats are poised to lose control of the House and Senate this November in no small part because of the crisis President Biden has unleashed on the southern border.  Now, Biden is ready to double down on disaster by lifting Title 42 – the Trump-era public health order that allows border officials to turn away illegal migrants to prevent the spread of Covid-19.  If Biden does so, he will turn crisis into a catastrophe – both at the border and at the polls.

“By lifting Title 42, the Biden administration is trying to have it both ways – declaring the pandemic emergency over for illegal migrants at the border, but not for the rest of us.  If the pandemic emergency is over, why are they still insisting we wear masks on planes?  Why are all lawful international air passengers still required to get a negative coronavirus test before entering the United States (while illegal border crossers are not)?  And why, if the emergency is over, is the Biden administration asking Congress for billions of dollars in emergency Covid spending?  Democrats need to decide: Either we are in a Covid emergency, or we are not….

“In reversing these and other Trump policies, Biden has produced an unprecedented torrent of illegal crossings that has overwhelmed border officials.  That surge in illegal migrants has been accompanies by a flood of deadly fentanyl crossing the southern border, which has helped fuel an increase of 30 percent in overdose deaths – killing more Americans than guns and homicides, and hitting minority communities the hardest.

“The only thing left holding back an even greater deluge is Title 42.  Last year, Customs and Border Protection (CBP) officials encountered nearly 2 million illegal migrants at the southern border – the highest annual total on record, and nearly four times the number the year before under Trump.  Of those, about 61 percent – more than 1 million – were denied entry into the United States thanks to Title 42.  So far this year, CBP is averaging more than 87,000 title 42 expulsions a month.  If Biden goes through with his plan to lift the order on May 23, hundreds of thousands of illegal migrants will enter the country.  And that’s only the beginning….

“Biden has created the worst border crisis in U.S. history – and does not seem to care that he is about to make it worse.  But voters do.  A new Politico-Morning Consult poll finds that 56 percent of voters oppose ending Title 42, making it Biden’s ‘most unpopular decision so far.’  Considering the fact that Biden’s approval is underwater on virtually every issue, that is saying something.  And the decision will become even less popular when Americans see the debacle it produces.

“While the president is not concerned about the pending catastrophe, moderate Democrats are.  Sens. Mark Kelly (Ariz.), Catherine Cortez Masto (Nev.), Raphael Warnock (Ga.) and Maggie Hassan (N.H.) have joined Senate Republicans in introducing a bill to keep Title 42 in place until 60 days after the surgeon general announces the end of the public health emergency related to Covid-19.  Six House Democrats – including Rep. Henry Cuellar (D-Tex.), who represents a South Texas border district – have joined the GOP to sponsor similar legislation.

“They understand what Biden apparently doesn’t – that his Title 42 decision will make his self-inflicted border crisis even worse, and turn a bad election into a cataclysmic one.”

---

Wall Street and the Economy

The holiday-shortened week saw a slew of important economic data, with the inflation numbers for March leading the way.  Consumer prices rose 1.2%, 0.3% ex-food and energy, the latter better than expected; but the year-on-year figures of 8.5% on headline, 6.5% on core, were the worst since 1981 and ’82, respectively.

The producer price data was worse; up 1.4% on headline, 1.0 on core, and for the past year, a record 11.2% on the former, vs. 10.3% prior, while the figure ex-food and energy rose a record 9.2%.

The Russian invasion of Ukraine has boosted prices of commodities across the board, particularly items such as crude oil, wheat, and sunflower oil, which are key exports of both nations.

China’s lockdowns are also continuing to disrupt supply chains, which we will gain more visibility on as companies report first-quarter earnings.

But the debate in the markets was, has inflation peaked?  Or is it a month or two from doing so?  Some of the year-over-year comparisons will moderate in coming reports, but it is far too early to say if it’s peaked.  It’s all about the war, and China’s Covid battle.

One thing all of us know, food prices, up 8.8% over the past year with the March numbers, the biggest increase for that category since 1981, are still doing nothing but going up for all manner of reasons.  Shopping for groceries yesterday, I kept noticing further hikes in the foods I like to buy. 

Separately, retail sales in March rose 0.5%, but gasoline made up the bulk of the increase, and ex-gasoline, retail sales fell 0.3%.  Worrisomely, online spending posted back-to-back declines for the first time in more than a year.

One more…industrial production in March was strong, up a far better-than-expected 0.9%.

Add it all up and the Atlanta Fed’s GDPNow barometer for first-quarter growth is at 1.1%.

A new survey of economists by the Wall Street Journal put the probability of the economy being in recession sometime in the next 12 months at 28%, up from 18% in January and just 13% a year ago.

“Risk of a recession is rising due to the series of supply shocks cascading throughout the economy as the Fed lifts rates to address inflation,” said Joe Brusuelas, chief economist at RSM US LLP.

Economists slashed their forecast for growth in 2022 to 2.6% in the fourth quarter from a year earlier, down a full percentage point from the average forecast six months ago, though still higher than the 2.2% average annual growth rate in the decade before the pandemic.

Inflation is forecast to be at 7.5% in June, edging down to a still-uncomfortable 5.5% by December.

So are we heading into a recession?  The labor data is far too strong for that, at least for a while, but the slowdown in the economy could be sharp.  Mortgage rates reached 5% officially this week, per Freddie Mac, for the first time since Feb. 2011.  [They’ve been over 5%, unofficially, for a while.]  The speed of the rise in the 30-year fixed rate, up 2.1 points in the past six months, is the fastest since 1994.  And that is doing a number on housing, and with inflation what it is, it’s really hurting the first-time home buyer.

Purchasing power has been sapped, and now the Federal Reserve is pivoting hard, hiking interest rates and laying the plans to shed its massive bondholdings.

Fed Governor Lael Brainard said on Tuesday that getting inflation back toward the Fed’s 2% goal is the central bank’s “most important task,” she told the Journal in an interview.

The Fed next meets May 3-4, and policymakers are generally agreed on a plan to trim $95 billion monthly from their $9 trillion balance sheet, according to minutes from their March meeting.  That process over time should be the equivalent of raising the Fed’s policy rate two or three times, Brainard said.

Brainard added that the longer the war in Ukraine goes on, “the more it escalates – the greater the potential risks, again, to the upside on inflation and to the downside on activity.”  Sweeping lockdowns in China are snarling supply chains further, she added.

Analysts and investors worry that if the Fed tightens policy too fast it could send the economy into a recession if businesses respond to higher borrowing costs and falling demand by slashing jobs.  Brainard said she doesn’t see it going that way, given that job openings are at a near-record.

But, as the Journal opines, in terms of interest rates, the Fed’s consensus target at its March meeting for a fed funds interest-rate peak of 2.8% in 2023 “looks inadequate.  History suggests that once inflation is this high (6.5% on core CPI), interest rates will have to exceed the inflation rate to break it.

“That will run the risk of recession.  The Fed’s anti-inflation resolve will be tested if growth ebbs and financial troubles erupt.  Any central banker can cut interest rates.  The Paul Volcker test of monetary mettle is raising rates when the political class is screaming at you….

“Inflation is a powerful political force because it can’t be explained away.  Nearly every voter feels it every day. If the November elections are a referendum on the cost of living, voters won’t blame the Kremlin.  They’ll blame the party in power in Washington.”

---

Meanwhile, the economic fallout appeared to worsen Thursday as Texas Gov. Greg Abbott (Republican) largely kept in place new inspection rules for commercial trucks entering from Mexico, with some companies saying they aren’t able to fulfill orders because trucks are stuck in multi-mil backups at a number of entry points.

Little Bear Produce is a Texas-based grower-packer-shipper, farming 6,000 acres in Texas and supplementing its inventory with Mexican-grown produce so it can be a year-round shipper to major grocery chains such as Wegmans, Publix, Albertsons and Kroger.

Brett Erickson, senior vice president for the company, told the Washington Post that the added inspections have cost it “hundreds of thousands of dollars” already, not to mention the reduced paychecks for many loaders who have had no work as trucks fail to show up.

“This has directly impacted our business since late last week. We would typically be receiving 10 to 12 loads of watermelon per day from Mexico, as well as different kinds of herbs and greens.  Since the middle of last week, we have received zero of those shipments of watermelon,” Erickson said.  That means the company has failed to meet its business obligations with major retailers, which have in turn had to find Mexican melons from farther away, such as from Arizona.  Added distance means added fuel costs.

Abbott, up for reelection in November, has said he wants Mexican governors to reach individual agreements with him to increase safety inspection of trucks crossing the border.

Editorial / Wall Street Journal

“Texas Gov. Greg Abbott on Wednesday sent a bus load of undocumented immigrants to Washington, D.C., to protest President’s Biden’s border policies.  Fine if he wants to poke lawmakers to control illegal migration, but why is he also punishing Americans by obstructing legal commerce?

“Last week Mr. Abbott directed state troopers to inspect trucks crossing his state’s southern border for human trafficking, weapons and drugs.  He was responding to the Administration’s coming withdrawal of Title 42, a pandemic policy that has allowed the feds to expel undocumented immigrants, including asylum claimants apprehended at the border.

“Republicans and some Democrats running for re-election warn that lifting the policy in May without a backup plan could lead to a surge of illegal immigration. In response Mr. Abbott has apparently decided to impose his own border control. ‘Texas should not have to bear the burden of the Biden Administration’s failure to secure our border,’ he says.

“Fair point, but his truck inspections are costing Texans and Americans dearly while doing nothing to secure the border.  Thousands of trucks are backed up at the border, and commercial traffic has dropped 60% at some ports since last week.  ‘This is not solving the border problem, it is increasing the cost of food and adding to supply-chain shortages,’ says Texas Agriculture Commissioner Sid Miller.  ‘Such a misguided program is going to quickly lead to $2 lemons, $5 avocados and worse.’

“The Fresh Produce Association of the Americas says that up to 80% of perishable fruits and vegetables have been unable to cross since Friday due to Texas inspections and a Mexican trucker protest against the inspections. Idled trucks are costing businesses millions of dollars a day and risk food spoilage.  Supermarkets are scrambling to restock shelves.

“More than $400 billion in goods cross the border via Texas-Mexico ports of entry a year.  U.S. retailers and manufacturers depend on Mexican factories for just-in-time deliveries.

“Bloomberg reported Wednesday that the border disruptions have already cost factories in northern Mexico $100 million, much of which will be borne by U.S. consumers….

“Since Title 42 remains in effect for now, the border patrol continues to remove illegal migrants.  The danger when it’s withdrawn is that more will pour across the border at non-ports of entry and then claim asylum, hoping to be released into the U.S.

“Mr. Abbott’s inspections won’t prevent that.  They merely impeded legal commerce between Mexico and the U.S.  Perhaps he’s trying to energize immigration restrictionists as he faces a re-election campaign against Democrat Beto O’Rourke in November.

“But the stunt could hurt Republicans in districts along the border, where the party has been gaining support.  It could also turn immigration politics more toxic and make Mexico less inclined to help at the border. Mr. Abbott is making the border problem worse, and giving Democrats a way to deflect attention from Mr. Biden’s failures.”

*This afternoon, Gov. Abbott said his state would halt enhanced inspections of trucks arriving from Mexico after reaching an agreement with the last of four neighboring Mexican states that would have them increasing security efforts targeting illegal immigration and drug smuggling.

But the damage has been done.

Europe and Asia

We didn’t have any major official economic data for the eurozone this Easter week, but the European Central Bank held a meeting and President Christine Lagarde said they are closely monitoring inflation expectations.

Lagarde said upside risks to the inflation outlook had intensified, especially in the near term.  Headline eurozone inflation hit a record high 7.5% last month, nearly four times the ECB’s 2% target, and price growth could accelerate for several months before peaking around mid-year as the war in Ukraine pushes up energy and food prices.

“While various measures of longer-term inflation expectations derived from financial markets and from expert surveys largely stand at around 2%, initial signs of above-target revisions in those measures warrant close monitoring,” she said.

Longer-term inflation expectations have been moving higher, raising fears they may become “unanchored,” a phenomenon that worries policymakers as it suggests a loss of credibility.

“The last thing that we want to see is inflation expectations at the risk of de-anchoring,” Lagarde said.  Wage growth is also likely to follow, especially since the unemployment rate in the EA19 is at a record-low 6.8% and labor shortages have started to emerge.

Separately, the UK’s Office for National Statistics said consumer prices rose 7% in the year to March, up from 6.2% in February, and another 30-year high.

Meanwhile, British Prime Minister Boris Johnson apologized but defied calls to resign on Tuesday after being fined for breaking coronavirus lockdown rules by attending a gathering in his office to celebrate his birthday.  Johnson’s wife and finance minister Rishi Sunak were also fined for breaching laws his government brought in to curb Covid-19.

It is believed to be the first time a British leader has been found to have broken the law while in office.

In June 2020, when Johnson’s birthday party took place, people from different households were not allowed to meet indoors and were asked to maintain a two-meter distance from each other.

France: It’s all about one thing…a huge presidential election runoff, April 24, between President Emmanuel Macron and far-right candidate Marine Le Pen. It’s an election that will not only determine who will lead the European Union’s second-largest economy for the next five years, but also the fate of France’s relationship with the European Union and NATO.

Macron won 27.8% in the first round, while Le Pen secured 23.2% and hard-left veteran Jean-Luc Melenchon 22.0%.  Melenchon urged his supporters not to give Le Pen a single vote but did not endorse Macron.  Other candidates in the fractured first round have thrown their support to Le Pen.

The contest is so tight it can go either way.

Le Pen told a rally on Thursday that victory has never been closer. “My friends, let’s not doubt victory… It will be the victory of France, a victory for all French,” she said.

With an electorate fragmented and undecided, the election will likely be won by the candidate who can, beyond his or her camp, convince a bigger number of voters that the other option would be far worse.  For decades in France, a “republican front” of voters of all stripes rallied behind a mainstream candidate that helped keep the far-right out of power.

But Macron’s abrasive style and policies that veered to the right at times have upset many voters, and Macron is in trouble, though he has pressed the point, warning of Le Pen’s “authoritarian” streak.

Le Pen counters, “We’re proposing a truly alternative project,” urging all voters to rally behind her to push out “a worn-out system.”

Le Pen, who has been a candidate in the past two presidential elections, is more popular then ever, according to the polls.  As I noted the other week, she has softened her image and pegged her campaign not on the war in Ukraine, but on cost-of-living woes.  She has not changed the core of her anti-immigration, Eurosceptic far-right platform, but is not focusing on that, unlike in her previous election bids.

Macron counters that Le Pen’s manifesto is full of lies and false promises that conceal a far-right agenda that ultimately would lead to France’s exit from the European Union.

Le Pen has previously supported Russia’s annexation of Ukraine’s Crimean peninsula, and in 2017 called for international sanctions over the issue to be dropped.

In 2014, when Crimea was annexed, her political party received a loan from a Russian bank with alleged ties to the Kremlin.

More next time.  Your editor is one of the few in America, frankly, to have marched with Le Pen, not once, but twice, and very up close and personal, as long-time readers recall.  [As a reporter, I hasten to add; not a supporter.]

Turning to Asia…China reported exports for March rose a better than expected 14.7% vs. a year ago, but imports fell 0.1%, way below consensus.  Exports to the U.S. rose 22.4% year-over-year, while exports to the EU fell 9.1%.

Sunday, we are going to receive a slew of data on first-quarter GDP, retail sales, industrial production and the like, and the consensus for GDP is 4.4%, annualized, vs. Q4’s poor 4.0%.  Others peg GDP for Q1 at around 3.5%.  Either would be well short of 2021’s 8.1%.

The bottom line is anti-Covid restrictions are severely impacting growth.

China’s government has given the green-light to investment in projects worth nearly 70% of what was allowed for the whole of last year, a sign Beijing is accelerating infrastructure spending to bolster the economy.

Spring planting by Chinese farmers who feed 1.4 billion people might be disrupted, Nomura economists warned Thursday.  That could boost demand for imported wheat and other food, pushing up already high global prices.

The Covid closures are an embarrassment to the ruling Communist Party and a setback for official efforts to shore up slumping growth.

Japan reported that March producer prices rose 9.5% year-over-year, owing to rising fuel and raw material costs, just like elsewhere around the globe.

Street Bytes

--Stocks fell over the 4-day trading week, with the Dow Jones losing 0.8% to 34451, while the S&P 500 fell 2.1% and Nasdaq 2.6%.  Earnings season really picks up in earnest the next two weeks and we’ll get some insight into supply chain and cost issues…and the resultant impact on margins.

--U.S. Treasury Yields

6-mo. 1.20%  2-yr. 2.45%  10-yr. 2.83%  30-yr. 2.91%

It was a strange bond market this week.  Yields fell after the dire inflation news, the feeling being among traders this was as bad as it would get.   The 10-year yield hit 2.64% Wednesday.  Then, without any real reason, Thursday, the yield soared anew to the highest level since December 2018.

It never should have dropped like that in the first place.

--The Bank of Canada pulled the trigger on its biggest rate increase in over two decades and said further rises are necessary to tame domestic spending and keep long-term inflation expectations anchored closer to its 2% target.

The central bank lifted its target for the overnight rate by half a percentage point from 0.50% to 1.0%.  It also said it would begin reducing the assets on its balance sheet, a la our Fed.

--U.S. crude oil stocks, including those in the Strategic Petroleum Reserve, built by 5.5 million barrels in the week ended April 8, per a Bloomberg survey

Stocks in the SPR fell by 3.9 million in the week after dropping by 3.7 million in the previous week.  Ergo, oil stockpiles, ex-SPR, rose 9.4 million barrels.

Overall, crude stocks were still down 13% from a year earlier, and crude oil inventories are about 13% below the five-year average for this time of year.

Separately, OPEC reduced the global oil demand growth outlook for this year.

The Energy Information Agency reported in its Short-Term Energy Outlook released Tuesday that its price forecast of $108 per barrel in Q2 and $102/b in 2023, down from $117/b last month, is highly uncertain as the outcome would depend on the impact of Russian sanctions, any future sanctions and independent corporate actions on Russia’s oil production or Russian oil sales in the global market.

Global oil inventories are still expected to build from the second quarter through the end of 2023, which would put downward pressure on oil prices, despite a reduction in the agency’s Russian oil production forecast, according to the EIA.

The EIA also projects U.S. prices for retail gasoline to average $3.84 per gallon in the summer, an increase from $3.06/gal in the year-ago period and the highest price since the summer of 2014.

Russian oil and gas production fell below 10 million barrels per day on Monday to its lowest since July 2020, per a Reuters report, citing sources.  The total of 9.76 million barrels per day on Monday alone, was the lowest since that time when output and demand were dented by the spread of coronavirus.

Crude finished up almost $9 on the week, back up to $106.54 on West Texas Intermediate.  So much for the administration’s latest release from the Strategic Petroleum Reserve.

[On a different energy note, the EIA said that back on March 29, wind turbines in the continental U.S. produced 2,017 gigawatt-hours of electricity, making up 19% of U.S. energy that day and only surpassed by natural gas with 31% on the same date.  Wind power has ranked in front of coal and nuclear energy on separate occasions, but never both on the same day.  Nuclear energy also produced 19% of electricity, while coal produced 17%.  A probable reason for the high level for wind power is wind speeds often peak during the spring in the U.S.]

--JPMorgan Chase & Co.’s CEO Jamie Dimon warned of economic uncertainties arising from Russia’s invasion of Ukraine and soaring inflation, after first-quarter profits at the largest bank slumped 42%.

“We remain optimistic on the economy, at least for the short term…but see significant geopolitical and economic challenges ahead due to high inflation, supply chain issues and the war in Ukraine,” Dimon said in a statement accompanying the earnings report.

JPM reported record profit during the first quarter last year, benefiting from a dealmaking boom after the Federal Reserve pumped liquidity into capital markets to mitigate the economic impact of the pandemic. This year, however, investment banking revenues declined as companies delayed takeovers and stock market listings amid a surge of volatility in equity markets.  The bank also set aside $902 million to cover potential loan losses.

JPMorgan is seen as a bellwether for the U.S. economy and its lackluster results set the tone for first-quarter earnings from Wall Street banks as the Fed looks to rein in inflation and the trading bonanza banks enjoyed during the pandemic tapers off.

“Inflation and Ukraine are powerful forces that threaten the economy,” Dimon said on a media call, underscoring a change in his bullish outlook for the U.S. economy.  “The Fed needs to try to manage this economy and try to get to a soft landing, if possible.”

Pressed on whether the U.S. could face a recession, Dimon said: “I am not predicting a recession.  Is it possible? Absolutely.”

Asked about the outlook for the current year, Dimon said there were “storm clouds on the horizon,” including the war in Ukraine.  “Usually wars don’t necessarily affect the global economy in the short run. But there are exceptions to that.  This may very well be one of them,” he said.

JPM’s first-quarter profit slumped 42% to $8.28 billion, compared with $143 billion a year earlier, due to the decline in investment banking fees and the bank setting aside $902 million to cover potential loan losses resulting from higher inflation and Russia-related exposures.  Trading was better than expected, but still down 3% on a record quarter last year.

“There is almost no chance you won’t have volatile markets, that can be good or bad.  But I think people should be prepared for that,” Dimon said.  JPM reported a 28% drop in investment banking revenue for the first quarter, dragging net revenue down 5% to $30.72 billion, from $32.27 billion a year earlier.  The fall also reflected markdowns related to Russia-linked derivatives (a loss said to be $524 million).  Investment banking fees plunged 32% to $2.01 billion, driven by a 69% decline in equity underwriting fees.

--Thursday, Goldman Sachs Group, Citigroup Inc., Morgan Stanley, and Wells Fargo & Co., all posted results that beat Street estimates, but also reported steep profit declines.

Goldman reported quarterly adjusted earnings of $10.76 per share, though revenue fell 26.9% to $12.93 billion from a year ago.  The company reported quarterly net income of $3.83 billion.  Provision for credit losses was $561 million for the first quarter, compared with a net benefit of $70 million in the first quarter of 2021 and net provisions of $344 million in the fourth quarter of 2021.

Citigroup posted a 46% plunge in first-quarter profit, as it took hits from provisions for Russia-related losses, a slump in underwriting fees and higher expenses.  Citi – the most global of all U.S. banks – added $1.9 billion to its reserves in the quarter to prepare for losses from direct exposures in Russia and the economic impact of the Ukraine war.  That pushed credit costs to $755 million, a contrast with the $2.1 billion benefit a year ago when it freed up loss reserves built during the pandemic.  The bank said it had reduced its exposure to Russia to $7.8 billion, from $9.8 billion in December.

Net income fell to $4.30 billion, from $7.94 billion a year earlier.  Revenue fell 2% to $19.2 billion.

Morgan Stanley reported a smaller-than-expected 11% drop in first-quarter profit to $3.54 billion, from $3.98 billion a year earlier.  Net revenue fell 6% in the quarter to $14.8 billion.  Trading revenue fared better than what some analysts had feared, falling just 6% in the quarter to $3.98 billion from its highs of last year.  Total expenses fell to $4.83 billion from $5.3 billion a year earlier.

Wells Fargo & Co.’s first -quarter profit dropped 21% to $3.67 billion, but beat the Street’s expectations as CEO Charlie Scharf’s plans to keep a tight rein on costs cushioned a drop in mortgage lending.  Overall average loans grew 3% in the quarter, largely helped by credit card and auto lending.  Mortgage loans, however, fell 33% from a year ago on lower originations as the Federal Reserve raised interest rates.  Total revenue fell 5% to $17.59 billion.

“Our internal indicators continue to point towards the strength of our customers’ financial position, but the Federal Reserve has made it clear that it will take actions necessary to reduce inflation and this will certainly reduce economic growth,” Scharf said.  “In addition, the war in Ukraine adds additional risk to the downside.”

--BlackRock Inc. reported quarterly adjusted earnings of $9.52 per share for the quarter ended in March, above expectations.  Revenue rose 6.8% to $4.70 billion from a year ago, a little shy of forecasts, as the world’s largest asset manager benefited from investors pouring money into its various index-traded and active funds.  Traditional asset managers have struggled since the start of the year to adjust to a rapidly changing macroeconomic environment, characterized by rising inflation, interest rate hikes and fears of a possible recession, made worse by Russia’s invasion of Ukraine.

However, BlackRock has been able to weather the difficult market conditions due to its diversified business model.  Its size and reach into every corner of the market places it at a relative advantage to some of its smaller rivals, analysts have said.

“As the world continues to face geopolitical and economic uncertainty, our investments over the years to build Blackrock’s all-weather platform position us well to advise our clients and help them pursue their long-term financial goals,” CEO Larry Fink said in a statement.

The New York-based firm ended the past quarter with $9.567 trillion in assets under management, up from $9.01 trillion a year earlier, but down from a high of $10.01 trillion in the fourth quarter.

Total revenue rose about 7% to $4.69 billion, helped by higher investment advisory and administration fees.  This was slightly below estimates of $4.73 billion.

--Delta Air Lines reported a loss of $1.23 per share in the first quarter, better than expected, as revenues rose 125.3% year-over-year to $9.35 billion, also exceeding forecasts.  The company forecast a return to profitability in the current quarter.

Unit revenue exceeded 2019 levels in the month of March for the first time in two years, as demand reaches record heights.

After a speed bump caused by the Omicron variant, travel demand has roared back, with some airlines reporting the highest ticket sales in their history.  You’ve seen the rebound in the TSA numbers below, week by week.

CEO Ed Bastian said in an interview, “The last five weeks have been the strongest period of bookings that Delta has ever seen in our history.” And since Delta is “successfully recapturing” higher fuel prices, the airline said it expects to generate an adjusted operating margin in the range of 12% to 14% and “strong” free cash flow in the June quarter.  The shares rose strongly in response.

Jet fuel prices in North America have gone up by more than 30% in the past month, since the Russian invasion of Ukraine and resulting sanctions on Russian exports. Fuel is the airline industry’s second-biggest expense after labor, but major U.S. carriers do not hedge against volatile oil prices like most European airlines.  Instead, they typically look to offset fuel costs with higher fares.  Airline fares were up about 24% year-on-year in March, among the biggest contributors to a jump in U.S. consumer prices.  Delta’s average fares are up about 33%.  Rising fares and higher inflation could dent travel spending, but Bastian said that while the industry needs to watch the overall health of consumers, travel demand is expected to remain “very healthy and strong” through the summer.

Delta’s revenue in the quarter through June is projected to recover to 93% to 97% of pre-pandemic levels.  Capacity is estimated to inch up to about 84% of the 2019 level.

--American Airlines expects higher costs in the current quarter amid higher labor and jet fuel expenses. American projects a pretax loss, ex-special items, with quarterly total revenue to fall about 16% compared to pre-pandemic levels, as inflationary pressures impact consumer demand.  So a less rosy forecast than that issued by Delta.

--Meanwhile, understaffed airports and airlines from Australia to the United States to Europe are struggling to cope with the rush of travelers, with long lines and flight disruptions expected to persist over the busy Easter weekend, and really on into the summer.

Passengers checking in at Sydney Airport (Australia) this week have waited for hours in queues snaking outside terminals.  I wrote last week of all the flight disruptions in Europe, as well as the U.S.

Sydney Airport CEO Geoff Culbert said on Tuesday, “We just can’t get staff.  It’s going to be like this for a little while.”

Culbert said on some days the airport, Australia’s international gateway, has found itself running at 60% staff capacity while having to process more than 80% of pre-Covid passenger volumes.  Recall that Australia ‘opened up’ later than the U.S. and Europe.

--JetBlue Airways confirmed on Sunday it plans to cut its summer schedule in a bid to avert flight disruptions as it works to ramp up hiring.  A spokesman for the airline confirmed an earlier report by CNBC that JetBlue had “already reduced May capacity 8-10% and you can expect to see a similar size capacity pull for the remainder of the summer.”

Yup, this is going to be a big story in coming months.

--EasyJet, the second-biggest discount carrier in Europe next to Ryanair, said it expects capacity to rise to near pre-pandemic levels this summer as the easing of travel restrictions lets loose pent-up demand.

The Luton, England-based carrier said the flying schedule for the current quarter will be about 90 percent of 2019 levels.

--Boeing said Tuesday its first-quarter deliveries totaled 95 jets, up from 77 a year earlier.

The plane maker’s Q1 deliveries consisted of 86 737s, five 767s, three 777s, and one 747, according to a statement.

--TSA checkpoint travel numbers vs. 2019

4/14…89 percent of 2019 levels
4/13…88
4/12…85
4/11…88
4/10…94
4/9…95
4/8…89
4/7…89

--The week started off with Elon Musk rejecting Twitter Inc.’s offer to join its board, a dramatic turn in a week when the billionaire became the biggest shareholder, with the social media company warning of “distractions ahead.”

The company’s board held many discussions with Musk, CEO Parag Agrawal said in a note posted to the site on Sunday, but did not disclose the reason for the Tesla chief’s decision.

Musk, who calls himself a free-speech absolutist and has been critical of Twitter, disclosed a 9.2% stake on April 4 and said he planned to bring about significant improvements at the social media platform.  But disclosure of the stake stoked widespread speculation of his intentions, including a potential takeover.

Then overnight Wednesday, Musk offered to acquire Twitter for $54.20 a share, saying the company needs to be taken private “to be a platform for free speech around the globe,” according to a filing Thursday morning.  That would make a potential deal worth about $43 billion.

But the offer was non-binding.  Musk said in the filing:

“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy.  However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”

Musk said the offer is at a 54% premium over Twitter’s share price before he began investing in the company and a 38% markup from the day before his 9.2% stake was announced.

He said the proposal was his “best and final offer” and that he would “reconsider” his share ownership if it is rejected.

The shares, which closed Wednesday at $45.85, hit $50+, well below the $54 offer, in the pre-market Thursday, but then fell back to close at $45.08, which told you everything.

Thursday afternoon, Musk said he made an offer to buy Twitter because he believes “it’s very important for there to be an inclusive arena for free speech.”  In an interview at the TED Conference in Vancouver, Musk said he believes Twitter’s algorithm should be open-source and suggested the code behind Twitter should be available on Github, a Microsoft-owned platform for sharing code for software development.

“Having a public platform that is massively trusted, and broadly inclusive is extremely important to the future of civilization,” Musk said.

Asked if he had the financing to do the deal, Musk said: “I have sufficient assets. I can do it if possible.”  He did not offer details.

The Twitter board said it would review Musk’s offer.

Musk also used his opportunity at the TED Conference to step up his criticism of the Securities and Exchange Commission, calling officials there “bastards” for bringing fraud charges against him over his 2018 tweets regarding taking Tesla private.  The SEC said at the time his funding tweets “lacked an adequate basis in fact,” after Musk had tweeted that he had “funding secured.”

When Musk announced his 9.2% stake in Twitter, he was required to have disclosed that he held a stake exceeding 5 percent in the company and is expected to invite regulatory scrutiny for missing a deadline to disclose such a stake and filing the wrong form, according to securities experts.

Then today, Twitter said it adopted a limited-duration shareholder rights plan (‘poison pill’) to protect itself from Musk’s takeover offer.

As for Musk’s auto company, a man driving a Tesla Model 3 in Southern California said the vehicle’s computer froze while he was driving 83 mph on a freeway on April 7.

The vehicle’s owner, Javier Rodriguez, told ABC7 Los Angeles the vehicle’s buttons and switches, including turn signals and hazard lights, were not working and the accelerator was not responding.

The Tesla’s brakes did work, and Rodriguez made it off the road.

A California Highway Patrol officer helped Rodriguez off the freeway and the vehicle was towed.

“I noticed that it started to get hot in the car and there started to be a weird scent coming,” Rodriguez told the Los Angles news station. “I was nervous that if I were to brake a whole lot that I wouldn’t be able to gain the speed again to keep up with traffic and get around cars. I was nervous somebody was going to slam into me.”

Rodriguez took his vehicle to Tesla where the diagnosis was “poor communication from charge port door causing power conversion system to shut off in order to protect on board components,” Rodriguez said.

“I need more explanation,” he said.  “I’m on the freeway and this happens at 83 miles an hour.  Everybody is trying to say, ‘Well we fixed it’…but I need an explanation.”  [Marian Jimenez Moya / USA TODAY]

--Taiwan Semiconductor Manufacturing Co. (TSMC) sees revenue of $17.6 billion to $18.2 billion in the quarter ending June 30, up from $13.29 billion a year earlier.  The company is working to address supply chain challenges with tool suppliers to help expand capacity, CEO C.C. Wei told analysts on an earnings call.

“Our suppliers are facing great challenges in their supply chain from the continued impact of Covid-19, which are creating labor, component and chip constraints in their supply chains, and extending tool delivery time for both advanced and mature nodes,” he said.

First-quarter revenue was up 36% year-on-year to $17.57 billion, with net income $7.25 billion, helped by better-than-expected demand from smartphone customers and high-performance computing chips.  TSMC expects chip demand to continue in the long term, calling it a “mega-trend” in the industry supported by demand for HPC chips for 5G and artificial intelligence, as well as an increase in chips used in gadgets. 

--Under a new proposal from the California Air Resources Board, more than a third of new passenger cars and trucks sold in the state in 2026 would have to be zero-emission vehicles.

But as Russ Mitchell of the Los Angeles Times points out, “To get there, electric cars would have to nearly triple last year’s market share of 13% in four years.”

Under an order issued by Gov. Gavin Newsom two years ago, there is a total ban on sales of new vehicles with internal combustion engines starting in 2035, with the EV mandate hitting 68% in 2030.

The air board, known as CARB, acknowledges that less expensive battery technology, more public charging stations and strong marketing campaigns will be necessary.

As in no way the 2026 proposal is going to fly.

--Apple CEO Tim Cook on Tuesday warned that proposed antitrust legislation would have the unintended consequence of making iPhones less safe, putting users at risk to “data hungry” companies looking to sidestep its privacy features.

The iPhone maker faces twin threats to its App Store business from Congress and the European Union, where lawmakers intend to loosen its grip on the app economy and make the iPhone more accessible to third-party developers as part of efforts to increase competition.

Legislation in both jurisdictions would force Apple to allow third-party programs to be downloaded onto the iPhone outside of the company’s App Store, where it currently regulates the offerings and charges a commission as much as 30% from in-app purchases.  Apple has said this change would hurt user security and privacy.

“Taking away a more secure option will leave users with less choice – not more,” Cook said a privacy professionals’ summit in Washington, D.C.  “And when companies decide to leave the App Store because they want to exploit user data, it could put significant pressure on people to engage with alternate app stores – app stores where their privacy and security may not be protected.”

“Apple believes in competition,” Cook said. “But if we are forced to let unvetted apps on to iPhone, the unintended consequences will be profound and when we see that we feel an obligation to speak up and ask policy makers to work with us to advance goals that I truly believe we share without undermining privacy in the process.”

--Starbucks’ interim CEO Howard Schultz told a weekly meeting of store managers on Monday that benefits he was considering expanding for nonunion employees would not immediately apply to the company’s newly unionized workers.

Workers in at least 16 company-owned stores have voted to unionize over the past six months, though not all of the votes have been certified.

Schultz has held meetings with employees in several cities to ask their ideas for improving the company.  Two of the appearances became contentious when Schultz was confronted by pro-union employees.

The highly unlikable Schultz reportedly lashed out at a 25-year-old barista at Long Beach Airport who was leading a unionization drive at one of the company’s California locations, telling the worker: “If you hate Starbucks so much, why don’t you go somewhere else?”

Schultz later said, “I have complete confidence that together we will restore the trust and belief of our partners and deliver an elevated Starbucks Experience to our partners and customers.”

--Bed Bath & Beyond Inc. reported a fiscal fourth-quarter loss of $159.1 million, after reporting a profit in the same period a year earlier, missing Wall Street expectations. The home goods retailer posted revenue of $2.05 billion, also falling short of estimates.

--The Wall Street Journal ran an editorial on “America’s Shoplifting Epidemic.”

“Two recent reports show the scope of the stealing.  Business.org surveyed some 700 small businesses and found that 54% had an increase in shoplifting last year.  Twenty-three percent said it happens daily….

“Mike DeAngelis, a spokesman for the CVS drug-store chain, says ‘our stores have experienced a 300% increase in retail theft incidents since the pandemic began.’  In New York City, retail-theft complaints rose by nearly 16% between 2019 and 2021, according to police… In San Francisco, retail theft drove five Walgreens stores out of business last October….

“The National Retail Federation reports that nearly two-thirds of retailers have seen more theft in states where the penalties were downgraded.

“The political assault on police has also reduced the number of cops across the U.S., even as homicides, shootings and other violent offenses have surged. That leaves fewer cops to address crimes like theft. In cities with progressive prosecutors, even repeat thieves are often freed without legal consequences.

“The (U.S) Chamber (of Commerce) recommends that states change the criminal code to address organized retail theft and increase penalties. Fine with us, but cities also have to end the impunity that’s driving this stealing spree.”

--Manhattan apartment rents hit a record high for a second straight month, with tenants paying a median of $3,644 on new leases signed in March, the most in three decades of data-keeping by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Rents jumped 23% from a year earlier and are up $14 from the previous record, set in February.

Despite all of New York City’s problems, demand is intense as Covid restrictions are lifted, more employers get workers back into their offices and the city’s social life bounces back.

--We note the passing of comedian Gilbert Gottfried, 67, who was a giant of a sort in advertising.  His shrill, one-of-a-kind voice not only made him a voiceover star on films like “Aladdin,” but in advertising he built up a career as a go-to figure in the ‘80s and ‘90s whenever brands needed a memorable, rather intense endorsement.  He especially thrived in creative work geared towards young audiences with spots for Baby Ruth, Pop Tarts and Frosted Cheerios thanks to his omnipresence in animation and kids entertainment.  He would use his distinct tone for other brands like Pepsi and MTV.

In 2000, Gottfried became the voice of the Aflac duck, a role that would cement Gottfried’s place among advertising’s most memorable mascots.  He maintained the role for 11 years until the brand severed ties with him in 2011 after the comedian tweeted offensive jokes about the earthquake and tsunami in Japan. Gottfried later apologized.

The Pandemic

--While Shanghai is easing rules that confined most of its 25 million people to their homes after complaints they had trouble getting food, most of its businesses remain closed.  And access to Guangzhou, an industrial center of 19 million people near Hong Kong, was suspended this week.  Other cities are cutting off access or closing factories and schools.

While Beijing has promised to reduce the human and economic cost of its “zero-Covid” strategy, President Xi on Wednesday ruled out joining the United States and other governments that are dropping restrictions and trying to live with the virus.

And Shanghai did report 3,200 new symptomatic cases on Thursday, while the number of asymptomatic cases was down from 25,146 the day before to 19,872, yesterday.

--South Korea said today that it will drop most Covid-19 restrictions next week, including a midnight curfew on eaters, as the Omicron surge is waning, although people will still have to wear masks.

Par-tay!

Prime Minister Kim Boo-kyum did tell a coronavirus response meeting, “Wearing masks is still a very important means to protect ourselves.  It is inevitable to maintain the indoor mask mandate for a considerable period of time.”

South Koreans, for now, also still have to wear a mask outdoors, but Kim said that is under review.

The number of cases in the country has fallen from a peak of over 620,000 a day in mid-March, to below 150,000 on Thursday.  The government is rolling out a second Covid-19 booster shot for people over 60.

--Two new Omicron subvariants that appear even more transmissible than the highly-contagious BA.2 are driving an uptick in Covid cases in New York, while BA.2 is affecting a spike in the Northeast.

While there’s no evidence that either causes more severe disease, the New York state health department estimates they have a 23% to 27% growth advantage over the BA.2 variant that was itself more infectious than the original Omicron.  It’s the first reported instance of significant community spread due to the two subvariants in the U.S.

BA.2 is estimated to make up over 85% of the coronavirus variants in the U.S., according to the CDC this week.

Concern over BA.2 prompted Philadelphia to restore an indoor-mask requirement.

Still, importantly, BA.2 hasn’t yet caused the rise in hospitalizations some doctors said they would have anticipated.  Disease experts say some combination of immunity from Covid-19 vaccinations and a severe wintertime surge, aided by springtime weather drawing people outdoors, might be keeping the virus at bay.

--The CDC extended for two more weeks the nationwide mask requirement for public transit as it monitors the uptick in Covid cases.  The order was to expire on April 18. The move, the Biden administration said, was being made out of an abundance of caution.

Critics, including the airlines, have seized on the fact that states have rolled back rules requiring masks in restaurants, stores and other indoor setting, yet Covid cases have fallen sharply since the Omicron variant peaked in mid-January.  The uptick due to BA.2 has seen nationwide cases rise from about 25,000 a day to over 30,000.  But those figures are an undercount since many people now test positive on at-home tests that are not reported to public health agencies.

--Pfizer and BioNTech said Thursday that a phase 2/3 trial of their Covid booster for children aged 5 to 11 showed results.  The companies said the vaccine was well tolerated and no new safety signals were observed.  The two will seek an Emergency Use Authorization for the booster for children in that age group in the coming days.

--At least 10 percent of the guests – 67 at last count – who attended a Gridiron dinner in Washington, D.C., almost two weeks ago have tested positive for the virus, including various Biden administration officials, as well as New York City Mayor Eric Adams.

--The World Health Organization says up to 65% of people in Africa have been infected with the coronavirus and estimated that the number of actual cases may have been nearly 100 times more than those reported.

The WHO reviewed 151 studies of the virus in Africa based on blood samples taken from people on the continent between January 2020 and December 2021.  The agency said that by last September, about 65% of people tested had some exposure, translating into about 800 million infections.  In contrast, only about 8 million cases had been officially reported to the WHO during that time period.

Despite repeated warnings from the WHO that the coronavirus would devastate Africa, the continent has been among the least affected by the pandemic. In its new analysis, the WHO said the milder cases in Africa were attributable in part to the continent’s much smaller proportion of people with underlying risk factors like high blood pressure, diabetes and heart disease.

“Africa’s youthful population is also a protective factor,” the UN health agency said.  Some also believe that previous infection with diseases like malaria may offer people some protection against Covid, but such theories haven’t been proved.

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

World…6,219,761
USA…1,015,280
Brazil…661,960
India…521,776
Russia…373,027
Mexico…323,891
Peru…212,565
UK…171.396
Italy…161,469
Indonesia…155,820
France…144,061
Iran…140,777
Colombia…139,741
Germany…133,306
Argentina…128,327
Poland…115,809
Ukraine…108,220
Spain…103,266
South Africa…100,142

Canada…38,288

[Source: worldometers.info]

U.S. daily death tolls…Mon. 157; Tues. 614; Wed. 438; Thurs. 368; Fri. 321.

Foreign Affairs

Iran / Iraq: Iran said the 2015 nuclear deal is alive but lingering in the “emergency room,” with its fate resting on a decision by the U.S. that could lift sanctions on Tehran’s economy and oil exports.

The UN’s International Atomic Energy Agency said Iran is starting to operate a new workshop at Natanz that will make parts for uranium-enriching centrifuges with machines recently moved there from its mothballed Karaj facility, the IAEA said in a report Thursday.

Israel believes Iran is close to having enough enrich uranium for a weapon as negotiations to return to the nuclear deal remain stuck.

While Iran is not yet enriching uranium to weapons-grade material at 90% purity, larger quantities of uranium enriched to a lower purity can be enough for a bomb, and it’s Israel’s assessment that Iran is close to having a significant quantity of uranium enriched to 60%.

The negotiations are stuck on an Iranian demand, outside of the nuclear agreement, that the Islamic Revolutionary Guard Corps be removed from the U.S. Foreign Terrorist Organization list, which President Biden has refused to do.

Thus far, none of the Europeans’ proposals for a compromise or alternative agreement between the Americans and Iranians have been accepted by the Iranians, who have made removing the IRGC’s FTO designation the sine qua non of an agreement, according to sources.

Israel has long argued, in opposing the original 2015 deal and its revival, that most of its limitations on Iran’s nuclear activities expire at the end of 2025.  Further, Jerusalem notes that the agreement neither restricts Iran’s malign activities in the region not its ballistic missile program, while lifting sanctions would lead to a major cash influx for terrorism, proxy warfare and weapons.

For months now, Britain, France and Germany, along with the United States, have warned there is little time before the deal’s nonproliferation benefits will become irrelevant, as Iran continues to violate the Joint Comprehensive Plan of Action (2015 accord).

David Ignatius / Washington Post

“Iraq, now and always, sits on the fault line between Iran and the Arab world.  Its current leader, Prime Minister Mustafa al-Kadhimi, wants a diverse, democratic Iraq to act as a bridge. It is a noble vision, but right now it’s a perilous one.

“ ‘Our region cannot take any more wars,’ Kadhimi told me during an interview here (Baghdad)  on Sunday. He hopes the United States and Iran can agree on a new nuclear pact as a first step toward reducing tensions. ‘We need a deal that brings some calm to the region,’ he argues….

“Kadhimi wants continued U.S. support, including a small non-combat military presence, to help stabilize his nation. ‘We truly believe in our relationship with the United States, as a country that helped us get rid of dictatorship and also…advance our democratic system,’ he argued.  It is hard to find a leader in the Middle East these days who is so unabashedly pro-America.”

But Iran has been targeting Kadhimi’s alliance with the U.S. and other Iraqis who oppose Iranian meddling.

“The problem for Kadhimi and his American friends is that, for now, Iraq remains enfeebled by corruption, political feuding and Iranian interference. Iraqis want a strong, well-managed state; the pro-Iranian political parties did badly in last October’s elections.  On paper, there’s a parliamentary majority now for a coalition of Shiites, Sunnis and Kurds to organize a new government, perhaps with Kadhimi remaining as prime minister.

“But forming a government has been impossible so far.  Pro-Iranian militants, who tried to assassinate Kadhimi last year and denounce him as a tool of the Untied States, claim the election was stolen….

“The situation could get worse if nuclear talks between the United States and Iran collapse, leaving Kadhimi precariously in the middle.  If the talks fall apart, ‘Iraq is likely to be a casualty,’ warned a U.S. official….

“That brings us back to the United States, which has been at once Iraq’s best and worst friend in recent decades.

“Iraqis worry that U.S. interest and power in the Middle East are waning.  One Iraqi quoted for me the admonition of former Egyptian president Hosni Mubarak: If you are a friend of the United States, you sleep without a blanket.  If the Iran nuclear talks blow up, it’s going to get chilly out here.”

China / Taiwan: This is a sensitive year for President Xi Jinping, as he is expected to try to break with tradition and award himself a third five-year term as leader at a Party Congress in the fall.

But as an editorial in The Economist put it:

“It is often said that China’s government plans decades ahead, carefully playing the long game as democracies flip-flop and dither.  But in Shanghai right now there is not much sign of strategic genius.  Even as the rest of the world has reopened, 25 million people are in a citywide lockdown, trapped in their apartments and facing food and medical shortages that not even China’s censors can cover up.  The zero-Covid policy has become a dead end from which the Communist Party has no quick exit.

“It is one of a trio of problems faced by China this year, alongside a misfiring economy and the war in Ukraine.  You may think they are unconnected, but China’s response to each has a common root: swagger and hubris in public, an obsession with control in private, and dubious results.  Rather than being the product of statecraft with the Yellow Emperor’s time horizon, China’s actions reflect an authoritarian system under Xi Jinping that struggles to calibrate policy or admit when it is wrong.”

Meanwhile, another bipartisan group of U.S. senators – led by the chairman of the foreign relations committee, Bob Mendez (D-N.J), arrived in Taipei on Thursday. The group included Republican senators Lindsey Graham (S.C.), Ben Sasse (Neb.) and Rob Portman (Ohio).

It wasn’t clear if the group would meet directly with President Tsai Ing-wen, or if it would be virtually as she has Covid close contact issues.

So China once again didn’t take kindly to the trip and stepped up its intrusions into Taiwan’s air defense identification zone.

At a recent Senate Armed Services Committee hearing, Joint Chiefs of Staff chairman Mark Milley suggested that the best defense of Taiwan would be by Taiwanese, as to the issue of whether the U.S. would send its forces in should Taiwan be attacked.

“We can certainly help them, as is being done in Ukraine, for example, and a lot of lessons are coming out that China is taking seriously,” he said. But Milley also stressed the best deterrence was to “make sure the Chinese know it is a very difficult objective to take.”

North Korea: The U.S. linked North Korean hackers to the theft of hundreds of millions of dollars worth of cryptocurrency tied to the popular online game Axie Infinity, according to digital forensics firms.

Ronin, a blockchain network that lets users transfer crypto in and out of the game, said digital cash worth almost $615 million was stolen on March 23.

No one has explicitly assigned blame for the hack, but on Thursday, the U.S. Treasury Dept. identified a digital currency address used by the hackers as being under the control of a North Korean hacking group often dubbed “Lazarus.”

Pakistan: Last Sunday, the lower house of parliament voted in favor of removing Prime Minister Imran Khan. 

Khan was ousted after 3 ½ years as leader of the nuclear-armed country of 220 million, where the military has ruled for nearly half its 75-year history.  With Khan’s ouster, Pakistan’s unenviable record for political instability continues: no prime minister has completed their full term since independence from Britain in 1947, though Khan is the first to be removed through a no-confidence vote.

Parliament then chose a more Western-friendly politician, Shehbaz Sharif, as prime minister on Monday.

Sharif’s election brings to a close a week-long constitutional confrontation that reached its climax on Sunday, although the country is likely to remain prone to political and economic turbulence.

Sharif, 70, who has a reputation domestically as an effective administrator more than as a politician, is the younger brother of three-time prime minister Nawaz Sharif.

Analysts say Shehbaz, unlike Nawaz, enjoys amicable relations with Pakistan’s military, which traditionally controls foreign and defense policy.

After the vote, Sharif vowed to tackle an economic malaise that has seen the rupee hit an all-time low and the central bank implement the biggest hike in interest rates in decades last week.

“If we have to save the sinking boat, what we all need is hard work, and unity, unity and unity,” he said in speech to parliament.  “We are beginning a new era of development today.”

Minutes before the vote, legislators from Khan’s party resigned en masse from the lower house in protest.  That means fresh by-elections in well over 100 seats.

Opposition parties and analysts say the military helped Khan win election in 2018, which they both deny, but that support waned after a falling out over the appointment of the country’s next intelligence chief late last year.

The military on Thursday dismissed Imran Khan’s accusation that the United States had conspired to topple him.  Khan had accused Washington of backing his ouster because he had visited Moscow against U.S. advice.  The White House denies the charge.

Khan met with Vladimir Putin on Feb. 24, the day Russia launched its invasion.

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 15).

In a new CBS News/YouGov poll, President Biden’s approval rating was 42%, the lowest yet in this survey, with 58% disapproving.

In another warning signal for the White House and the midterm elections, 54% of Hispanics and 33% of Blacks disapprove of Biden – and 22% of people who voted for him in 2020 also disapprove.

Sixty-nine percent of respondents disapproved of Biden’s handling of inflation, including 41% of Democrats.

A new Quinnipiac University national poll gave Biden a putrid 33% approval rating, 54% disapproving, with 13% offering no opinion.  The 33% ties a Quinnipiac poll low from Jan. 12, 2022.

Democrats approve 76-12 percent of Biden’s performance, while independents disapprove 56-26 percent. Republicans disapprove by a 94-3 margin.

--Former North Carolina congressman and White House chief of staff under Donald Trump, Mark Meadows, has been removed from the voter rolls in North Carolina as the state investigates allegations that he committed voter fraud in the 2020 election, as I wrote up a while ago.

Kind of ironic, ain’t it?  The man who promoted Trump’s baseless claims of widespread voter fraud registering to vote in 2020 using the address of a mobile home he never stayed in.

On Monday, Macon County officials removed the voter registration of Meadows… “after documentation indicated he lived in Virginia and last voted in the 2021 election there,” North Carolina State Board of Elections spokesman Patrick Gannon said in a statement Wednesday.

Under North Carolina statute, a person who moves to and votes in another state or the District of Columbia loses their North Carolina residency.

The small mobile home belongs to a Lowe’s retail manager, who bought it last summer from a widow living in Florida.  The woman, part of an investigation in the New Yorker magazine, said she had no idea Meadows had listed the home as his address in his voter registration form.

--Speaking of Trump, he is taking heat for endorsing celebrity surgeon Dr. Mehmet Oz, who is running as a Republican for U.S. Senate in Pennsylvania.

“Dr. Oz is smart, tough, and will never let you down, therefore, he has my Complete and Total Endorsement,” Trump said in a statement.  The other top Republican in the race is David McCormick, a former hedge fund CEO.  Recent polls had Oz and McCormick neck and neck in the Republican primary, which is May 17.

McCormick, a while back, thought he was getting Trump’s endorsement.

The Democratic side, in this key race to replace retiring Republican Sen. Pat Toomey, is between progressive lieutenant governor, John Fetterman, and Congressman Connor Lamb, a moderate representing the northwestern suburbs of Pittsburgh.

Toomey was one of seven Republican senators who voted to convict Trump in February 2021 following Trump’s impeachment on a charge of incitement of insurrection.

--The lieutenant governor of New York, Brian Benjamin, resigned from office on Tuesday, hours after he was arrested and charged with bribery and fraud in a federal corruption probe, bowing to a ballooning scandal after seven months in his post.

Benjamin, a former state senator, pleaded not guilty after he was charged with trading state funds for campaign donations from a real estate developer during his time in the Legislature.

Gov. Kathy Hochul (Democrat) said in a statement: “I have accepted Brian Benjamin’s resignation effective immediately.  While the legal process plays out, it is clear to both of us that he cannot continue to serve as Lieutenant Governor.”

“New Yorkers deserve absolute confidence in their government, and I will continue working every day to deliver for them,” she added.

These are serious charge and it was a major investigation that all knew about, yet Hochul stupidly expressed her confidence in Benjamin’s innocence as recently as last Thursday during a press conference. 

Hochul selected Benjamin in August 2021 to serve as her second-in-command as one of her first major decisions as chief executive following the departure of former governor Andrew Cuomo, who resigned in disgrace over sexual harassment allegations.

So Hochul is running for election this fall and Benjamin is technically still on the ticket.  In fact under state law, neither arrest nor conviction prompt the removal of a candidate from a New York State ballot.  At this point, from a time standpoint, he cannot be easily removed.

Hochul still has to pick another running mate, but for good reason, her judgement is being called into question.  The Democratic primary is in June.

The governor is also now facing renewed scrutiny over her husband, a powerbroker in the Buffalo, New York area who stands to benefit mightily from a sweetheart deal Hochul got into the state budget for the building of a new stadium for the Buffalo Bills.

--The attack on the New York City subway system Tuesday morning that resulted in ten people being shot, 28 injured, was yet another horrible incident on a system so vital to the life, and commerce, of Gotham.  New Yorkers, and commuters from other states who use the system to get to work, for example, have been very slow to return after Covid-19 hit, and then a wave of crime on the subways.  The timing of this attack, after new Mayor Eric Adams and the new police commissioner promised a crackdown could not have been worse.  The day after, the MTA, which runs mass transit in New York, said ridership was down at least 5%.

“It’s tragic. This is the kind of event that is exactly what we’re most concerned will delay and damage the city’s overall recovery,” said Kathryn Wylde, president and CEO of the Partnership for New York City, a business group.

According to a survey by Wylde’s group of nearly 10,000 office workers, conducted in March, 61% of transit commuters said safety was their top concern.

“Fear of crime on the subway was their No. 1 reason – more than Covid – for being concerned about returning to the office,” Wylde said.  Tuesday’s “incident clearly exacerbates that problem.”

Weekday subway ridership has plateaued at around 3 million riders – compared with the pre-pandemic weekday average of 5.5 million, and that is leading to a revenue drop of over $150 million vs. the MTA’s goals.

Editorial / New York Daily News…written before the apprehension of the suspect in the attack.

“First and foremost, we hope all the victims recover from their physical wounds. Psychological wounds, also severe, will languish for years. Those hurt must get the help they need to live in a world that will feel far scarier than the one they woke up to yesterday morning.

“We thank the transit workers, police, firefighters and other responders, including the ordinary New Yorkers who tended to the wounded….

“It goes without saying that a mass shooting is the last thing a subway system already struggling with crime and mentally unstable individuals, hoping to keep rebuilding ridership lost during the pandemic, needs.  Most of us are safe on our commutes, but perception has a way of redefining reality.  Mayor Adams is rightly bolstering cops’ presence on trains and platforms. Restoring confidence is now a steeper uphill train climb.”

So Mayor Adams then slammed Black Lives Matter and anti-police activists Wednesday after a night of bloodshed across the city that left more than a dozen people shot.

“Where are all those who stated ‘Black Lives Matter?’” Adams said on NY1.

“Do an analysis of who was killed or shot last night.  I was up all night speaking to my commanders in The Bronx, in Brooklyn.  The victims were black,” the mayor said.

Three people were killed and at least 13 others were wounded in a series of shootings that rocked parts of the two boroughs late Tuesday and early Wednesday, police said.

The mayor said those who protest against police brutality should also acknowledge the scourge of gun violence.

“The lives of these black children that are dying every night matter,” Adams said.  “We can’t be hypocrites.”

As for the eventual arrest of subway shooter Frank James, it was truly embarrassing that the NYPD did not grab him earlier, the Daily News reporting James wandered around Manhattan on a food tour, including grabbing lunch at Katz’s Deli, a famous spot.  He went to McDonald’s, a trendy Chinese restaurant, grabbed a beer at another place…in full sight.

It wasn’t until James, apparently fed up with the food tour, called Crime Stoppers himself, a worker spotted him, and he was taken into custody 40 minutes later.

--According to a Freedom of Information Act lawsuit by Judicial Watch, at the White House last spring, then-first dog Major was far more ornery than even most of us thought he was.

White House press secretary Jen Psaki acknowledge one biting incident at a briefing on March 9, 2021, saying that one day earlier, “the first family’s younger dog, Major, was surprised by an unfamiliar person and reacted in a way that resulted in a minor injury to the individual.”

The March 8 bite actually was the final attack in an eight-day streak of incidents with Secret Service agents, and the wounded agent Psaki acknowledged, whose injuries were categorized as “severe” by a colleague – fumed about Psaki’s spin.

“NO I didn’t surprise the dog doing my job by being at [redacted] as the press secretary just said!  Now I’m pissed,” the agent wrote to a coworker.

--Devastating floods in the South African province of KwaZulu-Natal have killed more than 390.  Some areas saw months’ worth of rain in one day, officials calling it “one of the worst storms in the history of our country.”

Mudslides caused most of the deaths.

--Talk about more wild weather in the U.S., a blizzard in the Northern Plains dumped 47 inches of snow in Albro Lake, Montana, with six-foot drifts in both Montana and western North Dakota, which saw 20-30 inches.

Meanwhile, hail measuring over 5.5 inches pelted Salado, Texas, which, as reported by USA TODAY, is so large, it exceeded the National Weather Services’ scale of hail reporting standards, which only covers hail up to 4.5 inches in diameter.

Needless to say, many cars were damaged.  Get this, the NWS says hail 2-4 inches in diameter can fall at a speed of over 100 mph.

--NASA’s Hubble telescope has discovered a comet with a nucleus 50 times bigger than normal and it’s barreling towards Earth at 22,000 miles per hour.

The icy nucleus has a mass of 500 trillion tons and is 85 miles wide – larger than the state of Rhode Island.

However, we are assured that the closest it will get is one billion miles away from the Sun, and that won’t be until 2031.  It is larger than any comet ever seen by astronomers before.

It was first spotted in 2010 but only now has Hubble confirmed its existence.

NASA has named it Bernardinelli-Bernstein after its discovery by astronomers Pedro Bernardinelli and Gary Bernstein.

Let’s hope Hubble wasn’t looking at it from the wrong end of the telescope.  Otherwise, it could be here next month.

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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 $1977
Oil $106.54

Returns for the week 4/11-4/15

Dow Jones  -0.8%  [34451]
S&P 500  -2.1%  [4392]
S&P MidCap  N/A
Russell 2000  N/A
Nasdaq  -2.6%  [13351]

Returns for the period 1/1/22-4/15/22

Dow Jones  -5.2%
S&P 500  -7.8%
S&P MidCap  -7.5%
Russell 2000  -10.7%
Nasdaq  -14.7%

Bulls 35.8
Bears 32.1

Happy Easter and Passover!

Brian Trumbore

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