Week in Review

---

Week in Review

05/14/2022

For the week 5/9-5/13

[Posted 8:00 PM ET, Friday]

Note: StocksandNews has significant ongoing costs and your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.

Edition 1,204

In remarks to the Chatham House think tank in London, President Volodymyr Zelensky said any peace deal with Russia would depend on Russian forces pulling back to their pre-invasion positions, and that this was the minimum that his country could accept.

Zelensky said he was the leader of “Ukraine, not a mini-Ukraine.”  But he did not mention Crimea, annexed by Russia in 2014.

Speaking a day before Putin’s Victory Day address, Zelensky said there could be no question of Russia holding on to territory it has conquered since it invaded Ukraine.

The fighting is turning into a long, bloody slog.  Russia has concentrated its forces around the Donbas region in the east, but is only inching forward, while abandoning its fight for Kharkiv.  Avril Haines, U.S. director of national intelligence, says Vladimir Putin’s ambitions extend further: he also wants a land corridor to link his conquests to Transnistria, the Russian-controlled breakaway bit of Moldova that borders western Ukraine.

But as I said before, no way he currently has the resources to accomplish this.

Russia, says Ms. Haines, thinks the West will eventually lose interest in Ukraine.  Yet America reckons time is on its side because sanctions will weaken Russia – so much so that it worries about Putin feeling cornered.

As noted below, in his Victory Day speech Putin did not declare war, which would allow Russia to order a mass mobilization, which could jumpstart his stalled campaign.

On the economic front…the other day I saw that gasoline prices at the pump had hit a new high in my state of New Jersey, $4.50 for regular (non-inflation adjusted), and that day the station down the street where I get my gas was at $4.49.  Three days later, yesterday, it was $4.75!  The way the pumps are positioned you can just stare at the tote board (we’re still the only state without self-serve, so we comfortably sit in the car) and I’m thinking, “goodness gracious!”

Nationwide, we hit a new record today, $4.43 on average, up from $4.08 a month ago. Diesel is up to $5.56, and that works its way into consumer prices.

Shrinking stockpiles ahead of the summer driving season also don’t bode well.  The International Energy Agency, in its monthly report on Thursday, said that there’s “almost universal product shortage.”

I have more on the topic below, and inflation in general, and what it all adds up to is soaring airfare and hotel room rates, which coupled with the high cost of gasoline will see some families, kids’ happiness be damned, drastically curtailing plans they had for that big trip.

All part of an economic equation that I firmly believe will have the economy grinding to a halt come the fall.  Maybe not recession, classically defined as two negative quarters for GDP in a row, but putrid growth.  Consumer confidence is waning.

Inflation is not going to be coming down rapidly.  Sky-high food prices will remain.  Just when the world desperately needs record U.S. agricultural production, many parts of the nation will be dealing with devastating drought throughout the summer.  And our American farmers, and those around the world, are dealing with much higher costs for labor, fuel and fertilizer.

Prices of all kinds are in the process of resetting at much higher levels.  The ‘official’ inflation rate will come down, as some monthly rates in products roll off, but the prices won’t be coming down.  You can have a 3-4% inflation rate, or lower, sometime in 2023, but you’ll be dealing with today’s prices.  And with a slowing economy, wage pressures will lessen.  This was an interesting week, the first in which you saw a wide variety of companies talk about layoffs, for the first time in a long time.

And now we have this serious issue of the severe shortage in baby formula, with the Biden administration flailing anew, as it has done on so many issues, led by an incoherent president.

It’s embarrassing, and pathetic.  It’s pathetic America has now gone through four awful presidencies in a row, with too much time remaining in the current occupant’s term. 

---

Meanwhile, as the week unfolded in the war…

--Sunday…Leaders of G7 industrial nations vowed on Sunday to deepen Russia’s economic isolation and “elevate” a campaign against Kremlin-linked elites.

The G7 said it was committed to phasing out or banning Russian oil and denounced President Putin’s invasion.

“His actions bring shame on Russia and the historic sacrifices of its people,” the G7 said in a statement, referring to Soviet Russia’s role in defeating Nazi Germany 77 years ago.

--All weekend we heard conflicting reports on how many civilians had been evacuated from the Azovstal steel plant in Mariupol.  Ukraine’s deputy prime minister said on Saturday, all women, children and elderly civilians had been evacuated, but later it seemed some still remained, and the figures didn’t tell you how many overall civilians in Mariupol have been able to get out, the city basically under Russian control, save for the sprawling plant.

And then there was the issue of just where were the civilians going?  It seemed most were headed east into Russian controlled territory, after first going through Russian checkpoints in Mariupol.  How many were then taken into Russia itself?

--The United States returned part of its embassy staff to Kyiv over the weekend, the latest step toward the resumption of a full U.S. presence in the capital.

First Lady Jill Biden made an unannounced trip to Ukraine on Sunday, crossing into a border town from Slovakia to meet Ukraine’s first lady, Olena Zelenska.  I give Ms. Biden a lot of credit for making the trip.

--Canadian Prime Minister Justin Trudeau made an unannounced visit to Ukraine as well, meeting with President Zelensky, as well as visiting the hard-hit city of Irpin.

--German Chancellor Olaf Scholz, in a televised address to the nation on Sunday, marking the anniversary of the end of World War II, assured Ukraine of solidarity in its fight against Russia’s invasion.

“Putin will not win this war.  Ukraine will persevere,” said Scholz.

Scholz pledged more humanitarian, financial and military aid.

--Irish rock group U2’s frontman Bono and his bandmate The Edge performed a 40-minute concert in a metro station in Kyiv Sunday, praising Ukrainians fighting for their freedom.

“This evening, 8th of May, shots will ring out in the Ukraine sky, but you’ll be free at last. They can take your life, but they can never take your pride,” Bono said.

--Monday…Vladimir Putin marked the anniversary of the Soviet Union’s victory over Nazi Germany in World War II in a subdued address on Red Square, 11,000 servicemen massed, but no overflights of 77 aircraft as originally talked of due to low cloud cover.  Putin made no declaration of victory in Ukraine.  In fact, he didn’t use the word Ukraine, speaking instead of war in the Donbas region of eastern Ukraine.

Putin condemned what he called external threats to weaken and split Russia, and repeated familiar arguments he had used to justify its invasion – that NATO was creating threats right next to its borders.  Vlad asserted the invasion was in response to preparations to attack Russian separatist-controlled Donbas and invade Crimea.

The chief of Russia’s general staff, Valery Gerasimov, was not shown in state-television coverage of the parade, in contrast to last year, when he appeared prominently.

The only major military triumph Putin can claim thus far is the still-incomplete fall of the southern port city of Mariupol after weeks of siege and bombardment that killed at least 20,000 civilians, according to Ukrainian officials.

Addressing the soldiers in the Donbas, Putin said: “Defending the Motherland when its fate is being decided has always been sacred.  Today you are fighting for our people in Donbas, for the security of Russia, our homeland.”

“Last December we proposed signing a treaty on security guarantees. Russia urged the West to hold an honest dialogue in search for meaningful and compromising solutions, and to take account of each other’s interests.  All in vain. NATO countries did not want to heed us, which means they had totally different plans.  And we saw it.

“Another punitive operation in Donbas, an invasion of our historic lands, including Crimea, was openly in the making. Kiev declared that it could attain nuclear weapons.  The NATO bloc launched an active military build-up on the territories adjacent to us.

“Thus, an absolutely unacceptable threat to us was steadily being created right on our borders. There was every indication that a clash with neo-Nazis and Banderites backed by the United States and their minions was unavoidable.

“Let me repeat, we saw the military infrastructure being built up, hundreds of foreign advisors starting work, and regular supplies of cutting-edge weaponry being delivered from NATO countries.  The threat grew every day.

“Russia launched a pre-emptive strike at the aggression. It was a forced, timely and the only correct decision.  A decision by a sovereign, strong and independent country.

“The United States began claiming their exceptionalism, particularly after the collapse of the Soviet Union, thus denigrating not just the entire world but also their satellites, who have to pretend not to see anything, and to obediently put up with it.

“But we are a different country.  Russia has a different character.  We will never give up our love for our Motherland, our faith and traditional values, our ancestors’ customs and respect for all peoples and cultures.

“Meanwhile, the West seems to be set to cancel these millennia-old values.  Such moral degradation underlies the cynical falsifications of World War II history, escalating Russophobia, praising traitors, mocking their victims’ memory and crossing out the courage of those who won the Victory through suffering….

“I am addressing our Armed Forces and Donbas militia.  You are fighting for our Motherland, its future, so that nobody forgets the lessons of World War II, so that there is no place in the world for torturers, death squads and Nazis.

“Today, we bow our heads to the sacred memory of all those who lost their lives in the Great Patriotic War, the memories of the sons, daughters, fathers, mothers, grandfathers, husbands, wives, brothers, sisters, relatives and friends.

“We bow our heads…to the memory of the old people, women and children of Donbas who were killed in atrocious and barbaric shelling by neo-Nazis. We bow our heads to our fighting comrades who died a brave death in the righteous battle – for Russia.”

Putin only spoke for 11 minutes, which many found staggering, expecting a 1-2 hour stemwinder.  He offered no assessment of progress in the war and gave no indication of how long it might continue. 

Volodymyr Zelensky, on the other hand, has said it is Russia that is staging a “bloody re-enactment of Nazism” in Ukraine.

Ukrainians had been told to heed air raid sirens and stay in bomb shelters on Monday, in the fear that Russia was going to intensify its attacks as Moscow marked the Soviet Union’s anniversary, but outside of new attacks on Odessa, it was more of the same on the part of Russian forces.

Zelensky confirmed that Saturday, in a Russian bombing of a school in eastern Ukraine, Bilohorivka, “about 60 were killed, civilians, who simply hid at the school, sheltering from shelling,” the Ukrainian president said in his nightly video address.

Zelensky added: “The main thing I felt today was the world’s even greater willingness to help us…it is clear to the whole free world that Ukraine is the party of good in this war.”

“And Russia will lose, because evil always loses.”

A deputy commander of the Azov regiment holed up in the Azovstal steel plant said, “We will continue to fight as long as we are alive to repel the Russian occupiers,” Captain Sviatoslav Palamar told an online news conference.

Zelensky said his country would win against Russia and would not cede any territory.  “There is no invader who can rule over our free people.  Sooner or later we will win,” he said in a written address to mark the World War II victory anniversary.  “Despite the horde, despite Nazism, despite the mixture of the first and the second, which is the current enemy, we win, because this is our land.

“Because someone is fighting for the father tsar, the Fuhrer, the party and the chief, and we are fighting for our Homeland.  We have never fought against anyone. We always fight for ourselves.  For our freedom.  For our independence.  We are fighting for our children, and therefore we will win.  We will never forget what our ancestors did in World War II. Where more than eight million Ukrainians died. And every fifth Ukrainian didn’t return home.  In total, the war claimed at least 50 million lives.  We do not say ‘we can repeat.’  Because only a madman can wish to repeat the 2194 days of war. The one who is repeating the horrific crimes of Hitler’s regime today, following Nazi philosophy, copying everything he did.  He is doomed.  Because he was cursed by millions of ancestors when he began to imitate their killed. And therefore he will lose everything.

“And very soon there will be two Victory Days in Ukraine. And someone will not have even one left.

“We won then. We will win now, too!

“Congratulations on the Victory Day over Nazism!

“Glory to Ukraine!”

A Zelensky adviser interpreted Putin’s speech as indicating that Russia has no interest in escalating the war through the use of nuclear weapons or direct engagement with NATO.

Speaking late Monday, Oleksiy Arestovych pointed to Putin’s statement that Russia would honor the memory of those who fought in World War II by doing “everything so that the horror of a global war does not happen again.”

Instead, he predicted Russia would make “a sluggish attempt” to take control of the Donbas, including Mariupol, and a land corridor to the Crimean Peninsula, which the Kremlin seized from Ukraine in 2014.

Arestovych said Russia would drag out the war while bleeding the Ukrainian economy with the aim of getting Ukraine to agree to give up that territory.

According to the Pentagon, Russia has about 97 battalion tactical groups in Ukraine, largely in the east and the south, a slight increase over last week; each unit with roughly 1,000 troops.

Approximately 2,000 Russian forces were around Mariupol, with as many as 2,000 Ukrainian defenders believed to be holding out at the steel plant, though I hasten to add these are estimates.

President Biden said he is worried that Putin does not have a way out of the war. Speaking at a political fundraiser outside Washington, Biden said Putin had mistakenly believed the invasion of Ukraine would break up NATO and break up the European Union.  Instead, the United States and many European countries have rallied to Ukraine’s side.

Biden said Putin is a very calculating man and the problem he worries about now is that the Russian leader “doesn’t have a way out right now, and I’m trying to figure out what we do about that.”

--Russian missiles hit the southern Ukrainian port city of Odessa, killing at least one, and taking out a large shopping center, a warehouse, and a “tourist infrastructure facility.”  European Council President Charles Michel was in Odessa and was forced to seek shelter during the barrage of Russian missiles that interrupted a meeting he was having with Ukrainian Prime Minister Denys Shmygal.

Michel said “silos full of grain, wheat, and corn ready for export” are sitting idle in Odessa.  “This badly needed food is stranded because of the Russian war and blockade of Black Sea ports,” which he said is “Causing dramatic consequences for vulnerable countries. We need a global response,” he tweeted.

President Zelensky said he discussed preventing “a global food crisis triggered by Russia’s aggressive actions,” during talks with Michel.

Before the war, Ukraine exported 4.5 million tons of agricultural produce per month through its ports – 12% of the world’s wheat, 15% of its corn and 50% of its sunflower oil, according to AFP news agency.

--The United States has seen indications that some Ukrainians are being moved to Russia against their will, Pentagon spokesman John Kirby said on Monday, calling the actions “unconscionable.” 

--Tuesday…U.S. Director of National Intelligence Avril Haines told lawmakers that the U.S. believes that Vladimir Putin is preparing for a long conflict in Ukraine and a Russian victory in the Donbas might not end the war.

“We assess President Putin is preparing for a prolonged conflict in Ukraine during which he still intends to achieve goals beyond the Donbas,” Haines said.  She added that Putin was counting on the Western resolve to weaken over time and as the conflict continued, there was concern about how it would develop in the coming months.

“Combined with the reality that Putin faces a mismatch between his ambitions and Russia’s current conventional military capabilities, likely means the next few months could see us moving along a more unpredictable and potentially escalatory trajectory,” Haines added.

At the same hearing, the head of the Defense Intelligence Agency (DIA), Lt. Gen. Scott Berrier, said the war was at a stalemate.

“The Russians aren’t winning and the Ukrainians aren’t winning and we’re at a bit of a stalemate here,” he said.

Putin was silent Monday about any plans for escalation.

Asked about the prospect of Putin using tactical nuclear weapons, Berrier said: “Right now, we do not see that.”

Ukrainian forces said on Tuesday its forces had recaptured villages from Russian troops, pressing a major counter-offensive in the northeast of the country that could signal a shift in the war’s momentum and jeopardize Russia’s main advance.  The defense ministry said the successes were pushing Russian artillery out of range of parts of Kharkiv, Ukraine’s second largest city, which has been under bombardment since the early days.

Ukrainian forces are moving into striking distance of Russia’s rear supply lines sustaining the main Russian attack force further south.

--Russia’s deputy foreign minister said on Tuesday that a decision on the possible use of nuclear weapons was clearly set out in Russia’s military doctrine, RIA reported.

“We have a military doctrine – everything is written there,” Alexander Grushko was quoted by RIA as saying.

Russia’s official military deployment principles allow for the use of nuclear weapons if they – or other types of weapons of mass destruction – are used against it, or if the Russian state faces an existential threat from conventional weapons.

The decision to use Russia’s vast nuclear arsenal, the biggest in the world, rests with the president, Vlad. 

Saturday, CIA Director William Burns said that Putin believes he cannot afford to lose in Ukraine and cautioned that the West could not ignore the risk of the use of tactical nuclear weapons.

“We don’t see, as an intelligence community, practical evidence at this point of Russian planning for a deployment or even use of tactical nuclear weapons,” Burns said.  He cautioned, though, that “the stakes are very high for Putin’s Russia.”

Back on June 2, 2020, Putin signed a decree that said Russia views its nuclear weapons as “exclusively a means of deterrence.”

Putin justified his Feb. 24 order for a special military operation by saying Ukraine had persecuted Russian speakers and the United States was keen to enlarge the NATO military alliance in a way that would endanger Russia.

--Tuesday night, the House emphatically approved a fresh $40 billion Ukraine aid package, 368-57, as lawmakers beefed up President Biden’s initial request for $33 billion.

The measure provides $7 billion more than Biden’s April request and divides the increase evenly between defense and humanitarian programs, including $5 billion to address global food shortages caused by the war’s crippling of Ukraine’s normally robust production of many crops.

Nebraska Republican Sen. Ben Sasse said, “This is really simple: If we want Ukraine to win, we need to continue to arm them to the teeth. A clean Ukraine bill will have the votes.  Let’s get this done.”

--Wednesday…European Union ambassadors held another fruitless meeting in Brussels as efforts to approve an embargo on Russian oil continued to run into fierce resistance by a single member of the bloc, Hungary.

Although the EU has displayed striking unity over the course of the 11-week war, this is an example of how fractures could develop over time to the benefit of Putin.

Sanctions require unanimity to be approved, and the bloc would prefer the strongest possible version of the oil embargo, instead of trimming it back to secure Hungary’s approval.  There is little hope of a breakthrough at this point.

Prime Minister Viktor Orban of Hungary maintains a warm relationship with Putin, and he’s argued a ban on Russian oil would be the equivalent of an “atomic bomb” for his country’s economy.

Ursula von der Leyen, president of the European Commission, paid a surprise visit to Hungary on Monday and came up empty after talking to Orban. Orban then held talks with French President Macron that also went nowhere.

--Russian Foreign Minister Lavrov said Wednesday that Russia has enough buyers for its energy resources outside of Western countries, as European Union countries try to sharply reduce their reliance on Russian oil and gas.

“Let the West pay more than it used to pay to the Russian Federation, and let it explain to its population why they should become poorer,” Lavrov said at a news conference in Muscat after talks with his Omani counterpart.

--The Kremlin signaled Wednesday that it could annex the strategically important southern Ukrainian region of Kherson.  Putin spokesman Dmitri Peskov told reporters that “the residents of Kherson should decide” whether to join Russia, months after the city, with a prewar population of about 290,000, became the first major city to fall to Russian forces after the invasion.

Kherson carries deep strategic significance: It is where the Dnieper River flows into the Black Sea, and it is the source of a Soviet-era canal supplying water to Crimea.

The Kremlin could take control of the region without even staging a referendum.

The Zelensky government claims it will liberate Kherson.  The Russian takeover of Kherson has been met with widespread resistance and street protests from local residents.  The regional governor estimates that nearly half of the population had left since March.

--Thursday…Finland’s leaders announced that they will seek NATO membership in response to Russia’s war on Ukraine – a move that would mark a tectonic shift in the military alliance and Europe’s security and that the Kremlin promptly said would “definitely” pose a threat to Russia’s security.

The green light from Finnish President Sauli Niinisto and Prime Minister Sanna Marin is the first step toward a formal application from a country with a long-standing military alignment. Sweden is considering a similar move, and Washington has said it would strongly support both.  Russia’s Foreign Ministry said Moscow would have “to take retaliatory steps…to stop the threats that arise.”

Finland shares an 830 mile land border with Russia.  When an application has been handed in, there is an interim period lasting until all 30 NATO members’ parliaments have ratified it.

The announcement of Finland’s intentions came a day after British Prime Minister Boris Johnson visited both Finland and Sweden to sign a military cooperation agreement, whereby the UK pledged to come to the aid of both if the two came under attack.

In 2017, Sweden and Finland joined the British-led Joint Expeditionary Force, which is designed to be more flexible and respond more quickly than the larger NATO alliance.  Fully operational since 2018, the force has held a number of exercises both independently and in cooperation with NATO.

--One of Vladimir Putin’s closest allies, former president Dmitry Medvedev, now deputy chairman of Russia’s security council, warned the West on Thursday that the increasing military support given to Ukraine by the United States and its allies risked triggering a conflict between Russia and NATO, and that such a conflict always carried the risk of turning into a full blown nuclear war.

Medvedev said in a Telegram post: “NATO countries pumping weapons into Ukraine, training troops to use Western equipment, sending in mercenaries and the exercises of Alliance countries near our borders increase the likelihood of a direct and open conflict between NATO and Russia.

“Such a conflict always has the risk of turning into a full-fledged nuclear war.  This will be a disastrous scenario for everyone.”

--Also Thursday, the United Nations Human Rights Council moved to deepen scrutiny of alleged rights abuses by Russian forces, including potential war crimes, throughout previously occupied areas of Ukraine.

Ahead of the vote, UN human rights chief Michelle Bachelet told the council that “the scale of unlawful killings” in Ukraine, including signs of summary executions, “is shocking.”

--NATO Secretary-General Jens Stoltenberg said the Finns would be “warmly welcomed” and promised a “smooth and swift” accession process, which is also backed by Washington.

Moscow called Finland’s announcement hostile and threatened retaliation, including unspecified “military-technical” measures.

--The $40 billion aid package for Ukraine was delayed Thursday in the Senate after Sen. Rand Paul (R-Ky) held up the vote on the legislation over objections to language in this bill.

Paul initially sought to add an amendment that would put the Afghanistan inspector general in charge of overseeing U.S. aid to Ukraine. But he later blocked the votes on the bill and amendment, instead wanting to include language in the legislation creating the inspector general oversight.

“My oath of office is to the U.S. Constitution, not to any foreign nation… We cannot save Ukraine by dooming the U.S. economy,” Paul said on the Senate floor.

Paul’s move will push the vote until at least next week as lawmakers are leaving Washington for the week.

Both sides agree on oversight, but it’s the adding at the last minute to the language that causes the delay.  Sen. Paul is such an ass.

--Friday…Turkish President Tayyip Erdogan said it was not possible for NATO-member Turkey to support plans by Sweden and Finland to join the pact, saying the Nordic countries were “home to many terrorist organizations.”  Erdogan gave no details on this claim, which is bogus, but he appears to be referring to support given to various Kurdish groups, and the followers of U.S.-based Islamic cleric Fethullah Gulen.  Ankara says Gulenists carried out a coup attempt in 2016.

Though Turkey has officially supported enlargement since it joined NATO 70 years ago, its opposition could pose a problem for Sweden and Finland given new members need unanimous agreement.  Time for arm twisting.

--Meanwhile, Finland said it was ready to cope in the event that Russia cuts off its supply of natural gas.  Key Finnish politicians have been warned of a possible halt to gas exports by Russia on Friday, per a newspaper report, which the Kremlin said was “most likely a hoax” and reiterated that state-owned Gazprom remained a reliable gas supplier.

--As of today, about 14 million Ukrainians have been forced from their homes – including more than six million who have fled the country – and at least 3,496 civilians have been killed, United Nations officials said.

The number uprooted is in comparison to a pre-war population of 44 million.  The UN estimates that an additional 13 million can’t leave their homes because of heightened security risks, destroyed roads and infrastructure, and lack of resources or ability to find refuge elsewhere.

The actual number of civilian deaths is far higher because the continuing battles have delayed reporting, including in Mariupol, where the mayor has said up to 20,000 civilians may have perished.

---

--UN Secretary-General Antonio Guterres said on Wednesday he was deeply concerned about hunger becoming widespread as the war in Ukraine threatened food security in different parts of the world.  Speaking alongside Austria’s chancellor and foreign minister in Vienna, Guterres also said talks were going on to evacuate more civilians from conflict zones in Ukraine and expressed confidence that more evacuations would happen in the future.

The war has sent global prices for grains, cooking oil, fuel and fertilizer soaring, with UN agencies warning that the price hikes will worsen a food crisis in Africa.

--The World Health Organization’s European chief said on Tuesday that at least 3,000 people had died in Ukraine because they had been unable to access treatments for chronic diseases.

So far, the WHO has documented some 200 attacks in Ukraine on healthcare facilities, and few hospitals are currently functioning.

Hans Kluge told a regional meeting of member states that “40% of households have at least one member in need of chronic treatment that they can no longer find, resulting in an estimated 3,000  premature avoidable deaths,” he said, mentioning diseases such as HIV/AIDS and cancer.

Some commentary….

David Ignatius / Washington Post

“If Russia’s assault on Ukraine sometimes seems to have the intractable intensity of a religious war, that’s partly because it is entwined with one – a bitter battle for control within the Orthodox community that has been raging for years.

“Russian President Vladimir Putin invoked this religious rivalry in a now-famous July 2021 essay that laid the emotional foundation for Russia’s invasion.  Asserting that Ukraine and Russia were ‘bound together’ by their shared Russian Orthodox faith, he denounced independent-minded Ukrainians who he said had ‘blatantly interfered in church life and brought things to a split.’

“Putin’s version is backed by Patriarch Kirill, the primate of the Russian Orthodox Church in Moscow. But it is bitterly disputed by the leaders of other Orthodox communities – and by the most senior Eastern Orthodox prelate, Ecumenical Patriarch Bartholomew of Constantinople, who from his seat in what’s now Istanbul oversees the roughly 1,500-year legacy of Byzantium.

“Pope Francis waded into this inter-communal battle Tuesday, tartly admonishing Kirill that he shouldn’t be ‘Putin’s altar boy.’….

“We think of Putin as a secular-autocratic leader. But he is also an Orthodox believer, who wears the cross his mother secretly gave him as a baby in Soviet times. Kirill has been his ally in rallying the Russian people to invade and conquer a neighboring Slavic country.  But to Putin and his patriarch, it seems, this is about reestablishing order among his rebellious faithful….

“Moscow’s push for control in recent years has taken on aspects of a religious Cold War. The Russian and Eastern Orthodox prelates have battled for dominion over churches in Africa, Korea, Singapore and elsewhere.  Kirill created an ‘exarchate’ in Africa to replace the patriarch of Alexandria, who is loyal to the Eastern Church.  An article in Religious News Service described it as an effort to ‘woo priests and parishioners…weakening the ancient institution and expanding the Russian Church’s sway.’

“Patriarch Theodore II of Alexandria in a January letter derided the Russian church’s intervention in Africa, calling its evangelists ‘savage wolves that come in among you and will not spare the flock,’ according to Religious News Service.  One activist in the Eastern church estimates that the Russian Orthodox organizers, with plentiful cash to distribute, have converted more than 200 churches in Africa….

“Anthony J. Limberakis, who heads the order in America, told me that the Russian Orthodox Church is trying to replace the ancient primacy of Constantinople, embodied now by Bartholomew.  Russia’s goal is ‘to use the Orthodox Church as a political tool for Russian nationalism and expansion,’ he said.

“ ‘When Kirill goes into other jurisdictions, like Africa or Korea, that’s a religious invasion,’ Father Alexander Karloustsos, a spiritual adviser to the Order of St. Andrew, told me in an interview.  ‘That’s why there is a schism.’

“From Putin’s standpoint, Kirill is a patriarch for all seasons. He blessed the invasion before it happened and now he is ignoring the terrible human cost.  ‘Russia has never attacked anyone,’ Kirill said in a sermon on Tuesday [Ed. May 3], according to Orthodox Times. He spoke on a day when shells and rockets were bombarding the birthplace of Russian Orthodoxy.”

Thomas L. Friedman / New York Times

“So where are we now?  Putin’s Plan A – taking Kyiv and installing his own leader – has failed.  And his Plan B – trying just to take full control of Ukraine’s old industrial heartland, known as the Donbas, which is largely Russian speaking – is still in doubt.  Putin’s freshly reinforced ground forces have made some progress, but it’s still limited.  It is springtime in the Donbas, meaning the ground is still sometimes muddy and wet, so Russian armor still has to stay on roads and highways in many areas, making them vulnerable.

“As America navigates Ukraine and Russia and tries to avoid being ensnared, one bright spot in the efforts to avoid a wider war is the administration’s success at keeping China from providing military aid to Russia. This has been huge.

“After all, it was just Feb. 4 when China’s president, Xi Jinping, hosted Putin at the opening of the 2022 Winter Olympic Games, where they unveiled all sorts of trade and energy agreements, and then issued a joint declaration asserting that the friendship between Russia and China ‘has no limits.’

“That was then.  After the war started, Biden personally explained to Xi in a lengthy phone call that China’s economic future rests on access to the American and European markets – its two largest trading partners – and should China provide military aid to Putin, it would have very negative consequences for China’s trade with both markets.  Xi did the math and has been deterred from helping Russia in any military way, which has also made Putin weaker.  The Western restrictions on shipping microchips to Russia have begun to really hobble some of his factories – and China has not stepped in, so far.

“My bottom line echoes my top line – and I can’t underscore it enough:  We need to stick as tightly as possible to our original limited and clearly defined aim of helping Ukraine expel Russian forces as much as possible or negotiate for their withdrawal whenever Ukraine’s leaders feel the time is right.

“But we are dealing with some incredibly unstable elements, particularly a politically wounded Putin.  Boasting about killing his generals and sinking his ships, or falling in love with Ukraine in ways that will get us enmeshed there forever, is the height of folly.”

-----

Biden Agenda

--Who would have thought a baby formula shortage would create yet another headache for the Biden administration and become an election issue?

Baby-formula manufacturers and retailers say they are working to address the long-running shortage on store shelves, but the hardship facing U.S. families could take months to abate and this rebounds heavily on the president and his party, whether deserved or not deserved.

The main cause was a voluntary shutdown, and recall, emanating from a critical Abbott Laboratories (producer of Similac) facility in Michigan, amid food-safety regulators investigating possible contamination of the Similac formula.  Abbott said it is working with the Food and Drug Administration to restart production, but it would take weeks before products from the plant are available on store shelves.  So Abbott said it is bringing products from its factory in Ireland.

Rivals have been racing to accelerate production, but it’s about getting the supply to the right places and many retail chains have been placing strict limits on orders.

Lawmakers on Capitol Hill have called for inquiries into why shortages that initially emerged at the start of the pandemic have been difficult to resolve.  Of course the White House is asking the Federal Trade Commission and state attorneys general to investigate allegations of price gouging…their go-to excuse on every commercial issue.

Grocery store chains are frustrated because when shortages of staples emerged at the start of the pandemic, they could shift to alternatives…there were other options.  But there aren’t a lot of baby formula manufacturers.  Abbott and Enfamil owner Reckitt Benckiser Group are responsible for roughly 80% of infant formula sales in the U.S., according to Euromonitor.  Nestle SA, which makes Gerber baby-food products, has a nearly 10% market share.

--On inflation…the president is hapless….

Editorial / Washington Post

“Inflation is one of the biggest challenges President Biden faces. Americans of all political persuasions are angry about it. They see it as gas and diesel prices hit record highs.  They see it at the grocery store.  They see it when they buy just about anything, from couches to cars.  And they see it in soaring home and rent prices in formerly affordable neighborhoods.  While inflation might have peaked in March, it is set to remain painfully high for months to come.  Families understand the math: Wages rose an average of 5.5 percent in the past year, while prices surged 8.3 percent.

“On Tuesday, Mr. Biden gave his most forceful remarks yet on inflation, telling the nation he was taking it ‘very seriously’ and considered it ‘my top domestic priority.’  He should have said this months ago.  The White House has been suffering from magical thinking on inflation, and, sadly, that continues.

“For much of last year, the Biden administration wrongly told the American public that rising prices would be short-lived. When it became clear that inflation would not come down on its own, the White House began a blame game.  One of its favorite talking points is to pin inflation on greedy corporations for hiking prices too much. That just doesn’t add up.  Corporations did not become far more greedy in the past few months.  What’s really going on is basic economics: There’s high demand for a lot of stuff and inadequate supply because of the pandemic, the war in Ukraine, China’s lockdown, crushed supply chains and not enough workers.  That’s a classic recipe for higher prices.

“Mr. Biden also spent much of his inflation speech berating Republicans for hyping up the inflation problems and failing to deliver remedies.  He especially went after Sen. Rick Scott of Florida, who did put out a terrible tax plan.  But this isn’t what Americans want to hear.  While the White House looks for culprits to blame for inflation, it has struggled to articulate any sort of plan….

“(It) was disappointing that Mr. Biden made no mention in his speech of bringing aboard more legal immigrant workers, lowering or eliminating Donald Trump’s tariffs, or making additional efforts to fix supply chain holdups.  When a reporter pressed Mr. Biden on tariffs, he said, ‘We’re discussing that right now.’

“It’s wishful thinking that inflation is going to come down much by Election Day.  To show voters he is on top of the problem, Mr. Biden needs to do more than blame someone else for high prices.”

Editorial / Wall Street Journal

“President Biden on Tuesday tried to get ahead of Wednesday’s April inflation report with a speech rehashing his well-worn proposals to reduce prices: Boost subsidies, raise taxes, and increase regulation. He should take Jerry Seinfeld’s advice to George Costanza and do the opposite of his every policy instinct….

“Mr. Biden again blamed inflation on the pandemic and Vladimir Putin, omitting that Democrats poured kerosene on the accelerating economic recovery last March with their $1.9 trillion spending bill.  Inflation was already at 7.9% when Mr. Putin invaded Ukraine.  At the same time, their policies were hampering the supply side of the economy in myriad and interconnecting ways.

“Consider energy and food.  The Administration’s war on oil and gas created enormous regulatory uncertainty that is stanching investment in new production despite high energy prices.  Producers can’t find workers.  Many left the industry when prices nose-dived early in the pandemic and are reluctant to return because Democrats have promised to put drillers out of business….

“Mr. Biden says more green energy will reduce electricity prices.  But then why have power prices increased by 11.1% in the last year?  More green energy will make the grid less reliable and increase demand for gas along with diesel-powered emergency generators, as it has in California and Texas.

“Speaking of which, diesel prices have increased by $2.40 a gallon in the last year, a buck more than gasoline prices, amid increased demand from freight and reduced refining capacity.  Higher diesel prices filter through to food prices as ships, trains, trucks, tractors and other farm equipment rely on the fuel.”

--Senate Democrats were blocked in their attempt to enshrine abortion rights in federal law in a vote that heightened the deep divide on the politically explosive issue.

All Senate Republicans and one Democrat – Joe Manchin of West Virginia – voted to keep legislation ensuring nationwide access to abortions from reaching the Senate floor.  The 49-51 vote was well below the 60 votes needed.

I understand the move, politically.  Senate Majority Leader Chuck Schumer aimed to put all the chamber’s Republicans on record at a time when polls continue to show most voters want Roe to remain intact.

It’s just a stark reminder of where the two sides stand.

--Next week’s likely story…a federal court rules on Title 42, which the administration is looking to end.  In a recent CNN poll, 43% of Americans said it should be rescinded, 57% said it should remain in place.

Wall Street and the Economy

On the data front, it was all about inflation and the readings for April confirmed that inflation could remain elevated at distressing levels for some to come.

While consumer prices came in a little below March levels, they were still very high, and producer prices, while also lower than the prior month, were a bit hotter than forecast.

The CPI was up 0.3% over March, 0.6% ex-food and energy (core), and for the 12 months, up 8.3%, ex-food and energy 6.2%.  These two figures were less than the prior month’s 8.5% and 6.5%.

The PPI was up 0.5% in April over March, up 0.4% on core, and year-over-year was up 11.0% on headline, up 8.8% ex-food and energy; both down from 11.2% and 9.2% in March.

Food prices rose a whopping 9.4% the past year, while air fares, up 18.6% in April, had their biggest one-month increase ever (up 33.3% the past year).

The shelter index, which makes up one-third of the CPI weighting, was up another 0.5% and 5.1% over the past year, the biggest increase since 1991.

Used car prices, seen as a good barometer, fell in April.

But the big cause for the slight decrease in the CPI in April over March, from 8.5% to 8.3%, was falling energy prices, which have since reversed this month.

So yesterday, Fed Chair Powell reaffirmed that the central bank is likely to raise interest rates by a half percentage point at each of its next two meetings, while leaving open the possibility it could do more.

In an interview with the Marketplace public radio program, Powell made clear his determination to get inflation under control but conceded that the Fed’s ability to do that without triggering a recession may depend on factors outside its control.

“If the economy performs about as expected,” Powell said, “it would be appropriate for there to be additional 50-basis point increases at the next two meetings.”

Asked if he was taking a larger 75 basis-point increase off the table, he restated his comment from a May 4 press conference that the Fed wasn’t “actively considering” such a move, but he added, “If things come in better than we expect, then we’re prepared to do less.  If they come in worse than what we expect, then we’re prepared to do more.”

Thursday, Morgan Stanley revised downward its forecast for real GDP growth by 100 basis points to 2%, lower than the Federal Open Market Committee’s 2.8% projection.  For 2023, Morgan Stanley analysts forecast GDP growth of 2.1%.  The investment bank said high energy prices, higher interest rates and broad-based inflation will contribute to consumer headwinds, while housing demand begins to subside and the labor market remains tight.

MS forecasts inflation of 5.1% for 2022, and then down to 2% in 2023.

The Atlanta Fed’s GDPNow barometer for second quarter growth is at 1.8%.

We did have some good news on the federal budget deficit front, which has shrunk by some $1.57 trillion so far this fiscal year, driven by record receipts from a strong economy and a slowdown in spending as pandemic-era programs fade.

The deficit dropped to $360 billion over the seven months from October through April 2022, according to Treasury Department data released Wednesday, with a record $308 billion surplus in April.

Receipts were $2.99 trillion in the fiscal year-to-date, up from $2.14 trillion a year ago.  Receipts for April – boosted by individual tax returns – amounted to $864 billion, the highest for any month on record.  As in there is zero reason for further tax increases, President Biden!

Spending fell to $3.35 trillion, down from $4.08 trillion a year ago, helped in part by the roll-off of pandemic-related benefits to households and businesses.

Europe and Asia

After all of last week’s data, just a reading on March industrial production for the EA19, down 1.8% over February, and down 0.8% year-over-year.

Consumer prices in Germany rose at an annual rate of 7.8% in April, preliminary numbers from the Federal Statistics Office showed on Wednesday, the highest rate since German reunification in 1990.  The price of food was the main driver, after surging energy prices were the main cause for March’s 7.6% hike.

The head of the Bundesbank, Joachim Nagel, urged the European Central Bank to take more aggressive action to counter the price spiral.

Christine Lagarde, the ECB’s president, signaled in a speech on Wednesday that the bank would be ready to raise its interest rate before the summer is over, possibly at a July 21 meeting.  The ECB hasn’t raised borrowing costs since 2011 and its deposit rate has been negative since 2014.

Across Europe, inflation has hit a record high for six months in a row, and now you have the uncertainty surrounding Russian energy.

Brexit: Sinn Fein won the largest number of seats in Northern Ireland’s Assembly election last weekend and with this historic victory, the right to nominate the party’s Northern leader, Michelle O’Neill, as the first minister of Northern Ireland – the first time in the North’s history that the top position has been held by a nationalist party.

So with this the Northern Ireland Protocol is front and center, a “real problem” that must be “fixed” to ensure the country can agree on a new power-sharing administration, Prime Minister Boris Johnson said.

The same Boris Johnson who negotiated the protocol when taking Britain out of the European Union, argues that without changes to the treaty, which is designed to prevent a hard border in Ireland, a new executive in Northern Ireland could not be formed as per the rules set out in the 1998 peace agreement.

Sinn Fein supports the protocol. The Democratic Unionist Party (DUP) has ruled out entering into a new power-sharing administration without significant changes to the protocol which governs post-Brexit trade arrangements.

The impasse has led to concerns that the protocol could spark sectarian violence in the region.

Reminder, under the protocol, the UK is required to impose checks on some goods crossing from Great Britain to Northern Ireland in order to maintain an open border with the Republic while protecting the EU single market.

But the UK complains that the way the protocol is implemented is imposing a huge burden on businesses in Northern Ireland and creating trade barriers within the Union.

Britain has warned they could unilaterally suspend the arrangements unless the EU agrees to major changes to reduce the impact.

Brussels has raised the possibility of suspending the entire Brexit deal if the threat is carried out, in a move that would spark an all-out trade war.

Yup, Brexit was an idiotic deal.  Brits are paying the price.  Hopefully, we don’t get a return of The Troubles in the North. 

But this afternoon, the DUP said it would not nominate a speaker when the North’s Assembly meets for the first time, meaning business cannot proceed – including the nomination of first and deputy first ministers – and the Assembly cannot sit.

DUP leader Jeffrey Donaldson said: “I believe that we need to send a very clear message to the European Union and to our government that we are serious about getting this protocol sorted out.”

The Alliance party leader Naomi Long said: “We have just had an election, it’s incumbent on us all to accept the outcome of it and make it work, and I think the DUP are playing a very dangerous game with the institutions and with the future of Northern Ireland.”

To be continued…militants on both sides have their excuse to create a lot of chaos.

In Asia…China’s April exports were up only 3.9% year-over-year vs. 14.7% the prior month.  April imports were unchanged (0.01%) Y/Y vs. -0.1% in March.  Imports from Russia surged to a record due to soaring energy prices.

April consumer prices were up 2.1% annualized, but producer prices rose 8.0%, down from 8.3% in March.

April vehicle sales cratered 47.6% Y/Y, the biggest drop since March 2020.  Auto sales were down 12% from a year ago. 

Yes, all the Covid restrictions are doing a number on China’s economy, and Premier Li Keqiang warned of a “complicated and grave” employment situation amidst the lockdowns.

Li instructed all government departments and regions to prioritize measures aimed at helping businesses retain jobs and weather the current difficulties, according to a statement last weekend.

“Stabilizing employment matters to people’s livelihoods, it is also a key support for the economy to operate within a reasonable range,” Li said, urging businesses to resume production with Covid-fighting measures in place.

This weekend we get key data on industrial production and retail sales for April.

In Japan, March household spending, a key metric here, rose 4.1% over February, but was down 2.3% year-over-year.

Street Bytes

--Despite a strong rally Friday, with Nasdaq up 3.8%, stocks finished down yet again on the week, with the Dow Jones now in the midst of a seven-week losing streak, longest since July 2001, down another 2.1%.  The S&P 500, -2.4%, and Nasdaq, -2.8%, have fallen six weeks in a row.  The S&P’s skid is its longest since June 2011.

It’s all about the worrisome inflation story, further Fed tightening, and growth concerns.

Next week we get key earnings from retailers such as Walmart and Home Depot.

--U.S. Treasury Yields

6-mo. 1.42%  2-yr. 2.58%  10-yr. 2.92%  30-yr. 3.09%

The 10-year Treasury had quite a ride this week, from 3.13% to 2.94% to 3.07% to 2.82% and finally settling at 2.92%, down 21 basis points on the week.  That momentarily helps mortgage rates slightly.

European yields fell on the same growth concerns, with the German 10-year yield at 0.94%, down from the prior week’s 1.13%.  The yield on Italy’s 10-year fell from 3.13% to 2.84%.

--The Senate confirmed Jerome Powell to a second four-year term as Fed chair, the vote 80-19.  Most of the nays were Republicans, though a few Democrats, including Elizabeth Warren and Robert Menendez, joined them.  Menendez said Powell had not done enough to promote diversity in the central bank’s leadership, while Warren said he had fallen short on bank regulation. 

Still, the final vote was an endorsement of Powell’s handling of the crisis triggered by the Covid-19 pandemic and the short but historically deep 2020 recession that marked his first term.

It’s also a mandate for him to proceed with what may be the sharpest set of interest rate hikes since the early 1980s when Paul Volcker led the Fed.

Powell was first nominated by Donald Trump, who soon soured on him for a series of rate hikes that irked the former president.  Trump even contemplated trying to oust Powell,

Biden has been more hands off with the Fed, to his credit, but he’s paying the price for the rise in inflation.

On Wednesday, the Senate confirmed Davidson College economist Philip Jefferson by a wide margin, but on Tuesday, a tie-breaking vote cast by Vice President Harris was required to confirm Michigan State University economist Lisa Cook, who becomes the first Black woman to sit on the Fed board.  Jefferson is the fourth Black man to be a member of the board.

Fed Governor Lael Brainard was confirmed several weeks ago as the central bank’s new vice chair.

One key vacancy remains: the vice chair for supervision, open since the departure of Randal Quarles around the end of last year. Biden’s pick for that post, Michael Barr, will face questioning by the Senate Banking Committee next week.  The president’s initial pick, Sarah Bloom Raskin, withdrew her name after opposition from Republicans and one Democrat denied her a path to confirmation.

--The oil ministers of Saudi Arabia and the United Arab Emirates warned that spare capacity is decreasing in all energy sectors as producers slash investment, causing everything from crude to diesel and natural gas to trade at or near record highs.

“I am a dinosaur, but I have never seen these things,” Saudi minister Prince Abdulaziz bin Salman, who’s been attending OPEC meetings since the 1980s, said Tuesday at a conference in Abu Dhabi, referring to the surge in prices for refined products.  “The world needs to wake up to an existing reality. The world is running out of energy capacity at all levels.”

The prince’s UAE counterpart, Suhail al Mazrouei, said that without more investment across the globe, OPEC+ wouldn’t be able to guarantee sufficient supplies of oil when demand fully recovers from the coronavirus pandemic.

“We’ve been warning about the lack of investment,” he said in an interview.  “That lack of investment is catching up with a lot of countries.”

Saudi Arabia and the UAE are among the few producers investing in greater output.  Most others are struggling to get funding as shareholders and governments encourage a shift from fossil fuels to renewable energy.

But, for now, Mazrouei said the oil market’s balanced and there is no need for OPEC+ to accelerate its gradual production increases.  Importing nations would disagree with this take.

OPEC+ rubber-stamped a 432,000 barrel-a-day increase for June at last week’s meeting, but many members are pumping below their quotas.

This week, crude prices stayed elevated, finishing the week at $110.18, roughly the same as last week.

--The cryptocurrency selloff gathered steam Thursday, with Bitcoin trading as low as $25,400.  Bitcoin had fallen the last seven consecutive days through Wednesday – its longest losing streak since March 2020, according to Dow Jones Market Data. Ether tumbled 10% from Wednesday evening to trade at $1,825 Thursday – its lowest level since July 2021.

Bitcoin closed last year at $46,200, after hitting $69,000 intraday on Nov. 9.

Digital assets are increasingly moving in lockstep with equities as traditional money managers such as hedge funds and family offices have entered the space during the last two years, analysts say.  Such funds are more likely to sell crypto holdings during periods of volatility rather than hold them.

And then you have the crash in a segment of the crypto universe, stablecoins, which are billed as being the least volatile part of the sector, with the assets supposedly pegged to the value of government-issued currencies.  But stablecoin TerraUSD decoupled from its $1 peg this week, hitting 54 cents early Thursday.  Another token, Luna, fell 97% in a 24-hour period.

With the crypto debacle, Coinbase Global Inc. founder Brian Armstrong, who as recently as November had a personal fortune of $13.7 billion, and $8 billion at the end of March, was down to just $2.2 billion on Thursday, according to Bloomberg, after the selloff in digital currencies.

Coinbase, the largest U.S. cryptocurrency exchange, saw its shares tumble 84% since their first day of trading in April 2021, closing Wednesday at $53.72. The shares hit $368 last Nov. 9. Armstrong took to Twitter Wednesday to defend the company, saying there is “no risk of bankruptcy” and users’ funds are safe.  [COIN ended the week at $68.]

Then there is Michael Novogratz, a frequent peddler of cryptocurrencies on CNBC.  The CEO of crypto merchant bank Galaxy Digital had seen his fortune plummet from $8.5 billion in early November, to $2.5 billion.  He’s been a champion of TerraUSD.

A measure called MVRV – which divides market value by the average purchase price – shows that short-term holders, on average, purchased Bitcoin at around $47,500, according to an analysis by Genesis Global.

More than half of traders who held crypto at the end of 2021 had gotten in that year, and Bitcoin’s average price last year hovered around $47,300, crypto-firm Grayscale Investments said back then.

As of Thursday, the sell-off has taken the combined market value of all cryptocurrencies to $1.2 trillion, less than half of where it was last November, based on data from CoinMarketCap.

Treasury Secretary Janet Yellen said during a House Financial Services Committee hearing that when it came to stablecoins: “I wouldn’t characterize it at this scale as a real threat to financial stability, but they’re growing very rapidly and they present the same kind of risks we have known for centuries in connection to bank runs.”

But, Friday, the cryptocurrency market stabilized, as did the Nasdaq.  Bitcoin is at about $30,000 as I go to post. 

--Walt Disney Co. eased concerns on Wednesday about the future of streaming video by picking up 7.9 million new Disney+ customers, although the company warned supply chain disruptions and rising wages could pressure finances and the shares fell 5% on the news.  Wall Street had been expecting 5.3 million new Disney+ customers from January through March.

Disney still has a long way to go to hit ambitious, multi-year targets, but its growth encouraged investors after Netflix Inc.’s losses.  “Right now, it’s very difficult to accurately forecast the potential financial impact due to the fluidity of the situation but you can trust that we are fully aware of it and we’re working hard to mitigate any pressure on the margin,” said CFO Christine McCarthy.

Disney needs to average nearly 9.1 million new customers per quarter to reach the low end of its goal of adding 230 million to 260 million Disney+ subscribers by the end of September 2024.  CEO Bob Chapek reiterated that target on Wednesday.

The world’s largest entertainment company has staked its future on building a streaming TV business to rival Netflix, and then Netflix unnerved Wall Street last month when the company disclosed it lost subscribers in the first three months of 2022 and forecast more defections in the second quarter.

Total subscriptions for Disney+, launched in November 2019, reached 137.7 million.

Disney reported adjusted earnings per share of $1.08, below analyst forecasts.  Revenue came in at $19.2 billion, also below consensus, but was impacted by money paid in early termination fees for TV shows and films it wanted to use on its own streaming service.  Nonetheless up 23% from a year ago.

Disney’s theme park business continued a strong rebound after extended pandemic-related closures and attendance restrictions.  Operating income at the parks unit totaled $3.7 billion, a 50% increase from a year earlier.  But continued closures of theme parks in Asia, due to Covid, could reduce operating income in the fiscal third quarter, the company said.

--TSA checkpoint travel numbers vs. 2019

5/12…90 percent of 2019 levels
5/11…86
5/10…87
5/9…89
5/8…93
5/7…94
5/6…88
5/5…87

--Toyota Motor warned “unprecedented” hikes in raw material costs could slice a fifth off full-year profit, a clear sign the world’s top automaker by sales can no longer shrug off the supply-chain crunch that has roiled the global industry.

The Japanese giant also reported a 33% drop in fourth-quarter operating profit, and the company’s shares fell 4% on the news.

Toyota had fared well during the earlier months of a global semiconductor shortage, thanks to its larger stockpile of chips, but it has now joined rivals in slashing production thanks to the prolonged crunch, as well as China’s fresh Covid-19 restrictions.

Toyota expects materials costs to more than double to $11.1 billion in the fiscal year that started in April, which it expected to deal with by switching to lower-cost materials. 

“We need to think about how we can respond to material inflation by eliminating the distinction between original equipment manufacturers and suppliers and working together as one,” CFO Kenta Kon told reporters, referring to car makers.  “Since the price of materials is rising, we need to work to reduce the amount of materials we use as much as possible and to replace them with less expensive materials.”

Toyota expects to sell 8.85 million vehicles globally this fiscal year, up 7.5% from last year, though it cut its production for May by around 50,000 vehicles as it plans to suspend some operations due to China’s lockdowns.

Honda and Nissan issued similar statements, warning that the long chip crunch and rising raw material costs were hurting profits and impacting production.

--Elon Musk hailed Chinese workers during an event sponsored by the Financial Times this week – praising their talent and work ethic even as he took a jab at some members of the American labor force.

When asked to reveal which electric vehicle startups have impressed him the most, Musk first pointed to Volkswagen as a burgeoning competitor to his market-leading Tesla.

Then he pointed to China, stating that he expected some “very strong companies” to emerge from the country and provide more competition in the years ahead.

“There’s just a lot of super-talented, hard-working people in China that strongly believe in manufacturing and they won’t just succeed by burning the midnight oil, they’ll be burning the 3 am oil,” Musk told the FT.

“They won’t even leave the factory, type of thing, whereas in America, people are trying to avoid going to work at all,” he added.

Tesla has one major plant in Shanghai and announced plans to build a second facility in the area.

--Meanwhile, car sales in China declined, as noted above, as weekslong anti-Covid lockdowns in parts of the country shuttered factories, disrupted supply chains and kept car buyers at home.

Passenger-car sales in April tumbled to 1.04 million vehicles, down 35.7% in April, the China Passenger Car Association said Tuesday, while production fell even more sharply, by 41%, to 969,000 vehicles.

Tesla sold just 1,512 cars made at its Shanghai plant, down 94% from a year ago and far below the more than 65,000 it sold in March, according to data from the association. Volkswagen AG and Nissan Motor Co. also saw steep declines in sales, with Nissan’s down 46% in April, year over year.

Tesla announced it had to cut production again at its Shanghai facility because supplies of some key components were suspended.

--Elon Musk said Tuesday he would reverse Twitter’s ban on former President Trump, while speaking at the aforementioned Financial Times conference.  Musk has called the ban “morally wrong and flat-out stupid.”  Trump has previously said he would use his own social media app, Truth Social.

But there are rising doubts Musk will complete his acquisition of Twitter.

I wrote the above on Thursday.  Overnight, Musk then tweeted that his $44 billion takeover of Twitter is “temporarily on hold” until he receives more information about the proportion of fake accounts, but the company had already revealed that in its last quarterly report.

Twitter shares overnight then crashed to $33.50, well below the $54.20 acquisition price to take it private.

Musk, about 90 minutes later, then tweeted he was “still committed to acquisition.”  The shares closed at $40.90.  To paraphrase baseball legend Bob Uecker, just a wee bit shy of the level Musk has talked about. 

--In a rare weekend move, Ford Motor Co. sold off about 8% of its stockholdings (8 million shares) in Rivian Automotive Inc., pushing shares of the electric-vehicle startup to an all-time low.

Ford is no longer partnering to develop an EV with Rivian, as had been planned under its initial investment in 2019, and wants to gradually reduce its stake in what has become a rival in the electric-truck market, they said.

Before the sale, Ford held about 102 million shares in Rivian overall, about 11.4% of the company.

The lockup period for Rivian investors to sell stock after its initial public offering in November expired Sunday.

Editorial / Wall Street Journal

“Companies that rise with the help of political subsidies can also fall by them.  Behold how electric vehicle manufacturer Rivian’s high-flying stock is crashing to earth.

“Rivian shares fell another 20.88% on Monday to $22.78 after its stock lockup period for early investors expired.  The EV startup went public in November with a $66.5 billion valuation and shares at $78. Its stock price soon surged to $172 amid investor euphoria fed by free credit and expectations that Congress would sweeten electric vehicle subsidies.

“At one point Rivian commanded a $153 billion market value – more than every auto maker in the world besides Tesla and Toyota – despite having delivered a mere 156 vehicles before its IPO.  But building a new auto maker from scratch isn’t easy.  Tesla missed production forecasts early on and was only making 20,000 or so cars annually five years after releasing its first model.

“Rivian’s stock began to slide as it ran into manufacturing problems, and investor hopes that Democrats would pass Build Back Better faded.  In March, Rivian slashed its production guidance this year by half to 25,000 vehicles and raised the price of its pickup truck by $12,000 to $79,500, citing increased costs across its supply chain.

“Prices of lithium and nickel for batteries have soared as government mandates have fueled an EV manufacturing boom.  Traditional auto makers like GM and Ford are electrifying their pickup models, which they hope will be more popular than electric sedans.  But bigger EVs require bigger batteries, which require more lithium and nickel.

“Higher costs may curb consumer demand. Such risks didn’t faze investors when credit was essentially free and more generous subsidies were in the offing.  But the Federal Reserve’s monetary tightening is causing investors to reassess valuations. Rivian and other EV startups are among the casualties.

“Many great companies survive rough markets, and Rivian may ride this one out and prosper.  But its stock rise and fall is a warning about too much money chasing too little profit too soon.”

Rivian shares rebounded a bit to close the week at $27.

--The online used-car company Carvana plans to lay off more than a tenth of its staff as its stock price plummets and it takes on new, high-cost debt, as the result of an acquisition, the wholesale vehicle auction unit of KAR Auction Services.

The company is laying off about 2,500 employees, primarily those in operations, CEO Ernie Garcia told workers in an email.  This is about 12% of its workforce.

“We have managed to grow despite sales being down industry wide, but we have grown a lot less than we planned for,” he said.  “As a result, we find ourselves out of balance.  Our team is bigger than we need and we can’t be certain growth will bring us back into balance.”

Carvana shares hit $376 in August 2021 and traded Thursday at $29.  Good gawd.  They rebounded some to finish the week at $43.50.

--Uber Technologies Inc. announced it was scaling back hiring and reducing expenditures on its marketing and incentive activities, according to a letter from CEO Dara Khosrowshahi.

--Earlier, Facebook-owner Meta Platforms Inc. said it is preparing cutbacks in its Reality Labs division, a strategic unit at the center of its strategy to refocus the company on hardware products and the “metaverse,” as first reported by Reuters.

--Shares in Wendy’s Co. tumbled after the company missed Street estimates for quarterly results on Wednesday, as rising inflation kept customers from splurging on the company’s bacon-loaded sandwiches and drinks.

The Dublin, Ohio-based fast-food chain said it had fewer customers place orders in the quarter, and analysts have said Wendy’s breakfast menu – known for items including the Baconator burger – could face pressure from consumers turning to cheaper meals as higher prices for everything hit Americans’ pockets.  McDonald’s, for example, is seeing some of its customers trade down to cheaper or fewer menu items.

Profit margins also fell for Wendy’s due to higher labor and commodity costs, such as for beef, chicken and coffee.

U.S. same-store sales rose 1.1% in the first quarter, compared with the consensus expectation of 2.3%.  Total revenue rose 6.2% to $488.6 million, also missing estimates.

--The biggest U.S. meat producer by sales, Tyson Foods Inc., reported soaring profits as the company raised prices for beef, chicken and pork, citing higher costs.

Tyson said it increased prices for beef by an average 23.8% over the three months ended April 2, while its chicken prices increased 14.4% and pork 10.8%. Tyson said its cost of goods sold increased by 15% over the quarter as the company paid more for animal feed, freight and labor expenses.

Meatpackers, like Tyson, have said that because many of their processing plants remain short-staffed, they can’t process as many cattle, hogs and chickens, constraining meat supplies. Demand from grocery stores and restaurants hasn’t let up, pushing meat prices higher.

Net income for Tyson in its fiscal second quarter rose to $829 million from $476 million a year earlier, propelled by the higher profit margins for its beef and chicken divisions.  The company reported $13.1 billion in quarterly sales, compared with $11.3bn a year earlier, the results surpassing Wall Street’s expectations.  The shares rose 2%.

--India reported its highest consumer price inflation, 7.8% in April, since May 2014.

--In Manhattan, the average apartment rent increased slightly from March to April, but at $4,822, is 32% higher than a year ago, when the average rent per month was $3,650, a report from Miller Samuel showed.

Between October and March, rents in New York City increased by an average of 22.6%.

Brooklyn has an average rent of $3,517, up 12% from last year.

--Peloton Interactive Inc. reported a bigger third-quarter net loss on Tuesday as expenses doubled and demand for its fitness equipment cratered from pandemic highs, leading the company to warn it was “thinly” capitalized.  The shares tumbled about 25% on the news, before recovering some.

CEO Barry McCarthy said in a letter to shareholders: “We finished the quarter with $879 million in unrestricted cash and cash equivalents, which leaves us thinly capitalized for a business of our scale.”

The company said it signed an agreement with JPMorgan and Goldman Sachs to borrow $750 million in 5-year term debt.

Like many stay-at-home winners, the fitness equipment maker is grappling with plummeting demand.  The company’s market value has tumbled to $4.7 billion from nearly $50 billion during the pandemic when its bikes and on-demand fitness content were lapped up.  Peloton said connected fitness subscribers for the fiscal fourth quarter will be about 2.98 million, a little less than expected, with revenue falling to $964.3 million in the third quarter from $1.26 billion a year earlier.

--New York City’s post-pandemic recovery has slowed as just a small fraction of Manhattan’s office workers have returned to work in-person, according to a survey published Monday.

The findings – compiled by the Partnership for New York City, which represents the Big Apple’s largest employers – estimated 62% of Manhattan’s office employees worked remotely during a typical weekday in late April.  And just 8% - or one in 12 – showed up to work in-person five days per week, the report shows.

About 78% of the city’s major employers expect a combination of remote and in-person work is here to stay, the survey found.

The survey also found many New Yorkers continue to cite crime and harassment as a reason to avoid the office.  Nearly two-thirds of the companies surveyed said improving public safety and addressing the city’s homelessness crisis would help bring workers back.

In line with all the above, mass transit ridership in Gotham remains down about 40% from 2019 – and the figure hasn’t budged by more than a few points in months.

I know one of the local commuter parking lots I pass every day on Tuesday was clearly at a post-pandemic high, this being for commuters headed into New York, but still far from capacity, which is where it was five days week before the coronavirus hit.

--U.S. casinos reported $5.31 in revenue in March, the highest monthly revenue in the industry’s history, according to a report this week from the American Gaming Association.  Gambling revenue was $114.31 billion in the first quarter, a record, The figures exclude revenue from casinos run by Native American tribes.

Back in 2020, due to the economy shutting down amidst the pandemic, revenue dropped to $30 billion for the year, down 31% from 2019, and the lowest since 2003, according to the AGA.

The casino industry reported $53.03 billion in revenue in 2021, up 21.5% from the 2019 high.

Today, casinos are benefiting from pent-up demand.  At least thus far, gamblers haven’t been put off by rising prices for food and accommodations.

Sports betting revenue rose 65% to $1.58 billion in the first quarter, the AGA said, while internet wagers contributed $1.21 billion in revenue, a 54% increase.

Business and international travel, as well as conventions and trade shows, still haven’t fully recovered from the pandemic, and as that improves, casinos will see more business.

--An iconic painting of Marilyn Monroe by Andy Warhol has been auctioned for $195 million – making it the most expensive piece of 20th Century art ever sold.

The painting, Shot Sage Blue Marilyn, was painted by Warhol in 1964 using a famous photograph as inspiration.

The amount is also the highest ever paid for an American work of art.

The Christie’s auction in New York was widely seen as a symbol of the luxury art market’s health.  [The sale price of $170m, rose to $195m with taxes and fees taken into account.]

The Pandemic

--After going the duration of the pandemic without reporting a case of Covid-19, North Korean state media announced the country’s first infections.  The ruling party’s highest decision-making body blamed the outbreak on the “carelessness, laxity, irresponsibility and incompetence” of those responsible for keeping the virus out of the country and promised a “maximum” response.  North Korea has no known vaccination program and some feel that this was a cry for help.  Kim Jong Un ordered a national lockdown.

But the North hasn’t directly asked for help, and then today, suddenly the country said six people have died and 350,000 have been treated for a fever that has “explosively spread nationwide,” state media said today.

The country clearly doesn’t have sufficient Covid-19 tests and other medical equipment and said it didn’t know the cause of the mass fevers.  But with a broken health care system and an unvaccinated, malnourished population, this could be devastating.

For North Korea to even admit six deaths and “187,000 being isolated for treatment,” is ominous.  And the lockdown only hampers its “all-out fight” against drought and the mobilization of labor.

Yet, as noted below, the nuclear weapons testing continues.

--After six weeks of confining people to their homes, enduring food shortages and the constant fear of being forcibly hauled away, Shanghai’s lockdown appears to have an end date.  But China’s increasingly fraught battle with Covid-19 is hardly over.

Officials in the financial hub said Friday they’re seeking to stop community spread of the virus by May 20, a sign they may begin dismantling the cruel restrictions that have upended lives and disrupted everything from banking to auto manufacturing.  But the prospect of lockdowns in major cities looms large, with Beijing facing a growing list of restrictions.

--In another development, China said it will impose tight restrictions on “non-essential” overseas travel for its citizens to help contain the outbreak.  How non-essential is to be defined is unclear.

Separately, the effective cancellation of Advanced Placement (AP) Exams in several Chinese cities over Covid restrictions has dealt a heavy blow both to students applying to overseas universities and an international education sector already grappling with a widespread crackdown.

--In line with the above, the World Health Organization said on Tuesday China’s zero-tolerance Covid policy is not sustainable given what is known of the disease, in rare public comments on a government’s handling of the virus.

“We don’t think that it is sustainable considering the behavior of the virus,” WHO Director-General Tedros Adhanom Ghebreyesus told a media briefing.  WHO emergencies director Mike Ryan said the impact of a “zero-Covid” policy on human rights also needs to be taken into consideration alongside the effect on a country’s economy from any Covid policy.

--The Wall Street Journal reported that “U.S. health authorities and researchers are investigating why some people who appeared to recover from Covid-19 after taking Pfizer’s antiviral pill developed symptoms again soon after.

“Paxlovid is supposed to treat the newly infected, keeping them out of the hospital.  Within two weeks of appearing to get better, however, some users experienced cold-like symptoms such as sore throat and cough, according to physicians and published case reports.

“The rebound cases haven’t resulted in severe disease so far. Doctors and health authorities still encourage Paxlovid’s use among people at high risk of developing severe Covid-19.”  [Jared S. Hopkins]

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

World…6,286,192
USA…1,026,485
Brazil…664,780
India…524,190
Russia…377,464
Mexico…324,465
Peru…213,000
UK…176,708
Italy…165,091
Indonesia…156,448
France…147,257
Iran…141,209
Colombia…139,821
Germany…137,809
Argentina…128,729
Poland…116,186
Ukraine…108,449
Spain…105,444
South Africa…100,744

Canada…40,209

[Source: worldometers.info]

U.S. daily death tolls…Mon. 155; Tues. 365; Wed. 259; Thurs. 222; Fri. 250.

Foreign Affairs

North Korea: After announcing the nation was on lockdown due to its first Covid outbreak, North Korea fired three ballistic missiles toward the sea off its east coast on Thursday, South Korea and Japan said. 

Three short-range ballistic missiles fired from the Sunan area of Pyongyang, where an international airport is located and where the North had said it fired its largest intercontinental ballistic missile, the Hwasong-17, on March 24, South Korea’s Joint Chiefs of Staff said.

The missiles flew approximately 224 miles, reaching an altitude of about 55 miles.

Japan’s Defense Minister Nobuo Kishi told reporters, “A series of missile launches when the invasion of Ukraine is taking place is unacceptable.”

It was the North’s 16th known weapons test this year.  It was also the first launch since the inauguration this week of conservative South Korean President Yoon Suk-yeol, who has signaled a hard line against the North’s weapons development.

[Last Saturday, North Korea had fired a short-range, submarine-launched ballistic missile off its east coast, one that flew 372 miles, the South Korean military said.]

Concerns remain that the North is about to test a nuclear weapon.

Separately, President Biden is considering a trip to the Korean DMZ when he visits Asia later this month.  Biden will be in South Korea and Japan from May 20-24 to hold talks with his South Korean and Japanese counterparts.

China: Cardinal Joseph Zen, one of the most senior Catholic clerics in Asia, and three others who helped run a now-disbanded Hong Kong fund for protesters were arrested on charges of “collusion with foreign forces,” and later released on bail.  Zen, a 90-year-old former bishop of Hong Kong, was questioned for several hours on Wednesday at a police station, before being released.

Zen left without making a comment to the media.  Police said those arrested were suspected of asking for foreign sanctions.  All were released with their passports confiscated under the national security law.

Overall, five were arrested, including one already under custody, the five being trustees of the “612 Humanitarian Relief Fund” which helped protesters who had been arrested during pro-democracy, anti-China protests in 2019 to help pay their legal and medical fees.

Hong Kong has long been one of the most important Catholic beachheads in Asia, home to an extensive network of aid agencies, scholars and missions that have supported Catholics in mainland China and elsewhere.

Beijing imposed the sweeping national security law in June 2020 that punishes terrorism, collusion with foreign forces, subversion and secession with possible life imprisonment.

The Vatican said it was following developments “with extreme attention.”

Meanwhile, John Lee was elected as Hong Kong’s next leader last Sunday, after winning over 99% of votes cast by a largely pro-Beijing election committee.  The Election Committee’s nearly 1,500 members cast their votes in a secret ballot.

“I look forward to all of us starting a new chapter together, building a Hong Kong that is caring, open and vibrant, and a Hong Kong that is full of opportunities and harmony,” Lee said in his victory speech.

He’s a Beijing toady…that is all you need to know.

On a different issue, China’s Foreign Ministry on Tuesday slammed the United States for changing the wording on the State Department website about Taiwan, saying “political manipulation” will not succeed in changing the status quo over the island.

The State Department’s website section on relations with Taiwan has removed wording on not supporting Taiwan independence and on acknowledging Beijing’s position that Taiwan is part of China.  Washington said the update did not reflect a change in policy.

State Department spokesperson Ned Price said that while some wording may have changed, “our underlying policy has not changed. …We regularly do updates on our fact sheets.  Our fact sheets reflect, in the case of Taiwan, our rock-solid unofficial relationship with Taiwan, and we call upon the PRC to behave responsibly and to not manufacture pretenses to increase pressure on Taiwan.”

Taiwan’s Foreign Ministry said the island will continue to strengthen its defense capabilities and cooperate with the United States and other like-minded countries to promote peace, stability and prosperity.

U.S. Director of National Intelligence Avril Haines told the Senate Armed Services Committee this week: “It’s our view that (China is) working hard to effectively put themselves into a position in which their military is capable of taking Taiwan over our intervention.”

Lastly, U.S. Indo-Pacific coordinator Kurt Campbell said the United States has plans to better battle illegal fishing in the Pacific as part of increased U.S. engagement with the region to counter China’s growing influence.

Several countries in the Indo-Pacific are furious with China’s vast fishing fleet, which often violates their exclusive economic zones and causes environmental damage and economic losses.

“One of the biggest challenges in the Pacific is in fact illegal fishing,” Campbell told a forum in Washington, and that in a couple of weeks, “we are going to, through various institutions, announce a major set of capabilities designed to improve maritime-domain awareness.”

China says it is a responsible fishing country that has been cooperating internationally to clamp down on illegal fishing.  You can stop laughing.

The U.S. coastguard said previously that illegal fishing has outpaced piracy as the top global maritime security threat, and risks heightening tensions among countries vying for overexploited fishing stocks.

Israel: A highly respected, and popular, veteran Al Jazeera correspondent, Shireen Abu Akleh, a Palestinian-American, was shot dead on Wednesday during an Israeli raid in the West Bank.

News of Abu Akleh’s death reverberated across the region.  She became a household name synonymous with Al Jazeera’s coverage of life under occupation during her more than two decades reporting in the Palestinian territories, including during the second intifada, or uprising, that killed thousands on both sides, most of them Palestinians.

Al Jazeera and witnesses, including her producer who was shot in the back Wednesday, said she was killed by Israeli gunfire.  She was wearing a “Press” vest.  Israel said it was unclear who was responsible, calling it “premature and irresponsible to cast blame at this stage.”  Israeli Defense Minister Benny Gantz, promised a transparent investigation.

But for now, it comes down to an investigation of the bullet that killed Abu Akleh, and the Palestinians will not allow a joint investigation into it.  This is what would determine who killed her.  Without the sharing of this, and by this time, how can you trust the findings, it’s a highly explosive issue.

The Israeli military Friday raised two possibilities.  The first, that Abu Akleh was hit by Palestinian militants who fired dozens of bullets toward Israeli military vehicles, “which is also the direction where Ms. Abu Akleh was.”  The second, that an Israeli soldier returning fire from a jeep toward a gunman had inadvertently hit her.  The vehicle was around 200 meters from Abu Akleh, the military said in a statement.

Iran: The International Atomic Energy Agency (IAEA’s) chief said on Tuesday he is still hopeful for a deal between Iran and world powers to revive the 2015 nuclear pact but that talks were struggling and the moment could be lost.

“We are, of course, still hopeful that some agreement is going to be reached within a reasonable time frame, although we have to recognize the fact that the window of opportunity could be closed at any time,” IAEA Director General Rafael Grossi said, speaking to European Parliament committees.  He said he had also warned Iran that the country was not being transparent enough about its nuclear activities.

“In the last few months we were able to identify traces of enriched uranium in places that had never been declared by Iran as places where any activity was taking place,” Grossi said.

Essentially, talks are over.  If there was to be an agreement to revive the nuclear accord, it should have been months ago, according to the parties in the discussions.  No one will be surprised when Iran decides to test a nuclear weapon at this point, having enough enriched uranium to do so, one has to believe.  As noted weeks ago, Iran doesn’t necessarily need “weapons grade” uranium to get the task done.

But wait…the European Union’s foreign policy chief said on Friday that he believed there had been enough progress during consultations between his envoy and Iranian officials in Tehran this week to relaunch negotiations.  This is pathetic.

Afghanistan: The Taliban decreed that Afghan women will have to wear the Islamic face veil for the first time in decades, a despicable decision.

Any woman who refuses to comply and ignores official warnings to male members of her family could see a male guardian jailed for three days.

The Taliban enforced the all-encompassing burka during their first stint in power in the 1990s.  But they had not enforced it in Afghan cities since taking over last year.

Many women in Afghanistan already wear the burka but some, particularly in urban areas, just wear a simple covering over their hair.

The decree was passed by the Taliban’s Ministry for the Prevention of Vice and Promotion of Virtue.

Taliban officials described the decree as “advice” but laid out a specific set of escalating steps for anyone not complying:

In the first instance their home would be visited and their husband, brother or father would be talked to.

In the second, their male guardian would be summoned to the ministry.

In the third, the male guardian would be taken to court and could be jailed for three days.

The United States condemned the move.  For Afghan women, any progress they made under the regime of the past few decades is over.  Incredibly depressing…but then these bastards were long going to hell.

It’s also another reason to excoriate President Biden for his unnecessary full withdrawal.

Philippines: Ferdinand Marcos Jr., the son and namesake of the Philippines dictator deposed in a 1986 popular uprising, won a presidential election by a huge margin on Monday, marking a stunning comeback for the country’s most famous political dynasty.

No one can tell you they have any idea what kind of leader “Bongbong,” 64, will be but what will be watched initially is whether corruption and cronyism – already notable risks in the Philippines – worsens.  He is popular among the young.

But given his family background and his checkered political career to date, there is little reason to be optimistic.

What we do know is that Bongbong will pursue closer ties with China, and that won’t be good for the United States.

Brazil: Former leftist President Luiz Inacio Lula da Silva (“Lula”) launched his presidential bid last Saturday, calling on Brazilians to unite behind him to defend Brazil’s democracy from the authoritarian government of far-right President Jair Bolsonaro.

Without mentioning Bolsonaro by name, Lula told supporters at a rally that his adversary was unable to govern and lied constantly to the nation to hide his incompetence.

“The most serious moment the country is going through forces us to overcome our differences and build an alternative path to the incompetence and authoritarianism that govern us,” he said.  “We want to join democrats and all political positions, classes, races and religious beliefs…to defeat the totalitarian threat, the hatred, violence and discrimination hanging over our country,” he said to a cheering crowd.

Official campaigning for the October election starts in August.  Recent opinion polls show Lula maintaining a comfortable advantage over Bolsonaro, who has repeatedly questioned Brazil’s electronic voting system, raising fears he might not admit defeat.

Random Musings

--Presidential approval ratings….

Gallup: 41% approve of President Biden’s job performance, 56% disapprove; 35% of independents approve (Apr. 1-19).

Rasmussen: 41% approve of Biden’s performance, 57% disapprove (May 13).  Last week’s 45-53 split was a fluke, it seems.

--Republican voters in Nebraska picked Jim Pillen as their nominee for governor on Tuesday, siding with the University of Nebraska regent backed by the state’s outgoing governor over a rival supported by former President Trump and accused of groping multiple women.

Pillen, a hog farm owner and veterinarian, defeated eight challengers, including Charles Herbster, Trump’s boy.

But Trump-endorsed candidates won primary races in West Virginia for the House on Tuesday.

In terms of gauging the former president’s juice, though, the big races are the next two weeks in Pennsylvania, Georgia, and North Carolina.

--Federal prosecutors have opened a grand jury probe into whether former President Trump mishandled classified records that ended up at Mar-a-Lago, the New York Times reported.

Prosecutors have issued a subpoena to the National Archives and Records Administration to obtain the documents, the report said.  Authorities have also made interview requests to people who worked in the White House in Trump’s final days in office, it said.

A grand jury probe suggests the Justice Department has advanced in its inquiry, which began after NARA said it had recovered 15 boxes of documents, including classified records, that Trump took down south when he left the White House.

--A House panel issued subpoenas Thursday to House Republican Leader Kevin McCarthy and four other GOP lawmakers in its probe into the Jan. 6 insurrection, an extraordinary step that has little precedent and will further inflame partisan tensions.

The panel is investigating McCarthy’s conversations with then-President Trump the day of the attack and meetings the four other lawmakers had with the White House as Trump and his aides worked to overturn the 2020 election.

The other four subpoenas were issued to Reps. Jim Jordan, Scott Perry, Andy Biggs and Mo Brooks.  They come as the investigation winds down and the panel prepares for a series of public hearings this summer.

McCarthy said, “They’re not conducting a legitimate investigation.  Seems as though they just want to go after their political opponents.”

--According to preliminary data published on Wednesday by the CDC, deaths from drug overdoses continued rising to record-breaking levels in 2021, nearing 108,000.

The increase of nearly 15 percent followed a much steeper rise of almost 30 percent in 2020.  The number of drug overdose deaths has increased every year but 2018 since the 1970s.

A growing share of deaths came from overdoses involving fentanyl, a class of potent synthetic opioids that are often mixed with other drugs, and methamphetamine, a synthetic stimulant.  State health officials battling an influx of both drugs said many of the deaths appeared to be the result of combining the two.

--Meanwhile, the CDC also issued a report that has gun homicides in 2020 at their highest level since 1994.

The rate hit 6.1 homicides per 100,000 residents, rising 34.6% during the first year of the pandemic compared with a year earlier.

“This is the worst homicide rate in 20 years,” said Dr. Debra Houry, a deputy director at the CDC.  “It’s significant and devastating; we cannot turn away from it.”  Dr. Houry said the increase continued in 2021, based on preliminary data.

The CDC said homicide rates increased more in areas with higher poverty levels.

Homicide rates had generally been on a long-term decline since the early 1990s.

The economic stressors and social isolation in poor communities during the pandemic could be a factor in the increase in killings, said Dr. Houry.  Disruptions to mental-health services and other social programs during the pandemic also played a role.

The largest increase in firearm homicide rates for any group was among Black males between the ages of 10 to 44, the report said.

Several cities set new highs for murders in the past two years.  Philadelphia, Portland, Ore., Louisville and Albuquerque had their deadliest years on record in 2021, according to data compiled by the Wall Street Journal.

--More than 90% of Great Barrier Reef coral surveyed this year was bleached in the fourth such mass event in seven years in the world’s largest coral reef ecosystem, Australian government scientists said.

Bleaching is caused by global warming, but this is the reef’s first bleaching event during a La Nina weather pattern, which is associated with cooler Pacific Ocean temperatures, the Great Barrier Reef Marine Authority said in its annual report released Tuesday that found 91% of the areas surveyed were affected.

Coral bleaches are a heat stress response and scientists hope most of the coral will recover from the current event.

--That was certainly a scary development at a Sandals resort in the Bahamas, where three Americans were found dead and a fourth hospitalized, two different villas, no foul play suspected.

It seems all four had complained of feeling ill and the day before had sought medical treatment.

While an examination by police found no signs of trauma, the victims “showed signs of convulsion.”

Both couples were in their 60s and there was a report they had complained the day before of a strong odor, such as from an insecticide. 

Another potential cause is a faulty A/C system that leaked coolant.

--The world got a look Thursday at the first wild but fuzzy image of the supermassive black hole at the center of our own Milky Way galaxy, with astronomers calling it a “gentle giant” on a near-starvation diet.  Officially, it’s called Sagittarius A*, or Sgr A*

Hell, that ain’t no gentle giant.  It looks like the eye of Sauron!

Astronomers believe nearly all galaxies have giant black holes at their center, where light and matter cannot escape.

The colorized image unveiled Thursday is from the international consortium behind the Event Horizon Telescope, a collection of eight synchronized radio telescopes around the world.

The University of Arizona’s Feryal Ozel labeled it “the gentle giant,” and while black holes gobble up galactic material, Ozel said this one is “eating very little.”  He also said, “We love our black hole.”

If you ever see Sgr A*, look away quickly…otherwise it will destroy you. 

The Milky Way black hole is only 27,000 light-years away, a light year being 5.9 trillion miles.

---

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

Pray for Ukraine.

God bless America.

---

Gold $1810
Oil $110.18

Returns for the week 5/9-5/13

Dow Jones  -2.1%  [32196]
S&P 500  -2.4%  [4023]
S&P MidCap  -2.0%
Russell 2000  -2.5%
Nasdaq  -2.8%  [11805]

Returns for the period 1/1/22-5/13/22

Dow Jones  -11.4%
S&P 500  -15.6%
S&P MidCap  -14.5%
Russell 2000  -20.2%
Nasdaq  -24.5%

Bulls 27.6…lowest since Feb. 2016, when S&P 500 was roughly 1900
Bears 40.8…highest since Mar. 2020, the market bottom after the nation locked down

Hang in there.

Brian Trumbore

---