Week in Review

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Week in Review

05/07/2022

For the week 5/2-5/6

[Posted 9:00 PM ET, Friday]

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Edition 1,203

I received a phone call this morning that threw me for a loop, and I discuss why at the end of the column.  I have to admit it impacted my ability to put this week’s review together.

Putin’s War continues and some of us wonder just what he will do on May 9, Victory Day, Russia’s celebration of victory over Nazi Germany, and whether Putin will tout victory of some kind in Ukraine.

Survivors of the siege of Mariupol have trickled out, but far less than 1,000 when up to 100,000 civilians might remain in the key port city.  The devastation of both Mariupol and the Azovstal steel plant, once one of Europe’s largest, is beyond sickening, especially knowing that scores of wounded Ukrainian soldiers and civilians are essentially receiving no medical care. I shudder to think about the untreated injuries the soldiers have suffered.

And we all should shudder at the cost of the war, which is expected to rise to at least $600 billion over time, Putin causing some $4.5 billion in damages a week.

Further, if you thought I was exaggerating the looming global food crisis as being one of my reasons for being so gloomy, I hope you watched the lead on “60 Minutes,” where Scott Pelley summed it up… “Food is a weapon in this war.”

Meanwhile, as for the economy and the Federal Reserve, the great Wall Street trader, and philanthropist, Paul Tudor Jones, was on CNBC Tuesday morning and said he “can’t imagine a worse environment for financial assets than we have now,” noting the Fed is in uncharted waters.

Of course I totally agree.

The Federal Reserve then raised interest rates one-half percent, as expected, on Wednesday, and in one of the stupidest rallies of all time, stocks soared, the Dow Jones rising over 900 points, and just as I told you I would do last week, I was furiously shorting the market during Powell’s press conference, the rally sparked by a comment he made that a hike of 75 basis points wasn’t in the cards.  This is nuts, I thought.

The next day the market reassessed, as I cover down below, the market tanked, and I sold my position.

Yes, it’s likely the inflation data will improve as we roll out of the 2021 comparisons in the coming months, but it’s not going to improve that much.  The price of gas at the pump is right back to $4.27 a gallon, nationwide, vs. $4.16 a month ago, making a mockery of the Biden administration’s desperation releases from our Strategic Petroleum Reserve, and Thursday, Freddie Mac, in its weekly release, said a 30-year fixed mortgage was up to 5.27%, from 5.10% a week prior, the highest in nearly 13 years, and 2 percent above the 3.22% of early January.

Of course that is going to have a major impact on a key sector of the economy, the housing market, and the likes of Home Depot, Whirlpool…manufacturers of anything that goes into a home.

You also still have major supply chain issues, as corporate America has been telling us in their quarterly earnings reports.

So next week brings new inflation data and I can guarantee Wall Street will attempt to rally if the figures tick down even a fraction, and I’ll probably be right back in taking the other side.

Lastly, I have to admit I was surprised by the reaction to the leaked Supreme Court draft of an upcoming decision that will likely overturn Roe v. Wade.

We all heard the oral arguments in December and got a good sense then of where this was headed, but I grant you the extraordinary leaking of the draft opinion was rather disturbing.  This too is covered in detail below.

So we move on…and a review of the war in Ukraine as the week unfolded….

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--Sunday, House Speaker Nancy Pelosi met Ukraine’s president in a previously unannounced visit to Kyiv, becoming the highest-ranked American official to travel to the country since Russia’s invasion.

“Our delegation traveled to Kyiv to send an unmistakable and resounding message to the entire world: America stands firmly with Ukraine,” Pelosi said in a statement.

Volodymyr Zelensky showed footage of Pelosi’s visit on his Ukrainian-language Twitter account early Sunday.  “Thank you for helping to protect the sovereignty and territorial integrity of our state!” he tweeted.

Pelosi’s delegation was comprised of House Democrats, which drew some criticism from the other side of the aisle.

“Our commitment is to be there for you until the fight is done,” Pelosi told Zelensky in the video.  “Your fight is a fight for everyone.”

--The United Nations announced it was conducting a “safe passage operation” for civilians from the Azovstal steel works in Mariupol.  The operation began on April 29 and is being coordinated with the International Committee of the Red Cross, Russia and Ukraine, the UN said.

And so continued, in fits and starts, but survivors dribbled out, having been underground for weeks, and during the course of the week, it was not always clear just where they were all going since they had to go through Russian checkpoints to get to territory held by Ukraine.  Many were just being sent to Russia.

--Russian Foreign Minister Sergei Lavrov on Sunday said the upcoming anniversary of Russia’s liberation at the end of World War II will have no bearing on Moscow’s military operations in Ukraine.  Speaking on Italian television, Lavrov said, “Our soldiers won’t base their actions on a specific date.  We’ll commemorate our victory in a solemn manner but the timing and speed of what is happening in Ukraine will hinge on the need to minimize risks for civilians and Russian soldiers.”

Lavrov also said in the interview that Russia is committed to working to prevent a nuclear war ever beginning.  “Western media misrepresent Russian threats,” he said.  “Russia has never interrupted efforts to reach agreements that guarantee that a nuclear war never develops.”

Of course this is the same guy who days earlier said the West should not underestimate the elevated risks of nuclear conflict over Ukraine.

--Monday, speaking to the Italian outlet Mediaset in an interview released Sunday, Lavrov claimed that President Zelensky “puts forward an argument of what kind of Nazism can they have if he himself is Jewish.”

Lavrov, according to a transcript posted on the Russian foreign ministry website, then added: “So what if Zelensky is Jewish.  The fact does not negate the Nazi element in Ukraine. I believe that Hitler also had Jewish blood…some of the worst anti-Semites are Jews.”

Israeli Prime Minister Naftali Bennett said that he viewed Lavrov’s comments “with utmost severity,” calling them lies and demanding that “use of the Holocaust of the Jewish people as a political tool must cease immediately.”

Israeli Foreign Minister Yair Lapid slammed Lavrov for alleging Adolf Hitler may have “had Jewish blood” and summoned the Russian ambassador for “clarifications.”

Since Russia’s invasion, Israel has sought to keep a delicate balance between the two sides, but remarks by the Russian foreign minister to an Italian channel sparked anger in Israel.

Moscow has previously said it wants to “de-militarize” and “de-Nazify” Ukraine.

Lapid, in a statement from the foreign ministry on the “grave remarks,” condemned the comments.

“Foreign Minister Lavrov’s remarks are both an unforgivable and outrageous statement as well as a terrible historical error,” Lapid said.

“Jews did not murder themselves in the Holocaust.  The lowest level of racism against Jews is to accuse Jews themselves of antisemitism.”

Dani Dayan, director of the Yad Vashem, the World Holocaust Remembrance Center in Israel, also criticized Lavrov’s statement, calling them “unfounded, delusional and dangerous remarks which deserve to be condemned.”

In a speech at the end of March to the Israeli parliament, Zelensky called on Israel to “make a choice” by supporting Ukraine against Russia and asked the Jewish state to provide it with weapons.

Israel has done little…helmets and bulletproof vests to Ukrainian rescue workers, but no weapons.  But now there is a mood to do more, but still no advanced weaponry.

There has also been little public pressure on Naftali Bennett to pick a side from the Biden administration or from within Israel.  But Moscow seems to be reacting to signs Israel was shifting its position closer to Kyiv.

--Also Monday, the United States said that intelligence showed Moscow was preparing to annex vast new swaths of Ukrainian territory in the coming days.

A move by the Kremlin to formally claim as part of Russia parts of eastern Ukraine, specifically the regions of Donetsk and Luhansk, along with the southern city of Kherson, would throw the conflict into a new explosive phase.

The moves would echo the annexation of Crimea in 2014, but the important difference is that Ukrainian forces are fighting to retain control of their territory.

The U.S. expects the Russians to stage fraudulent referendums in mid-May in which it will appear that citizens of Donetsk, Luhansk and Kherson will appear to express their support for leaving Ukraine and becoming part of Russia.  Russia would then install puppet governments.

Michael Carpenter, the U.S. ambassador to the Organization for Security and Cooperation in Europe, told reporters at the State Department that the votes would be an attempt to give the annexations a “veneer of democratic or electoral legitimacy.”  He called the move “straight out of the Kremlin playbook.”

--Ukraine said Monday that it sank two Russian naval vessels in the Black Sea, as a Russian missile attack killed civilians in Odessa.  Both vessels, patrol boats, were hit near Snake Island by armed drones, according to Ukraine.  The military said it had been carrying out airstrikes on the strategic island, 22 miles off the coast.  Russian forces captured the island on the first day of the war.

--Tuesday, the Russian Foreign ministry fanned the flames…accusing the Israeli government of supporting a “neo-Nazi regime” in Ukraine.

In a text published online, officials accused Israeli Foreign Minister Lapid of making “anti-historical statements” which “explained the course of the current Israeli government in supporting the neo-Nazi regime in Kyiv.”

--Pope Francis revealed that during a meeting with Hungarian Prime Minister Viktor Orban, he was told that Vladimir Putin intends to end his invasion of Ukraine next week.

“When I met Orban, he told me that the Russians have a precise plan, and that the war will end on May 9th,” the pope told an Italian newspaper in an interview.

“I sure hope so. That would explain the speed of the military operations in the last few days,” he continued, noting that Russia has been focused on taking the Black Sea ports away from Ukraine.

“I have a bad feeling about it all, I’ll admit,” Francis said.  “I’m very pessimistic. However, it is our duty to do all we can to stop the war.”

The pope met with Orban on April 21.

But the pope said during the interview that he wanted to meet with Putin, saying he must travel to Moscow before visiting Kyiv.

“First, I must go to Moscow, I want to meet Putin first of all,” he said.  “But in the end, I am just a priest, what can I possibly achieve?  I’ll do what I can.  If Putin decided to leave the door open.”

Putin has yet to accede to the Vatican’s desire for a meeting and Francis is wrong.  He should go to Kyiv, this weekend, and he needs to call out Putin by name.

The pope added: “I fear that Putin cannot, and does not, want to have this meeting at this time.  But how can you not stop so much brutality?”

The pope did have a good comment on Patriarch Kirill of the Russian Orthodox Church in the same interview.  As I’ve been writing, Kirill, the Putin butt-boy, has given the war his full-throated backing.  Francis said Kirill “cannot become Putin’s altar boy.”

The pope told the newspaper about a March 16 conversation over Zoom that he had with Kirill, and Francis said, Kirill was listing off all the justifications for the war from a sheet of paper he was holding.

“I listened and then told him: I don’t understand anything about this,” Francis said.  “Brother, we are not state clerics, we cannot use the language of politics but that of Jesus.  We are pastors of the same holy people of God. Because of this, we must seek avenues of peace, to put an end to the firing of weapons.”

The Russian Orthodox Church, in a statement Wednesday, responded, “It’s regrettable that after a month and half after the conversation with Patriarch Kirill, Pope Francis chose the wrong tone to convey the content of this conversation.”

But the statement went on to say that Kirill had sought to help the pope see the pro-invasion point of view, repeating Russian claims about attacks on Russian speakers in Ukraine.

Kirill then told Francis that “promises were not kept” about NATO not expanding after the end of the Soviet era.  [Washington Post]

Meanwhile, one leading church figure did make it to Ukraine…New York Archbishop Cardinal Timothy Dolan, who had been touring refugee and aid facilities in Poland and Slovakia.

While in Ukraine, Dolan met with several internally displaced Ukrainians, and there were some touching photos of him and the elderly. Dolan also said, “I blame Putin, and I’m not afraid to say that.”

The United Nations estimates about 7.7 million Ukrainians have been displaced, on top of the 5.7 million refugees that have entered Poland and other neighboring states.

Dolan beseeched his social-media followers to continue donating goods and money to relief efforts in Ukraine.

--British Prime Minister Boris Johnson told Ukraine on Tuesday he believed it would defeat Russia and expose the “gigantic error” of the Kremlin’s invasion as he invoked Winston Churchill to underline his support for Kyiv.

Becoming the first Western leader to address Ukraine’s parliament since the start of the invasion, Johnson saluted the country’s bravery in exploding “the myth of Putin’s invincibility.”

“I have one message for you today: Ukraine will win, Ukraine will be free,” Johnson told the lawmakers by videolink, after standing for the Ukrainian national anthem and being introduced by the speaker.

“This is Ukraine’s finest hour, that will be remembered and recounted for generations to come,” he said, echoing words spoken by Churchill in 1940 when Britain faced the threat of being invaded and defeated by Nazi Germany.

Johnson announced a further $375 million in military aid to Ukraine, including electronic warfare equipment.

“The so-called irresistible force of Putin’s war machine has broken on the immoveable object of Ukrainian patriotism and love of country,” Johnson said.  “We will carry on supplying Ukraine, alongside your other friends, with weapons, funding and humanitarian aid, until we have achieved our long-term goal, which must be to fortify Ukraine so that no one will ever dare to attack you again.”

Johnson’s critics back home questioned the timing of the address, saying it was a way of boosting his ratings ahead of local elections on Thursday.

--Ukrainian defenders of the steel plant in Mariupol said Russian forces had started to storm the last pocket of resistance, Tuesday.

--Vladimir Putin, in a phone call with French President Emmanuel Macron, urged the West to put pressure on Kyiv to halt “atrocities,” Russian news agencies said.  Putin told Macron that the West could help end “war crimes (and) massive shelling of towns and settlements in Donbas,” leading to civilian casualties.

Unbelievable.  Russia denies alleged war crimes by its own forces and is blaming the deaths of civilians on what it calls nationalists and “neo-Nazis.”

“The West could help put an end to these atrocities by exerting appropriate influence on the Kyiv authorities and by halting arms deliveries to Ukraine,” RIA news agency cited the Kremlin as saying.

--Wednesday, European Commission President Ursula von der Leyen laid out details of another package of sanctions against Russia to be agreed to by EU countries in the coming days.

Von der Leyen said the bloc was ending its dependency on Russian oil – with purchases banned by the end of the year.

She acknowledged that it would not be easy, as some countries were dependent on such imports.

Hungary has opposed an embargo on Russian fuels and has threatened to veto the plan.  Slovakia said it is too dependent on Russian oil and will be for years.

There is also no consensus among the EU’s 27 members on winding down the use of Russian natural gas – a fuel which has not yet been targeted by EU sanctions.

Germany is the world’s top buyer of Russian gas, though Berlin has been reducing its reliance on same since 2020.

--Russian Defense Minister Sergei Shoigu said the Russian military would consider NATO transport carrying weapons in Ukraine as targets to be destroyed, RIA news agency quoted him as saying. Shoigu also said that the Ukrainian fighters holed up in the sprawling Azovstal plant in Mariupol were kept under secure blockade after Vladimir Putin ordered that they be hermetically sealed off.

--A Russian submarine in the Black Sea fired two Kalibr cruise missiles at targets in Ukraine, Russia’s defense ministry said Wednesday.

Last week, Russia first reported using submarine strikes against Ukrainian targets.

--According to a report in the New York Times on Wednesday, U.S. intelligence has been helping Ukraine target and kill nearly a dozen Russian generals.  The administration tip-toed around the report, but if true, great!

The U.S. also passed on intelligence on Russia’s Black Sea flagship, Moskva, ahead of its sinking, NBC News reported.

--Thursday, President Zelensky, in a video address to a medical charity group, said Russia has devastated hundreds of hospitals and other medical institutions and left doctors without drugs to tackle cancer or the ability to perform surgery.

Zelensky said many places lacked even basic antibiotics in eastern and southern Ukraine, the main battlefield.

“If you consider just medical infrastructure, as of today Russian troops have destroyed or damaged nearly 400 healthcare institutions: hospitals, maternity wards, outpatient clinics.”

In areas occupied by Russian forces the situation was catastrophic, he said.

“This amounts to a complete lack of medication for cancer patients. It means extreme difficulties or a complete lack of insulin for diabetes. It is impossible to carry out surgery.  It even means, quite simply, a lack of antibiotics.”

--The Russians continued to obliterate the Azovstal steel works with an estimated 200 civilians still in hiding underground.

Vladimir Putin said Russia was prepared to provide safe passage for the civilians but reiterated calls for Ukrainian forces inside to disarm, which there is zero indication they will do.

Russian forces breached the plant’s defenses for a third day despite an earlier pledge by Moscow to pause military activity to permit civilian evacuations.

The Kremlin denies Ukrainian allegations that Russian troops stormed the plant.

In his evening address, President Zelensky said that Russian shelling and attempts to wrest control of the steelworks were ongoing.

“Just imagine this hell. And there are children!  More than two months of constant shelling, bombing, constant death nearby,” he said.

--In an interview with the AP on Thursday, Belarusian President Alexander Lukashenko said he didn’t expect the war to “drag on” as long as it has.  “I am not immersed in this problem enough to say whether it goes according to plan, like the Russians say, or like I feel it,” he said, adding, “I want to stress one more time: I feel like this operation has dragged on.”

--The Wall Street Journal reported Thursday that a series of unexplained explosions inside Russia raises the specter of a wider war in the coming weeks.  That includes sabotaged rail lines, fires at ammunition depots, and apparent helicopter strikes on oil facilities just across the border from Ukraine.  Officials in Kyiv deny any role in the incidents, while some point to divine intervention.

--Friday, a senior Ukrainian official said a new attempt was under way “at the moment” to evacuate civilians trapped with Ukrainian fighters in the Azovstal steel works.

Andriy Yermak, the head of the presidential staff, gave no details and it was not immediately clear what stage the new rescue effort was as UN Secretary-General Antonio Guterres told the Security Council on Thursday that a third operation was under way to evacuate civilians from Mariupol and Azovstal.

--Germany announced today it was sending seven howitzers to Ukraine.  The Panzerhaubitzen 2000 system has a range of 25 miles.  This is a big step for Berlin and the Olaf Scholz government.

--The British military said Friday that Russia is still desperate for some sort of “symbolic” victory ahead of May 9.  But Russian losses of personnel, equipment and munitions “continue to build and frustrate their [wider] operational plans in southern Donbas.”

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--Pope Francis on Sunday described the war in Ukraine as a “macabre regression of humanity” that makes him “suffer and cry,” calling for humanitarian corridors to evacuate people trapped in the Mariupol steelworks.

Noting the month of May is dedicated to Mary, the Mother of God, Francis asked for month-long prayers for peace.

“My thoughts go immediately to the Ukrainian city of Mariupol, the city of Mary, barbarously bombarded and destroyed,” he said. “I suffer and cry thinking of the suffering of the Ukrainian population, in particular the weakest, the elderly, the children,” he said.

--Ukraine’s farmers continue to plant spring grains and oilseeds despite Russian airstrikes on agricultural infrastructure, including grain elevators.

Planting is ongoing in all but one region despite fighting in the east and south, but often the fields have to be cleared of mines and unexploded shells.

--German exports to Russia plunged 62 percent in March from the previous month, government statistics showed Wednesday, as sanctions aimed at starving the Russian economy took hold.

German companies nevertheless sold more than $1 billion to Russia in the month, as some firms not affected by the sanctions were reluctant to cut ties.  Packaged medicines are an important item for Russia that it continues to buy from Germany.

Bayer, the chemical and health products giant, has ceased all spending in Belarus and Russia but continues to sell essential products in both.

Activists and pro-Ukrainian groups aren’t happy, but the company said:

“Withholding essential health and agricultural products from the civilian populations – like cancer or cardiovascular treatments, health products for pregnant women and children as well as seeds to grow food – would only multiply the war’s ongoing toll on human life.”

Some commentary….

Walter Russell Mead / Wall Street Journal

“The war in Ukraine is the most serious European military conflict since World War II, and it threatens to produce the greatest nuclear crisis since the height of the Cold War.  Both sides have been repeatedly surprised by the intense military conflict, and both sides keep raising the stakes even as the danger of nuclear confrontation grows.

“For Mr. Putin the surprises were almost all bad. The initial attack collapsed into a slog through hostile terrain by an army whose leadership, intelligence and logistical failures have exposed the inner weakness of the decadent Russian state.  Far from dividing and intimidating Europe, the attacks have energized and united the North Atlantic Treaty Organization, led to a revolution in German strategic thinking, and made it likely that Sweden and Finland will join the alliance even as it moves more forces closer to Russian territory.

“Washington has encountered some strategic surprises of its own.  President Biden’s strategy called for ‘parking Russia,’ believing that diplomacy could prevent new conflicts in Eastern Europe. That calculation was obviously wrong.  Once the war started, Ukraine did not, as Washington anticipated, quickly collapse.  Ukraine’s initial successes led the U.S. to provide more help, but Washington’s unprecedented sanctions failed to weaken Mr. Putin’s resolve or shake his domestic political support.

“Having been drawn this far into the conflict, Washington cannot now accept a Ukrainian defeat without a serious loss of honor and prestige.  But even discounting the nuclear risks, the task of assisting a bankrupted Ukraine to prevail against larger Russian forces in a war of attrition is a daunting one.  Currently, the Biden administration is committed to winning a war it thought wouldn’t happen on the side of a country it believed to be helpless in the face of dangers and difficulties it does not yet know how to assess.

“The revolution in American thought about Ukraine is reminiscent of the changed perceptions of Korea in 1950.  At that time, American policy makers signaled that South Korea was outside Washington’s defense perimeter – until North Korea’s invasion led them to realize how important Korea was.

“Before Mr. Putin’s invasion, the West generally thought of Ukraine as a strategic and economic backwater. It was a weak and corrupt state whose politics reflected shadowy struggles among oligarchs. Today we think of Ukraine as a strong democratic state whose security is critical to European stability.

“This change in Western perceptions makes compromise much harder to find. A few weeks ago, appeasing Mr. Putin by feeding him more slices of Ukrainian territory in a ‘compromise peace’ looked to many Western policy makers like the natural and necessary conclusion to the war. That approach now seems both morally repugnant and strategically vain.  This changed view explains why Defense Secretary Lloyd Austin and Mrs. Pelosi have begun to speak of degrading Russian power and seeking victory for Ukraine.

“This changing Western approach confirms Mr. Putin’s belief that the conflict between Russia and the West over Ukraine is an existential one for Russia.  Without Ukraine, Russia cannot truly be a great power, and the West is willing to fight to prevent Russia from achieving what, from Mr. Putin’s perspective, is an indispensable goal.

“What is most notable about this crisis so far is the speed with which it has moved toward threats of nuclear war.  Senior Russian officials like Foreign Minister Sergei Lavrov are openly speculating about the possibility of nuclear escalation, presumably in hopes of deterring Western support for Ukraine….

“The prospect of tactical nuclear strikes on the European mainland would, Mr. Putin undoubtedly hopes, test the cohesion of the NATO alliance.  While nobody wants to be quoted on the record, senior Europeans are already whispering to sympathetic journalists about concerns that the Biden administration is escalating too far and too fast.  Would France and Germany continue to back American policy if Russia strikes Ukrainian targets with nuclear warheads?  Is American public opinion ready for a replay of the Cuban missile crisis?

“The Ukraine war is not yet 10 weeks old, and it has already revolutionized world politics.  The next 10 weeks could be even more dramatic.  President Biden could soon face as stern a test as any American president has since World War II.  We must hope, and pray, that he is up to the job.”

Nicholas Eberstadt / Washington Post

“The Russian army’s strangely stumble-footed invasion of Ukraine is only the latest reminder of the pervasive and long-standing ‘human resource’ woes that frustrate Vladimir Putin’s aspirations for superpower status.  Russian military tactics and field performance may improve, but the greater demographic constraints on Putin’s ambitions are unforgiving.  In the coming years, those constraints will brutally ratchet down the Kremlin’s options.

“With vast territory and abundant mineral reserves, Russia since the days of the czars has banked upon parlaying natural wealth into geopolitical power.  The strategy of becoming an ‘energy superpower’ was always a dubious one, but especially so today.  Putin is flailing against the history of modern economic development.  The wealth of modern nations is overwhelmingly generated by human beings and their capabilities.  Natural resources (land, energy and all the rest) have accounted for a shrinking share of global output for the past two centuries, with no end in sight.

“Thus, for all its vaunted oil and gas riches, Russia’s export earnings last year were actually lower than Belgium’s.  Like other Western democracies, Belgium manages to augment and unlock the economic value residing in human beings.  Putin’s petro-kleptocracy is woefully inept on both counts.

“When Putin does pay attention to demography, he obsesses over headcounts – for him, ‘capitas’ are more important than ‘per capitas.’ He fixates on raising birthrates and seizing neighboring territory instead of enhancing the capabilities and productivity of his entire population.

“Russia is depopulating – even after Putin’s annexation of Crimea in 2014, its total numbers are lower today than when the Soviet Union collapsed.  Russia’s working-age population and its pool of prospective 18-year-old conscripts are also falling.  Shrinking societies can prosper, as Germany and Japan have shown.  Kremlin policies all but preclude that path for Russia.

“It is not that Russia lacks talented, enterprising, impressive people, as anyone who has spent time there knows.  Nor does it suffer a shortage of formal education.  According to one major global assessment, mean years of schooling for Russia’s working age (15-64) population were comparable in 2015 to levels in Denmark, France and Sweden, and well above those in Austria and New Zealand. The problem is that Russia has somehow managed to create a high-education, low-human-capital society. The syndrome was evident under the Soviets, but it is even more acute under Putin’s malign rule….

“Meanwhile, much of the rest of the world beyond Russia’s borders is speeding ahead with improvements in health, education, innovation and wealth.  Russia’s dire basic demographic problems are relatively well-known – its declining prospective global shares of total population, working-age manpower, etc.  But the demography of Russia’s squandered human potential darkens its prospects further still.

“Putin’s recognition of this dismal reality may have stoked his appetite for ever-greater risk-taking in Georgia, Crimea and now Ukraine.  His nuclear saber-rattling is the tactic of a leader playing a weakening hand.  An open and liberal Russia could still prosper, but it cannot become a normal country under the rule of a petro-kleptocracy."

Editorial / Washington Post

“Each day brings fresh information about the extent of Russian atrocities in Ukraine; though it is difficult to keep up with the news, it is important never to grow numb.  On Wednesday, for example, the Associated Press published a painstaking reconstruction of the March 16 Russian aerial attack on Mariupol’s main theater – packed at the time with civilians, including children.  The AP report establishes that the death toll was probably almost 600, nearly double previous estimates.  Meanwhile, some 100,000 civilians remain trapped in Mariupol, which Russia has reduced to rubble; apparently, some 200 are still stuck underground at a fortress-like steel factory with the last Ukrainian combatants, who, in turn, are under furious Russian assault. Russia has permitted only scattered and limited evacuations. And in the Kyiv area, officials have recovered the bodies of at least 1,200 civilians in areas from which Russian forces have recently retreated.

“Horrific as they are, the destruction and killing are not entirely wanton. They are being carried out in pursuit of a political objective; to erase Ukraine not only as a state but even as a concept. That conclusion emerges from the rhetoric of Russia’s leaders and state media, as well as from quietly accumulating facts on the ground.  In occupied areas, including Kherson, the largest Russian-held city (population 300,000), authorities have imposed an Internet blackout, announced that next year school will be taught in Russian, introduced Russian administrative documents and initiated a gradual monetary conversion to the ruble. Demonstrations against the occupation in Kherson have ended because organizers have been arrested. Statues of Lenin have been reinstalled in various localities near Kherson from which they had been removed. There are reports that Moscow plans to stage pro-annexation referendums in the areas it controls, as well as in two spurious ‘people’s republics’ it previously recognized, Donetsk and Luhansk, after which it will assert its sovereignty.  It’s all strikingly similar to the strategy President Vladimir Putin employed to annex Crimea in 2014.

“The Ukrainian government has said that many thousands of its people have been forcibly removed to Russia, a claim Russia’s own state-run news service, TASS, indirectly lent credence to Wednesday when it reported that 1.1 million people, including approximately 300,000 citizens of Ukraine and other countries, have been taken from Ukraine to Russia during the war. The historical echo in this case is of the mass deportations carried out by the Soviet regime during the early 1930s, as part of a campaign by Joseph Stalin to subdue Ukraine through political repression and forced agricultural collectivization and the famine it caused.

“One should not overstate the parallels to the Soviet-era famine, in which 3.9 million Ukrainians – out of a total of 5 million in the U.S.S.R. as a whole – lost their lives. The death toll in today’s war, substantial as it is, does not approach that.  But one should not understate the parallels either.  In blatant disregard of Ukraine’s recognized status under international law, Mr. Putin has declared that it is not a real state but rather the product of anti-Russian foreign machinations, which Russia must counter with force.  This can only be called a war of conquest – and Mr. Putin is deadly serious about it.  His opponents, led by the United States, must be equally serious about stopping him.”

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Biden Agenda

--In a bombshell, POLITICO obtained an initial draft majority Supreme Court opinion written by Justice Samuel Alito that shows the court has voted to strike down the landmark Roe v. Wade decision.

The draft opinion is an unflinching repudiation of the 1973 decision which guaranteed federal constitutional protections of abortion rights and a subsequent 1992 decision – Planned Parenthood v. Casey – that largely maintained the right.  “Roe was egregiously wrong from the start,” Alito writes.

“We hold that Roe and Casey must be overruled,” he writes in the document, labeled as the “Opinion of the Court” and later authenticated.  “It is time to heed the Constitution and return the issue of abortion to the people’s elected representatives.”

This is a draft, and justices can and sometimes do change their votes as draft opinions circulate and major decisions can even be subject to vote-trading, right up until the decision is unveiled.  The court’s holding will not be final until it is published, most likely by the end of June when the current court term expires.

The immediate impact of the ruling as drafted in February would be to end a half-century guarantee of federal constitutional protection of abortion rights and allow each state to decide whether to restrict or ban abortion.  For all we know, there may have already been changes to the draft.

What upset so many people is that no draft decision in the modern history of the court has been disclosed publicly while a case was still pending.

It seems clear that four of the other appointed justices – Clarence Thomas, Amy Coney Barrett, Brett Kavanaugh and Neil Gorsuch – had voted with Alito.

Chief Justice John Roberts called it “absolutely appalling” Thursday that someone leaked a draft opinion of such import and vowed that the unprecedented disclosure won’t stop the Supreme Court’s work.

In a Washington Post/ABC News poll conducted last week, 54% of Americans said the Supreme Court should uphold Roe, while 28% said the court should overturn it. (Another 18% had no opinion either way.)

A CNN survey in January found that 69% of Americans said they would not like to see the Supreme Court overturn Roe, compared to 30% who said they would.

Another CNN poll conducted following the leak of the draft, found 66% say Roe v. Wade should not be completely struck down, and 59% would support Congress passing legislation to establish a nationwide right to abortion, including 81% of Democrats, 65% of independents and 30% of Republicans.

A 2021 poll by Pew Research Center found that 59% of U.S. adults believed abortion should be legal in all or most cases, while 39% though it should be illegal in most or all cases.

Just to look at an individual battleground state, a new Meredith Poll in North Carolina, released Tuesday, found that 52.6% of participants want North Carolina to pass a law keeping the current provisions of Roe or expanding abortion access further.  Just under 40% of respondents want a law that severely restricts access to abortion or makes it illegal in all circumstances.

At least 26 states are expected to ban abortion if Roe v. Wade falls, 13 of them “trigger” states like Oklahoma, with bans set to take effect as soon as the justices rule against Roe.

Various opinion….

Editorial / New York Daily News

“Notwithstanding the investigation launched Tuesday by Chief Justice John Roberts…we don’t yet know and may never learn who spirited out the full 98-page first draft, a document confirmed as authentic.  Perhaps someone from one of the court’s three liberal chambers did so to ignite a public blowback and try to force reconsideration of an impending reversal.  Perhaps a person tied to the majority – likely to be comprised of Alito, Clarence Thomas, Neil Gorsuch, Amy Coney Barrett and Brett Kavanaugh – did so to prevent one of the five from getting cold feet.   Perhaps it was just an angry clerk making mischief.

“Regardless, the leaker’s motive was almost certainly to inject a heavy dose of fear and intimidation into the minds of The Nine and prevent the court’s deliberations from proceeding on their own terms.  That will shatter confidence within the court and about the court in ways that can never be repaired.

“Speaking of things that are left in shards on a Washington floor, Kavanaugh four years ago said that he viewed Roe as ‘settled law,’ an assertion that must now be viewed as contemptuous of his obligation to tell the truth.  It was on the basis of that straight-faced claim that Sen. Susan Collins, played like a cheap fiddle, voted to confirm the justice, getting him to a bare minimum 50 votes.  Tuesday, she caterwauled that if this is the final decision with Kavanaugh and Gorsuch on board, it ‘would be completely inconsistent with what’ the two ‘said in their hearings and in our meetings in my office.’

“We accept and respect that many Americans hold a sincere moral opposition to terminating a pregnancy, which eventually becomes a life with its own rights. We similarly accept and respect many Americans’ moral belief that a woman’s body – which encompasses the zygote-turned-embryo-turned fetus’ entire world – is hers and only hers to control, especially early on. So too, millions of Americans who support reproductive freedom with limits are genuinely torn on where and how to draw the line, which is why Roe’s viability line, after conception but well before birth, has intuitive resonance for many….

“Roe, which rooted the right to abortion in an important but muddy privacy right, is no model of principled constitutional jurisprudence; the fetal viability standard it established, which was 24-28 weeks at the time, has moved down below 20 weeks as health care has advanced.  Nor is Casey, which invented a hard-to-apply ‘undue burden’ standard, beyond amendment.

“But in a single nation, the prospect of radical state-by-state bans with no exceptions even for rape would create an untenable situation in which the right to an abortion – often sought by women in dire straits, or struggling with risky pregnancies that threaten their life or health – becomes contingent on one’s ability to travel to another state.  Since when should freedoms hinge on access to a few thousand dollars and a car or a plane ticket?”

S.E. Cupp / New York Daily News

“I am pro-life.  I hate abortion, and wish desperately that women confronting that difficult and awful choice felt they had alternatives to ending the life of an unborn child. But I also believe deeply in democracy.  In this country, the Supreme Court, the highest in the land, settles these issues and we must accept them.

“Roe v. Wade is six years older than I am. I have always accepted, like most Americans, that abortion should be legal – and, like most Americans, that it should come with some restrictions.  Overturning the law meant overturning the will of the people, something Republicans have become increasingly comfortable doing. 

“But I have to wonder if they’d be so comfortable if liberal justices overturned conservative landmark opinions, like the gun rights case D.C. v. Heller, or the money-in-politics case, Citizens United vs. FEC, or the religion case, Burwell v. Hobby Lobby.  If President Biden or another Democratic president gets the opportunity to appoint more liberal judges, these might not be hypotheticals.

“Which gets to the next concern, which is faith in the courts.

“If the next group of justices can overturn settled law that is widely popular and accepted even by judges as ‘the law of the land,’ what is the point of the Supreme Court?  Unlike the other two branches, the judicial branch is supposed to act apart from political whims. If this court overturns, Roe, Obergefell v. Hodges, the gay marriage ruling, or myriad other landmark cases, who will have faith that justice in America is blind?

“Then there are the political implications.  The good news for Democrats is that this unpopular move by the court would give them a fighting chance in what was poised to be a bloodbath in November.  I can’t think of a more galvanizing issue.

“Finally, there’s the leak itself….

“Whatever you think of the leak, and however you come down on abortion, this news is deeply troubling and has vast implications, not just for women but all American voters.  And it’s just another in a long line of chilling consequences from one election in 2016, an election that in so many unforgivable and irreparable ways, shredded the democratic institutions that hold this country up.”

Peggy Noonan / Wall Street Journal

“Let’s start with true anger and end with honest hope. The alarm many felt at the leaking of an entire draft Supreme Court decision shouldn’t be allowed to dissipate as time passes.  Such a thing has never happened.  Justice Samuel Alito’s preliminary opinion being taken from the court, without permission or right, and given to the press was an act of sabotage by a vandal.  It hardly matters whether the leaker was of the left or right.  It reflected the same spirit as the Jan. 6 Capitol riot – irresponsible destructiveness.  As the book has been thrown at the rioters, it should be thrown at the leaker….

“Apart from the leaker, here is what I always want to say when the issue is abortion. The vast majority of human beings on both sides are utterly sincere and operating out of their best understanding of life.  Yes, there were plenty of people the past 50 years who used ‘the issue’ to accrue money and power. But this long life tells me the overwhelming majority of people held their views for serious reason. They sincerely saw the prohibition of abortion as a sin against women; they sincerely saw abortion on demand as a sin against life.

“You have to respect the opposing view.

“And you have to respect that as a wound, the Roe v. Wade decision never healed, never could. Josh Prager, in his stupendous history of that decision, ‘The Family Roe,’ noted the singular fact of this ruling: Other high court decisions that liberalized the social order – desegregation of schools, elimination of prayer in the schools, interracial marriage, gay marriage – were followed by public acceptance, even when the rulings were very unpopular.  Most came to have overwhelming support. But not Roe.  That was the exception.  It never stopped roiling America.  Mr. Prager: ‘Opposition to Roe became more hostile after its issuance.’

“Why? Because all the other decisions were about how to live, and Roe was about death.  Justice Alito seems to echo this thought in his draft opinion, which would turn the questions of legality and illegality over to each state.  This is not a solution to the issue, it is a way of managing it – democratically.

“Some states, New York and California for instance, have already passed their own liberal abortion laws.  Some states, such as Texas and Utah, will ban most or all abortions within their boundaries.  It will be uneven, a jumble. But the liberal states will have their liberal decision, the conservative states their conservative ones, and that is as close to resolving the dilemma as we, as human beings in a huge and varied nation, will get.

“I respect and agree with the Alito draft, didn’t think Roe was correct or even logical, and came to see the decision as largely a product of human vanity….

“I am pro-life for the most essential reason: That’s a baby in there, a human child.  We cannot accept as a society – we really can’t bear the weight of this fact, which is why we keep fighting – that we have decided that we can extinguish the lives of our young.  Another reason, and maybe it veers on mysticism, is that I believe the fact of abortion, that it exists throughout the country, that we endlessly talk about it, that the children grow up hearing this and absorbing it and thinking, ‘We end the life within the mother here,’ ‘It’s just some cells’ – that all of this has released a kind of poison into the air, that we breathed it in for 50 years and it damaged everything.  Including of course our politics.

“It left both parties less healthy.  The Democrats locked into abortion as party orthodoxy, let dissenters know they were unwelcome, pushed ever more extreme measures to please their activists, and survived on huge campaign donations from the abortion industry itself.  Republican politicians were often insincere on the issue, and when sincere almost never tried to explain their thinking and persuade anyone.  They took for granted and secretly disrespected their pro-life groups, which consultants regularly shook down for campaign cash.  They ticked off the ‘I’m pro-life’ box in speeches, got applause and went on to talk about the deficit.  They were forgiven a great deal because of their so-called stand, and this contributed, the past 25 years, to the party’s drift.

“Abortion distorted both parties….

“But the end of Roe could be a historic gift for both parties, a chance to become their better selves.

“And if Roe is indeed overturned, God bless our country that can make such a terrible, coldhearted mistake and yet, half a century later, redress it, right it, turn it around.  Only a thinking nation could do that. Only a feeling nation could do that. We’re not dead yet, there are still big things going on here.”

---

With all the above in mind, Oklahoma Gov. Kevin Stitt signed a law banning abortions around the sixth week of pregnancy on Tuesday.

The bill, known formally as S.B. 1503, bans abortions after cardiac activity can be detected, which usually occurs after about six weeks, typically before most women know they are pregnant.

Separately, Tesla is covering travel costs for employees seeking out-of-state abortions, joining the ranks of major companies who’ve introduced a similar policy to benefit workers affected by new restrictions in the past few months.

The EV maker officially moved its corporate headquarters last year from Silicon Valley to Texas, which passed a law banning abortions at roughly six weeks of pregnancy.

Conservatives love how Elon Musk is acquiring Twitter, but the same Musk tweeted in September that he believes “government should rarely impose its will upon the people, and, when doing so, should aspire to maximize their cumulative happiness.  That said, I would prefer to stay out of politics.”

--The U.S. public’s view of the nation’s economy is the worst it’s been in a decade, a new CNN poll found.  A majority of U.S. adults say President Biden’s policies have hurt the economy, and 8 in 10 say the government isn’t doing enough to combat inflation.

Only 23% rate economic conditions as even somewhat good, down from 37% in December and 54% last April.  The last time public perception of the economy was this poor in CNN’s polling was November 2011, when 18% called economic conditions good.

Also, only one-third (32%) say things in the country are going well, about the same as late last summer.

A near universal 94% of Republicans rate current economic conditions in the U.S. as poor, as do 81% of independents and 54% of Democrats.

A Washington Post/ABC News poll has 38% saying they approve of Biden’s handling of the economy, but on the dominant issue of inflation, 68% say they disapprove compared with 28% who give him positive marks. Just over 1 in 5 independents, 22% say they approve of how Biden has been dealing with rising prices.

--Back in March, President Biden said Vladimir Putin should be expelled from the Group of 20 and barred from its economic policy summit in Indonesia in mid-November, the country that holds the G-20 presidency this year.  Biden said then that if Russia wasn’t expelled, Ukraine should at least be able to join the gathering.

But last week, Indonesian President Joko Widodo said, “Indonesia wants to unite the G-20. Don’t let there be a split.  Peace and stability are the keys to the recovery and development of the world economy.”  A Putin representative said he would go.

I didn’t bring it up last time because this is way in the future…so much is going to happen in the next two months and there’s no reason for the U.S. to make a big deal of it now.

But it’s not as if the U.S. has unanimous support within the group…far from it.  Canada, Britain and Australia have joined the administration in isolating Putin, but others haven’t.

Wall Street and the Economy

As expected, the Federal Reserve intensified its fight against inflation by raising the benchmark short-term funds rate 50 basis points, a ½ percent, to a range of 0.75% to 1%, the highest point since the pandemic struck two years ago.

The Fed also announced it will start reducing its huge $9 trillion balance sheet, which consists mainly of Treasury and mortgage bonds, starting June 1, which also serves to raise rates.  Those holdings more than doubled after the pandemic recession hit as the Fed bought $trillions in bonds in an attempt to hold down long-term borrowing costs, but now, by reducing the Fed’s holdings, this will have the effect of further raising loan costs, on top of the hike in the funds rate, throughout the economy.

So higher loan rates across the board, for mortgages, credit cards and auto loans, as the prices for food, energy and consumer goods continue to rise.  This is how you slow demand, sports fans, and the Fed needs to do so to have a shot at reaching its inflation mandate, which is an unrealistic 2% today.

It’s a delicate balancing act…the Fed trying not to tip the economy into recession.  Fed Chair Jerome Powell has said he wants to quickly raise the Fed’s benchmark to a level that neither stimulates nor restrains economic growth, which the Fed says is about 2.4% or so come year end.

But that’s nowhere high enough to beat down 8% inflation.

In its statement, the Federal Open Market Committee said it “anticipates that ongoing increases in the target range will be appropriate,” which Chair Powell later said in his press conference meant “50 basis points is on the table the next two meetings.”

But Wednesday, the Dow Jones rose 932 points after the Fed move because Chair Powell eased fears when he said a 75-basis point hike “is not something that the committee is actively considering” in future meetings.

“I think expectations are that we’ll start to see inflation, you know, flattening out,” he said.

Well, yeah, some of the harsh year-over-year comparisons are going to be rolling off with each month, but inflation is not going right back down to 2-3%.

Powell said in the Wednesday afternoon news conference, addressing the American people: “Inflation is much too high.  We understand the hardship it is causing and we are moving expeditiously to bring it back down. We have both the tools we need and the resolve that it will take to restore price stability on behalf of American families and businesses.”

“It’s our job to make sure that inflation of that unpleasant high nature doesn’t get entrenched in the economy,” Powell said. “The process of getting there involves higher rates – higher mortgage rates and higher borrowing rates, things like that.  It’s not going to be pleasant either, but in the end everyone is better off.  Everyone.  Particularly people on fixed incomes and at the lower part of the income distribution are better off with stable prices.”

This was the second of a forecast seven rate hikes in 2022, with meetings coming up in June, July, September, November and December.

It’s also true, as Powell referred to numerous times, that the market has been pricing in an aggressive tightening program on the part of the Fed with the yield on the 2-year Treasury, the most inflation sensitive, rising from 0.73% at year end to 2.73% today.

The yield on the 10-year has risen from 1.51% to 3.13% since Dec. 31, both far in excess of the 75 basis points the Fed has formally raised rates in the last two meetings.  So the market has been doing the Fed’s work.

But we are still way shy of where we need to go and Powell and Co. know that.  And that’s one reason why the stock market reassessed on Thursday and the Dow Jones tanked 1063 points, the worst day for it since Oct. 2020. Nasdaq crashed 5.0%, it worst day since June 2020.

Finally, Powell was confident the U.S. economy wasn’t near recession.

“Businesses are in good financial shape.  The labor market is very, very strong.  And so it doesn’t seem to be anywhere close to a downturn. …The economy is strong and is well positioned to handle tighter monetary policy.  But I’ll say I do expect that this will be very challenging, it’s not going to be easy, and it may well depend, of course, on events that are not under our control.  But our job is to use our tools to try to achieve that outcome, and that’s what we’re going to do.”

So on the economic front this week, we had another strong jobs report today, the economy adding 428,000 jobs in April, which represents the 12th straight month of job growth in excess of 400,000.  Job gains in February and March were slightly downgraded to 714,000 and 428,000 (yes, exactly the same as April), respectively.

The jobless rate was unchanged at 3.6%, a notch above the pre-pandemic level of 3.5%, the Labor Department said today.

U6, the underemployment rate, ticked up to 7.0%.

The leisure and hospitality industries continued to exhibit growth, and manufacturing added 55,000 jobs in the month, both symbolic of an economy with underlying demand, despite the negative GDP figure for the first quarter, which isn’t expected to continue.

[The Atlanta Fed’s GDPNow very early barometer for the second quarter is at 2.2%.]

But the labor participation rate fell to 62.2%, as roughly 363,000 workers fell out of the labor force in April, the first drop since September, though it’s not clear why.

And employers are trying to hire workers to accommodate the solid demand, particularly for services, and posted 11.5 million job openings earlier this spring, the highest for the data point in records going back to 2000.

At the same time, workers’ wages rose just 0.3% in April, but were still up a robust 5.5% for the past 12 months, though this is obviously way below the inflation rate.

In other economic news this week, we had the April ISM manufacturing report, a less than expected 55.4 (50 the dividing line between growth and contraction), the lowest since July 2020, and the ISM service sector reading was also shy of expectations at 57.1.  Still robust growth for both, but trending down.

A reading on March factory orders was strong, up 2.2%.

Europe and Asia

We had a slew of data for the eurozone this week, led by the April PMI readings (courtesy of S&P Global).  The final EA19 manufacturing figure was 55.5, a 15-month low, with the service sector at 57.7, an 8-month high.

Germany: 54.6 mfg., 57.6 services
France: 55.7 mfg., 58.9 services
Italy: 54.5 mfg., 55.7 services
Spain: 53.3 mfg., 57.1 services
Ireland: 59.1 mfg., 61.7 services
Netherlands: 59.9 mfg.
Greece: 54.8 mfg.

UK: 55.8 mfg., 58.9 services

Chris Williamson / S&P Global

“The eurozone economy has shown surprising resilience in the face of the Ukraine-Russia war, thanks to a renewed burst of service sector activity as virus containment measures were relaxed further during April. The survey data are consistent with GDP rising at a quarterly rate of around 0.7% at the start of the second quarter after signaling a 0.4% rise in the first quarter.

“Unfortunately the acceleration of output growth seen during the month was accompanied by a further surge in costs, which fed through to a record rise in average prices charged for goods and services.

“The combination of the stronger growth profile for the second quarter and a persistent acceleration of inflation signaled by the surveys will add to speculation that the ECB could start raising interest rates as soon as its July meeting.

“However, downside growth risks have increased, meaning policymakers could take a more cautious approach to tightening policy.  Manufacturing growth has almost stalled, led by falling production in Germany, due to the new supply chain shocks and uncertainty caused by Russia’s invasion of Ukraine.  It also remains unclear as to whether the service sector can sustain its current growth once the initial rebound from the reopening of the economy fades, especially given the soaring cost of living.  Hopes of the economy being buoyed by pent-up demand may be confounded if spending power is eroded by inflation and risk aversion sets in, encouraging saving. The data flow as we head into the summer will therefore likely prove pivotal to policymakers in their assessment of whether the eurozone’s economic resilience can prove enduring.”

Meanwhile, Eurostat released all kinds of other data.

March industrial prices soared 5.3% in March over February, up a stupendous 36.8% year-over-year!

March retail trade for the euro area fell 0.4% over February, up 0.8% from a year ago.

The March unemployment rate for the EA19 was 6.8% compared with 8.2% March 2021.

Germany 2.9%; France 7.4%; Italy 8.3%; Spain 13.5%; Ireland 5.5%; Netherlands 3.3%.

Separately, the Bank of England approved a 25-basis point increase in its base interest rate, now 1%, as BOE Governor Andrew Bailey warned the Bank is walking a “narrow path” between growth and inflation.

It was the fourth consecutive rate hike since December at a time when millions of UK households are grappling with skyrocketing living costs.

Inflation in Britain hit an annualized 30-year high of 7% in March – more than three times the BOE’s target level – as food and energy prices continue to surge.  UK consumer confidence, meanwhile, plunged to a near record low in April amid fears of slowing economic growth.

The Bank expects inflation to rise to roughly 10% this year as a result of the war and lockdown in China.

Turning to Asia…China reported putrid PMI figures for April. The official government manufacturing number (courtesy of the National Bureau of Statistics) was 47.4, down from 49.5 in March, with the service sector reading at 41.9, down from 48.4.

The private Caixin figures (small- and medium-sized businesses) had manufacturing at 46.0 and services all the way down to 36.2 from 42.1, the second-sharpest rate of reduction ever, next to Feb. 2020 and the onset of the pandemic.

Obviously, these numbers being all below 50 denote major contraction, not growth, and reveal the impact of the zero Covid approach and widespread government lockdowns.  We aren’t going to get figures on April retail sales and industrial production for another ten days but they will be very telling.

Japan’s April manufacturing PMI was a decent 53.5.

South Korea’s manufacturing PMI for last month came in at 52.1, while Taiwan’s was 51.7.

Street Bytes

--After another week of extreme volatility, the Dow Jones has fallen six consecutive weeks, while Nasdaq and the S&P 500 are on a five-week losing streak, longest for the S&P since June 2011.  Nasdaq’s run of five straight with a loss of at least 1% is the first time for this tech-heavy barometer since Nov. 2012.

For this week, the Dow and S&P lost 0.2% and Nasdaq 1.5%.

--U.S. Treasury Yields

6-mo. 1.31%  2-yr. 2.73%  10-yr. 3.13%  30-yr. 3.23%

The yield on the 10-year has risen five straight weeks, from 2.38% to 3.13%, a huge move.

Over the same period, the Italian 10-year has seen its yield rise from 2.09% to 3.13%, while the German bund has jumped from 0.55% to 1.13%

--Oil rose a second straight week as the European Union pondered a phased in oil embargo on Russia, raising the prospect of further tighter supply, while OPEC+ increased its production targets, slightly, but it’s nowhere near enough to make up for Russia’s supply that is now off the market.  There is very little spare capacity to begin with, let alone no desire to help the West. 

Plus investors are eyeing higher demand from the United States this fall as Washington unveiled plans to buy 60 million barrels of crude for its strategic petroleum reserve, after it has taken out 1 million barrels a day in an attempt to crater prices, which everyone should have known wouldn’t work.

West Texas Intermediate closed the week at $110.32.

OPEC now expects 2022 world oil demand to expand by 3.67 million bpd in 2022, down 480,000 bpd from its previous forecast, as the Chinese lockdowns were curbing use of transport fuels and petrochemical feedstock.

Crude oil processing in China totaled 14.3 million barrels per day in March, according to the National Bureau of Statistics, while crude oil imports amounted to 10 million b/d, according to customs authorities.

But in a note from Commerzbank, in April the IEA revised its demand forecast for the country down by 925,000 barrels per day, owing to the impact of the lockdowns.

--BP PLC took a $25.5 billion pretax accounting charge related to its decision to exit its Russian holdings, including its stake in government-controlled oil producer Rosneft, by far the biggest financial hit tallied by companies exiting Russia after its invasion of Ukraine.

BP said that without the one-time charges, its first-quarter underlying net income (or as they call it replacement-cost profit) was $6.2 billion, better than expected.

Last week, Exxon Mobil announced it took a $3.4 billion accounting charge after it decided to halt operations at its Sakhalin Island development in Russia’s Far East.

--Shell reported its highest ever quarterly profits, $9.13 billion in the first three months of the year, nearly triple its $3.2 billion profit it announced for the same period last year.

But the firm said pulling out of Russian oil and gas projects had cost it $3.9bn.

Shell CEO Ben (“I’ll never be your beast”) van Beurden said the war in Ukraine had caused “significant disruption to global energy markets.”

“The impacts of this uncertainty and the higher cost that comes with it are being felt far and wide.”

--Citigroup said one of its traders made an error in the so-called stock market “flash crash” in Europe on Monday.

Trading was briefly halted in several markets after major share indexes plunged just before 8 a.m. GMT on Monday.

Nordic stocks were hit the hardest, while other European indexes also plummeted for a short time.

“This morning one of our traders made an error when inputting a transaction.  Within minutes, we identified the error and corrected it,” Citi said in a statement late Monday.

Sweden’s benchmark Stockholm OMX 30 share index was one of the hardest hit, falling by 8% at one point, before recovering most of those losses to end the day 1.87% lower.

This was no doubt a “fat finger” trade – a reference to someone incorrectly typing the details of a trade, and sometimes these can be costly, and Citi is expected to eventually reveal a hefty number.

In August 2012, a computer glitch at financial services firm Knight Capital caused a major stock market disruption, costing the company around $440 million.

--Qantas Airways Ltd. announced a landmark order for Airbus SE A350-1000 jets capable of non-stop flights from Sydney to London as part of a wider deal with the European planemaker.

The airline, which has touted plans for the world’s longest commercial flights for more than five years, saw its “Project Sunrise” initiative delayed by the pandemic, but has since said an aircraft order this year would make flights possible by mid-2025.

The news comes days after Boeing Co. further delayed development of its 777X jetliner which had at one stage been in contention to ease direct flights from Australia’s east coast to London and New York.

--The Federal Aviation Administration said Wednesday the rate of unruly air passenger incidents dropped to its lowest level since late 2020 after a U.S. judge ended a government transportation mask mandate on April 18. 

The FAA said in the week ending April 24, there were 1.9 reported incidents per 10,000 flights, compared to 4.4 reported incidents per 10,000 flights in the prior week.

--Spirit Airlines rebuffed a $3.6 billion cash takeover bid from JetBlue Airways, saying a deal likely can’t be completed, and it is sticking with plans to merge with rival budget carrier Frontier Group Holdings. Shares in Spirit fell 10% in response.

JetBlue’s offer came with a higher price tag than Frontier’s cash-and-stock offer, however, Spirit’s board said it believed there was too much risk that regulators would bar a merger with JetBlue, even after JetBlue pledged to shed assets to win regulatory approval and to pay a $200 million breakup fee if it was unable to complete the proposed acquisition for antitrust reasons.

Spirit’s board is making the right decision.

Both JetBlue and Frontier see Spirit as key to their ambitions to create the fifth-largest U.S. airline and take on the larger carriers that have come to dominate the industry after a series of mergers.

Frontier and Spirit are both part of a niche of fast-growing airlines that cater to budget-conscious travelers, with low base fares and fees for everything else, from bottled water to carry-on bags.  They have said that their combination would create an ultralow-cost juggernaut.

--British Airways owner IAG has scaled back plans to ramp up short-haul capacity at Heathrow airport, saying a cut of around 5% to its summer schedule would provide stability for passengers and avoid disruptions seen earlier in the year.

The company, which also owns Iberia, Vueling and Aer Lingus, has struggled to cope with Omicron-related crew absences and a shortage of ground staff.

CEO Luis Gallego said the cost of dealing with the issues, including IT problems, was the main reason the company’s first-quarter operating loss of 754 million euros missed analyst forecasts.

IAG said it had seen a strong recovery in business travel in the first quarter and it expected to post operating profits from the second quarter onwards and for the full year.

--Boeing announced Thursday that it would move its headquarters to Arlington, Va., from Chicago, where it has been based for more than two decades.

The choice of Arlington, across the Potomac River from Washington, underscores the importance of the federal government and its regulatory bodies to Boeing, which is a leading military contractor as well as a manufacturer of commercial aircraft.

Boeing said it would establish a research and technology hub in northern Virginia.

--TSA checkpoint travel numbers vs. 2019

5/5…87 percent of 2019 levels
5/4…86
5/3…84
5/2…86
5/1…90
4/30…95
4/29…89
4/28…90

*Numbers not as strong this week…huh

--Warren Buffett on Saturday used the annual meeting of Berkshire Hathaway Inc. (the first such public gathering in Omaha, NE, since the pandemic) to rail against Wall Street excess and extol the virtues of cash after rapidly spending tens of billions on stocks and companies, while addressing the risk to his conglomerate from the threat of nuclear war.

The meeting allowed shareholders to address questions directly to Buffett and Berkshire Vice Chairmen Charlie Munger, Greg Abel and Ajit Jain.  Buffett’s comments came after Berkshire, long criticized for keeping too much idle cash, revealed it had scooped up more than $51 billion of stocks in the first quarter, including a much larger stake in Chevron Corp.

Berkshire also said first-quarter operating profit was little changed, as many of its dozens of businesses withstood supply chain disruptions caused by Covid-19 variants and the Ukraine invasion.

Buffett, 91, said it “really feels good” to address shareholders in person, after holding the last two meetings without them.

In a February annual shareholder letter, Buffett had bemoaned the lack of investment opportunities, but then he said in March, Berkshire bought 14.6% of Occidental Petroleum Corp. after he read a research report, and agreed to pay $11.6 billion for insurer Alleghany Corp.    Berkshire also made a multibillion investment in HP Inc.  It’s stake in Chevron is now $26 billion, up from $4.5 billion at the beginning of the year.

Buffett said it was simple: “Markets do crazy things, and occasionally Berkshire gets a chance to do something. It’s not because we’re smart… I think we’re sane.”

Berkshire’s cash stake sank more than $40 billion to around $106 billion in the quarter, but Buffett assured shareholders that they should not worry.  “We will always have a lot of cash,” he said.  “It’s like oxygen, it’s there all the time but if it disappears for a few minutes, it’s all over.”

Ajit Jain stumbled on the issue of the impact to Berkshire’s portfolio, heavily in insurance, if there was a nuclear war.  Jain said he had a “lack of ability” to estimate Berkshire’s insurance exposure.

Buffett said there was a “very, very, very low” risk of nuclear attack, though the world had come close in 1962 during the Cuban Missile Crisis.

Munger, 98, criticized bitcoin, saying that if an advisor suggested you put your retirement account there, “just say no.”

Munger also said there is an insane amount of speculation in the stock market over the last couple years as the market soared.

“We have people who know nothing about stocks being advised by stockbrokers who know even less,” Munger said.

Buffett said on the topic of inflation: “Inflation swindles the bond investor…it swindles the person who keeps their cash under their mattress, it swindles almost everybody.”

--Advanced Micro Devices Inc. on Tuesday forecast stronger than expected full year and second-quarter revenue as the data center boom fuels demand for its chips.  “Each of our businesses grew by a significant double digit percentage year-over-year, led by EPYC server processor revenue more than doubling for the third straight quarter, said AMD CEO Lisa Su in a statement.

The strong outlook and earnings pushed up AMD shares by 3%.

Worldwide spending on cloud infrastructure services jumped 34% to $55.9 billion in the first quarter, according to data from research firm Canalys, highlighting huge opportunities for companies supplying chips and other hardware for the industry. 

AMD expects revenue of about $6.5 billion, plus or minus $200 million for the current quarter, a little above expectations.  For the full year, it forecast revenue of $26.3 billion, up about 60%, and ahead of current analyst forecasts.  AMD’s first-quarter revenue came in at $5.89 billion, beating the Street.

AMD finalized the acquisition of Xilinx Inc. in mid-February and the earnings and forecasts include its results.

--CVS Health raised its outlook for full-year earnings after beating the Street’s expectations in the first quarter, the shares rising nearly 5%, as pharmacy claims volumes and Covid-19 test kits bolstered sales.

Revenue in Q1 was up 11% to $76.83 billion, the estimate being $75.3 billion.

“We once again showed the power of our purpose and potential, building on our strong momentum and raising full-year guidance as a result,” said CEO Karen Lynch.

Revenue in health care benefits rose 13% to $23.11 billion, while pharmacy services increased 8.6% to $39.46 billion.  Purchases of kits to test for Covid-19 helped increase front-store volumes, the company said.

--Pfizer Inc. expects demand for its Covid-19 antiviral drug to increase as governments return to replenish their supplies and seek to thwart surges as the virus continues to evolve.

The treatment, a pill called Paxlovid, brought in $1.5 billion in sales during Pfizer’s first quarter, while its vaccine totaled $13.2 billion.

The company said Tuesday it is on track to deliver between $98 billion and $102 billion in revenue for the year, with $32 billion coming from its Covid vaccine and $22 billion from Paxlovid.

Pfizer’s quarterly sales surged 77% to $25.7 billion, driven by sales of pandemic products, and was higher than the Street expected.

Pfizer’s net income rose to $7.86 billion for the quarter, up from $4.88 billion last year, while earnings per share rose 59% to $1.37.

Pfizer trimmed its 2022 earnings forecast, due to an accounting-policy change.

Shares of Pfizer rose 2% on Tuesday.

--Moderna shares rose nearly 6% on Wednesday after the biotech firm said it tripled sales of its Covid vaccine during the first three months of 2022 and smashed most analysts’ expectations with more than $6 billion in revenue.

Total revenue for the quarter was $6.1 billion, with net income for the quarter of $3.66 billion – three times the amount reported in the initial quarter of 2021.

The company said it sold $5.9 billion worth of its Covid-19 vaccine, now known as Spike vax, in Q1. 

Most analysts had Moderna reporting $4.6 billion in total revenue.  First-quarter profit of $8.58 per share was also far more than the experts predicted.

Combined, Moderna and Pfizer sold about $19 billion worth of their Covid vaccines during the first quarter.

--Shares in Yum Brands missed Q1 revenue and profit estimates as staffing issues and delivery driver shortages pushed U.S. Pizza Hut sales down 6%.  But the KFC/Taco Bell parent company’s shares rose 3% Wednesday, as first-quarter comp sales overall rose 3% from a year earlier.

KFC same-store were up 3%, Taco Bell 5% and Pizza Hut’s were even.

When removing China, same-store sales at the KFC division gained 10% and Pizza Hut International rose 10%.

--Starbuck sales climbed to record levels in the fiscal second quarter, but its profits took a hit from climbing labor and ingredient costs.

The Seattle coffee company – which welcomed back former CEO Howard Schultz last month as its interim leader – said revenue rose 15% to a record $7.6 billion in its quarter, which ended April 3, up from $6.7 billion a year earlier, as the company opened 313 net new stores during the period.  The revenue was in line with Wall Street estimates.

But net earnings rose just 2% to $674 million.  Starbucks said its same-store sales rose 7% globally in the second quarter, largely on the strength of the business in North America (up 12%); as international same-store sales fell 8% due to Covid restrictions in China, where sales declined 23%.

Starbucks then suspended its guidance for the rest of the fiscal year due to China.

“I remain convinced Starbucks’ business in China will be eventually larger than our business in the U.S.,” Schultz said in a call with investors. The company expects “even greater impact” to its third-quarter results because of the timing of lockdowns in Shanghai and resurgence of the virus in Beijing and other cities.  Even so, demand in its U.S. stores has been “relentless,” Schultz said.

Higher costs for labor, freight and commodities ate into North American operating margins, which contracted to 17.1% from 19.3% in the prior year.

Starbucks announced a $1 billion investment in employee wages and benefits last fall, with a plan to lift U.S. workers’ pay to at least $15 per hour by this summer.  Schultz said those increases will give the stores the workers they need to handle customer demand.

Even so, more than 50 U.S. cafes have elected to join the Workers United union, while five stores voted against the union, out of roughly 240 altogether that have sought to hold elections since August.

--Amazon.com workers voted against unionizing a second warehouse in New York City, representing a defeat for labor organizers just weeks after celebrating their first U.S. win at the retailing giant.

Employees at the company’s distribution center in the borough of Staten Island, voted 618 to 380 against joining the Amazon Labor Union.

--Biogen Inc. said on Tuesday that CEO Michael Vounatsos will step down and that the company is pulling back on selling its controversial Alzheimer’s drug Aduhelm, in what appears to be a final blow to its prospect of becoming a big seller.

The future of Aduhelm has been in doubt since the U.S. government’s Medicare program restricted coverage of the medicine to patients in clinical trials.  Aduhelm was expected to be the company’s next big blockbuster treatment, but controversy over its approval without clear evidence of patient benefit and the U.S. decision to severely limit access cast serious doubt on its sales potential.

The federal government imposed tight Medicare coverage restrictions on the drug, which brought in $2.8 million in sales in the recently completed first quarter.

Biogen is still counting on a second Alzheimer’s drug, lecanemab which, like Aduhelm, was developed with Japanese company Eisai Co. Ltd.

--Uber Technologies reported a loss of $5.93 billion in the first quarter, which was actually better than expected as adjusted for non-recurring costs, the loss amounted to $0.18 per share vs. the loss of 27 cents analysts forecast.

The ride-hailing company posted revenue of $6.85 billion, also topping estimates, and up from $2.90 billion a year earlier, as demand for rides rebounded strongly from the downturn caused by the Covid-19 surge late last year and the company’s food delivery grew despite restaurant reopenings.

Uber said that the value of rides booked in April exceed 2019 levels and that it expects the total value of bookings in the current quarter to be between $28.5 billion and $29.5 billion.

Uber also issued a bullish outlook for the current quarter, noting that its driver base was at a post-pandemic high and it didn’t need to spend heavily to boost supply.  Because Uber has a food-delivery business, it was better positioned to entice drivers to switch to ferrying customers again.

But the shares fell because rival Lyft Inc. had reported results a day earlier and they were miserable, Lyft’s shares tumbling 30% (Uber’s fell about 5%).

Lyft forecast adjusted earnings of $10 million to $20 million, representing a second sequential quarterly decline and missed Wall Street expectations by a mile.  The company said it would invest in the current quarter to ensure adequate driver supply and grow its ride-hailing platform.

Lyft did see a strong rebound in ridership for the first quarter after a surge in Covid cases hurt business in January.

The company said its first-quarter revenue rose 44% to $876 million.  It projected between $950 million and $1 billion of revenue in the current quarter. 

Ridership is still at roughly 70% of the pre-pandemic fourth quarter of 2019.  The company wouldn’t project when it expects to return to pre-pandemic ridership levels.

--Hong Kong’s economy shrank 4% in the first quarter from a year ago, according to government data, as the city imposed its most stringent measures to curb an outbreak of Covid-19, breaking four quarters of recovery.

However, the city has been removing restrictions in the second quarter.

--Canada’s economy gained a net 15,300 jobs in April, entirely in part-time work, Statistics Canada said on Friday. The jobless rate edged down to 5.2%, a new record low.

--Paramount Global said its main streaming platform, Paramount+, added 6.8 million subscribers during the first quarter, as the service benefited from original content including “Halo” and a “Star Trek” series, as well as National Football League games.

The company, home of CBS, Nickelodeon and the Paramount movie studio, said Paramount+ had nearly 40 million subscribers as of March 31, an increase of more than 20% from the 32.8 million total customers it had as of Dec. 31.

Both Paramount+ and Comcast’s Peacock streaming service have ad-supported options that are more affordable than the premium, ad-free option.  Last month, Netflix said it was exploring a lower priced ad-supported version of the platform in hopes of boosting its subscriber base, but it was too late…the stock was obliterated.

--Elon Musk, who has agreed to take Twitter Inc. private, has told potential investors he could return the social-media company to public ownership after just a few years.  The deal is expected to close later this year, the company said.

Musk has been speaking to investors such as private-equity firms, which could help lower the $21 billion he plans to kick in to help pay for the deal.  The rest of the money is coming from loans.

Private-equity firms often take companies private with an eye toward fixing them up outside of the spotlight and then taking them public again within five years or so.

And it now appears Musk has assembled a group of investors including Saudi Prince al-Waleed bin Talal, Oracle co-founder Larry Ellison and a bitcoin exchange to put up more than $7 billion to back his bid.

This will reduce the balance of cash Musk needs to put up personally to just under $20 billion.

But the New York Times’ Steven Lee Myers and Paul Mozur had an interesting take on Musk’s ownership of Twitter, given his rather significant exposure in China.

“Like all foreign investors in China, he operates Tesla at the pleasure of the Chinese authorities, who have shown a willingness to influence or punish companies that cross political red lines.  Even Apple, the world’s most valuable company, has given in to Chinese demands, including censoring its App Store.

“Mr. Musk’s extensive investments in China could be at risk if Twitter upsets the Communist Party state, which has banned the platform at home but used it extensively to push Beijing’s foreign policy around the globe – often with false or misleading information.

“At the same time, China now has a sympathetic investor who is taking control of one of the world’s most influential megaphones.  Mr. Musk said nothing publicly, for example, when the authorities in Shanghai shut down Tesla’s plant as part of the citywide effort to control the latest Covid-19 outbreak, even after lambasting officials in Alameda County, Calif., for a similar step when the pandemic began in 2020.”

Jeff Bezos, founder of Amazon and one of Musk’s biggest rivals in tech, space and now media, was right when he tweeted, “Did the Chinese government just gain a bit of leverage over the town square?”

Let the scrutiny begin.

--Robinhood Markets’ co-founders stand to make gobs of money, but only if the share price soars.

CEO Vladimir Tenev would collect $800 million, and $592 million awaits co-founder and Chief Creative Officer Baiju Bhatt, according to a regulatory filing this week.

But, for them to get any of this pile of gold, Robinhood’s stock price must first reach $120, and it is currently at $10.  The trading app went public last year at $38 a share.

--Budweiser owner Anheuser-Busch InBev said Thursday it sold more beer at higher prices in the first quarter, helping the world’s biggest brewer report better-than-expected earnings.

But at what point will customers be turned off?  So far drinkers have been willing to pay up.

AB InBev CEO Michel Doukeris said consumers in the U.S. have emerged from the pandemic flush with cash, and that with unemployment low, there is no reason to expect them to trade down. Even in some developing markets that are net exporters of commodities, surging commodity prices are also buoying the economy and employment, he added.  “Consumers continue to be in good shape.”

In North America, however, drinkers continue to move away from AB InBev’s two blockbuster brands Bud and Bud Light, with volumes declining 4.2%.

--Finally, Aaron Elstein of Crain’s New York Business had a story on a smelly, and gross, topic.  Public bathrooms in Gotham.

“Disgusting bathrooms lie at the core of rising complaints that public spaces have become shabby and unsafe,” said Adam Ganser, executive director of the nonprofit New Yorkers for Parks.

“Change that and you would change a lot about how people perceive the city,” Ganser told Crain’s.

So a bill was introduced in the New York City Council that would require the city to install at least one public restroom in every ZIP code, the city having 300 ZIP codes, which would meaningfully add to the 1,400 restrooms already in parks and other public places.

Now I haven’t been to the restrooms in Manhattan’s Bryant Park, but they are supposedly the city’s nicest public restrooms. The cost, covered by nearby landlords, is $250,000 a year to maintain them.

When I was working with PIMCO and had appointments in the Wall Street area, prior to the first World Trade Center bombing, all of us in the same position knew to go to the Vista Hotel there.  They had a big public restroom that was clean, and many of us also just went on to the various floors and used available restrooms near conference facilities.  It was the perfect central location, plus it had a large phone bank.

For midtown, I went to the Helmsley Hotel, centrally located, with a terrific phone bank and luxurious public facility.

Alas, the Vista Hotel never reopened after the first bombing, which was in the parking lot below.

There was a time I wanted to write a book on public restrooms around the U.S. 

But let’s move on, shall we?

The Pandemic

--The Food and Drug Administration said on Thursday it was limiting the use of Johnson & Johnson’s Covid-19 vaccine for adults due to the risk of a rare blood clotting syndrome, the latest setback to the shot that has been eclipsed by rivals.

The J&J shot, which received clearance in February 2021 for adults, can be administered in cases where authorized or approved Covid-19 vaccines are not accessible or if an individual is less keen on using the other two shots, Pfizer and Moderna, the FDA said.

Use of the J&J shot has been weak in high-income countries, hurt by reports of rare, potentially deadly blood clots, production issues, including an accidental mix-up of ingredients by a contract manufacturer, and concerns about efficacy.

The FDA in January amended the fact sheet for the J&J vaccine to include the risk of immune thrombocytopenia, months after the European Union’s drugs regulator took similar action.

The Centers for Disease Control and Prevention in December had recommended that Americans choose to receive mRNA shots from Pfizer and Moderna over J&J’s vaccine due to the rare cases of blood clotting.

Around 18.7 million Americans have received a J&J Covid shot compared with 217.5 million who received the Moderna vaccine and 340.6 million people who have received Pfizer’s shot, according to the CDC.

--President Xi Jinping spoke out for the first time on China’s handling of the Covid-19 outbreak in Shanghai, saying it “will stand the test of time” and pledged to fight any attempt to “distort, question and challenge” the country’s policies.

Chairing the seven-member Politburo Standing Committee meeting, the highest decision-making body in China, Xi gave a speech telling officials and party members to stand firm and not waver.

Xi said China will prevail in the fight against Covid-19 in Shanghai just as it did in Wuhan, state broadcaster CCTV reported on Thursday night.

While the policy helped China keep its caseload down early in the pandemic, it has been less effective against the highly transmissible but less deadly Omicron variant.

“We must be firm in overcoming thoughts of indifference and self-righteous thinking, and underestimating the epidemic,” a statement issued after the meeting said.

“We must keep a clear head and unwaveringly adhere to the general policy of dynamic zero-Covid. We must struggle against speech and acts that distort, question or reject our country’s anti-epidemic guidelines and policy.”

Very Maoist language. 

Beijing closed more than 40 subway stations, about 10 percent of the total, and numerous bus routes on Wednesday, in a district where most infections were found in that city, though the number of confirmed cases is very low, about 50, especially versus some 20 million tests that were conducted.

--The new Omicron variants that are emerging appear to be even more transmissible than previous versions, with preliminary data showing BA.2.12.1 to be about 25 percent more transmissible than the now-dominant BA.2 subvariant.

Virologist Robert F. Garry of Tulane University told the Washington Post: “This virus has probably got tricks we haven’t seen yet.  We know it’s probably not quite as infectious as measles yet, but it’s creeping up there, for sure.”

South Africa is seeing a spike in Covid cases, this time from two new subvariants, BA.4 and BA.5.

--Taiwan has been facing its worst outbreak since the beginning of the pandemic with over 30,000 new cases today, and ten deaths, but the island’s central authorities announced they would no longer maintain a “zero-Covid” policy like the mainland.

Instead, the government is asking people to quarantine at home if they test positive, unless they show moderate to severe symptoms.

Taiwan has been relatively lucky throughout the pandemic, but it has maintained strict border controls with a two-week quarantine on arrival required for all visitors.

Domestically, mask wearing is universal both outdoors and indoors, and is legally required on public transportation and in places like shops and theaters.

--The CDC is urging people to continue wearing masks on airplanes, trains, buses and other public transportation, even though mask mandates have fallen by the wayside in much of the United States.

Slightly more people in my area continue to wear masks in grocery and drug stores than weeks ago, though I no longer do myself…being double-boosted. 

Cases in New York City have been moving up, but while hospitalizations have increased over the last month, they are still below 500, when during the Omicron-induced surge around the holidays, hospitalizations in the city peaked above 6,500 in January, according to data from New York State.

A Washington Post analysis found that while for much of the pandemic, unvaccinated people made up an overwhelming majority of Covid-related deaths, “the gulf between unvaccinated and vaccinated deaths has been shrinking in recent months.  Many of those vaccinated deaths have occurred in seniors.”

During the Omicron surge in January and February, 42 percent of the people who died of Covid had been previously vaccinated.

Nearly two-thirds of people who died during the Omicron surge were age 75 or older, according to the Post analysis.  It is a population that is overwhelmingly vaccinated but also significantly more vulnerable to the worst effects of the virus.

Vaccines are less effective for older people, in part, because their immune systems produce fewer antibodies in response to the shots.

A second booster shot is important. A study from Israel found that a second shot significantly reduced deaths in people between the ages of 60 and 100 years old.

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

World…6,274,197
USA…1,024,319
Brazil…664,143
India…523,975
Russia…376,696
Mexico…324,350
Peru…212,906
UK…176,212
Italy…164,304
Indonesia…156,357
France…146,608
Iran…141,157
Colombia…139,809
Germany…136,812
Argentina…128,653
Poland…116,124
Ukraine…108,411
Spain…104,869
South Africa…100,505

Canada…39,716

[Source: worldometers.info]

U.S. daily death tolls…Mon. 164; Tues. 429; Wed. 331; Thurs. 285; Fri. 280.

Foreign Affairs

China: Aside from the Covid theater, Beijing sent 18 aircraft into Taiwan’s air defense zone Friday, Taiwan’s defense ministry reported, forcing its air force to scramble anew.

Taiwan remains in a heightened state of alert due to fears China could use Russia’s invasion of Ukraine to make a similar military move on the island, though Taipei’s government has yet to report any signs Beijing is about to attack.

The number of aircraft in this latest maneuver is still well off the last large-scale incursion, 39 Chinese aircraft on Jan. 23.

Japan this week reported eight Chinese naval vessels, including an aircraft carrier, passed between islands in Japan’s southern Okinawa chain.

Japanese Prime Minister Fumio Kishida warned on Thursday that the invasion of Ukraine could be replicated in East Asia if leading powers do not respond as one, saying peace and stability in the Taiwan Strait must be maintained.

Kishida, speaking in London after a meeting with British Prime Minister Boris Johnson, said now was the time for the Group of Seven leading nations to solidify its unity.

“Collaboration among countries sharing universal values becomes ever more vital,” he said.  “We must collaborate with our allies and like minded countries, and never tolerate a unilateral attempt to change the status quo by the use of force in the Indo Pacific, especially in East Asia.”

“Ukraine may be East Asia tomorrow.”

North Korea: Kim Jong Un and his Orcs fired a ballistic missile toward the sea off the east coast on Wednesday, South Korea and Japan said, about a week after Pyongyang vowed to develop its nuclear forces “at the fastest possible speed.”

The North’s 14th known weapons test this year comes days before the South’s new president, Yoon Suk-yeol, takes office on May 10.

The missile flew 290 miles to a maximum altitude of 485 miles, South Korea’s Joint Chiefs of Staff said.

“A recent series of North Korea’s ballistic missile launches poses a grave threat to the peace and stability of not only the Korean peninsula but also the international community,” the JCS said in a statement, urging the North to immediately stop such actions.

South Korea’s incoming defense minister, Lee Jong-sup, said North Korea seemed to be preparing for a new nuclear test, possibly a smaller, tactical nuclear weapon.

Israel: Three people were killed and others wounded in what police say was a suspected terror attack in the central Israeli city of Elad.

Two attackers – one armed with a gun, the other an axe – targeted passers-by at a park in the city, Israeli media reported.

The attack came in the largely ultra-Orthodox Jewish community on Israel’s Independence Day, a public holiday marking the establishment of the country.

It also follows a spate of deadly attacks carried out by Palestinians and Israeli Arabs in recent weeks that have killed at least 15 in Israel and the West Bank.

Israel has responded by raiding Palestinian towns, sparking clashes that left at least 26 people dead, including bystanders.

Random Musings

--Presidential approval ratings….

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

Rasmussen: 45% approve of Biden’s performance, 53% disapprove (May 6).  This bump in approval is a bit surprising for this survey.

In the above-mentioned new CNN poll, Biden has an overall approval rating of 41%, with 59% disapproving, unchanged from CNN’s last poll, conducted in January and February.

A new Washington Post/ABC News survey has Biden’s approval at 42%, 52% disapprove.  Back in February, the split was 37-55

The only good news in this poll is that 46% of registered voters say they would vote for the Democrat in their congressional district, compared with 45% who say they would vote for the Republican.  But based on historical patterns, Democrats will need a far bigger advantage to avoid losing their majority.

--At Saturday’s White House Correspondents’ Dinner, President Biden joked:

“A special thinks to the 42 percent of you who actually applauded.  I’m really excited to be here tonight with the only group of Americans with a lower approval rating than I have.”

--I kind of got a kick out of the reaction to J.D. Vance winning the Ohio Republican Senate primary with 32% on Tuesday. Yes, it was a sign that Donald Trump still holds sway in the Republican party, having endorsed (“J.D. Mandel”) as Trump called Vance.  After all, (Josh) Mandel, who earlier had the Trump imprimatur, took 23.9% and Matt Dolan, who never sought Trump’s endorsement, took 23.3%.  I mean it’s not like Vance had 45% in a seven-candidate field.

Well, thankfully, Karl Rove, from his Wall Street Journal perch, weighed in.

“After a bruising seven-way primary in Ohio, Donald Trump’s choice…J.D. Vance…won Tuesday. His victory showed the strength of Mr. Trump’s support among Republicans, as well as its limitations.

“The last poll before Mr. Trump endorsed on April 15 – taken by the Trafalgar Group – showed Mr. Vance at about 23%, trailing former Treasurer Josh Mandel, who held 28%. Both candidates were ahead of businessman Mike Gibbons at 14%, state Sen. Matt Dolan at a little under 12%, former state GOP Chairwoman Jane Timken at just below 8%, and two others who together held roughly 3%.  About 13% of voters were undecided.

“Tuesday, Mr. Vance won with 32%, (Mandel 24%, Dolan 23%, Gibbons 12% and Timken 6%) ….

“Mr. Trump’s last-minute help for the new GOP Senate nominee didn’t end with his endorsement.  The former president’s support led tech entrepreneur Peter Thiel to give Mr. Vance’s super PAC $3.5 million for ads during the primary’s final two weeks.  Together Messrs. Trump and Thiel drew most late deciders into the Vance column.  Without that one-two punch of endorsement and last-minute ad blitz, it’s likely someone else would be the GOP’s general-election standard-bearer.

“Still, while Mr. Trump’s endorsement made the critical difference, only 1 of 11 Ohio Republicans followed Mr. Trump’s call to fall in line as Mr. Vance’s share grew from 23% in the last pre-endorsement poll to 32% on Election Day.  His 9% bump was overshadowed by the rise of Mr. Dolan, who nearly doubled his share of the vote after Mr. Trump announced his late-in-the-race endorsement.  Almost 68% of Ohio Republicans ignored or rejected the former president’s call to join in his ‘Complete and Total Endorsement’ of Mr. Vance.

“It didn’t help that many Trumpers didn’t like Mr. Vance.  Ohio Republican county party officials and national convention delegates who were Trump loyalists publicly expressed their displeasure with the former president’s decision.

“The gubernatorial primary in Ohio also highlighted the limits of Mr. Trump’s sway. While the former president didn’t endorse any candidate outright in their four-way race, he made it clear that incumbent Gov. Mike DeWine wasn’t a favorite, calling him a ‘terrible governor’ and a ‘terrible, terrible guy’ at an April 23 rally for Mr. Vance. Still, Mr. DeWine was comfortably renominated, proving that candidates can survive a denunciation by the former president.

“There’s no good news in Tuesday’s results for Democrats.  Four years ago, with heated contests in both parties over nominations for an open governor’s seat, 827,039 Ohioans voted in the Republican primary and 679,738 in the Democratic race.  As this piece goes to press the unofficial results from this year’s race show GOP turnout approaching 1.1 million while Democratic turnout is just over 500,000.  Ohio ain’t the purple, swingy battleground it once was.

“In coming days, there’s likely to be a celebratory picture of Mr. Vance arriving at Mar-a-Lago to thank the former president.  There will be smiles and expressions of gratitude by the new Senate nominee.  Mr. Trump likely will relish the moment – his man won the contest, yet another candidate is indebted to him, and his pugnacious form of politics triumphed.

“But back in Ohio, a majority of Republicans just saw their favorite lose, and among these there will be many who thought of themselves as loyal Trumpistas who now blame the defeat of their favorite on Mr. Trump’s intervention in the primary.  Mr. Trump will appear to them as a divisive figure who’s leading only an element of the GOP, not the party writ large.  Unhappy supporters will wonder why he intervened in the process, especially so late in the race.

“Having endorsed in so many hard-fought primaries, the former president clearly believes it strengthens his hold on the GOP to pick a favorite candidate.  But even when his chosen candidate wins, it may diminish his standing among some Trump supporters who backed another hopeful.  The problem grows bigger when, inevitably, some of Mr. Trump’s anointed candidates lose.  Each defeat shows the limit of Mr. Trump’s influence and they may matter more in the long-run.  The more GOP candidates survive Mr. Trump’s opposition, the weaker he will appear.”

J.D. Vance will be facing Democratic Rep. Tim Ryan, who handily won his Senate primary with 70%.  Ryan is a strong candidate, a moderate who has courted Trump supporters, but as Karl Rove points out, the party numbers above are deadly for the Dems.

I wish retiring Sen. Rob Portman was staying on.  He’s my kind of Republican.  A classy moderate.

Meanwhile, there are three really big primaries coming up that will further test Trump’s popularity and influence.  Pennsylvania and North Carolina on May 17, and Georgia May 24.

--In a Washington Post/ABC News poll, 52% say Donald Trump should be charged for his actions on Jan. 6, 2021, and 42% say he should not.  What’s kind of surprising is the split was 54-43 when the Post/ABC poll was conducted one week after the attack.

Specifically, the question was: “As you may know, Donald Trump encouraged his supporters to march to the U.S. Capitol, where the riot followed.  Do you think Trump should be charged with a crime for his role in this incident, or do you think he should not be charged?”

As you might imagine, 86% of Republicans oppose prosecuting Trump versus 88% of Democrats who support charging Trump.  Independents support charging Trump by 56% to 38%.

--Ex-Defense Secretary Mark Esper has a memoir coming out next week, “A Sacred Oath,” and Esper claims in the book that Trump asked him if they could shoot protesters who had gathered around the White House after Minneapolis police killed George Floyd, Axios first reported on Monday.

“Can’t you just shoot them?  Just shoot them in the legs or something,” Trump said.

The book claims Trump, “red faced and complaining loudly about the protests,” asked Esper about shooting the protesters as they sat in the Oval Office.

“The good news – this wasn’t a difficult decision,” Esper wrote, according to Axios.  “The bad news – I had to figure out a way to walk Trump back without creating the mess I was trying to avoid.”

But wait, there’s more!  [And more it seems on “60 Minutes” this Sunday.]

Trump in 2020 asked Esper about the possibility of launching missiles into Mexico to “destroy the drug labs” and wipe out the cartels, maintaining that the United States’ involvement could be kept secret, Esper recounts in his memoir.

--I’m a big fan of Arkansas Republican Gov. Asa Hutchinson, who last Sunday basically made it official.  He’s not afraid to run for president against Donald Trump.

“I’ve made it clear: I think we ought to have a different direction in the future,” Hutchinson told Dana Bash on CNN’s “State of the Union.” “I think [Trump] did a lot of good things for our country, but we need to go a different direction.”

Hutchinson added that a run for president in two years is “on the table” and Trump’s own plans are “not a factor in my decision-making process.”

So on one side of the Republican Party, you’d have Trump and Ron DeSantis.

On the other side would be Hutchinson, Liz Cheney, Larry Hogan and, maybe, Adam Kinzinger (though I think he’s too young, but would be a potential running mate).

Yup, back on 1/1/22 in this space I wrote:

“Personally, I’m beginning to think of a combination of Asa Hutchinson and Liz Cheney as a ticket in 2024.  But we have a full, action-packed year ahead of us before this becomes the focus.”

--Rep. Madison Cawthorn (R-NC) is in the news yet again, and again for the wrong reason.

A video emerged showing him naked in bed atop another man, getting physical and making noises.

Cawthorn said he was just “acting foolish, and joking” with “a friend” in response to the video he characterized as the latest hit piece meant to destroy his political career.

The American Muckrakers PAC, a group trying to achieve Cawthorn’s defeat in this year’s election, posted the video on its website, FireMadison.com, according to a Charlotte Observer report.

“Blackmail won’t win. We will,” Cawthorn said Wednesday without elaborating further.

--New York City’s new mayor, Eric Adams, had a very short honeymoon.  It’s always been about public safety, and New York’s disturbing crime situation, and while it’s only been 4+ months, there is zero improvement on this front.  And to take it a step further, the other day, the 73rd pedestrian was killed by a car or truck!  73 people dead crossing the freakin’ street!

Anyway, a new Quinnipiac University poll, which quizzed 1,249 registered voters in the city, found that 43% of New Yorkers approve of Adams’ overall job as a mayor – down from the 46% he garnered in the same survey in February.

One of the poll’s most revealing statistics is on crime, with 54% of New Yorkers now disapproving of Adams’ handling of the issue, compared with 37% who approve. In the February survey, 49% of New Yorkers approved of Adams’ crimefighting agenda, while 35% disapproved.

The lowest mark Adams got in the survey was on his handling of homelessness, with 56% of New Yorkers disapproving of it, and 31% approving.  On this I actually agree with the Adams administration’s policy of cracking down on street homeless encampments, which are panned by critics as cruel and counterproductive.

Well, personally, all you need to know is that I haven’t been into New York City since 2019.  I would have long gone in, even during the height of the mask mandate era, but I’m uneasy walking around not knowing if a wacko homeless guy is going to randomly stab me.  And that has happened far more than when I was going into New York all the time, with my friends, in the 1970s when crime was awful…but it was nowhere near as random then as it is now.

I like Eric Adams.  I was writing of this guy’s potential a long time ago.  I really want him to do well and he is trying.  He has rolled out a number of initiatives, including a modified version of the NYPD’s controversial plainclothes units.

But New Yorkers want more cops on the streets, and especially in the subways, where ridership is still down 40% from pre-pandemic levels.  The Quinnipiac poll basically found that riders do not feel safe at night, specifically, 61%, compared with 43% of respondents who fear the trains during the daytime…and for good reason.  Major felonies are up 63% in the mass transit system so far this year from the same period of 2021.

--I never thought I’d be supporting actor Leonardo DiCaprio, but the other day, Brazilian President Jair Bolsonaro, a bad guy, hit back at Leo, a big-time environmentalist who encouraged Brazil’s youth to vote in elections later this year.

“Brazil is home to the Amazon and other ecosystems critical to climate change,” DiCaprio posted on Twitter.

“What happens there matters to us all and youth voting is key in driving change for a healthy planet,” he added.

Bolsonaro, who has cut environmental protections all over his country, responded with sarcasm.

“Thanks for your support, Leo!  It’s really important to have every Brazilian voting in the coming elections,” the far-right leader tweeted back.

“Our people will decide if they want to keep our sovereignty on the Amazon or to be ruled by crooks who serve foreign special interests.”

Separately, Reuters reported that CIA Director William Burns told senior Brazilian officials last year that Bolsonaro should stop casting doubt on his country’s voting system ahead of the October election.

--The water supply for the Las Vegas area marked a milestone, and not a good one, when a water intake pipe broke the surface of drought-depleted Lake Mead, necessitating the activation of a new pumping facility to draw water from deeper in the crucial Colorado River reservoir.

--What a tragedy we had the other day in Oklahoma.  Three University of Oklahoma meteorology students died while storm chasing in Kansas last weekend.

The three students perished in a car crash late Friday while returning to Norman, Okla., from storm chasing that day.  Three hours earlier they witnessed a small tornado north of Herrington, Kansas.

Nicholas Nair, 20; Gavin Short, 19; and Drake Brooks, 22, were beloved by the OU community.

They were driving southbound on a wet highway when their SUV hydroplaned, left the roadway to the right and then came back onto the highway and stopped.  The 2017 Volkswagen Tiguan was struck by a semi traveling in the same direction, according to Oklahoma Highway Patrol.  Rescuers from Tonkawa Fire Department worked on the car for nearly 5 ½ hours to remove them from the wreckage but they died at the scene.  Tonkawa is a very familiar name from my door-to-door bookselling days.  I was based in nearby Ponca City for about half the summer.

Just so sad.

--Finally, I received some shocking news from the brother of my long-time tech guy this morning.  Roj was dead…and has been for a long time!  I was going to call him this weekend to go over all kinds of things, including why he hadn’t deposited my last check!  [Which the brother was now in possession of.]

As in I’ve been running a ghost site!  StocksandNews has been chugging along and it’s been like the late-Payne Stewart’s airplane…it was flying but everyone onboard was dead, and then it finally crashed.

I can’t get into a lot of things but suffice it to say, it’s stress city tonight.  IF the site happens to go down in the coming week, the disruption should be brief.

Understand, because everything was going smoothly on the back end, and I’ve been swamped and didn’t have time to work on the projects with Roj I wanted to, I had no reason to call him.  All good.  But he was dead!  This is a guy who has been with me the last 20 years.  But last time I talked to him, around Christmas, he didn’t sound good at all.  Turns out it was a heart attack.

Picture, I have never communicated with the company hosting S&N, and they’ve done a great job, but they might not know Roj is dead.  Unreal. 

Well, fingers crossed until Monday when I can have a lengthy chat with the company.  I literally was going to be making some big changes to the site.  [Please don’t write me offering your services, I have someone teed up if need be.]

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

Pray for Ukraine.

God bless America.

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Gold $1882
Oil $110.61

Returns for the week 5/2-5/6

Dow Jones  -0.2%  [32899]
S&P 500  -0.2%  [4123]
S&P MidCap  -0.8%
Russell 2000  -1.3%
Nasdaq  -1.5%  [12144]

Returns for the period 1/1/22-5/6/22

Dow Jones  -9.5%
S&P 500  -13.5%
S&P MidCap  -12.7%
Russell 2000  -18.15
Nasdaq  -22.4%

Bulls 30.9
Bears 39.3

Hang in there.

RIP, Roj. 

Brian Trumbore

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