Week in Review

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Week in Review

02/18/2023

For the week 2/13-2/17

[Posted 6:00 PM ET, Friday]

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Edition 1,244

For years and years, Americans’ trust in their government and institutions has been eroding and this week only made it worse, as President Biden gave a pathetic, and very late, explanation regarding the Chinese spy balloon and the other objects flitting about the northern skies, and for residents of East Palestine, Ohio, for good reason they can’t possibly trust what local and federal officials are telling them about the disastrous train derailment in their community.  Much more on both topics below.

But this coming week, specifically Friday, Feb. 24, marks the one-year anniversary of Vladimir Putin’s invasion of Ukraine and there is obvious reason to believe Putin will mark it in spectacular fashion.

This has not been a good stretch for Ukraine, nor for Russian mothers worried about their sons who were dragged into this war and are getting cut down in massive numbers.

As noted below, the attrition rates are staggering, on both sides, and I can’t help but repeat the comment from a Ukrainian commander back in January:

“So far, the exchange rate of trading our lives for theirs favors the Russians.  If this goes on like this, we could run out.”

Today, at the annual Munich Security Conference in Germany, where heads of state and government, as well as politicians and security experts convene, Ukrainian President Volodymyr Zelensky addressed the audience, urging Western allies to quicken their support.

“There is no alternative to speed, because it’s speed that life depends on,” Zelensky said.

He compared Ukraine’s struggle against the Russian invasion to the biblical fight between David and Goliath, saying his country had David’s courage but needed help in getting the sling.

Zelensky vowed that his country would ultimately prevail over Moscow’s aggression but warned that Russia “can still destroy many lives.”

“That is why we need to hurry up,” he said. “We need the speed.”

“Goliath must lose” for the world to be safe.

It is a pivotal moment.  NATO Secretary-General Jens Stoltenberg said today: “We will not allow President Putin to win this war, it (would) be a tragedy for Ukraine but also dangerous for us.”  Stoltenberg also said China was closely watching the conflict, which would affect decisions in Beijing and was another reason for NATO countries to stand together.

Moscow, with no representatives in attendance, accused Washington of inciting Ukraine to escalate the conflict and saying that the United States was now directly involved in the war because “crazy people” had dreams of defeating Russia.

Aside from Vice President Kamala Harris and Secretary of State Antony Blinken, a third of the U.S. Senate is at the conference. China’s top diplomat, Wang Yi, is also expected to attend, so we’ll see if Blinken and Wang meet face-to-face.  [As described below, a mass strike action at German airports is creating some chaos for anyone flying commercial to the event.]

It also needs to be said that the U.S. diverted eight Russian aircraft in two days flying near Alaska…TU-95 BEAR-H bombers and SU-35 fighter jets.  The aircraft were operating within the Alaska Air Defense Identification Zone, though remained in international airspace.

The first group of four came just hours after Dutch fighter jets intercepted a formation of Russian military aircraft near Poland’s NATO airspace and escorted them out.

Biden and the UFOs

As I went to post last Friday, hours earlier the U.S. announced it had shot down a second object off the coast of Alaska, following the Feb. 4 downing of the Chinese spy balloon off the coast of South Carolina.  We then had shootdowns of two other objects last Saturday and Sunday, source unknown.

Diplomatic friction festered between the United States and China on Wednesday as Beijing charged that U.S. high altitude balloons flew over its Xinjiang and Tibet regions and said it would take measures against U.S. entities that undermine Chinese sovereignty.

Beijing says its 200-foot balloon that the U.S. shot down was a civilian research vessel mistakenly blown off course, and that Washington overreacted.  China also said this week that U.S. balloons had flown over its airspace without permission more than 10 times on round-the-world flights since May 2022. The White House disputes these allegations.

Washington added six Chinese entities connected to Beijing’s suspected surveillance balloon program to an export blacklist.

The Chinese Foreign Ministry responded: “The U.S. has abused force, overreacted, escalated the situation, and used this as a pretext to illegally sanction Chinese companies and institutions,” said spokesperson Wang Wenbin.

“China is firmly opposed to this and will take countermeasures against relevant U.S. entities that undermine China’s sovereignty and security in accordance with the law,” Wang said, without specifying the measures.

Beijing then imposed fines and sanctions against two U.S. defense companies, as Lockheed Martin Corp. and a subsidiary of Raytheon Technologies Corp. were added to a list of “unreliable entities” for selling weapons to Taiwan, China’s Ministry of Commerce said in a statement Thursday.

The U.S. hopes that China will not use any visits by members of Congress (such as House Speaker McCarthy) as a pretext for military action in Taiwan.  Deputy Secretary of State Wendy Sherman said at an event in Washington this week that she urges all countries to warn Beijing against conflict over the issue.  She also said Washington had growing concern about China’s partnership with Russia and support for its invasion of Ukraine.

As for the three objects downed since last Friday, National Security Council spokesman John Kirby said Tuesday that the intelligence community believes the objects “could just be balloons tied to some commercial or benign purpose.”

“We don’t see anything that points right now to these being part of the PRC spy balloon program or in fact, intelligence collection against the United States of any kind,” Kirby said.

But Sunday, the Pentagon had said the unidentified object shot down that day over Lake Huron appeared to have traveled near U.S. military sites and posed not just a threat to civilian aviation but also as a potential tool for surveillance.

“Based on its flight and data we can reasonably connect this object to the radar signal picked up over Montana, which flew in proximity to sensitive DOD sites,” the Department of Defense statement said. “We did not assess it to be a kinetic military threat to anything on the ground, but assess it was a safety flight hazard and a threat due to its potential surveillance capabilities.” [Reuters]

So then on Thursday, President Biden finally appeared before the public to issue a lame statement on all the balloons, saying he expected to speak with China’s President Xi Jinping about the Chinese spy balloon, but no one in the White House seems to know when this will take place, and Chinese leadership has turned down all requests to talk about the matter thus far, including Defense Secretary Lloyd Austin’s attempts to call his counterpart.

“We are not looking for a new cold war,” Biden said.  “I hope we are going to get to the bottom of this, but I make no apologies for taking down that balloon.”

But regarding the three other unidentified objects that were shot down, the administration has said they were downed because they posed a threat to civil aviation. “We don’t yet know exactly what these three objects were, but nothing right now suggests they were related to the Chinese spy balloon program or they were surveillance vehicles from any other country,” Biden said.  The intelligence community believes the objects were “most likely balloons tied to private companies, recreation or research institutions,” he added.

But as of today, none of the three balloons or whatever kind of device they were has been recovered, so how can you talk about the objects definitively?! You can’t.

Biden’s remarks came amid reports that the Chinese balloon downed on Feb. 4 originally had a trajectory that would have taken it over Guam and Hawaii but was blown off course by prevailing winds.

This is plausible, but the problem is, if true, why did it then take a trajectory that took it directly over our nuclear assets in Montana and other strategic sites?

Editorial / New York Post

“President Joe Biden can’t tell it straight to save his life, not even when it comes to violations of U.S. sovereignty.

“He read out a brief, surprise statement Thursday on the trio of mystery objects shot down by U.S. forces after last week’s spy-balloon fiasco.  ‘Nothing right now suggests they were related to China’s spy balloon program,’ the prez insisted, ‘or that they were surveillance vehicles from any other country.’

“OK, then why did he order them shot down?  ‘We could not rule out the surveillance risk to sensitive facilities,’ he said.

“So is ‘shoot first’ the rule going forward?  Was it supposed to be the rule before now?  How – and why – did we go overnight from ‘wait and see’ to DefCon 5?  Reporters surely would’ve asked those questions – but Biden didn’t take any.

“After several days when the president said nothing on the issue this was thin gruel indeed.  Adding to the insult, he repeated his laughable claim that he gave the order to shoot down the Chinese balloon ‘as soon as it would be safe to do so.’  (Which turned out to mean after letting it have a weeklong gander at our nuke sites while wandering over low-population swathes of the country.)

“So the whole affair remains completely opaque. Which gives major credence to the theory that 1) the White House kept the first balloon quiet (until private citizens spotted it and got the word out) in an effort to avoid having to cancel Secretary of State Antony Blinken’s trip to Beijing, and 2) that everything subsequent – including our new, aggressive anti-balloon posture – is pure butt-covering.

“Unless and until Biden does more than pretend to explain it all, no one has any reason to believe anything else.”

Editorial / Wall Street Journal

“Our inclination is to support a President’s foreign policy when it’s in the national interest, no matter the party in the White House. But it’s getting harder to do when the current White House habit is to spin every issue for short-term political gain.

“The latest example is the decision finally to roll out President Biden on Thursday for a cursory overview of the unprecedented military action over North America in the past two weeks.  Mr. Biden offered little of substance for fewer than 10 minutes and shuffled off without taking questions.

“He said that after a Chinese spy balloon violated U.S. air space, the U.S. military ‘closely scrutinized’ American skies, including ‘enhancing our radar pickup.’ Three mysterious interlopers over Alaska, Canada and Lake Huron were shot down over the past week ‘out of an abundance of caution.’

“Mr. Biden says ‘nothing’ suggests the objects were part of China’s spy balloon flotilla. And the intelligence community thinks the objects were likely connected to private companies or scientific research.

“Mr. Biden’s promise that he’s asked for ‘sharper rules’ for dealing with objects in U.S. air space will leave Americans wondering why we haven’t had the ability to make such distinctions.  The Administration told the public about the Chinese spy balloon only after civilians in Montana spotted it and shot it down only after Congressional criticism.

“It appears the White House then responded by becoming a bit ‘trigger happy,’ as Rep. Mike Turner of the House Intelligence Committee put it, in shooting down the other objects.  But the tone of Mr. Biden’s event was everything’s fine, nothing to worry about, go back to watching Netflix.

“The public still knows little about China’s spy balloon, even as the Pentagon says it’s recovered significant debris.  U.S. officials are leaking that the Chinese intended to send it over Guam or Hawaii, and it somehow wandered over the Aleutians and into Montana.  Why not be honest about what it spied on?

“Mr. Biden seemed at pains to sound tough on China, but it looks to us like he wants to put the whole episode in the same memory box where we are supposed to store his tremendous victory in withdrawing from Afghanistan.”

Daniel Henninger / Wall Street Journal

“The government’s trust-us officialspeak is they are trying to ‘manage’ this relationship.  Avoiding World War III is a worthy baseline. And unraveling the complex commercial and economic relationship with China will be hard. But China is exploiting America’s strategic ambivalence to gain ground daily on every tactical front.

“The balloon incursion should be an opportunity for the U.S. president to level with the American people about the military challenges and economic sacrifices of answering this threat.  But he won’t.  Why not?....

“(The) balloon/UFO invasion proves the U.S. security dike is breaking. We aren’t being attacked by an unknown unknown from outer space.  We’re under pressure from the known knowns of China, Russia, Iran and North Korea.  Americans will have to learn to live with the Biden silence because help can’t arrive for two years.”

Gordon G. Chang / New York Post

“Make no mistake: China’s incursions into our airspace look like a prelude to an attack.

“The Chinese balloon we shot down on Feb. 4 lingered over Malmstrom Air Force Base, the site of approximately a third of America’s land-based intercontinental ballistic missiles.  The balloon then flew near both F.E. Warren and Minot Air Force bases, which house the remainder of America’s minutemen III wings.  The balloon also passed close to Whiteman Air Force Base, home to the nuclear-capable B-2 bomber fleet, and Offutt Air Force Base, the headquarters of Strategic Command, which controls U.S. nuclear weapons.

“This path suggests China is gathering intelligence for either a first or second strike on America’s nukes.

“Whatever China is planning, the violation of American territorial airspace was blatant and reveals the dangerous mentality of Chinese leadership.

“There are several alternative explanations for why Beijing engaged in such a brazen act at this moment.  It’s possible that the Chinese military has become so politically powerful inside the ruling Communist Party that it could launch this balloon without consulting other regime elements.  Perhaps Chinese President Xi Jinping had decided this was the time to intimidate the United States into not defending, say, Taiwan or Japan.

“President Xi has seen Russian President Vladimir Putin use nuclear threats against the United States.

“Xi can see that Vladimir Putin’s nuke threats have been effective in getting President Biden to hold back on supplying military equipment for beleaguered Ukraine.

“We cannot look into Xi’s mind, but we can see what he has been doing: preparing the People’s Republic of China for war.  At the Communist Party 20th National Congress in October, he appointed his ‘war cabinet.’  He is pushing the fastest military buildup since WWII, he is trying to sanctions-proof his regime and he’s mobilizing China’s civilians for battle.

“The balloon intrusion shows Xi’s utter disrespect for the U.S. and suggests he is not deterred by America.

“The bold intrusion can be a Beijing head fake or the prelude to conflict.  President Biden’s failure to talk about the matter suggests his administration still does not know what is going on.

“Until the administration can figure this out, the American people should assume that the worst is coming.”

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This week in Ukraine….

--Over the weekend, Yevgeny Prigozhin, founder of the Wagner Group, said his forces had taken some villages around Bakhmut, but he said on Saturday it could take two years for Moscow to control all of the two eastern Ukrainian regions that make up the Donbas (Donetsk and Luhansk).

Kyiv’s top military commander, Valeriy Zaluzhnyi, said on Saturday that Russia carried out some 50 attacks daily in Donetsk.  Zaluzhnyi maintained his forces continued to hold Bakhmut.

Oleksiy Danilov, the secretary of Ukraine’s National Security and Defense Council, told Ukrainian television on Saturday that Russia’s offensive had begun, “and our troops are repelling it very powerfully. The offensive that they planned is already gradually underway. But (it is) not the offensive they were counting on,” Danilov said.

Ukraine’s deputy head of military intelligence, Maj. Gen. Vadym Skibitsky said “Everything is ready,” in place for Russia’s second wave of military mobilization but was waiting to gauge the success of a stepped-up offensive aimed at capturing swaths of territory ahead of the first anniversary of its invasion.

“The personnel are in place, the lists are ready, the people tasked with carrying out recruitment and training are on standby,” said Skibitsky.

The major general said that even if Russia forges ahead with a new round of mobilization, it will likely suffer from the same issues the previous wave brought to light, including shortages of modern equipment in good working order and a sufficient number of officers capable of preparing the vast influx of untrained men.

Meanwhile, Russia carried out another massive strike on Friday and Saturday against critical energy facilities, with the Russian Defense Ministry claiming it had blocked the transport of foreign weapons and ammunition by rail to battlegrounds in Ukraine.

Ukraine’s armed forces said late last Friday that Russian forces had fired more than 100 missiles and mounted 12 air and 20 shelling attacks.  It said 61 Russian cruise missiles were destroyed.  Ukraine’s Energy Minister German Galushchenko said Russia had hit power facilities in six regions with missiles and drones, causing blackouts across the country.

--There have been all kinds of stories recently on casualties. A Ukrainian official told Politico that Ukraine took out more than 5,000 Russian soldiers from battle – killed, wounded or taken prisoner – after Russian forces attempted to collect intel on Ukraine’s defense capabilities in Vuhledar.

Ukraine claims it eliminated thousands of soldiers, including members of an elite Russian brigade, when the 155th naval infantry troops stormed the coal-mining town in the Donetsk region in late January.

Ukraine claims it killed the brigade’s command staff and destroyed 130 pieces of equipment, including 36 tanks.  One official said Russian forces were typically losing 150 to 300 marines a day near Vuhledar.

UK officials said a stunning 824 Russian troops are dying each day, which would be four times higher than the mean in June-July 2022, the UK’s Ministry of Defense claimed.  But it added, Ukraine “also continues to suffer a high attrition rate.”

None of this can be confirmed, but you’ve seen some of the videos Ukraine has produced of the slaughter of some Russian units, entire tank columns taken out.

The Ukrainian military claims 137,780 Russian military deaths since the full-scale invasion began.

[Today, American and British officials say Russia has likely suffered as many as 200,000 casualties.  “This likely includes approximately 40-60,000 killed,” the British military said.  “The Russian casualty rate has significantly increased since September 2022 when ‘partial mobilization’ was imposed.  This is almost certainly due to extremely rudimentary medical provision across much of the force.”]

--Monday, NATO Secretary-General Jens Soltenberg told reporters at a Ukraine Contact Group gathering in Brussels that Russia’s invasion forces appear to have begun a major new offensive  to take more territory from Ukraine.

“The reality is that we’re seeing the start” of a new offensive, the alliance chief said, “because we’re seeing what Russia is just now, what President Putin is doing now is sending thousands and thousands of more troops, accepting a very high rate of casualties, taking big losses, but putting pressure on the Ukrainians.”

Stoltenberg, in a nod to military strategists, noted, “What Russia lacks in quality, they try to compensate in quantity – meaning that the leadership, the logistics, the equipment, the training, don’t have the same level as the Ukrainian forces, but they have more forces.”

“For me, this just highlights the importance of timing – it’s urgent to provide Ukraine with more weapons,” Stoltenberg said.  “The faster we can deliver weapons, ammunition, spare parts, fuel to the Ukrainian front the more lives we save, and the better we support efforts to find a peaceful, negotiated solution to this conflict.”

But Stoltenberg added: “The war in Ukraine is consuming an enormous amount of munitions, and depleting allied stockpiles.  The current rate of Ukraine’s ammunition expenditure is many times higher than our current rate of production,” he said.

“For example, the waiting time for large-caliber ammunition has increased from 12 to 28 months.”  And that means “Orders placed today would only be delivered two-and-a-half years later,” Stoltenberg said, emphasizing, “We need to ramp up production, and invest in our production capacity.”

Stoltenberg issued a near-term forecast: “We see no sign whatsoever that President Putin is preparing for peace, or ready to negotiate something, which will respect the territorial integrity and sovereignty of Ukraine. What we see is that President Putin and Russia still wants to control Ukraine.  And therefore, the only way to ensure that Ukraine prevails as a sovereign nation is to continue to provide military support to Ukraine.”

According to the British military, “The current operational picture suggests that Russian forces are being given orders to advance in most sectors, but that they have not massed sufficient offensive combat power on any one axis to achieve a decisive effect.”

--The eastern city of Bakhmut is clearly a focus of Russian forces.  The regional governor, Pavlo Kyrylenko, said in an interview, “There is not a single square meter in Bakhmut that is safe or that is not in range of enemy fire or drones,” according to Reuters.  “Bakhmut’s capture would provide a stepping-stone for Russia to advance on two bigger cities in Donetsk – Kramatorsk and Sloviansk – and give Moscow new momentum after months of setbacks following its invasion last Feb. 24,” Reuters writes.

The General Staff of Ukraine’s Armed Forces said on Monday that Russian mortar and artillery fire had struck areas around seven settlements, including Bakhmut.  Russia said its troops had advanced 1.2 miles to the west in four days but didn’t say which part of a long frontline made such a move.

Volodymyr Nazarenko, deputy commander of Ukraine’s Svoboda battalion, told Reuters: “(Bakhmut), the city’s suburbs, the entire perimeter, and essentially the entire Bakhmut direction and Kostyantynivka are under crazy, chaotic shelling.”  Nazarenko added that although no fighting was taking place in the city center, the defenders were prepared to meet any assault.

“The city is a fortress, every position and every street there, almost every building, is a fortress,” he said.

Ramzan Kadyrov, leader of the Russian region of Chechnya, said in an interview on Russian state television that Russia had the forces to take the capital Kyiv and that it needed to capture Ukraine’s second city Kharkiv and its main port, Odesa.

The United States reiterated that all U.S. citizens should leave Russia immediately amid the risk of arbitrary arrest or harassment by Russian law enforcement agencies.

--On Tuesday, at a two-day NATO defense ministers meeting, also in Brussels, Stoltenberg urged Western countries to boost supplies to Ukraine, and to ramp up ammunition production for Ukraine as he warned again Putin was preparing for new offensives and attacks.

“We see no signs that President Putin is preparing for peace. What we see is the opposite, he is preparing for more war, for new offensives and new attacks,” Stoltenberg said.

He also said the question of supplying fighter jets to Ukraine was on the agenda but “not the most urgent issue now.”

Instead, Stoltenberg said, “the urgent issue right now is to deliver what has always been promised,” namely armored vehicles.

Secretary of Defense Lloyd Austin explained why helping Ukraine matters: “This isn’t just about Ukraine’s right to live in peace and security; it’s also about the kind of world that our children will inherit,” Austin told delegates at the summit.  “None of us want to live in a world where autocrats can assault their peaceful neighbors, trample their borders, and bombard their people. So we’ve come together to stand up for a world where rules matter, where sovereignty is respected, and where civilians are protected.”

Joint Chiefs of Staff Chairman Army Gen. Mark Milley said: “In short, Russia has lost” its war already.  “For Ukraine, this is not a war of aggression; it is a war of defense.  For Russia, it is a war of aggression,” he said.  “While Russia has waged this war for far too long, they will not outlast” Ukraine and its allies, Milley said.

President Zelensky said Russia was in a hurry to achieve as much as it could with its latest offensive before Kyiv and its allies could gather strength.

--Russia said on Wednesday it had broken through two fortified Ukrainian defense lines on the eastern front.  The Russian Defense Ministry said the Ukrainians had retreated in the face of Russian attacks in the Luhansk region, although it gave no details, including on the specific location.

President Zelensky’s office in Kyiv said Ukrainian forces had repelled some Russian attacks in Luhansk but added: “The situation in the region remains difficult.”  Luhansk regional governor Serhiy Haidai said Russia was pouring heavy equipment and mobilized troops into Luhansk.  “The attacks are coming from different directions in waves,” Haidai said.  “(But) those who spread the information that allegedly our defense forces have pulled back beyond the line of the administrative border (of Luhansk) – this does not correspond to reality.”

In Kyiv, the capital’s military administration said six Russian balloons that may have contained reconnaissance equipment were shot down over the city on Wednesday.  “The purpose of launching the balloons was possibly to detect and exhaust our air defenses,” it said on Telegram.

NATO Secretary Gen. Stoltenberg reiterated that alliance members were increasing production of 155mm artillery rounds and needed to ramp up even further.  “This is now becoming a grinding war of attrition and (this) is a war of logistics,” he told reporters after the summit of NATO defense ministers wrapped up.

Defense Secretary Austin said after the Brussels talks that Ukraine had a very good chance of taking and “exploiting” the initiative on the battlefield this year.

As of Wednesday, Russia holds swathes of Ukraine’s southern regions of Kherson and Zaporizhzhia, including its nuclear plant, nearly all of Luhansk and over half of Donetsk.  Last year, Russia declared it had annexed the four regions in a move condemned by most United Nations members as illegal.

--Britain’s military chief Ben Wallace said Wednesday that Russia is using an estimated 97% of its army for the ongoing invasion of Ukraine.  He also said those Russian soldiers are experiencing “First World War levels of attrition” due to the resistance Ukraine’s forces are putting up.

Moscow’s gains so far have “come at a huge cost to the Russian army,” Wallace told the BBC.  We now estimate 97% of the Russian army, the whole Russian army, is in Ukraine.”

A London-based think tank released a report that concludes the Russian military has lost at least half of its tanks in the war.

“Russia’s tank and artillery fleets have suffered significant attrition,” said the report released by the International Institute for Strategic Studies.  The group assessed about half of Moscow’s prewar fleet of modern tanks, including the T-72B3 and T-72B3M models, has been lost.

Henry Boyd, a military analyst at the institute, said his research indicates that between 2,000 and 2,300 Russian tanks have been destroyed.

At the same time, Russia and Ukraine are depleting ammunition stocks at a staggering pace, putting pressure on weapons makers globally to meet demand and forcing Moscow to turn to allies like Iran to bolster supplies.

--Thursday, Russia rained more missiles across Ukraine and struck its largest oil refinery at Kremenchuk, Kyiv said, while the head of the Wagner group, Prigozhin, predicted the fall of Bakhmut within a couple of months.  Were that timeline to be right that would mean thousands more deaths, potentially on each side.

Russia launched 36 missiles in the early hours Thursday, Ukraine’s Air Force said, after NATO officials met the previous day to plot more support for Kyiv.  About 16 were shot down, a lower rate than normal.  The extent of the damage at the refinery was unclear, but it’s been hit a number of times during the war.

“Another massive missile attack by the terrorist state on civilian infrastructure in Ukraine,” the Defense Ministry tweeted.

Ukraine said the barrage included three KH-31 missiles and one Oniks which its air defenses cannot shoot down.  Police in Moldova said they again found missile debris near the border with Ukraine.

--Friday, Belarusian President Alexander Lukashenko said he would again let his ally, Vladimir Putin, use Belarus to stage further attacks on Ukraine – though would only send troops of his own if Belarusian forces were attacked.  Lukashenko met with Putin in Moscow on Friday.

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--Former Italian Premier Silvio Berlusconi, a member of Italy’s right-wing governing coalition, blamed President Zelensky for Russia’s invasion, telling reporters on Sunday that if Zelensky had ceased attacking Russian-backed separatist forces in eastern Ukraine, “none of this would have happened.”

Berlusconi, long a friend of Vladimir Putin, said: “My judgment of this man’s behavior (Zelensky’s) is very, very negative.”  He was silent on Putin.

The comments ignited a furor in Rome, with Italian Prime Minister Giorgia Meloni responding in a statement that reiterated her government’s “firm and staunch” policy of aiding Ukraine’s self-defense.

A spokesman for Ukraine’s Foreign Ministry, Oleg Nikolenko, wrote on Facebook: “Berlusconi’s ridiculous accusations against the Ukrainian president are an attempt to kiss Putin’s hands, which are covered in blood up to the elbows.  At the same time, the Italian politician should understand that by spreading Russian propaganda he encourages Russia to continue its crimes against Ukraine, and therefore bears political and moral responsibility.”

--Germany said 1.1 million people arrived from Ukraine in 2022, exceeding its unprecedented migrant influx in 2015-16.

--According to a report funded by the U.S. State Department, at least 6,000 children from Ukraine have attended Russian “re-education” camps in the past year.

Russia has also unnecessarily expedited the adoption and fostering of children from Ukraine in what could constitute a war crime, the Yale Humanitarian Research Lab report found.

Since the start of the war nearly a year ago, children as young as four months have been taken to 43 camps across Russia, including in Moscow-annexed Crimea and Siberia, for “pro-Russia patriotic and military-related education,” said the report.

--A former Russian Minister of the Interior, Maj. Gen. Vladimir Makarov, was found dead in a suburb near Moscow after an apparent suicide weeks after he was reportedly relieved of his post by Vladimir Putin, Russian state news agency TASS reported.  It was reportedly a self-inflicted gunshot.

But Makharov is the latest in a string of mysterious suicides tied to Putin and his regime; four since September.

--According to the independent Russian news website Meduza, which is based in Latvia and was recently banned in Moscow, Vladimir Putin is increasingly traveling around his domain in an armored train, not unlike his dictator comrade in North Korea, Meduza citing two sources allegedly close to the Kremlin.

--Lastly, there’s been a slight erosion in U.S. support for arming Ukraine compared to three months into the invasion. 

According to a new survey from AP-NORC Center for Public Affairs Research, the good news is “Strong bipartisan support continues” among Americans, the survey’s authors write, with 84% of Democrats in favor of the U.S. playing “at least a minor role” in helping Ukraine defend itself compared to 70% of Republicans who feel the same way.  Those numbers were 94% for Democrats, and 74% for the GOP back in May.

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Wall Street and the Economy

For those looking for the Federal Reserve to pause its rate hike regimen after maybe just one more 25 basis point hike at its next Open Market Committee meeting March 21-22, they were deeply disappointed this week.

The inflation data for January was not good, at least vs. expectations.  Consumer prices rose 0.5%, ex-food and energy 0.4%, and for the last 12 months, 6.4% on headline, 5.6% on core.  All four numbers exceeding consensus.

Yes, headline CPI of 6.4% was below the prior month’s 6.5%, continuing a trend, and the core figure of 5.6% was less than the prior 5.7%.  But these are nowhere near, say, 3%, let alone the Fed’s preferred target of 2%.

[Grocery prices rose 11.3% in January from a year earlier.  Restaurant prices, which are viewed as a signal of labor-cost pressures, increased 8.2% in the month, about the average for the second half of 2022.]

And then Thursday, producer prices also came in hotter than expected for January, up 0.7%, 0.5% ex-food and energy; 6.0% year-over-year, 5.4% on core.

Again, less than the prior revised 6.5% and 5.8%, but way too high for comfort.

Last week I pointed out the revisions to the past inflation figures, upward, and I got a kick out of how so many traders didn’t seem to factor this in to January’s data.

Meanwhile, we had a hot number for January retail sales, 3% vs. expectations for 1.7%.  Ex-autos the figure was 2.3%, far greater than the consensus forecast of 0.7%.

Separately, January industrial production was unchanged, vs. expectations for a 0.5% rise, while January housing starts were poor, 1.309 million annualized vs. a prior revised number of 1.371m, and well below forecasts.

[The Atlanta Fed’s GDPNow barometer for first-quarter growth is at 2.5%.  But Freddie Mac’s 30-year fixed-rate mortgage rose to 6.32% this week from 6.12% prior and is destined to be higher next time we get a readout.]

As for equities, the markets took the bearish news in terms of the Fed and largely continued to just putter around, in “Nothing to see here, Officer” fashion.

And this despite further hawkish talk from all manner of Fed officials.  St. Louis Fed President James Bullard, for one, said continued rate increases will “lock in” slowing inflation even with continued economic growth, which sounds good and prices have indeed been falling from their peak, 40-year highs.  But he did say continued rate hikes, though didn’t indicate how many more rate hikes he feels might be necessary.

“The U.S. economy is growing faster than previously thought, and labor market performance remains robust with unemployment below its longer-run natural level,” Bullard said.  “Continued policy rate increases can help lock in a disinflationary trend during 2023, even with ongoing growth and strong labor markets, by keeping inflation expectations low.”

But all the past and future Fed moves operate with a lag effect, a negative lag effect.

Cleveland Fed President Loretta Mester said Thursday the risks of inflation accelerating are still tilted to the upside and will require further monetary policy tightening, with inflation data determining how far above 5% the federal funds rate will need to reach before the Fed pauses.

Mester added that there was a “compelling economic case” for a 50-basis point increase at the FOMC’s Jan. 31-Feb. 1 meeting rather than the 25 bp increase that the panel delivered.

Both Mester and Bullard are nonvoters this year.

Dallas Fed President Lorie Logan, who does vote this year, said the Fed needs to be flexible to react to inflation, including resuming rate increases after a brief pause if conditions call for it.

Philadelphia Fed President Patrick Harker (voter) said he expects the Fed to be able to pause at some point this year and let previous rate increases do their work.  But he said the CPI news did not change his view that rates will have to rise above 5%.

New York Fed President John Williams (voter) said the Fed’s work on inflation is not done with inflation well above the target.  “We must restore balance to the economy and bring inflation down to 2% on a sustained basis.”

Richmond Fed President Tom Barkin (nonvoter) said that even with slowing inflation, it is still the case that the Fed will need to leave rates elevated for longer to prevent a recurrence of high inflation.

Fed Governor Michelle Bowman (voter) said Friday the Fed needs to keep raising interest rates until it makes more progress on bringing high inflation back down towards its 2% goal.  “I think there’s a long way to go before we reach our 2% inflation objective and I think we’ll have to continue to raise the federal funds rate until we see a lot more progress on that,” she said.

On a different topic that will no doubt impact future interest rates in one form or another, the Congressional Budget Office said Wednesday that it expects the U.S. economy to stagnate this year with the unemployment rate jumping to 5.1% - a bleak outlook that was paired with a 10-year projection that publicly held U.S. debt would nearly double to $46.4 trillion in 2033.

The CBO projects that within a decade, the national debt in relation to the size of the economy will rise to unprecedented levels.  Debt held by the public is projected to reach 118% of GDP by 2033 – the highest level ever recorded – according to the CBO.

The report estimates a $1.4 trillion budget gap in 2023 between government spending and tax revenues.

The updated 10-year Budget and Economic Outlook outlined stark expectations for the coming year as high interest rates and inflation continue to impact U.S. households and businesses.

But the CBO is often wildly wrong, especially in attempting to look so far into the future, though it did also say that the debt ceiling could be hit in July, not the June target set by the Treasury Department recently, if tax receipts from the current filing season fall short of estimated amounts.

Editorial / Wall Street Journal

“This CBO forecast is more significant than most because it’s the first comprehensive account of what the last two years of Democratic Party control have wrought.  It’s also far enough past the pandemic that it offers a guide to how all of the new spending and tax increases will affect the federal fisc for a decade.  You don’t have to be an alarmist to see that the trend is setting the U.S. up, sooner or later, for a fateful reckoning….

“(So-called) mandatory spending for entitlements (Social Security, Medicare and more) hit a new peak of 16.3% of GDP last year, far above the (1973-2022) 10.9% average.  That will fall slightly as pandemic programs end, but it will accelerate again later in this decade as more of the baby boomers retire.

“And don’t forget interest on the federal debt, which is rising fast again as the Federal Reserve raises interest rates to normal levels.  CBO estimates that interest payments will gobble up 3.6% of GDP in a decade, which is based on optimistic assumptions about inflation and rates.  [Ed. interest normally takes up 2.0% of GDP.] ….

“As for the much-discussed federal debt… Debt held by the public – the kind we have to pay back to creditors like the Chinese and Japanese based on contracts – is now 97% of the economy, and will soon rise to 100% and keep going to 118.2% in 2033.  How high can it go before creditors stop lending?  No one knows, but it will be ugly if they do.

“Most of the media will ignore all this because they figure it plays into the hands of Republicans who want to use the debt limit as leverage to gain spending concessions from Mr. Biden.  But these are all facts that the public deserves to know.  The White House will soon release Mr. Biden’s budget, which will try to prettify all this up so it doesn’t look so spendthrift.  CBO’s numbers are a useful reality check….

“The bottom line is that the President and the Democrats have built a much larger federal government that is taking nearly a quarter of all national income, up from about a fifth over the last 50 years.  Mr. Biden has also raised taxes, though not nearly enough to pay for all of the new spending.  He now wants even higher taxes, which he claims will reduce the deficit, though that would really fund even more new spending.

“All of this backs the argument made by Republicans to restrain spending growth in everything except national defense. They will have to use their leverage carefully, and with more unity and political savvy than they have shown so far.  They do have reality on their side, for whatever that is still worth.”

Lastly, President Biden is remaking his economic team,  choosing officials who signal stability and continuity on the policy front ahead of his expected re-election campaign.

Current Fed Vice Chair Lael Brainard will serve as the director of the National Economic Council; Brainard succeeding Brian Deese.

And Jared Bernstein will be nominated to chair the Council of Economic Advisers, succeeding Cecilia Rouse.  Bernstein is currently a CEA member with longstanding ties to the president and served as his top economic adviser when Biden was vice president.

Brainard is also thought to be the likely successor to Treasury Secretary Janet Yellen when she decides to step down.

Europe and Asia

European Central Bank President Christine Lagarde said eurozone inflation remains far too high and the ECB will keep raising interest rates to dampen underlying price pressures.  Lagarde and Co. have promised another 50 basis-point move in March.

Inflation in the 20-nation eurozone fell to 8.5% in January from a peak of 10.6% in October.  But as in the U.S., the target is 2%.

On the economic data front, a flash estimate on fourth quarter GDP for the euro area rose 0.1% over the prior quarter, according to Eurostat.  A first estimation of annual growth for 2022 had GDP rising 3.5% in the EA19.

December industrial production in the euro area fell 1.1% compared with November, and down 1.7% year-over-year.

Britain: Scotland’s first minister, Nicola Sturgeon, resigned after eight years in power. Ms. Sturgeon, who will also stand down as leader of the Scottish National Party, is a fierce advocate for Scottish independence but in November, her government suffered a setback when the Supreme Court ruled against a second referendum.  She’s only 52 but burned out by politics and said it’s time for someone else to carry the independence torch, though you won’t see any new votes for same for years to come. 

Separately, UK inflation slowed by more than expected to a six-month low in January, adding to growing evidence that price pressures have peaked.

But the annual rate of consumer price inflation is still 10.1%, the Office for National Statistics said, down from 10.5% in December, after a high of 11.1% in October.

Core inflation, which in the UK strips out food, energy, alcohol and tobacco, did decline to 5.8% from 6.3% the previous month.

Chancellor Jeremy Hunt said: “While any fall in inflation is welcome, the fight is far from over.”

France: It’s not just on the streets where you see protests over President Emmanuel Macron’s plan to raise the retirement age (about 1 million out in force last Saturday across the country), but also in parliament, as observers say the debate is the most turbulent in years in the National Assembly.

Tensions are fueled by the unpopularity of the reform aimed at raising the minimum retirement age from 62 to 64 and requiring people to have worked for at least 43 years to be entitled to a full pension, amid other measures.

The bill to accomplish this already has over 20,000 proposed amendments, mostly from the leftist opposition coalition.  Which makes it impossible to finish before what I understand to be a Friday night deadline.

Prime Minister Elisabeth Borne said on Tuesday, “What do our fellow citizens see?  A held-up debate? Held up by the multiplication of amendments… Held up by the multiplication of insults?  Held up by abhorrent personal attacks?”

One of the hard-left lawmakers called Labor Minister Olivier Dussopt “a murderer” while speaking about growing numbers of fatal workplace accidents in France.

If the Assembly doesn’t finish debate by Friday, it gets sent to the Senate without a vote.  The end of the legislative process will take weeks.

Turning to Asia…due to the Lunar New Year holiday falling at different times of the year, China always combines items such as retail sales and industrial production, two of the more important metrics, for both January and February, thus nothing of import to note on this front until end of the month.

Japan released a flash reading on GDP for the fourth quarter, an annualized pace of 0.6%, worse than the consensus for 2.0%, and after a revised -1.0% in the previous quarter.

December industrial production was -2.4% year-over-year.

And January exports rose 3.5% Y/Y, a little better than expected, with imports up 17.8% Y/Y, in line.

Exports to the U.S. rose 10.2%, and 9.5% to the EU.  They fell 17.1% to China.

Separately, Japan’s government named the next governor of the Bank of Japan, Ueda Kazuo, a veteran economist who served a term on the BOJ’s policy board until 2005. He is replacing Kuroda Haruhiko, who oversaw a decade of monetary stimulus, in April.

But this change comes at a difficult time.  Japan has struggled with low inflation, sometimes tipping into deflation, for decades.  The current rate of 4% is the highest in 41 years.  However, there is no sustained wage growth the BOJ wants to see before it opts to abandon its stimulus.

Street Bytes

--Stocks finished mixed, with the Dow Jones falling a third week in a row, but just 0.1% to 33826.  [The weekly losses have been only -0.2%, -0.2% and -0.1%.]  The S&P 500 lost 0.3%, but Nasdaq gained 0.6%.

Monday the markets are closed for the Presidents Day holiday, but the rest of the week we’ll have earnings from all the major retailers, like Walmart and Home Depot, as well as a critical report on the Fed’s favorite inflation benchmark, the personal consumption expenditures index on Friday.

Across the pond, I have to note London’s FTSE 100 index closed above 8000 for the first time this week, despite all of its economic, and political, issues. Time for a pint to celebrate.  Maybe three.

--U.S. Treasury Yields

6-mo. 5.02%  2-yr. 4.61%  10-yr. 3.81%  30-yr. 3.86%

Treasury yields rose again across the board, but we had a strange rally today, with the yield on the 10-year soaring to 3.93% early in the session, only to close at 3.81%.  Nonetheless, the highest weekly close of the year.

--Crude oil prices remain largely stuck in about a $73 to $80 range on West Texas Intermediate, closing this week at $76.40.  The U.S. Energy Information Administration announced crude stockpiles jumped by a whopping 16.3 million barrels to 471.4 million, their highest since June 2021, but the build was a one-off.

The International Energy Agency forecast higher global oil demand growth and said there could be a supply deficit in the second half due to restrained production from OPEC+.  The IEA said China will make up nearly half of this year’s oil demand growth after its reopening, while 1 million bpd of production from Russia will be shut in by the end of the first quarter, citing a European ban on seaborne imports and a Group of Seven (G7) price cap.

Nat gas prices continued to slide, all the way to Sept. 2020 levels today, $2.23 (closing at $2.27), even though U.S. liquefied natural gas (LNG) exports to other countries were on track to jump to their highest since May 2022 after a vessel picked up a cargo from Freeport LNG’s long-idled export plant in Texas.

Freeport, the second biggest U.S. LNG export plant, shut in after a fire in June, and it’s had a hard time getting federal regulators to authorize a restart for commercial operations.  The regulators and analysts have said Freeport will likely not return to full capacity for a while, but that day is coming.

Gas demand is heavily impacted by the weather and on Wednesday here in Summit, N.J., it hit 66, and 70 on Thursday.  We still haven’t had a snowstorm…amazing…not even an inch.  But March can be wild.

Europe caught a massive break with the weather this winter, after Russia’s invasion of Ukraine a year ago forced Europe to rush to fill up their storage tanks of nat gas, with storage today at 66% of capacity, well above the five-year average of 46%.  Not just milder than normal temperatures, but also strong liquefied nat gas imports have helped offset a decline in Russian gas pipeline flows, as noted by Australia’s ANZ Bank, which specializes in such matters.

But Shell said European demand for natural gas will surpass available supply for the rest of the decade, while China is expected to boost LNG imports this year.

--Air India unveiled deals on Tuesday for a record 470 jets from Airbus and Boeing, accelerating the rebirth of a national emblem under new owners Tata Group as Europe and the United States hailed deepening economic and political ties with New Delhi. 

The provisional deals include 220 planes from Boeing and 250 from Airbus and eclipse previous records for a single airline as Air India views with domestic giant IndiGo to serve what will soon be the world’s largest population.

The Airbus order includes 210 A320neo narrowbody planes and 40 A350 widebody aircraft, which Air India will use to fly “ultra-long routes,” Tata Chairman N. Chandrasekaran said.  Boeing will supply 190 737 MAX, 20 of its 787 Dreamliners and 10 mini-jumbo 777X.

New CEO Campbell Wilson is working to revive Air India’s reputation as a world-class airline and shake off its image as a tardy, run-down operation with an ageing fleet and poor service.

Air India’s order tops American Airlines’ combined deal for 460 Airbus and Boeing planes more than a decade ago.

As India experiences a strong post-Covid travel surge, Air India’s strategy is to recapture a solid share of trips between India’s diaspora and cities such as New Delhi and Mumbai that are currently dominated by foreign rivals such as Emirates. And it will put the airline on a stronger footing to compete with domestic rival IndiGo, which has a majority share of the Indian market and a strong position in regional flights.

--Meanwhile, Boeing said Tuesday it delivered 38 airplanes in January, which included 35 units of 737 MAX jets and three 787 Dreamliners.

The company’s backlog was 4,585 orders, and the total unfulfilled orders as of Jan. 31 were 5,408, according to the data.

--More than 2,300 flights to and from German airports were canceled Friday as workers walked out to press their demands for inflation-busting pay increases.

The strikes at seven airports, including Frankfurt, Munich and Hamburg, affected almost 300,000 passengers and forced airlines to cancel flights in the thousands.

The leading labor union has said failure to reach a meaningful deal with employers on pay could result in a “summer of chaos” at German airports. 

--We have a travel nightmare at JFK International Airport in New York, as one of the terminals has been without power for over 24 hours due to an electrical panel failure and small fire.  The disruption impacts 8.5% of the airport’s total gates, which serve more than a dozen international airlines including Air China, Air France and Turkish Airlines.

--TSA checkpoint numbers vs. 2019

2/16…107 percent of 2019 levels
2/15…81
2/14…78
2/13…107
2/12…95
2/11…93
2/10…139
2/9…105

Yes, these aren’t typos…the numbers are just all over the place these days.

--Tesla Inc. said it would recall 362,000 U.S. vehicles to update its Full Self-Driving (FSD) Beta software after regulators said on Thursday the driver assistance system did not adequately adhere to traffic safety laws and could cause crashes.  The National Highway Traffic Safety Administration (NHTSA) said the Tesla software allows a vehicle to “exceed speed limits or travel through intersections in an unlawful or unpredictable manner that increases the risk of a crash.”

Tesla will release an over-the-air software update free of charge and the EV maker said it is not aware of any injuries or deaths that may be related to the recall issue.

The shares traded as high as $217 before the announcement, and were holding up fine, but then cratered to $197 before closing the week at $208.

--New Jersey Gov. Phil Murphy (Dem.) announced my state will move up its goal to reach 100 percent clean energy by 15 years – an initiative that will also require new cars sold in the state to be all-electric by 2035.

--Ford Motor Co. halted production and shipments of its F-150 Lightning to address a potential battery issue, a setback in the company’s efforts to ramp up output of the electric pickup truck.

The Detroit-area factory where the Lightning is built has been idle since the start of last week, a company spokeswoman said Tuesday.  “As part of our pre-delivery quality inspections, a vehicle displayed a potential battery issue and we are holding vehicles while we investigate,” she said.

Ford began Lightning production in April and has been working to accelerate factory work to meet what it says is a long customer wait list.

Separately, Ford announced it will dismiss 11% of its workforce in Europe in the latest sign of industrial disruption caused by the automotive sector’s shift to electric vehicles.

Of the total 3,800 jobs to go, workers in Germany and the UK will be hardest-hit with about 2,300 and 1,300 positions to be eliminated respectively over the next three years, Ford said Tuesday.

“Paving the way to a sustainably profitable future for Ford in Europe requires broad-based actions and changes in the way we develop, build and sell Ford vehicles,” Martin Sander, general manager of Ford’s electric-vehicle business in Europe, said in a statement.  “This will impact the organizational structure, talent, and skills we will need in the future.”

Ford is shifting its model lineup in Europe to battery-only by 2035 and has previously said that the reduced complexity of electric cars would lead to smaller product-development teams.  The company is also trimming jobs in the U.S. as CEO Jim Farley targets $3 billion in annualized savings while investing more than $50 billion in EVs through 2026.

Ford had some 35,000 positions in Europe as of the end of last year, with Cologne its biggest plant with some 14,000 workers.

And speaking of the EV theme, Ford said Monday it will invest $3.5 billion in Michigan to build a lithium iron phosphate, or LFP, battery plant, in collaboration with a Chinese supplier.

The BlueOval Battery Park Michigan facility in Marshall is initially expected to create 2,500 jobs, with battery production scheduled to start in 2026.

The company aims to deliver an annual run rate of 600,000 EVs globally by the end of 2023 and 2 million by the end of 2026.

But Virginia Governor Glenn Youngkin (R) reportedly rejected efforts for a proposed Ford EV battery factory in the state over the company’s partnership with China’s Contemporary Amperex Technology.

--Cisco Systems Inc. shares rose after the company raised its outlook for the year after posting better-than-expected results, a bright spot among tech companies.

Chief Financial Officer Scott Herren attributed the increased full-year outlook to Cisco’s growing recurring revenue base and remaining performance obligations, backlog and steps taken to improve its supply.

The networking-equipment giant posted net income of $2.77 billion, or 67 cents a share, for the fiscal second quarter ended Jan. 28, down from $2.97 billion, or 71 cents a share, a year earlier.  But adjusted earnings of 88 cents beat analyst estimates for 85 cents.

Revenue increased 7% to $13.59 billion, ahead of consensus of $13.42 billion.

For the current fiscal year, Cisco is projecting revenue growth of 9% to 10.5%, with adjusted earnings between $3.73 and $3.78 a share, both up from the company’s previous guidance.

--Deere & Co. shares surged 8% Friday after the company posted fiscal first-quarter earnings of $6.55 per share, up from $2.92 a year earlier, and ahead of the Street’s forecast of $5.45.

Net sales and revenue for the quarter ended Jan. 29 were $12.65 billion, up from $9.57 billion a year ago. Analysts expected $11.14 billion.

Pretty, pretty good.  Deere also guided higher for fiscal 2023.

Demand from farmers has been strong, after elevated crop commodities last year left producers with income to purchase new equipment or upgrade their fleets.

--Coca-Cola Co. said on Tuesday it would raise soda prices further in 2023 to combat stubbornly high costs, in sharp contrast to a halt at rival PepsiCo Inc., as the beverage giants bet on different paths to boost sales for the year.

Coca-Cola also forecast annual profit growth above Wall Street expectations, while PepsiCo had delivered a more somber forecast last week.

Coke CEO James Quincey said the company would continue raising prices “across the world” this year, but at a moderating pace.  Coca-Cola’s average selling price rose 11% for the full year ended Dec. 31, while PepsiCo’s increased 14%.  Unit case volumes for Coca-Cola fell 1% in the quarter, hit by a drop in demand in Europe, where there’s been a cost-of-living crisis.  Quincey said consumer demand in the region is likely to remain weak for the rest of 2023.

--DraftKings reported stronger-than-expected fourth quarter revenue and raised its outlook for 2023.  Heading into college basketball’s March Madness tournament, its business is surging as more states legalize sports gambling.  Its shares rose 6.4% in response.

The gambling company (used by yours truly in a very small fashion) reported revenue of $855 million, up from $473 million in Q4 of 2021.

But for 2022, DK reported a loss of $3.16 per share on revenue of $2.24 billion.  The company is slashing its workforce by 3.5% to cut costs.

--Fidelity Investments is bucking the trend and looking to fill 4,000 new jobs by midyear as rival asset managers winnow their staff.  The additional positions will focus on customer service and technology, the company said in a statement Wednesday. 

Last year was a record year for hiring that brought Boston-based Fidelity’s headcount to 68,000.

Foreign Affairs, Part II

China: On a totally different topic from spy balloons, perceived threats and ongoing tensions between Beijing and Washington, China’s top leaders on Thursday declared a “decisive victory” over Covid-19, saying its efforts led to more than 200 million people getting medical treatment and the country having the world’s lowest fatality rate.

“With continuous efforts to optimize Covid-19 prevention and control measures since November 2022, China’s Covid-19 response has made a smooth transition in a relatively short time,” China’s Politburo Standing Committee remarked in a meeting.

“A major decisive victory in epidemic prevention and control has been achieved.”  Nearly 800,000 severe cases received proper treatment, but leaders cautioned that while the epidemic situation continues to improve in China, the virus is still spreading globally and continues to mutate, according to state media.

The meeting stressed that China will increase the vaccination rate for the elderly, and strengthen the supply and production of medical goods.

In December, China dismantled its almost three-year strict policies following historic protests against the government’s tough antivirus curbs.  The U-turn unleased Covid on 1.4 billion people that had been largely shielded from the disease.  There has been scant data on deaths and hospitalizations as the surge swept across the country, fears amplified by the massive migration of travelers during the Lunar New Year.  But the government said the Covid situation was at a “low level” after the holidays.

North Korea: The foreign ministry said on Friday that South Korea and the United States will face an unprecedentedly strong response if they go ahead with their planned military drills, accusing the allies of raising tensions in the region.  In a statement carried by the state media KCNA, the North also said it will consider additional action if the U.N. Security Council continues to pressure Pyongyang.

I’m still sittin’ around waiting for the nuclear test.

Turkey/Syria: Amid growing public anger over his handling of the catastrophic earthquake, Turkish President Erdogan on Tuesday announced a series of measures, including the construction of what he said would be high-quality and safe buildings to meet the housing need in the entire quake zone in one year.

Good luck. This is one of the worst homelessness emergencies in the history of the world.  Millions have been displaced, cutting across all classes.

Among the moves, university students have been evicted from their dormitories to make room for the homeless, prompting criticism from students and their families.

You’ve also had a security situation, with the likes of German, Austrian and Swiss aid organizations suspending their rescue operations, citing reports of clashes between groups of people and gunfire, but now the odds of finding any survivors are essentially zero, though a few were plucked from the rubble eight days after the quake, which hit Feb. 7.

[And amazingly, two more were found alive today, 11 days after.]

Business owners in Antakya, for one, were emptying their shops to prevent their merchandise from being stolen by looters.

Among the many issues, also picture the sanitation situation.  I was reading a Reuters story from Wednesday that summed it up.

“More than a week after his home was wrecked…Mohammad Emin’s body is still covered in dust and grime.  Like countless other victims of a catastrophe that killed more than [now 44,000] in Turkey and Syria, he is still waiting for a wash – affected by a shortage of clean water that international health bodies say poses a risk to public health….

“With much of the region’s sanitation infrastructure damaged or rendered inoperable…Turkish health authorities face a daunting task in trying to ensure that survivors, many homeless, now remain disease-free.”

At one camp for 10,000 who are displaced, doctors are offering tetanus shots and distributing hygiene kits, but there are no showers and just six toilets.  No one is changing their clothes.

The WHO is stepping up monitoring of waterborne diseases, seasonal influenza and Covid-19.

Meanwhile, in Syria, aid literally finally began to trickle in, where over 5,800 deaths have been reported but with some areas not seeing a single piece of heavy machinery as yet.  Hardline groups, and Turkey in some cases, have been holding up U.N. deliveries. So picture the looming disease situation here.

Syrian President Assad spoke for the first time on the earthquake, Thursday, ten days after the fact, and said his government had few available resources in a plea for international aid.

Iran: President Ebrahim Raisi was in China this week at the invitation of President Xi Jinping.  What a lovely thought.

Last Saturday, the Islamic Republic marked the 44th anniversary of the Iranian revolution with state-organized rallies, as anti-government hackers briefly interrupted a televised speech by Raisi.

Raisi appealed to the “deceived youth” to repent so they can be pardoned by Iran’s supreme leader.

On Sunday, Ayatollah Ali Khamenei issued an amnesty covering a large number of prisoners including some arrested in recent protests.

Rights group HRANA said that as of Friday, 528 protesters had been killed, including 71 minors.  It said 70 government security forces had also been killed. As many as 19,700 protesters are believed to have been arrested.

Israel: The U.S. is “deeply dismayed” at an Israeli Cabinet decision to expand Jewish settlement activity in the occupied West Bank, the White House said on Thursday, suggesting President Biden was prepared to take a harder line in dealing with Prime Minister Benjamin Netanyahu.

Such activity “creates facts on the ground that undermine a two-state solution” between Israelis and Palestinians, White House press secretary Karine Jean-Pierre told reporters.

Senior members of Netanyahu’s far-right coalition have sought to further expand settlements in West Bank territory captured by Israel in the 1967 war and where Palestinians aim to establish a state.  Most world powers consider the settlements in the West Bank and East Jerusalem illegal.  I agree.

On Sunday, Israel granted retroactive authorization to nine settler outposts in the West Bank and announced mass construction of new homes in established settlements.

Brazil: Former President Jair Bolsonaro said he plans to return to Brazil in March to lead the political opposition to leftist President Lula and defend himself against accusations he incited attacks by protesters on government buildings last month.

Bolsonaro, who hasn’t conceded defeat, appeared to moderate his criticism of the election outcome.  “Losing is part of the electoral process,” he said.  “I’m not saying there was fraud, but the process was biased.”

Random Musings

--Presidential approval ratings….

Gallup: 41% approve of Biden’s job performance, 54% disapprove; 36% of independents approve (Jan. 2-Jan. 22).

Rasmussen: 45% approve, 54% disapprove (Feb. 17).

--An Atlanta-based grand jury investigating efforts by Donald Trump and his allies to overturn Trump’s election loss in Georgia concluded that some witnesses may have lied under oath during their testimony and recommended that charges be filed.  But in the five-page excerpt of the grand jury report made public Thursday, those witnesses were not identified.

“The grand jury recommends that the district attorney seek appropriate indictments for such crimes where the evidence is compelling,” the report reads.

The unsealed document offered no major clues about the grand jury’s other findings – although the panel noted that it unanimously agreed that Georgia’s 2020 president vote had not been marred by “widespread fraud,” contrary to what Trump and many of his allies have claimed.

Fulton County Superior Court Judge Robert McBurney said releasing the full report at this time would violate due process of “potential future defendants” because what was presented to the grand jury was a “one-sided exploration” of what happened.

McBurney may release other sections of the report soon.

--Dominion Voting Systems filed a motion for summary judgment Thursday in its $1.6-billion defamation case against Fox News, claiming Rupert Murdoch’s network knowingly pushed a false narrative based on former President Trump’s bogus claims that the 2020 election was stolen from him.

“From the top down, Fox knew ‘the Dominion stuff’ was ‘total bs,’ the brief stated.  “Yet despite knowing the truth – or at minimum, recklessly disregarding that truth – Fox spread and endorsed these ‘outlandish voter fraud claims’ about Dominion even as it internally recognized the lies as ‘crazy,’ ‘absurd,’ and ‘shockingly reckless.’”

Sean Hannity, in a sworn deposition, said: “(The) whole narrative that Sidney (Powell) was pushing, I did not believe it for one second.”

Tucker Carlson was telling colleagues on the day of the Jan. 6 attack on the Capitol that Trump was “demonic” and a “destroyer,” yet he expressed slavish loyalty to the president on his show and called the violent riot an “election justice protest.”

Tucker is such a POS.

The document goes into granular detail to claim the network panicked over viewer reaction to Trump’s loss, with the truth at times taking a back seat to concern over declining ratings.  The case is scheduled to go to trial in mid-April, but could be delayed.

--Folders marked classified and found at Donald Trump’s Florida home after he left the White House did not contain any documents, the former president said on Tuesday after a report his team received a subpoena for one such folder.

The Guardian newspaper separately reported that the empty folder was seen by investigators Trump hired to search Mar-a-Lago for any remaining White House documents not turned over when he left office in 2021 and not uncovered by an FBI search last year.  One document with classification markings was also turned over last month, ABC News reported.

In a post on Truth Social, Trump said he kept folders with classified markings at his resort but they were empty.  His lawyer Timothy Parlatore told CNN that Trump used the now-returned empty manila folder to block blue light from a landline phone in his bedroom “that keeps him up at night.”

--Editorial / Wall Street Journal

“The 2024 presidential campaign is underway, Lord help us, and on Tuesday former South Carolina Governor and U.S. ambassador to the U.N. Nikki Haley joined the fray. The question her opening video didn’t answer, but she will have to, is: Why her?

“Some Republicans want to clear the field for one candidate to beat Donald Trump, who would almost certainly lose again to President Biden.  But running for President is an ordeal, and primary contests have the virtue of identifying candidates’ weaknesses that will give GOP voters an idea of who is the best long-distance runner.

“Ms. Haley’s candidacy is welcome in that sense, and she brings clear strengths. She was a popular Governor, held a cabinet-level position in a foreign policy role, and brings racial and gender diversity to the GOP field. She also has a charisma and can light up a room of Republicans.

“Some of these advantages sound more impressive than they are. South Carolina’s Governor is constitutionally weak – legislative leaders hold most of the power – and remaining popular in the solidly red Palmetto State is no sure sign of resilience at the national level….

“Ms. Haley’s finest moment came in 2015 when she signed a bill removing a Confederate flag from a monument on the grounds of the state house.  This happened after the murder of nine African-Americans by a white supremacist in Charleston.  The Governor’s speech on the occasion of the bill signing was inspiring, and throughout that episode she played her role admirably.  But the removal of the flag was not the result of her effort. When her opponent in the gubernatorial race proposed removing the flag a year earlier, she dismissed the idea.

“More concerning is Ms. Haley’s reputation for speaking in the absence of knowledge.  As U.N. ambassador Ms. Haley performed well enough.  But she also resigned from the position after less than two years, and her colleagues in government have been critical in their memoirs about her work ethic and depth.

“The bigger challenge for Ms. Haley is identifying the rationale for her candidacy beyond a winning persona….

“She hasn’t staked out any clear domestic policy directions, and she doesn’t have an obvious core of support.  Her ‘new generation’ line suggests Ms. Haley, age 51, will make her relative youth and vitality a contrast with Messrs. Biden and Trump. Good idea, but Florida Gov. Ron DeSantis, another likely candidate, is 44.  Other likely candidates are similarly youthful.

“Ted Kennedy famously fizzled in the 1980 Democratic primary when he couldn’t answer the question ‘Why do you want to be President?’  Ms. Haley needs her own answer.”

Haley’s whole strategy it seems is built on winning the South Carolina primary and building momentum, and attracting donors, from there.  But Republican Sen. Tim Scott is very well-liked in the state and he could be running.

A national Reuters/Ipsos poll released Tuesday found that 4% of registered Republicans supported Haley, while Trump received 43%, and Ron DeSantis 31%.

When asked about Haley’s bid for president, Donald Trump said in an interview with Fox News: “I’m glad she’s running.  I want her to follow her heart – even though she made a commitment that she would never run against who she called the greatest president of her lifetime.”

--California Sen. Dianne Feinstein announced she would not seek re-election in 2024, clearing the path for a hotly contested race for her seat among California Democrats.

Feinstein, 89, was first elected to the Senate in 1992.  She’s been under pressure for years to resign and has pushed back on lawmakers’ accounts that her memory had deteriorated.

Feinstein was a trailblazer.  The first female mayor of San Francisco, the first to chair the Senate Judiciary Committee and now the longest-serving female senator.

Among those who will seek the seat are Reps. Katie Porter and Adam Schiff, with Nancy Pelosi likely to endorse Schiff.

--Democratic Sen. John Fetterman (Pa.) checked himself into Walter Reed Medical Center for treatment for clinical depression.  Fetterman was briefly hospitalized earlier in the month after feeling lightheaded, though doctors determined he had not suffered a new stroke.  His chief of staff in a statement Thursday said, “While John has experienced depression off an on throughout his life, it only became severe in recent weeks.”

The statement did not say how long Fetterman was expected to be in the hospital, but it’s likely to be weeks.  As I’ve written countless times, it’s a travesty he stayed in the Senate race last year after his May stroke.

--The Federal Election Commission is warning Rep. George Santos to substantiate who is in charge of his campaign’s finances – or risk a ban on raising or spending any money.

The FEC sent a letter to Santos asking him to file paperwork to list the treasurer of his campaign, after his previous one resigned in January.  The letter adds to confusion over who’s in charge of the embattled New York Republican’s campaign accounts.

Santos is facing a series of inquiries from federal and local authorities over his campaign’s expenditures, the sources of his income and lies he’s told about his background.

--It was beyond pathetic that President Biden refused to do a Super Bowl interview as is tradition with Fox News, Fox Sports doing the game.  Fox’ lead news anchor Brett Baier had planned to do the honors.  The White House, though, blamed Fox, saying the president had agreed to do the interview with Fox Soul, but Fox honchos nixed the plan.

Biden did interviews with CBS News in 2021 and NBC last year.

But I forgot Donald Trump bailed on a planned interview with NBC’s Lester Holt before the 2018 Super Bowl.

--As alluded to above, residents of East Palestine, Ohio, have a right to be outraged, and fearful, after the train derailment and toxic chemical spill of about two weeks ago.  A public meeting Wednesday didn’t help matters when the rail firm at the heart of the matter, Norfolk Southern, failed to show up, citing physical threats to its employees.

After the derailment, emergency crews performed a controlled release of vinyl chloride from five railcars that were at risk of exploding.

Thick plumes of black smoke towered over the town, but crews monitoring the air quality sought to reassure locals that it was going as planned.

Thousands of dead fish have appeared, while people have told local media of chickens suddenly dying and pets falling ill.

Ohio Gov. Mike DeWine (R) on Tuesday said he recommended residents use only bottled water, but then Wednesday, he said further testing showed the drinking water was fine.  Now he’s back to ‘use bottled,’ last I saw.

Some dear family friends grew up in East Palestine.  Don and Emma met my parents at Pitt, Don and our late Dr. Bortrum going on to successful careers at Bell Laboratories in Murray Hill, N.J., while Emma and my mother were nurses.

The two families then lived in Summit and we celebrated every major holiday together.

So the other day I’m talking to Meg, one of their children, and she reminded me that Don grew up across from the tracks where the derailment occurred and how they used to take walks on them back in the day on their trips ‘home.’

Good people in East Palestine (just 40 miles from Pittsburgh), just like my relatives in the area.

But today, what a disaster.  You build up your life there, buy a house, raise a family, and now try moving out and getting anything for your property.

They deserve major financial support, paid for by Norfolk Southern.

--The California exodus continues, with no sign of slowing down as the state’s population dropped by more than 500,000 people between April 2020 and July 2022, with the number of residents leaving surpassing those moving in by nearly 700,000.

The population decrease was second only to New York, which lost about 15,000 more people than California, census data show.

The primary reason for the exodus is the state’s high housing costs, but other reasons include the long commutes and the crowds, crime and pollution in the larger urban centers.  The increased ability to work remotely – and not having to live near a big city – has also been a factor.

--Poor New Zealand…two weeks after a powerful series of storms caused massive damage in Auckland, killing eight, this week Cyclone Gabrielle hit the North Island, the worst since 1988, bringing widespread flooding, landslides and power failures to much of the same area.  At last report five more were killed, but thousands are missing, though the government says the final death toll won’t be staggering.

That said, hundreds of thousands of lives (in a nation of just five million), have been severely disrupted.

--Here’s something scary.  Equatorial Guinea confirmed its first-ever outbreak of Marburg virus disease, following the deaths of at least nine people in the country’s western province.

Equatorial Guinean health authorities sent samples to the Institut Pasteur laboratory in Senegal, with support from the World Health Organization to determine the cause of the disease after an alert by a district health official on Feb. 7. 

Only one of eight samples tested positive for the virus. But so far nine deaths and 16 suspected cases with symptoms including fever, fatigue and blood-stained vomit and diarrhea have been reported.

Sorry to be graphic, but as the WHO regional director for Africa said: “Marburg is highly infectious,” with a fatality rate of up to 88%.  It is in the same family as the virus that causes Ebola.  Illness caused by Marburg virus begins abruptly, with high fever, severe headache and severe malaise.  The other symptoms follow within seven days.  The virus is transmitted to people from fruit bats and spread among humans through direct contact with the bodily fluids of infected people, surfaces and materials.

There are no vaccines or antiviral treatments approved to treat the virus. [WHO]

So, the point for my writeup is that if we see headlines in a few weeks or months that this is spreading outside Equatorial Guinea, it will be a concern.

For example, Cameroonian authorities detected two suspected cases of Marburg on Monday, in a region bordering Equatorial Guinea.  I haven’ seen anything more since, but Cameroon borders Nigeria.

Fun with geography and disease!  Another free feature of StocksandNews.

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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 $1851
Oil $76.40

Regular Gas: $3.42; Diesel: $4.52 [$3.52 / $3.93 yr. ago]

Returns for the week 2/13-2/17

Dow Jones  -0.1%  [33826]
S&P 500  -0.3%  [4079]
S&P MidCap  +1.0%
Russell 2000  +1.4%
Nasdaq  +0.6%  [11787]

Returns for the period 1/1/23-2/17/23

Dow Jones  +2.1%
S&P 500  +6.2%
S&P MidCap  +9.7%
Russell 2000  +10.5%
Nasdaq  +12.6%

Bulls 45.1
Bears 26.8

Hang in there.

Brian Trumbore

*StocksandNews is 24 years old this week.  It is what it is.

[Actually, “Week in Review” started when I was at PIMCO in Nov. of 1997, and upon my departure, I rolled into S&N the following week.]

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