Week in Review

---

Week in Review

02/25/2023

For the week 2/20-2/24

[Posted 6:00 PM ET, Friday]

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

Edition 1,245

President Biden had a good week, in terms of the optics, as Monday he made a surprise appearance in Kyiv, meeting with President Volodymyr Zelensky as the one-year anniversary of Putin’s War approached.  His words that day, and then Tuesday in Warsaw, Poland, hit the mark.

But it was a victory lap, when victory has yet to be achieved; albeit significantly, Ukraine is still standing, though largely in ruins, tens of thousands dead, 13 million displaced.

Biden was triumphalist, when as good as the U.S. has been in providing the aid to keep Ukraine alive, we refuse to give them what they need to win…slow walking each request.

And the president never once appearing before the American people, in an Oval Office address, explaining why this conflict is critical to our own future.

At stake is the international order.  Biden says that, but then, with Ukraine putting its men and women in the line of fire so that Americans don’t have to take the bullets, he doesn’t give Zelensky and his countrymen the tools they need to finish the job.

Biden keeps saying he doesn’t want the war to escalate.  It has escalated.

But if America wants to avoid further escalation, formally involving a NATO member, like in the Baltics, Ukraine has to defeat Putin.

More below…but for now, all praise to President Zelensky and the heroic Ukrainians.

---

China laid out a moronic 12-point peace plan Thursday that was clearly written by a third grader under lockdown and a year behind in his studies…a plan that included “stopping unilateral sanctions” and nothing on Russia giving back territory that is Ukraine’s.  In essence, it was a ‘peace plan’ with no consequences.  It was laughable and dead-on-arrival.

But a year later, the conflict has exposed a deep political divide, and the limits of U.S. influence, as in from India, to Africa, to Latin America, the effort to isolate Putin has failed.  It’s not just China and Iran.

As the Washington Post pointed out, India announced last week that its trade with Russia has grown by 400 percent since the invasion. And in the past few weeks, Russian Foreign Minister Sergei Lavrov has been welcomed in nine countries in Africa and the Middle East – including South Africa, where Russia and China are staging military exercise this weekend.

Only 33 countries have imposed sanctions on Russia.

In Ukraine, a survey conducted by the independent Kyiv International Institute of Sociology showed 87% of Ukrainians steadfastly support the position repeatedly expressed by President Zelensky, that they are unwilling to concede any territory to end the war.  Only 9% believe some territory can be abandoned to attain peace.

Europeans remain steadfast in their support, according to a new poll from the European Union that shows 91% of respondents in favor of providing humanitarian aid to those impacted by the war and 88% willing to welcome those fleeing the conflict into the bloc.  In addition, 65% backed paying for military equipment for Ukraine to fight Russia.

But as noted last week, support in the United States is slipping, though still solidly behind Ukraine.

Zelensky said today that Russia has to lose the war so it stops seeking to conquer territories it once controlled.  “Russia must lose in Ukraine,” he told a conference in Lithuania via video-link.

“Russian revanchism must forever forget about Kyiv and Vilnius, about Chisinau [Ed. Moldova] and Warsaw, about our brothers in Latvia and Estonia, in Georgia and every other country that is now threatened.”

Earlier on Telegram, Zelensky said: “On 24 February, millions of us made a choice.  Not a white flag, but a blue and yellow flag. Not fleeing, but facing. Facing the enemy. Resistance and struggle.  It was a year of pain, sorrow, faith and unity. And this is a year of our invincibility.  We know that this will be the year of our victory!”

Ukrainian Defense Minister Oleksiy Reznikov said on Facebook: “Ukraine is entering a new period, with a new task – to win.  It will not be easy. But we will manage.  There is rage and a desire to avenge the fallen.”

But as Josh Rogin writes in the Washington Post:

“As the Ukraine war enters its second year, the Biden administration is pledging to support Kyiv for ‘as long as it takes.’ That language is calculated to send a message of resolve to Russian President Vladimir Putin, but it’s not what Ukrainians want to hear.  Though they’re fighting valiantly, Ukrainians are also suffering greatly – and they are begging the West to help them speed up the war, not settle in for an endless slog….

“ ‘We are very grateful for the support that is coming, but there is one phrase that makes us very concerned,’ Ukrainian member of parliament Yelyzaveta Yasko told me.  ‘Many leaders right now are saying, ‘We will support you as long as it takes.’  And we feel this phrase is quite dangerous.’…

“Russia’s attacks on Ukrainian infrastructure, energy production and agricultural facilities are taking a brutal toll on the economy. The Ukrainian military is incurring heavy losses.

“The deepening destruction means Ukraine will become even more dependent on the West in the future and reconstruction will become exorbitantly expensive and difficult. The longer the war goes on, the less industry Ukrainian refugees will have to return to….

“The first thing you will hear from any Ukrainian is ‘Thank you.’  Ukrainians are not ungrateful or greedy – they are trying to survive. But their desperation is increasing.  ‘As long as it takes’ must not become an excuse for a lack of urgency. By next year’s anniversary, there might not be a Ukraine to save.”

---

This Week in Ukraine

--Last Saturday, Vice President Kamala Harris delivered a speech at the Munich Security Conference in which she said Russia has committed “crimes against humanity” during its invasion of Ukraine. 

“In the case of Russia’s actions in Ukraine we have examined the evidence, we know the legal standards, and there is no doubt: these are crimes against humanity,” Harris said in prepared remarks. “And I say to all those who have perpetrated these crimes, and to their superiors who are complicit in those crimes, you will be held to account.”

Well, not likely, Madam Vice President.  This carries no immediate consequences, but the administration is hoping to hold members of Vladimir Putin’s government accountable through international courts and sanctions.

--U.S. Secretary of State Antony Blinken made a worrisome comment on Sunday’s talk shows on the issue of China potentially providing military aid to Russia: “The concern that we have now is, based on information we have, that they’re considering providing lethal support.  And we’ve made very clear to them that that would cause a serious problem for us and in our relationship.”

U.S. Ambassador to the United Nations Linda Thomas-Greenfield said Chinese military aid “would be a red line.”

Blinken and China’s top diplomat, Wang Yi, had a contentious meeting on the sidelines of the Munich Security Conference over the weekend.  Blinken said China made no apology for sending the spy balloon over U.S. airspace and military sites.

Wang chastised the U.S. for its “absurd and hysterical” response to the balloon.  And he blamed the U.S. for being an obstacle to peace in Ukraine.

--President Zelensky said Ukraine’s military is inflicting “extraordinarily significant” losses on Russian forces near the town of Vuhledar in the eastern Donbas.  “The situation is very complicated. And we are fighting. We are breaking down the invaders and inflicting extraordinarily significant losses on Russia,” Zelensky said in his nightly video address on Sunday.

Zelensky said that while he couldn’t share military intelligence, “I want our people to have predictability right now.  And a sense that Ukraine is moving toward its goal.”

--Monday and Tuesday were titanic days.

Monday, President Biden made a surprise visit to Kyiv, where he met with President Zelensky; Biden the first modern U.S. president to visit a war zone where U.S. troops had not been deployed.

“I thought it was critical that there not be any doubt, none whatsoever, about U.S. support for Ukraine in the war,” Biden said, as he stood with the Ukrainian president. “The Ukrainian people have stepped up in a way that few people ever have in the past.”

President Putin then gave his annual state-of-the-nation address to Russia’s parliament on Tuesday.  Much of the speech focused on the “special military operation” in Ukraine, as he calls his invasion of Russia’s neighbor.  But as The Economist described, Putin gave “a rambling tirade replete with bizarre references to Nazis, pedophilia and even the devil himself.”  Mr. Putin repeated his favorite refrain – that “the West is entirely to blame for his decision to wage war.”

Putin also said: “Russia is suspending its participation in New START – I repeat, not withdrawing from the treaty, no; but merely suspending its participation,” he said.  “There is no connection between the New START issue and, let’s say, the Ukrainian conflict and other hostile actions of the West against our country,” Putin told lawmakers.

He also said he put the country’s ground-based strategic (or nuclear) missiles “on combat duty” just last week.  According to Putin, nations in the West “want to inflict a strategic defeat on us and want to get into our nuclear facilities…Do they really think we’re easily going to let them in there just like that?” he said in macho-speak.

Putin sought to justify the war, saying it had been forced on Russia and that he understood the pain of the families of those who had fallen in battle.

“They started the war, and we used force in order to stop it,” he said.

“The people of Ukraine have become the hostage of the Kyiv regime and its Western overlords, who have effectively occupied this country in the political, military and economic sense,” Putin added.  “They intend to transform a local conflict into a phase of global confrontation. This is exactly how we understand it all and we will react accordingly, because in this case we are talking about the existence of our country.” 

Defeating Russia, he said, was impossible.  Russia would never yield to Western attempts to divide its society, Putin said, adding that a majority of Russians support the war.

Secretary of State Antony Blinken responded: “The announcement by Russia that it’s suspending participation (in New START) is deeply unfortunate and irresponsible.  We’ll be watching carefully to see what Russia actually does.  We’ll of course make sure that in any event, we are postured appropriately for the security of our own country and that of our allies.”

So then Russia said it will continue to observe limits on the number of nuclear warheads it can deploy under the arms treaty despite Moscow’s decision to suspend participation in the landmark agreement, the Russian foreign ministry said in response to Putin’s speech and announcement.

Under the treaty, signed in 2010 and extended until 2026, Moscow and Washington committed to deploying no more than 1,550 strategic nuclear warheads and a maximum of 700 long-range missiles and bombers.

“In order to maintain a sufficient degree of predictability and stability in the sphere of nuclear missiles, Russia intends to adhere to a responsible approach and will continue to strictly observe the quantitative restrictions provided for by the New START treaty within the life cycle of the treaty,” the ministry said in a statement.  The ministry also said it would continue to notify the United States of planned test launches of inter-continental ballistic missiles (ICBMs).

Kremlin spokesman Dmitry Peskov said Russia’s main goal was ensuring that nuclear parity with the United States continued to be respected.  Peskov, speaking hours after Putin’s speech, said: “The main goal of the president and our country is to make sure that nuclear parity continues.”

The U.S., NATO, Britain and France criticized Putin’s decision.

President Biden followed Putin in a speech in front of the Royal Castle in Warsaw, Tuesday evening.

“When President Putin ordered his tanks to roll into Ukraine, he thought we would roll over. He was wrong,” Biden said.  “Ukraine will never be a victory for Russia. Never.”

For some in the West, Ukraine’s ability to resist its much larger and stronger neighbor is nothing short of astonishing, as Biden acknowledged in his remarks.  “One year ago, the world was bracing for the fall of Kyiv,” he said. “I’ve just come from a visit to Kyiv and I can report: Kyiv stands strong.  Kyiv stands proud.  It stands tall, and most important, it stands free.”

Time and again, Biden called out the Russian president by name (Putin not having mentioned his counterpart in his own speech).  “President Putin is confronted with something today that he didn’t think was possible a year ago.  The democracies of the world have grown stronger,” he said.  “Not weaker. But the autocrats of the world have grown weaker, not stronger.”

--Six civilians were killed and scores wounded in the shelling of a market and public transport stop in the southern city of Kherson, just as Putin was delivering his speech and talking of not being at war with the Ukrainian people.

--Wagner Group chief Yevgeny Prigozhin accused top brass on Tuesday of deliberately depriving his fighters of munitions in what he called a treasonous attempt to destroy his private militia company. The Russian defense ministry quickly pushed back, issuing a lengthy statement saying complaints about lack of ammunition were “absolutely untrue” and would help the enemy.  It did not mention Wagner by name.

As noted in the past, Prigozhin’s militia has spearheaded the battle for Bakhmut, but early this year he was stripped of the right to recruit prisoners and there have been some signs of a Kremlin move to curb his influence.

On Tuesday, he lost his temper and at one point shouted.  “There is simply direct opposition going on (to attempts to equip Wagner fighters),” he said in a voice message on his Telegram channel.  “This can be equated to high treason.  The chief of the general staff and the defense minister are giving orders right and left, not just not to give Wagner PMC (private military company) ammunition, but not to help it with air transport,” Prigozhin alleged.

The Russian defense ministry, commenting on what it called “overexciting statements,” said military officials were doing all they could to supply fighters.  “Therefore, all the statements supposedly made on behalf of assault units about the lack of ammunition are completely untrue,” it said.

Prigozhin said Wagner fighters were “dropping like flies” in the absence of necessary supplies, including special spades to dig trenches.

Monday, Prigozhin messaged that unnamed officials were denying Wagner supplies out of personal animosity to him, and that he was required to “apologize and obey” to rectify the situation.

On Tuesday in his speech, Putin said he wanted an end to infighting.  “We must get rid of – I want to emphasize this – any interdepartmental contradictions, formalities, grudges, misunderstandings, and other nonsense,” he told the political and military elite. [Reuters]

--President Zelensky said Tuesday that Ukrainian forces were maintaining their positions on the front line in the east after Russia reported it was advancing on its main target in the area, Bakhmut.

Ukrainian and Western officials say pro-Moscow forces have lost thousands of men.  “It is very important that despite great pressure on our forces, the front line has undergone no change,” Zelensky said in his nightly video address following detailed reports from the front at a meeting of Ukraine’s military command.

Ukrainian forces in the eastern Donetsk and Luhansk regions were doing everything possible to contain enemy attacks, “with Russia not letting up at all despite sustaining staggering losses,” he said.

--China warned that the Ukraine war could spiral out of control, calling on Western countries to stop hyping up the conflict and linking it with the future of Taiwan.  Foreign Minister Qin Gang said that China would work with the international community to find a peaceful resolution to the war.

“It has been a year since the Ukraine crisis has escalated in an all-round war, and the situation has attracted international attention.  The Chinese side is deeply concerned about the escalating conflict and potential for developments to spiral out of control,” he said.

“We urge relevant countries to immediately stop adding fuel to the fire, stop blaming China and stop provoking the situation by using references like ‘Ukraine today, Taiwan tomorrow.’”

The European Union’s high representative for foreign policy Josep Borrell this week warned China against supplying lethal military equipment to Russia. 

--Russia said Wednesday it would stick to agreed limits on nuclear missiles and keep informing the United States about changes in its deployments, a senior defense official said, despite the “suspension” of its last remaining arms control treaty with Washington.

Both chambers of Russia’s parliament quickly voted in favor of suspending Moscow’s participation in the New START treaty, rubber-stamping Putin's announcement.

But Major-General Yevgeny Ilyin, told the lower house, or Duma, that Russia would also continue to provide Washington with notifications on nuclear deployments in order “to prevent false alarms, which is important for maintaining strategic stability.”

Asked in what circumstances Russia would return to the arms deal, Kremlin spokesman Peskov said: “Everything will depend on the position of the West… When there’s a willingness to take into account our concerns, then the situation will change.”

--President Putin on Wednesday said that China’s Xi Jinping would visit Russia, saying relations had reached “new frontiers” amid U.S. concerns Beijing could provide material support to Russia.  But the visit won’t come for months, it seems.

Putin welcomed Wang Yi to the Kremlin, telling him that bilateral trade was better than expected and could soon reach $200 billion a year ago, up from $185 billion in 2022.  “Everything is progressing, developing.  We are reaching new frontiers,” Putin said.

Wang said the relationship between China and Russia would “not succumb to pressure from third parties” – a clear jab at the United States.

Beijing continues to deny it is supplying Moscow with arms, after Blinken’s warnings, for which he supplied no evidence, and China said the U.S. was in no position to make demands.

“No matter how the international situation changes, China has been and remains committed, together with Russia, to make efforts to preserve the positive trend in the development of relations between major powers,” Wang told Foreign Minister Sergei Lavrov.

This week, Russia and China are conducting military exercises in South Africa.

--Prior to heading home, President Biden met leaders of NATO’s eastern flank to show support for their security after Moscow suspended its participation in New START, which Biden called a “big mistake.”

Britain said it was increasing production of artillery shells to help Kyiv push back Russian forces.

Moldova said it was preparing for a “full spectrum of threats,” foreign minister Popescu said, amid fears that Russia could intensify attempts to destabilize the small nation already reeling from the war in neighboring Ukraine.

--Thursday, Ukraine said its forces had repelled Russian assaults along the length of the front line (90 attacks in the northeast and east over the past 24 hours), as Vladimir Putin, empty-handed after a bloody winter offensive, talked up Russia’s nuclear force.  Putin announced plans to deploy new Sarmat multi-warhead intercontinental ballistic missiles this year.  This came after he suspended Russia’s participation in New START.

Russia would “pay increased attention to strengthening the nuclear triad,” Putin said in remarks released by the Kremlin, referring to nuclear missiles based on land, sea and in the air.

The last weeks have seen Russia mount infantry assaults across frozen ground in battles described by both sides as the bloodiest of the war.  Moscow’s forces have made progress trying to encircle Bakhmut, but have failed to break through Ukrainian lines to the north near Kremmina and to the south at Vuhledar, where they have taken heavy losses assaulting across open ground.

--Friday, President Zelensky urged Joint Chiefs Chair Army Gen. Mark Milley to increase the speed of weapons deliveries.

Russia said it appreciated China’s peace plan.  “We appreciate the sincere desire of our Chinese friends to contribute to resolving the conflict in Ukraine by peaceful means,” Foreign Ministry spokeswoman Maria Zakharova said, adding however that this would also mean recognizing “new territorial realities” in Ukraine.

---

--Ukraine told schools on Tuesday to hold classes remotely from Feb. 22 to 24 because of the risk of Russian missile strikes around the first anniversary of the invasion.

--Russia tested an intercontinental ballistic missile Monday while President Biden was in Ukraine that appears to have failed.  U.S. officials told CNN on Tuesday that Russia used a deconfliction line to notify the U.S. in advance of the missile test, and the U.S. did not view the test as an anomaly or an escalation.

The test was of a nuclear-capable heavy SARMAT missile, dubbed Satan II by NATO, and classified as a “superweapon” by the head of Russia’s aerospace research agency.

The U.S. believes the test failed because Vladimir Putin did not mention it in his State of the Nation address on Tuesday.

--Ramzan Kadyrov, the leader of Chechnya, said on Sunday that he one day planned to set up his own private military company in the style of the Wagner Group.

Kadyrov said that Wagner, which has been fighting alongside Russian troops in Ukraine, had achieved “impressive results” and said private military companies were a necessity.  “When my service to the state is completed, I seriously plan to compete with our dear brother Yevgeny Prigozhin and create a private military company. I think it will all work out,” said Kadyrov, who has served as head of the Chechen Republic since 2007.

--Jailed Russian opposition leader Alexei Navalny said on Monday that Moscow’s forces had committed war crimes in Ukraine and he accused Putin of destroying Russia’s future for the sake of his own personal ambition.

In a post on social media ahead of Friday’s anniversary, Navalny said Russia had hit “rock bottom” and could only recover once the “Putin dictatorship” had been dismantled and Moscow started to “reimburse” Kyiv for the damage inflicted curing the war.  “Tens of thousands of innocent Ukrainians have been murdered and pain and suffering have befallen millions more.  War crimes have been committed,” Navalny said via a Twitter feed maintained by his associates.

In another of Monday’s tweets, Navalny, serving an 11 ½-year sentence on fraud charges, said: “The real reasons for this war are the political and economic problems within Russia, Putin’s desire to hold on to power at any cost, and his obsession with his own political legacy.  He wants to go down in history as ‘the conqueror tsar’…”  He also Russia’s defeat on the battlefield was “inevitable,” and that Moscow had to withdraw its troops from Ukraine and recognize its borders as they were set in 1991 after the fall of the Soviet Union. 

--When Russia invaded Ukraine a year ago, many predicted disaster for its economy.  But the economy has proved surprisingly resilient.  GDP only fell 2.2% in 2022, compared with early predictions of a 10% contraction.  The IMF now forecasts growth of 0.3% for 2023.

Western sanctions have had a minimal impact.

--The U.N. rights office has recorded more than 8,000 civilians killed in the war, but the figure is described as the “tip of the iceberg.”

Opinion….

Editorial / Washington Post

“The split-screen dissonance in Tuesday’s speeches by President Biden and Vladimir Putin, delivered hours apart, was the latest signal that the deepening East-West conflict, triggered by the Russian dictator’s war in Ukraine, is at its most dangerous juncture in decades.  Mr. Biden’s address in Warsaw, a day after he made a stirring surprise visit to Kyiv, was a tough-minded pledge to stick by Ukraine despite the peril.  Mr. Putin’s speech twisted the reality of his unwarranted imperial aggression against a smaller neighbor into a self-righteous litany of lies claiming Russia was the aggrieved victim of a predatory West.

“Beyond those two screens, however, there was a third, less widely seen, that cast a clear light on the truth of Moscow’s assault and its effect on real people in real time.  Images from the Ukrainian port city of Kherson showed the bloody aftermath of a Russia rocket attack Tuesday at a crowded bus station that left at least six people dead and scores more hurt: buildings blasted, bodies torn, lives ruined.  Notwithstanding Mr. Putin’s propaganda, the world knows which side is prosecuting a war that has left hundreds of thousands of casualties in the past year, and could end it, immediately, if the tyrant in the Kremlin elected to do so.

“Instead, by announcing that Moscow would suspend its participation in the most important, and last, remaining treaty regulating the nuclear arsenals of the United States and Russia, Mr. Putin dealt another sledgehammer blow to global security and stability.  In combination with his threats to use tactical nuclear weapons on the battlefield in Ukraine, the suspension of the New START accord, signed by the two countries in 2010, means that arms control between the two superpowers, a project hammered out over decades, might now be another casualty of Mr. Putin’s contempt for civilized conduct among nations.

“An equal cause for concern is the prospect that China, which seeks to join the United States and Russia in a three-way arms race within the decade, is considering whether to abandon its posture of mainly rhetorical support for Mr. Putin’s war and begin arming Russian forces….

“The war in Ukraine and Russia’s intensifying strategic threat are the defining challenges of Mr. Biden’s presidency.  He has so far risen to the occasion, galvanizing the Western alliance, rallying public opinion and projecting strength and resolve – even while calibrating U.S. weapons supplies to Ukraine in what increasingly seems a vain effort to deprive Mr. Putin of pretexts for further escalation.

“Mr. Biden’s speeches in Kyiv and Warsaw were forthright and inspirational – especially for Ukrainians and Poles.  By making an appearance in Kyiv, in a somewhat risky visit to a city that is the target of episodic missile attacks, the president added symbolic weight to his repeated vow to stand by Ukraine in its fight for survival….

“Mr. Biden was right to reaffirm the civilized world’s commitment to thwart an unjust war.  In Kyiv as in Warsaw, he pledged U.S. support for Ukraine’s right to sovereignty, to live free from aggression and to strive for democracy. That is the right message, at the right time.  His mission is to deliver on his promise, and to ensure that Mr. Putin’s war of aggression ends in defeat.”

Editorial / Wall Street Journal

“A year of war in Ukraine hasn’t changed Vladimir Putin, and we hope Western politicians preaching ‘peace’ were listening to his speech on Tuesday.  The Russian promised nothing but more war and blamed the West for it.  His choice in turn means there is only a binary choice for the West: Give Ukraine the weapons to win, or abandon Ukraine and live with the fallout for decades.

“It’s worth noting how little Mr. Putin’s ambitions have changed since he rolled over Ukraine’s border last Feb. 24.  His humiliating failure to capture Kyiv in the war’s first days didn’t dissuade him from regrouping to attack the country’s east. Russian forces are now launching a fresh offensive and grinding down Ukrainians in Bakhmut.

“The Russians have lost some 2,000 tanks, half of the operational fleet, according to estimates, and appear to be hauling old Soviet equipment out of storage.  But Mr. Putin has turned to Iran for a steady supply of drones and other military equipment, and now he’s hoping that China will ship him weapons.  ‘Significantly’ more than 100,000 Russians are dead or wounded, the Pentagon says, but Mr. Putin is throwing 200,000 more into the fight, even with little training or equipment.

“Mr. Putin’s goal is unchanged: Control most or all of Ukraine and incorporate it into his greater Russian empire.  He still thinks he can outlast the Ukrainian government and its Western supporters.  Many in the U.S. and Europe are ready to head to a negotiating table, but Mr. Putin is not.  The only settlement he has in mind is Ukraine’s surrender.

“The fastest route to peace then is defeating Mr. Putin, which the Biden Administration still seems reluctant to admit.  Mr. Biden hasn’t wavered in his rhetorical support for Ukraine, and his Tuesday Speech in Poland struck the right notes that autocrats ‘cannot be appeased’ but ‘must be opposed.’

“Yet his air of triumphalism is premature – Ukraine could still lose – and it is backed by ambivalent action.  In the latest example, Mr. Biden is still holding back the Army tactical missile system, long-range weapons that the Ukrainians desperately want so they can strike deeper into Russian positions.  The Administration is leaking that the U.S. military doesn’t have any to spare, but allied inventory estimates run in the thousands.

“This has been the pattern for a year. The Biden team throws up reasons why a certain weapon – tanks, Patriot missile defenses, Himars – can’t be provided to Ukraine.  The system is far too complex. The training will take too long. Then these objections suddenly vanish after criticism in public and from Congress, and Ukraine gets the goods.  Can we skip ahead and provide F-16 fighter jets now?

“Getting Ukraine the weapons they need is increasingly urgent. If Russia receives arms from China, the war will descend into an even bloodier stalemate or a Ukrainian defeat.  Political support could fray in European capitals and in Washington, even as Beijing’s involvement raised the global risks of defeat.

“To that end, Mr. Biden might speak more directly to the Americans who are increasingly skeptical of the stakes in Ukraine, and ground his case for U.S. support in core national interests, not Wilsonian flights about foreign ‘sovereignty’ and democracy….

“The risks of backing Ukraine are real, but the risks of abandoning it are greater.  The Ukrainians have put up an audacious fight but, absent more advanced U.S. arms, this story could still end with Mr. Putin a greater menace to Europe, China emboldened, and the United States weaker.  That’s not a place to desire.”

Daniel Henninger / Wall Street Journal

“It has become clear in the past several weeks that the tectonic plates of global power are shifting. The autocratic alliance of China, Russia and Iran is signaling it’s no longer content to accept an indefinite standoff of competing ideologies and commercial interests as the status quo. They have decided to make Ukraine a singular test, which they believe the U.S., Europe and Asia’s democracies will fail.

“I’m not predicting World War III, at least not as conventionally understood. This new alliance – the two significant nuclear powers and Iran on the brink of becoming one – seems to recognize that the self-destruction of nuclear war means they have to win on a series of conventional fronts, such as Ukraine, Taiwan or the Baltics.

“Nor should we forget history’s lesson that unlikely events can push an already tense world off the rails.  The assassination in 1914 of the Austrian Archduke Franz Ferdinand in Sarajevo tipped the world toward war.  A Chinese spy balloon, presumably pushed off course by the weather and floating across the U.S. land mass, may prove to be such an event.  It’s hard to ignore that China’s response to the U.S.’s pro forma shooting down of the balloon has been unapologetic belligerence….

“As in the past when an alliance of adversaries turned more aggressive, some Republicans have rediscovered the centuries-old belief that the U.S. can insulate itself from the tides of history.  On the same day this week that President Biden went to Kyiv to join Ukrainian President Volodymyr Zelensky, Florida’s Gov. Ron DeSantis aligned himself with the Republicans’ isolationist minority in Congress, criticizing Mr. Biden’s ‘blank-check policy’ and saying ‘we have a lot of problems accumulating here in our country’ that Mr. Biden is neglecting.

“A political realist would view Mr. DeSantis’ statements on Ukraine as mainly an attempt to peel off more of a Trump base that may be open to alternatives.  Like some of the other neoisolationists in Congress, Gov. DeSantis did add that he considers China a more important threat than Russia.  This has become a distinction without a difference.

“Messrs. Xi and Putin have been explicit in citing the restoration of nationalistic and territorial glory as justification for their jacked-up militarism.  The West, properly understood as the world’s determinedly free peoples, has spent much of the past several centuries defeating messianic nationalists content to spill buckets of blood beyond their borders.  History’s greatest killer is unchecked xenophobia.

“The bet being made in Moscow and Beijing is that their will to win can eventually cause American and European leadership to break. That ‘win’ isn’t about merely defeating the Ukrainians.  It’s about finally proving to the other nations these two have courted – in Asia, the Middle East, Latin America and in resource-rich Africa – that the time has arrived to join the world’s winners and pull back from the losers.

“If several Republican presidential candidates as well as Germany and France look willing ultimately to abandon the Ukrainians, similar recalculations will be made in India, Australia, Japan and South Korea.

“The U.S.’s strategic objective in Ukraine is to prevent Russia, China and Iran from being able to declare persuasively to the watching world that they are winning.

“Only one nation in the whole world is actively fighting to stop this alliance from winning.  Ukraine merely wants the U.S. and Europe to send them the necessary instruments of war – not next summer, but now – with which, as the last year has proved, they will fight to the last man, woman and child. The Ukrainians have already written their blank check.  Our fatigue is not an option.”

---

Wall Street and the Economy

There’s been lots of talk in recent weeks of the Fed engineering a soft landing, but in actuality many are now talking of a ‘no-landing’ scenario after the strong January jobs report; no landing meaning the economy continues its upward trajectory, but inflation remains sticky.

And if inflation is sticky, as economist Ed Yardeni notes: “Fed officials likely would conclude that the only way to bring inflation down is by causing a recession.  In other words, the inflationary no-landing scenario may turn out to be the long way to a hard landing.”

That wouldn’t be good for stocks.

This week, the equity market swooned on Tuesday (after a three-day weekend), the Dow Jones falling 697, on the growing concerns that the Fed will keep interest rates higher for longer, as well as poor earnings guidance from retail heavyweights Home Depot and Walmart, though the reaction to the latter was somewhat muted.

Also Tuesday, existing home sales for January fell a 12th consecutive month, to 4 million annualized, below expectations, and down 37% from a year ago.  The median home price was up only 1.3% year-over-year, $359,000.

January new home sales accelerated to a 670,000 annual rate, from an upwardly revised 625,000 in December, well above the 630,000 consensus.  But home sales were still down 19% from a year ago, while the median sales price of $427,500 was below the $430,500 level of Jan. 2022.

We had a second look at fourth-quarter GDP and it ticked down to 2.7% from an initial 2.9%, as consumption was revised downward significantly, from 2.1% to 1.4%.

So the markets were waiting for Friday’s report on personal income and consumption for January, a report that includes the Fed’s key personal consumption expenditures index, and it was not good.

Personal income rose a less than expected 0.6% vs. a revised prior 0.3%, while consumption was a strong 1.8% vs. -0.1% prior revised,

The PCE, though, was much hotter than forecast, 0.6% on both headline and core, while the 12-month figure was 5.4%, and the money number, ex-food and energy, 4.7% vs. an expected 4.3% and 4.6% prior revised…as in an increase and the highest since October.

The equity markets then tanked anew.

Earlier in the week, we had the Fed’s minutes from the Jan. 31-Feb. 1 meeting with most of the officials supporting the quarter-point hike because a slower pace “would better allow them to assess the economy’s progress” toward reducing inflation to their 2% target.

At the meeting, Fed officials also unanimously agreed that “ongoing increases” in the Fed’s key rate “would be appropriate,” which points to additional hikes in the next two meetings, at least.

Lastly, the Atlanta Fed’s GDPNow barometer for first-quarter growth is at 2.7%.

Freddie Mac’s 30-year fixed-rate mortgage rate is up to 6.50% from 6.32% last week.

Europe and Asia

We had the flash February PMIs for the eurozone, courtesy of S&P Global, and the composite reading is at a 9-month high, 52.3 (50 the dividing line between growth and contraction), with manufacturing at 50.4, also a 9-month high, and services 53.0, an 8-month high.

Germany: mfg. 50.6 (9-mo. high and back to growth mode), services 51.3
France: mfg. 45.9 (3-mo. low), services 52.8 (5-mo. high)

UK: mfg. 51.6 (9-mo. high), services 53.3 98-mo. high)

Chris Williamson / S&P Global

“Business activity across the eurozone grew much faster than expected in February, with growth hitting a nine-month high thanks to resurgent service sector activity and a recovering manufacturing economy.  February’s PMI is broadly consistent with GDP rising at a quarterly rate of just under 0.3%.

“Growth has been buoyed by rising confidence as recession fears fade and inflation shows signs of peaking, though manufacturing has also benefitted from a major improvement in supplier performance.

“The pandemic-related delivery delays that dogged factories over the past two years have given way to faster delivery times, in turn meaning pricing power is shifting from suppliers in factory purchasing managers, bringing industrial price inflation down.

“However, although inflationary pressures have continued to moderate in February, the survey hints at persistent elevated price trends in the service sector, linked in part to higher wage growth, which will concern ECB policymakers.

“The combination of accelerating growth and stubbornly elevated price pressures will naturally encourage a bias towards further policy tightening in the months ahead.”

Eurostat then released January inflation data for the EA19, 8.6%, down from 9.2% in December, and a peak of 10.6% in October.

Germany 9.2% (ann.), France 7.0%, Italy 10.7%, Spain 5.9%, Netherlands 8.4% (down from 17.1% in Sept.)

Britain: There was some movement on the labor front, as nurses suspended their strikes and agreed to enter talks with ministers over higher wages.  But the government is only recommending a 3 ½-percent annual increase and inflation is still at double-digits.  Subway drivers have threatened a strike for March 15.

At the same time, Prime Minister Rishi Sunak is pushing to finalize a Brexit deal over Northern Ireland, seeking legal changes with the European Union to the existing treaty, which the EU has previously opposed.

Back to inflation, Citigroup predicts UK prices will be rising at just a 2% level by the end of the year on falling gas prices.

Turning to Asia…nothing of consequence in terms of economic indicators in China this week.  But there were increasing stories on how the Ministry of Finance has been giving guidance to some state-owned enterprises (SOEs) as recently as last month, urging them to let contracts with the Big Four auditing firms expire, according to reports.

China is seeking to rein in the influence of the U.S.-linked global audit firms and ensure the nation’s data security, as well as to bolster the local accounting industry.

The China-U.S. audit deal last year was hailed as a sign that the competitive superpowers can still work together on some issues; but Beijing’s audit guidance is a reminder that decoupling is still proceeding in sensitive areas like SOEs and advanced technology.  One risk for China is that shifting to lesser-known auditors will make it harder for SOEs to attract capital from international investors.

Japan’s flash February PMI readings showed a big split between the manufacturing and service sectors; the former at just 44.9, the latter at a solid 53.6.

And on the inflation front, January consumer prices rose 4.3% vs. a prior 4.0%, with core (ex-food and energy) at 3.2%.  Incoming Bank of Japan Governor Kazuo Ueda said Friday, however, it was appropriate to maintain the BOJ’s ultra-loose monetary policy.

Ueda said the recent rise in consumer inflation was driven mostly by surging import costs of raw materials, rather than strong domestic demand.  He also warned that uncertainties regarding Japan’s economic recovery remained “very high,” warranting the BOJ to maintain its decades-long stance.

Street Bytes

--Stocks fell, the S&P 500 for a third consecutive week, the Dow Jones a fourth, on renewed Fed fears, with virtually everyone in agreement now that 25-basis-point hikes are in the cards for March (21-22), May (2-3) and June (13-14); the S&P falling 2.7%, the Dow 3.0% to 32816, and Nasdaq 3.3%.

More earnings reports from retailers on tap for next week, including Target, as well as key data on the manufacturing and service sectors.

--U.S. Treasury Yields

6-mo. 5.09%  2-yr. 4.81%  10-yr. 3.95%  30-yr. 3.86%

The 10-year is up 43 basis points, 3.52% to 3.95%, in three weeks, a huge move, as reflected in the increase in mortgage rates, which could impact the housing market again.  It’s the highest weekly close for the 10-year since Nov. 4.

--Crude oil was largely unchanged, staying within its $73 to $80 range on West Texas Intermediate, WTI closing at $76.55 this week.

But the action was in natural gas, where prices continued to plummet at the start of the week, hitting $1.96 mBtu (per million British thermal units), the lowest since the 2020 pandemic lockdown and off from last August’s high of $9.71.  A shocking decline.  The price climbed back to $2.17 at the close on Wednesday from the $1.96 print earlier in the day.  And it went further, to $2.57 today, on talk of a cold snap the next two weeks that I frankly don’t see (pockets of cold, yes, but not nationwide).  I’ll say nat gas falls back significantly by next Friday.

U.S. gas inventories have flipped to an unseasonable surplus after being at a significant deficit to normal levels this summer, when the price surged to $9.

Pittsburgh-based producer EQT, whose operations are spread through Pennsylvania, West Virginia and Ohio, said this week that the market may remain oversupplied for the rest of the year.  To get back into balance, some producers will have to slow their activity.

The problem for natural-gas producers is that supply has ramped up quickly, but demand has lagged behind.  The warm winter reduced demand for heating, and even though the U.S. exports about 20% of its supply, like to Europe and Asia, Europe in particular has also had a warm winter and the export figure isn’t likely to rise much due to a lack of infrastructure to liquefy and ship nat gas.

Producers inevitably are going to have to dial back output to buoy prices.

--Walmart Inc. struck a cautious note in its economic outlook for 2023 on Tuesday, as the retail bellwether forecast full-year earnings below estimates and warned that cautious spending by consumers could pressure profit margins.

Shares of the world’s largest retailers initially fell in premarket trading but battled back to finish largely unchanged on the week. 

The company said it continued to battle price hikes from many of its product suppliers in a high-inflation environment.  “There’s still a lot of trepidation and uncertainty with the economic outlook.  Balance sheets are continuing to get thinner, savings rate is roughly half of what it was at a pre-pandemic level and we’ve not been in a situation like this where the Fed is raising at the rate that it does,” CFO John David Rainey told reporters.  “So that makes us cautious on the economic outlook because we simply don’t know what we don’t know.”

Walmart forecast earnings of $5.90 to $6.05 per share for the year through January 2024, compared with analysts’ estimates of $6.50.

Investors have been keenly eyeing the retailer’s efforts to negotiate better prices from its suppliers and ward off competition from rivals such as Target Corp., whose products are relatively pricier.  Inflation-squeezed consumers are increasingly shifting toward buying more food and consumables from general merchandise, which Rainey said he expects to continue this year and be a drag on margins, which hits Walmart’s gross profit rate, which fell some in the holiday quarter, primarily due to markdowns and sales of lower-margin products.

Still, WMT reported strong demand in the quarter ended Jan. 31, posting total revenue of $164.05 billion, a 7.3% increase from last year.  Analysts had estimated revenues of $159.76 billion.  Comparable sales in the U.S. rose 8.3%, ex-fuel, helped in part by higher prices and e-commerce sales.  Adjusted earnings per share came in at $1.71 for the quarter, handily beating consensus of $1.51.

--Home Depot Inc. forecast annual profit below Wall Street expectations on Tuesday as demand for home improvement products dwindle due to soaring inflation, while it grapples with higher costs and a tighter labor market.

The No. 1 U.S. home improvement chain posted a surprise drop in fourth-quarter comparable sales, sending its shares down a whopping 7%.

Following an exponential surge in remodeling activity during the pandemic, demand for home improvement tools such as paint and flooring is now cooling as consumers cut back spending.  Wall Street analysts have warned that home improvement chains are set for a challenging 2023. Contractor sales soured in December from a month earlier, for example.

HD said comp sales fell 0.3% in the fourth quarter ended Jan. 29, slightly below consensus.  Customer transactions fell 6% in the quarter.  Overall, sales were $35.83 billion, vs. the Street’s forecast of $36 billion.

The company expects earnings per share to decline in the mid-single digits percentage range for 2023, while analysts were expecting an increase.

The company is seeing elevated costs across its supply chain despite taking cost control measures, while a tight labor market has prompted it to invest more in employee wages and benefits.  Home Depot said it would spend an additional $1 billion in annualized compensation for its frontline, hourly associates, starting from the first quarter of 2023.  It also projected 2023 sales growth to be flat compared to fiscal 2022.

--Boeing has halted deliveries of 787 Dreamliner jets because of a documentation issue, according to the Federal Aviation Administration.

The plane maker hasn’t handed over a Dreamliner since Jan. 26 from the production line or from the dozens stored awaiting delivery.

The FAA said Boeing halted deliveries after conducting additional analysis on a fuselage component and that “Deliveries will not resume until the FAA is satisfied that the issue has been addressed.”

Boeing said it didn’t expect its full-year production and delivery guidance to be affected.  But the company said the problem was found during a review of certification records, prompted by an analysis error from a supplier related to the 787’s forward pressure bulkhead, a section in the nose of the jet that has caused problems in the past.  Boeing shares fell 4% today on the news.

The supplier, Spirit AeroSystems Holdings Inc., said it is continuing to deliver fuselage barrels for the planes to Boeing.

--TSA checkpoint numbers vs. 2019

2/23…107 percent of 2019 levels.
2/22…91
2/21…90
2/20…106
2/19…96
2/18…87
2/17…124
2/16…107

--Shares in chip maker Nvidia soared 12% after the company reported revenue for the fourth quarter ended Jan. 29 of $6.05 billion, down 21% from a year ago and up 2% from the previous quarter.  Earnings were $0.57 per share, down 52% from a year ago and up 111% from the prior quarter.

For fiscal 2023, revenue was $26.97 billion, flat from a year ago.

So why did the shares rise so much?  Because revenue and earnings beat expectations.

“AI is at an inflection point, setting up for broad adoption reaching into every industry,” said Jensen Huang, founder and CEO.  “From startups to major enterprises, we are seeing accelerated interest in the versatility and capabilities of generative AI… We are set to help customers take advantage of breakthroughs in generative AI and large language models….

“Gaming is recovering from the post-pandemic downturn, with gamers enthusiastically embracing the new Ada architecture GPUs (graphic processing units) with AI neural rendering,” Huang said.

Yes, lots of growing hype around AI, and Nvidia is trying to position itself as the big winner, at least in the eyes of investors.

Last week it was Microsoft, which was an early victor through its partnership with ChatGPT parent OpenAI, but then it fell victim to the fanfare when its Bing AI chatbot flamed out in some tests.  Alphabet stock posted its worst ever two-day market cap loss after its event to promote Google’s new chatbot underwhelmed investors.

But Nvidia unveiled a business model to sell its AI services directly to companies with its earnings report on Wednesday.  But now it too needs to live up to the hype in future reports.

The company, by the way, now has a market cap over five times that of Intel and is the seventh-largest publicly traded U.S. firm.  The key to the company’s success is that it controls about 80% of the market for GPUs, which are specialized chips that provide the kind of computing power required for services such as ChatGPT’s chatbot. 

GPUs are also designed to handle the specific kind of math involved in AI computing efficiently, while generic central processing units (CPUs) from Intel can handle a broader range of computing tasks with less efficiency.  According to research firm Gartner, the share of specialized chips such as GPUs that are used in data centers is expected to rise to more than 15% by 2026 from less than 3% in 2020.

Advanced Micro Devices is the second-biggest player in the GPU industry, with the other 20% of market share for the product.

All of the above is bad news for Intel.

Speaking of Intel, it cut its quarterly dividend to the lowest level since 2007 as part of efforts to save cash during a period of macro uncertainty.

The company on Wednesday affirmed its first-quarter expectations for revenue, after sales plummeted 32% in the fourth quarter.  CFO David Zinsner said Intel “took steps to right-size the organization” and rationalize investments.

--General Mills said Tuesday it has increased its fiscal full-year 2023 guidance due to its “continued in-market performance” and now expects adjusted earnings per share to grow between 7% and 85, from its prior outlook of 4% to 6% growth.

The food maker said it now expects organic net sales to grow about 10% for fiscal 2023, compared with its previous growth projection of between 8% and 9%.

--Toll Brothers reported earnings that beat consensus, with the luxury home builder saying buyer confidence is on the upswing, the company’s CEO said in a statement on Tuesday.

The company reaffirmed guidance calling for EPS of $8 to $9 and an adjusted gross margin of 27%.  The company reported earnings per share of $10.90 in 2022.  Toll Brothers wasn’t immune to the broader housing market pullback, earnings show.  The company reported 1,461 net signed contracts in the fiscal first quarter, down from 2,929 in the first quarter of 2022.  But CEO Douglas Yearly, Jr., said the company has seen an increase in buyer demand amid improving confidence.

--Wells Fargo & Co. is cutting hundreds of jobs in its mortgage unit this week, adding to thousands of cuts last year, as the firm retreats from a business it once dominated.

The latest reductions affected more than 500 employees, according to reports.  Last month, Wells Fargo announced a “new strategic direction” for the business that includes exiting correspondent lending, a pivot that CFO Mike Santomassimo said last week is “largely done.”  The firm also said it will shrink the portfolio of loans it services.

The cuts add to thousands across the home-lending industry in recent months, after the Federal Reserve’s rate hike cooled the once red-hot housing market.  JPMorgan Chase & Co. eliminated hundreds of positions in its mortgage unit this month, on top of reductions last year.

--The Washington Post first reported that Meta (Facebook) is preparing for another round of job cuts that could affect thousands of workers, a move that comes months after Meta laid off more than 11,000 employees, about 13% of its workforce, in November.

--Ericsson is set to cut around 1,400 jobs in Sweden as part of a cost-cutting drive, as the company missed expectations for its fourth-quarter earnings and warned reduced spending from customers in the U.S. and other developed markets was hitting its margins.

The reductions in Sweden are likely to be followed by several thousand more job cuts in other countries.

--German chemicals giant BASF said it would cut 2,600 jobs, as it warned of a further decline in earnings due to rising costs.  Most of the cuts, 1,800, will come from the company’s Ludwigshafen headquarters, which employs 39,000.

“Europe’s competitiveness is increasingly suffering from overregulation, slow and bureaucratic permitting processes, and in particular, high costs for most production input factors,” said CEO Martin Brudermueller.

BASF has suffered from Europe’s sky-high natural gas prices, though these have eased significantly of late.

--McKinsey & Co. plans to eliminate about 2,000 jobs, one of the consulting giant’s biggest rounds of cuts ever.

The reductions are expected to focus on support staff in roles that don’t have direct contact with clients and is intended to preserve the compensation pool for its partners, according to reports.

--There’s a Lucid Group Inc. showroom in the nearby Short Hills Mall, and doing a bit of mall walking these days, I can’t help but notice it.  So I saw where on Wednesday, the electric carmaker’s shares fell 14% after the company forecast 2023 production well short of expectations after reporting quarterly revenue missed estimates as well.

Lucid said it expects to produce 10,000 to 14,000 luxury electric vehicles this year, up from 7,180 last year.  But analysts on average were expecting the company to make 21,800.  Eegads.

Revenue of $257.7 million in the quarter was well off estimates for $302.6 million.

The company is backed by Saudi Arabia’s sovereign wealth fund, Public Investment Fund (the same backers as LIV Golf).

--Domino’s Pizza Inc. missed quarterly estimates on Thursday and the shares cratered 9%.  It’s a sign that price hikes were eating into demand for its pizzas and chicken wings.

The world’s largest pizza chain, like other fast food companies, has raised prices of its menu items over the past year as it wrestles with elevated costs for transportation, labor and raw materials.

Even with some of Domino’s promotions, its same-store sales climbed just 0.9% in the fourth quarter, missing expectations for a 3.7% rise.

The Michigan-based company has also been facing acute staffing shortages, especially of delivery drivers at its U.S. stores, which has lengthened delivery times and further dented sales.

But Domino’s dismal report comes in contrast to other fast food majors, such as McDonald’s and Taco Bell owner Yum Brands Inc., who saw more customers turn to their stores in search of wallet-friendly meals.

Total revenue rose to $1.39 billion in the three months ended Jan. 1 from $1.34 billion a year ago (though menu price hikes of 7% accounted for this in part), below estimates for $1.44 billion.

--Thomas H. Lee, 78, a private-equity investor, and billionaire, famed for orchestrating the takeover of Snapple in the 1990s, and the acquisition of Warner Music from an ailing Time Warner, committed suicide Thursday in his Manhattan office.

--Walt Disney Co. said Tuesday that ‘Avatar: The Way of Water’ became the third highest-grossing film of all time worldwide over the weekend.

The movie has passed Jurassic World to become the ninth highest-grossing film of all time domestically.  The film has earned about $2.24 billion with $657 million domestically and $1.59 billion internationally, the company said.

Foreign Affairs, Part II

China: Secretary of State Antony Blinken met his counterpart, China’s top diplomat, Wang Yi, on the sidelines of the Munich Security Conference last weekend and the two traded barbs on everything from the Chinese spy balloon and Taiwan to North Korea and Russia in their first meeting since the balloon crisis.  Blinken sought to offer assurances, saying the U.S. is “not looking for a new Cold War” after Wang had said the “Cold War mentality is back.”

But Blinken then said China was weighing whether to give Russia weapons for its war in Ukraine, a “red line,” to which China said the Biden administration was spreading lies and “disseminating fake news.”

European Commission President Ursula von der Leyen rebuffed China’s remarks, warning that Beijing had “very clearly taken sides…with Russia so it has taken a specific position.”

Separately, a senior Chinese diplomat told his Japanese counterpart that Beijing was very troubled by Tokyo’s military build up and criticized it for adopting a “Cold War mentality” in their formal security talks in four years.

“To be honest, we have concerns over Japan’s release of its new defense and security documents,” Chinese Vice Foreign Minister Sun Weidong said on Wednesday at a meeting in Tokyo with Japanese Minister for Foreign Affairs Shigeo Yamada.  Japan hosts the biggest overseas concentration of American forces outside the United States.

North Korea: The latest ICBM test appears to have featured a missile that can potentially travel anywhere on Earth, according to Dutch astronomer Marco Langbroek, who analyzed the lofted trajectory Pyongyang used for its launch on Saturday and shared a chart illustrating his point.

North Korea’s state news agency, KCNA, said the launch was designed to verify the weapon’s reliability and the combat readiness of the country’s nuclear force.  It said the missile was fired at a high angle and reached a maximum altitude of 3,585 miles, flying a distance of about 615 miles for 67 minutes before accurately hitting a pre-set area in the waters between the Korean Peninsula and Japan.  The details show the weapon is theoretically capable of reaching the mainland U.S. if fired at a standard trajectory.

The White House condemned the launch and called it “a flagrant violation of multiple UN Security Council resolutions” against North Korea’s nuclear program.

The North then fired two more ballistic missiles of the short-range variety off its east coast Monday.

Kim Jong-un’s sister, Kim Yo Jong, said on Monday that whether to use the Pacific Ocean as its “shooting range” depends on the United States. Kim said Pyongyang was carefully examining the impact of the increase in the U.S.’s strategic presence in the region.

What was interesting to me was Kim Yo Jong made the statement, as some believe now that Kim Jong-un has elevated his daughter, he would eventually take out his sister, a clear rival.  That could still happen.  Kim has done it before.

North Korea launched more than 95 cruise and ballistic missiles in 2022, a new record.

The U.S. and South Korea held a table-top exercise in Washington on how to respond to a possible nuclear attack by North Korea; the first such exercises of their sort since South Korean President Yoon Suk Yeol took office about a year ago and bolstered joint military exercises with the U.S. which has angered Pyongyang.

The U.S. reiterated that any nuclear attack by North Korea against the U.S. or its allies would “result in the end” of Kim Jong-un’s regime.

Speaking of North Korea’s record number of missile launches last year, its hackers stole $1.7 billion in cryptocurrency, according to a report this week from Chainalysis, a data firm based in New York.

Last March it ripped off a cross-chain bridge, a method for moving cryptocurrency from one coin’s blockchain to another, associated with the game Axie Infinity.  At the time it was discovered, the stolen currency was worth more than $600 million, making it the second-biggest crypto-theft ever.

But I thought blockchain was so secure, the editor snickered.

Investigators, though, are getting better at tracking the hacks.

--On a totally different topic concerning South Korea, it broke its own record for the world’s lowest fertility rate.  Last year the number of babies a woman can expect to have during her lifetime dropped to 0.78 from 0.81. The rate required for the population to remain stable is 2.1.  By 2100 the country’s population is expected to fall by 53% to 24 million. It is the fastest-shrinking population among rich economies.

Iran: Tehran on Thursday directly acknowledged an accusation attributed to international inspectors that it enriched uranium to 84% purity for the first time, which would put the Islamic Republic closer than ever to weapons-grade material (90%).

Israeli Prime Minister Benjamin Netanyahu is threatening to take military action similar to when Israel previously bombed nuclear programs in Iraq and Syria, but Israel doesn’t have the capability.  They would need U.S. help.

Israel: Israeli troops on Wednesday entered a major Palestinian city in the occupied West Bank in a rare, daytime arrest operation, triggering fighting that killed at least 10 Palestinians and wounded scores of others.

The brazen raid, coupled with the high death toll, raised the prospect of further bloodshed.  A similar raid last month was followed by a deadly Palestinian attack outside a Jerusalem synagogue, and Hamas warned that “its patience is running out.”

In a move that could further increase tensions, Israel’s West Bank settler organization said that Israeli officials had approved construction of nearly 2,000 new homes in West Bank settlements.

By week’s end that total was up to 7,000, even as the U.N. Security Council passed a statement strongly criticizing Israeli settlement construction on occupied lands claimed by Palestinians.

The U.S. has repeatedly criticized Israeli settlement construction, but has taken no action to stop it.

Separately, Israel launched an air strike on Damascus and its surroundings, killing five suspected terrorists.  The building struck in central Damascus was near a heavily guarded security complex close to Iranian installations.

Turkey/Syria: The World Health Organization said that 26 million people need aid following the earthquakes that have left well over 46,000 dead.  Turkey wound down its rescue operation last Sunday.

The death toll will soar, with some 345,000 apartments in Turkey now known to have been destroyed, and many still missing.

Random Musings

--Presidential approval ratings….

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

Rasmussen: 46% approve, 52% disapprove (Feb. 24).

--America now knows Emily Kors, the 30-year-old Atlanta-area resident who served for eight months as forewoman of the special grand jury looking into Donald Trump’s and his allies’ efforts to overturn the results of the 2020 election.

And America now knows that Emily Kors is an idiot.

Back in the old days, if you were a juror in a mob trial, well, you might be concerned about your safety.

But since social media came around, it takes a lot of guts to want to be on any high-profile jury, so I for one am thankful for those who served on this particular grand jury.

But for Ms. Kors not to understand she just ruined her life, let alone change the narrative of this whole investigation and any likely indictments, shows that she is severely lacking in smarts.

Kors was allowed to speak her mind, but legal experts are virtually in agreement that her candid talk, including tidbits about jurors socializing with prosecutors and conclusions about potential charges has provided the former president and his supporters with all kinds of ammunition.  I’m pissed.

And it’s not as if Fulton County District Attorney Fani Willis hadn’t already made some missteps herself.

This case should have been a layup.  I’ve consistently written in this space that it was the only one I cared about because it was the only case needed to help reach the conclusion that Donald Trump should not be running for office again in 2024.  Certainly, at least give his opponents in any Republican primary their own ammunition to help beat back the challenge.

So Trump is already calling the grand jury’s work “an illegal Kangaroo Court.”

--Editorial / Wall Street Journal

“It’s still unclear what caused the Feb. 3 train derailment in East Palestine, Ohio*, but Donald Trump and his opponents aren’t letting the tragedy go to political waste.  The former President on Wednesday lambasted the Biden Administration’s response during a visit to the rural Ohio town, while Democrats spin a progressive parable of corporate greed.

“Local public anger is boiling over amid a lack of certainty about what caused the Norfolk Southern Corp. derailment, how long it will take to clean up the disaster, and what the long-term environmental harm might be.  Enter Mr. Trump, who on Wednesday donned a superman cape and handed out bottled water while denouncing Biden officials.  ‘They were doing nothing for you,’ he said.  ‘They were intending to do nothing for you.’

“Bottled water aside, Mr. Trump may have made matters worse by suggesting the tap water is unsafe, even as Gov. Mike DeWine and Environmental Protection Agency head Michael Regan were drinking tap water themselves to reassure the public.

“But Biden officials have also contributed to the mistrust with a cookie-cutter progressive narrative.  In a Feb. 19 letter to Norfolk Southern CEO Alan Shaw, Transportation Secretary Pete Buttigieg accused railroads of spending ‘millions of dollars in the courts and lobbying members of Congress to oppose common-sense safety regulations, stopping some entirely and reducing the scope of others’ while buying back stock.

“Mr. Buttigieg cites a 2015 Obama Administration regulation mandating Electronically Controlled Pneumatic (ECP) braking technology on some trains carrying flammable liquids such as oil.  ECP brakes apply pressure throughout trains instantaneously, unlike conventional brakes in which each car receives a signal sequentially through an air pipe.

“The costly rule provided marginal safety benefits, but it would have advanced the left’s anti-fossil fuel agenda… Industry groups sued, and Congress instructed the Transportation Department to reevaluate its analysis and the Government Accountability Office to do an assessment.

“GAO in 2016 identified myriad problems with the government’s cost-benefit analysis, and the Trump Administration rescinded the rule in 2018.  There’s no evidence ECP brakes would have prevented the derailment, and the Obama rule wouldn’t have applied to the Norfolk Southern train because it wasn’t classified as a ‘high hazard flammable unit train.’….

“Mr. Buttigieg also flogs $18 billion that Norfolk Southern has reportedly spent on buying back stock and dividends in the past five years, which he suggests came at the expense of safety.  But there’s no evidence of that either.  Train derailments have fallen by half since 2003 and by more than 80% since 1980 even as deregulation has made railroads more efficient and profitable.

“There are still roughly 1,000 derailments a year, as Mr. Buttigieg said last week, and the one in East Palestine has drawn more attention than most because of its major damage.  But politicians aren’t helping anyone in the town by exploiting the tragedy for their own ends.”

*The chair of the National Transportation Safety Board said the derailment might have been avoided if the railway company’s alarm system had given engineers an earlier warning that bearings were overheating, Jennifer Homendy told reporters on Thursday after the release of a preliminary investigation.

The crew of the train acted properly, the warning just came too late.

While stressing a final report could be 18 months away, Homendy said the NTSB could recommend that railroad companies lower the temperature thresholds that would trigger an alarm about overheated bearings.

Norfolk Southern Corp. said its system to detect overheated bearings was operating normally in the area where the accident took place and said its warning system is among the most sensitive in the industry.

Meanwhile, the Ohio Department of Natural Resources said nearly 45,000 animals have died as a result of the toxic derailment, updating an initial estimate of 3,500, though all of the animals found dead were aquatic species, and that there is no evidence that any terrestrial animals were killed by the train’s chemicals.

Mary Mertz, who directs the department, said there is no sign that any of the chemicals have killed animals in the nearby Ohio River.

“Because the chemicals were contained, we haven’t seen any additional signs of aquatic life suffering,” she said, adding that all of the deaths occurred immediately after the crash three weeks ago.

As for the stories of chickens dying, I’ve yet to see anyone note in their reports that the nation is still dealing with the worst-ever bird flu outbreak!  Heck, the Wall Street Journal has a front-page story on the topic today.  Is it possible the dead chicken or two shown on the networks died of bird flu and not as a result of the accident?

--House Speaker Kevin McCarthy provided exclusive access to a trove of U.S. Capitol surveillance footage from the Jan. 6, 2021, insurrection to Fox News host Tucker Carlson, who has called the violence that occurred that day a “false flag” operation.

Carlson said on his program Monday: “So there’s about 44,000 hours, and we have…been granted access to that. …We believe we have secured the right to see whatever we want to see.  We’ve been there about a week.  Our producers, some of our smartest producers, have been looking at this stuff and trying to figure out what it means and how it contradicts or not the story we’ve been told for more than two years.  We think already in some ways that it does contradict that story.”

Carlson said he would air what his people have found next week.  U.S. Capitol Police had previously said they shared 14,000 hours of footage with the House select committee investigating the riot.

McCarthy needs Carlson’s support.  Tucker has criticized him for years.

--Rep. Marjorie Taylor Greene (R-Ga.) called Monday for a “national divorce,” in a rather shocking President’s Day tweet.

“We need to separate by red states and blue states and shrink the federal government.  Everyone I talk to says this,” added Greene.  “From the sick and disgusting woke culture issues shoved down our throats to the Democrat’s [sic] traitorous America Last policies, we are done.”

Greene later clarified amid a social media uproar that a “national divorce” doesn’t mean “civil war,” and argued that President Biden is the one leading the country “into WW3.”

“People are absolutely fed up and disgusted with left wing insanity and disaster America Last policies.  National divorce is not civil war, but Biden and the neocons are leading us into WW3, while forcing corporate ESG and gender confusion on our kids.  Enough!” Greene tweeted.

She later tripled down in response to a tweet by Biden about his surprise visit to Ukraine early Monday, saying: “Impeach Biden or give us a national divorce.  We don’t pay taxes to fund foreign country’s [sic] wars who aren’t even NATO ally’s [sic].  We aren’t sending our sons & daughters to dies [sic] for foreign borders & foreign ‘democracy.’  America is BROKE.  Criminals & Cartels reign.  And you’re a fool.”

Well, Greene comes from a purple state (which elected Biden and two Democratic senators, in case she forgot).  So we need to have a three-way…divorce that is.

Maybe we can carve out her district, kind of like Andorra.

--Rep. Paul Gosar (R-Ariz.), who you’ll recall is hated by his own family, was slammed by Twitter users Monday for saying that “Ukraine is not our friend, and Russia is not our enemy” on the heels of President Biden’s first trip to the war-torn nation.

--Rep. George Santos’ campaign filed paperwork Tuesday listing a new campaign treasurer but provided scant detail about the mystery man apparently tapped to track the congressman’s coffers.

The statement of organization listed Andrew Olson as the new treasurer, but gave no phone number for him, while giving an address that Santos has listed as his own in prior filings.

There’s no evidence an Andrew Olson ever served as treasurer for a federal election campaign.  The last treasurer named by Santos’ campaign said he was not, in fact, the treasurer, and had not authorized forms stating that he was.

Separately, Santos admitted to having been “a terrible liar” when confronted with his embellished resume in an interview with TalkTV’s Piers Morgan.  Santos told Morgan he had made mistakes under pressures but his lies were not about “tricking the people.”

Instead, he said, it was about “getting accepted by the party here locally.”

--Rhode Island’s political establishment was shocked to hear that Rep. David Cicilline (D) plans to resign from Congress later this year to become the president and CEO of the Rhode Island Foundation, which is the state’s largest philanthropic organization, with an endowment of more than $1.3 billion.

What’s so shocking is that Cicilline, who has held elected office as a Rhode Island state representative, mayor of Providence, and member of Congress, could have held his seat the rest of his life.

--Vivek Ramaswamy, an entrepreneur and conservative political activist, announced in a Wall Street Journal op-ed, as well as Tucker Carlson’s show, that he was running for the GOP nomination for president.

I cannot stand this guy, having seen him on CNBC countless times.  I can’t stand anyone that is a fast talker like he is.

--The U.S. is still averaging about 400 deaths a day from Covid (the average over a three-month span covering November through January), at least as a contributing cause.  The disease is still ranked at No. 3 among major causes of death, behind heart disease and cancer.

But those 75 and older represent about seven of every ten Covid deaths.

--Former president Jimmy Carter will die at home, opting for hospice care instead of additional medical intervention, the Carter Center announced last Saturday.  Alas, I am all too familiar with this, both of my parents having gone through it…one at home, one at a special facility.

When he passes I’ll have a few things to say.

--California farmers received the highest allocation of water since 2019 for the year, the U.S. Bureau of Reclamation said Wednesday.

Much of the water California farmers rely on comes from the snowpack in the Sierra Nevada mountains, which ends up in reservoirs during the spring melt off and is delivered by federal and state officials to irrigate crops.  But many farmers went without during the past three years.  Now they are slated to get at least 35% of their contracted supplies.  Some farmers with higher water rights will receive 100% of their allocations.

Well, as you’ve seen, and as I’ve written, California’s snowpack has been terrific this year, and the state’s two largest reservoirs, Lake Shasta, and Lake Oroville, have seen their levels rise substantially already.

But this weekend’s storm of historic proportions, including Los Angeles County’s first blizzard warning since 1989, could be fantastic for the reservoirs.  It’s not just the Sierras that will receive more, but Mt. Baldy, the highest peak in the county and in the San Gabriel range, could get up to 8 feet of snow or more.

The good news with the above, however, has nothing to do with Lake Powell, the nation’s second-largest reservoir that sits along the Colorado River on the Arizona-Utah border, generating electricity for about 4.5 million people and water to more than 40 million in seven states.

As noted in a story by Anumita Kaur in the Washington Post: “As of last week, its water levels fell to 3,522 feet above sea level, which is the lowest seen since the structure was filled in the 1960s.  It’s now just 22 percent full, and unprecedented cuts in states’ water usage are necessary to avoid dire consequences….

“If the reservoir drops to 3,490 feet, the dam may be unable to generate hydropower….

“At 3,370 feet, the reservoir becomes a ‘dead pool,’ meaning water may be unable to flow downstream at all, cutting states off.”

Lake Powell is about a quarter of the water in the Los Angeles Basin.  It supplies water to 90 percent of people in Las Vegas, and about half of Phoenix.

The Bureau of Reclamation, which is in charge of the nation’s dams, recently propped up Lake Powell by flowing more water into the lake from upstream reservoirs, and reducing how much it releases downstream, but these are temporary, not permanent, fixes.

[As the Midwest and West were being pounded by winter storms, on Thursday, Nashville hit 85 degrees, making it the earliest month in the year to ever reach that high.  Pittsburgh set its own record with its third February day where the temp hit 70, the first time for this since record tracking began in the city in 1875.]

--The Great Lakes reached a historic low for ice cover for this time of year, dipping below the record on Sunday, and it has continued slipping.  As of Wednesday, the Great Lakes overall had just over 6.5% ice cover.

While the mild weather has its advantages, at this time of year, ice cover should be roughly 40%.

So look for reports this coming summer of massive algae blooms, which aren’t good.  [They occur every year in some parts of the lakes, but this will be headline generating stuff.]

--Meanwhile, Italy, has had, as has much of Europe, a very dry winter that has raised concerns the nation could face another drought after last summer’s emergency, with the Alps having received less than half of their normal snowfall, according to scientists and environmental groups.

The warning came as Venice, where flooding is normally the primary concern, faces unusually low tides that are making it impossible for gondolas, water taxis and ambulances to navigate some of the canals.

The problems in Venice are being blamed on a combination of factors – the lack of rain, a high-pressure system, a full moon and sea currents.

Italian rivers and lakes are suffering from severe lack of water.  The Po, Italy’s longest river which runs from the Alps in the northwest to the Adriatic, has 61 percent less water than normal for this time of year.

Last July, Italy declared a state of emergency for areas surrounding the Po, which accounts for roughly a third of the country’s agricultural production and suffered its worst drought for 70 years.

---

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

Pray for Ukraine.

God bless America.

---

Gold $1818
Oil $76.55

Regular Gas: $3.38; Diesel: $4.45 [$3.54 / $3.96 yr. ago]

Returns for the week 2/20-2/24

Dow Jones -3.0%  [32816]
S&P 500  -2.7%  [3970]
S&P MidCap  -2.5%
Russell 2000  -2.9%
Nasdaq  -3.3%  [11394]

Returns for the period 1/1/23-2/24/23

Dow Jones  -1.0%
S&P 500  +3.4%
S&P MidCap  +7.0%
Russell 2000  +7.3%
Nasdaq  +8.9%

Bulls 44.4
Bears 26.4

Hang in there.

Brian Trumbore

 

---