Week in Review

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Week in Review

03/30/2024

For the week 3/25-3/29

[Posted 2:00 PM ET, Friday]

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Edition 1,302

With Congress on recess for a few weeks, and a government shutdown avoided as the House and Senate passed legislation funding the government through September, when Congress returns it has to be all about funding for Ukraine, Israel and Taiwan.  Speaker Mike Johnson has privately told people in recent weeks that continued American aid for Ukraine is vital, but the knives are out among some in his caucus as the isolationist wing of the party does not want any aid measure for Kyiv, which is infuriating to some of us who get it.  The fact is Johnson will need Democratic support to survive the coming battle (more on this below).

On Thursday, Johnson had a phone call with Ukrainian President Zelensky.  Zelensky said he thanked Johnson and other U.S. officials for their “critical support of Ukraine” since Russia’s invasion in February 2022, and briefed the Speaker on the “battlefield situation.”

“In this situation, quick passage of U.S. aid to Ukraine by Congress is vital,” Zelensky wrote on X.

A new Quinnipiac University national poll has voters supporting sending more aid to Ukraine by a 52-43 margin.

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Terror Attack ...I posted last Friday as the following was developing....

In the deadliest terror attack in Russia for two decades, four men burst into the Crocus City Hall (about 12 miles from the Kremlin) on Friday night, spraying people with bullets during a concert by the Soviet-era rock group Picnic.

Verified footage showed camouflage-clad gunmen opening fire with automatic weapons, with video showing people taking their seats, then rushing for the exits as repeated gunfire echoed above screams.  Investigators said some died from gunshot wounds and others in a huge fire that broke out in the complex.

Reports said the gunmen had lit the blaze using petrol from canisters they carried in rucksacks.

Baza, a news outlet with good contacts in Russian security and law enforcement, said 28 bodies were found in a toilet and 14 on a staircase.  “Many mothers were found embracing their children,” it said.

The United States said that it had warned Russia two weeks before about the possibility of an attack in Moscow, which prompted the U.S. embassy there to issue a warning that “extremists” had imminent plans for an attack.

By Monday, the death toll had risen to 137, 182 more injured. Later that day the toll was revised to 139.  Many of the injuries were horrific.

Islamic State, specifically an affiliate known as ISIS-Khorasan or ISIS-K, claimed almost immediate responsibility for the attack, a claim that the U.S. publicly said it believes, and the militants released what it says was footage from the attack.  ISIS-K seeks a caliphate across Afghanistan, Pakistan, Turkmenistan, Tajikistan, Uzbekistan and Iran.

Russia later arrested four men, all said to be from Tajikistan.  They appeared separately, led into a cage at a Moscow court by Federal Security Service (FSB) officers.

But Vladimir Putin, in his first public comments, nearly 24 hours after the attack, did not mention any connection to ISIS, saying the attackers tried to escape to Ukraine.  He said 11 people had been detained, including the four suspected gunmen.

Putin said some people on “the Ukrainian side” had been prepared to spirit the gunmen across the border.  Putin claimed the gunmen fled the concert hall and made their way to the Bryansk region, about 210 miles southwest of Moscow, to slip across the border to Ukraine.

Neither Putin nor the FSB publicly presented any proof of a link with Ukraine.

Unverified videos of the suspects’ interrogations circulated on social media.  One of the suspects was shown having part of his ear cut off and stuffed into his mouth.

One man, a Tajik named Dalerdzhon Mirzoyev, leaned against the glass cage as the terrorism charge was read out.  Saidakrami Rachabalizoda, his ear in bandages, remained sitting.

Muhammadsobir Fayzov, appeared in gaping hospital clothes, his face covered in cuts.  Shamsiddin Faiduni, his face bruised, stood.  [BBC News, plus video I viewed.]

Ukraine denied any role and President Volodymyr Zelensky accused Putin of seeking to divert blame by mentioning Ukraine, calling Russia’s claims “absurd.”

“It’s obvious that Putin and other thugs are just trying to blame someone else,” Zelensky said in his nightly video address on Saturday.  “Their methods are always the same.  We’ve seen it all before, destroyed buildings and shootings and explosions. And they always find someone else to blame.”

Zelensky said Putin should use his own men to fight terrorism at home instead of invading Ukraine.  “They have brought hundreds of thousands of their own terrorists here, on Ukrainian land, to fight against us, and they don’t care about what is happening inside their own country,” he said.

“Yesterday, as all this happened, instead of dealing with his fellow Russian citizens, addressing them, the wimp Putin was silent for a full 24 hours, thinking about how to tie this to Ukraine.  It’s all absolutely predictable,” Zelensky said.

Ukrainian military intelligence spokesman Andriy Yusov told Reuters: “Ukraine was of course not involved in this terror attack. Ukraine is defending its sovereignty from Russia invaders, liberating its own territory and is fighting with the occupiers, army and military targets, not civilians.”

In an article for the Komsomolskaya Pravda newspaper, Russian Foreign Ministry spokeswoman Maria Zakharova called into question U.S. assertions that Islamic State was behind the attack.  She said the U.S. was evoking the “bogeyman” of Islamic State to cover its “wards” in Kyiv, and reminded readers that Washington had supported the “mujahideen” fighters who fought Soviet forces in the 1980s.

Saturday, Zakharova wrote on Telegram: “Now we know in which country these bloody bastards planned to hide from pursuit – Ukraine.”

Two U.S. officials said on Friday that the United States had intelligence confirming Islamic State’s claim of responsibility.

Islamic State has a strong motivation to strike Russia, which intervened against it in Syria’s civil war in 2015, and security analysts said the IS claim seemed plausible as it fit the pattern of past attacks.

--Monday, Russia challenged assertions by the United States that ISIS orchestrated the attack, accusing Washington of covering for Ukraine.

Kremlin spokesman Dmitry Peskov told reporters it was inappropriate to comment on a claim of responsibility for the attack by Islamic State while the investigation was live.

“The investigation is underway,” Peskov said.  “So far, no versions have been put forward at all.”

When asked if such a deadly attack unfolding just outside the Russian capital was a failure for the special services, Peskov said emotions were running high but that no country was immune.

“Unfortunately, our world shows that no city, no country can be completely immune from the threat of terrorism,” Peskov said.  “The fight against terrorism is an ongoing process that requires full-scale international cooperation.  But you can see that now in this most acute confrontational period, such cooperation is not being fully carried out in any way,” which is bulls---.  The U.S. warned Russia.

But on Monday Putin posted on Telegram: “We know that the crime was carried out by the hand of radical Islamists with an ideology that the Muslim world has fought for centuries.”  He did not directly mention Islamic State, and repeated his previous assertion that the assailants had been trying to flee to Ukraine, saying there were “many questions” to be examined. 

“The question that arises is who benefits from this?” Putin then said at the Kremlin during a video conference with leaders of Russia’s security forces.  “We know by whose hand the crime against Russia and its people was committed.  But what is of interest to us is who ordered it.”

President Zelensky in his nightly video address, Monday, derided Putin’s comments, saying that for the Kremlin leader “everyone is a terrorist, except himself, though he has been thriving on terror for two decades,” a reference to allegations that Putin orchestrated the Moscow apartment bombings in 1999.

Eight suspects, natives of Kyrgyzstan and Tajikistan, had been imprisoned on suspicion of involvement in the attack by Tuesday.

Kremlin spokesman Peskov said: “I have nothing to add to what has already been said on this topic.”  He also declined to answer a question as to whether the four Tajiks seen in Court had been tortured.

Tuesday, the director of Russia’s FSB, Alexander Bortnikov, said that the United States, Britain and Ukraine were behind the concert hall attack, TASS reported.

“Islamists couldn’t prepare such an action alone,” Bortnikov told Russian state TV.

--Also Tuesday, however, Belarus’ President Alexander Lukashenko told reporters that the four attackers linked to Ukraine by Putin and Bortnikov, were actually fleeing toward Belarus, not Ukraine, when they were captured.

The Washington-based Institute for the Study of War wrote in their Tuesday evening assessment that geolocated footage put the capture about 124 kilometers from the Belarusian border and 95 kilometers from the Ukrainian border at the closest point, which would seem to suggest “the attackers were initially traveling...towards Belarus but saw roadblocks or other deterrents and shifted their course east through roads to the (Ukrainian route),” ISW notes.

“Lukashenko has very little evident incentive to lie about the facts of the attack in this way,” ISW writes.

--Russia then went into overdrive advancing a narrative that pins the blame on a usual suspect: Ukraine, and the West.

The aforementioned Russian foreign ministry spokeswoman Maria Zakharova said Wednesday it was “extremely hard to believe” that Islamic State could conduct the deadliest terror attack on Russian soil in 20 years.

“The very fact that within the first 24 hours...the Americans started screaming that it wasn’t Ukraine, I think, is a piece of incriminating evidence,” she said.  “The second fact to note concerns the clamor by the U.S. that this assuredly was the work of ISIS... The speed with which they could [conclude this] is astonishing.”

This week’s cover of Russia’s biggest weekly newspaper shows portraits of Western leaders engulfed in flames.  “We know the architects of the Crocus terrorist act. We hope they burn in hell,” reads the banner headline.  “They can tell lies about ISIS to each other.”

“It’s simply not true,” State Department spokesman Matthew Miller said.  “Those comments by Russian officials, including from President Putin, are just propaganda to justify their continued aggression against Ukraine.”

The official death toll rose to 140 on Wednesday.

--The French government said late Sunday it was raising its terror alert warning to the highest level after the shootings in Moscow.  President Emmanuel Macron then said on Monday that Russia was victim of an Islamist attack and that the group behind the Moscow shootings had also attempted to commit several acts in France recently.

“This group also tried to commit several actions on our own soil” Macron told reporters during a visit to French Guyana.  “I think it would be both cynical and counterproductive of Russia itself and the security of its citizens to use this context to try and turn it against Ukraine.”

--Garry Kasparov / Wall Street Journal

“(The) official Kremlin story line is already a shambles. In one of the most surveilled cities on earth, where you can be arrested in 30 seconds for whispering ‘no war,’ the terrorists continued their attack for more than an hour and then simply drove away.

“The FSB, Russia’s state security service, claims to have arrested four suspects near Ukraine, at one of the most fortified borders in the world.  Or did the suspects actually drive to Russia ally Belarus, as that’s nation’s ambassador to Russia said?  Considering the amount of materiel and preparation required to do so much damage to a venue the size of a small village, it’s odd that the terrorists would suddenly turn into bungling amateurs by carrying their Tajik passports and heading to a militarized border.

“Every official statement from the Kremlin and its propagandists will be a lie, with a few half-truths tossed in.  It’s a control reflex of the security state of which Putin is a product. As I often say, I believe in coincidences, but I also believe in the KGB.

“Mr. Putin angrily dismissed warnings from the U.S. Embassy on March 7 and March 18 about a potential terror attack at a concert venue in Moscow... Then, on March 22, Mr. Putin issued orders to conscript hundreds of thousands more Russians for his war of conquest against Ukraine.

“Twenty-five years ago, when then-Prime Minister Putin needed a platform for his presidential campaign, a series of terrorist apartment bombings in Russia launched the Second Chechen War.  I laid out the copious evidence that these were false-flag attacks, staged by the FSB, in my 2015 book, ‘Winter Is Coming.’  It’s a deed so shocking that it is difficult to believe – until you realize what sort of man Mr. Putin is. He has no allergy to blood, Russian or any other kind, if spilling it furthers his goals.  [Ed. I noted Putin’s culpability right after the bombings in 1999 in this very space, and before then-New York Times columnist William Safire famously did.]

“Twenty-five years ago, Mr. Putin grabbed power by committing mass murder in Chechnya.  Today, in hope of staying in power, Mr. Putin is committing a mass murder in Ukraine....

“It’s a cowardly new world order.  The White House is busy telling Ukraine where it can’t shoot and telling Israel where it can’t hunt terrorists. Instead of providing leadership to unite democratic allies against dictators, Mr. Biden’s administration puts limits on America’s allies to protect America’s enemies.  You don’t have to wonder what Taiwan and China make of America’s descent into passivity.

“Republican obstruction of aid to Ukraine is despicable, but Mr. Biden can’t use it to excuse his own politicking and inaction.  America has the largest military arsenal known to man, but it rusts in warehouses while Ukrainians die.  Harry Truman had to face down Stalin and said the buck stopped with him.  Mr. Biden says the buck stops with Speaker Mike Johnson. Donald Trump threatens isolationism in speeches and social-media posts; Mr. Biden is making isolationism a reality by refusing to stand up to dictators or to his own domestic opposition.

“Mr. Biden retreated from Afghanistan, and Russia invaded Ukraine. He retreated from Ukraine, and Hamas launched a war against Israel.  Weakness invites aggression....

“Like all dictators, Mr. Putin excels at creating distractions from his crimes. The Moscow attack will draw global attention away from his war on Ukraine, but it won’t distract him at all.  Mourn for every innocent life lost in Moscow, but also act to save the next one in Ukraine.

“If a suspected serial killer is at large, the first thing to do when there’s a murder is to check his alibi.  Mr. Putin is under indictment for war crimes, and his bloody track record makes him suspect No. 1.  There can be no common cause against terror with Russia when the world’s most accomplished terrorist rules the Kremlin.”

Editorial / Washington Post

“The Islamic State claimed responsibility online. U.S. officials have identified as likely perpetrators the group’s affiliate known as Islamic State-Khorasan Province, which is active in Pakistan and Afghanistan.  ISIS-K, as it is sometimes known, might be seeking to expand its reach by attacking Russia – having previously committed a massacre of 84 Iranians in January.  If so, this new atrocity is a reminder that the transnational threat of violent Islamist extremism is far from over, despite the destruction of the Islamic State’s forces in Iraq and Syria by the United States and its allies.

“There is nothing to celebrate in this incident.  Still, it’s appropriate to praise both the professional competence and – yes – ethics of U.S. intelligence, which detected the plot in advance and then fulfilled its ‘duty to warn’ even as an adversary government by sharing information with Russia, officials told The Post. Indeed, the U.S. Embassy in Moscow announced publicly on March 7 that it was ‘monitoring reports that extremists have imminent plans to target large gatherings in Moscow, to include concerts.’

“What cannot be explained is the response to this by Russian President Vladimir Putin. Three days before the attack, he brushed off the U.S. warning, publicly denouncing it as ‘provocative’ and claiming it resembles ‘outright blackmail and the intention to intimidate and destabilize our society.’  He made this comment at a meeting of the Federal Security Service, or FSB, the all-powerful successor to the Soviet KGB, which has been instrumental in arresting dissidents and anyone who has even slightly criticized Russia’s ruinous war against Ukraine.

“Did Mr. Putin’s FSB fall down on the job and fail to detect the gunmen moving through Moscow?  To be sure, Russian security agencies claim to have thwarted two previous attempted Islamic State attacks in Russia this month. The slaughter at the Crocus City Hall, however, suggests that Mr. Putin’s much-vaunted spy apparatus, perhaps exhausted and distracted by the war in Ukraine, is not quite what it’s cracked up to be.

“Mr. Putin has erected a totalitarian regime on the claim that his unquestioned preeminence means stability and security for Russia. He constantly warns of enemies bent on causing chaos and instability. He cemented his power just this week with a simulacrum of an election in which he supposedly received almost 90 percent of the vote. But after the bloodbath at the concert hall, Russians are entitled to wonder whether Mr. Putin’s authoritarian system is effective at protecting anyone but him.

“On Saturday, Mr. Putin attempted to deflect blame to Ukraine, saying the captured suspects were heading to an escape corridor leading to Ukraine.  This was clumsy propaganda, and Ukraine credibly denied any involvement....

“Mr. Putin has survived in power partly by persuading many Russians, especially in big cities, that his one-man rule represents their best hope for security, abroad and at home.  Unfortunately for Mr. Putin, if only one man rules, then, when catastrophe strikes, only one man can be held responsible.”

So I take you back to October 2002, when Chechen militants staged several major terrorist attacks, as Russia waged a second war to defeat a separatist movement.  That month, dozens of Chechen gunmen seized a crowded Moscow theater, the Nord-Ost, taking more than 750 people hostage.

The siege lasted for days, until Russian special forces filled the theater with a debilitating gas to incapacitate the gunmen.  At least 170 people died, including hostages and the dozens of attackers, as a result of the raid, with most of the deaths attributed to the gas.  The Russian government then later acknowledged that it had pumped in an aerosol version of fentanyl in its attempt to end the standoff.

Just weeks later, mid-November, I was in Moscow and wrote of how when I went to a recital hall and then the world-famous Bolshoi Theatre, across the street from my hotel (The Metropol), there was zero security! Zero!

I went to Moscow at that time of year because it is winter already there and I wanted the Dr. Zhivago affect as I toured all over, and what was astounding was that in the case of the Bolshoi, just weeks after the attack, all of us wearing heavy coats, in my case a long raincoat, there wasn’t a single security guard to check everyone walking in!  Ditto the recital hall.

So I loved the commentary immediately following the Crocus City Hall attack on how security is always super tight in Moscow.  No it isn’t!  I know.

But today, it’s all about the upcoming Paris Olympics.  The French will be as prepared as they can be.  But there will still be lots of soft targets.  French President Emmanuel Macron gets it.  But you can’t be everywhere, and it will be fingers crossed at what we hope is a terrific two weeks.

Daniel Henninger / Wall Street Journal

“Catastrophic failures of national-security intelligence keep happening.

“Friday’s attack on Crocus City Hall near Moscow by Islamic State, with some 130 killed, was an intelligence failure.

“Hamas’ Oct. 7 rampage, pitching Israel into a war of survival, was an intelligence failure.

“Sept. 11 was an infamous intelligence failure.

“The first two events sit starkly before the world.  But 9/11 no longer does.

“With its nearly 3,000 American deaths, ‘9/11’ became shorthand for an attack that happened more than 22 years ago, in 2001.  For most of the people we call ‘younger voters,’ the event called 9/11 is a wholly historical event, not one they experienced.

“It seems reasonable to ask: Will the U.S. wait for another 9/11 attack before doing what is necessary to avoid or deter it?  The unhappy answer is that because U.S. politics has turned inward and memories are short, America likely will be unprepared for another internal catastrophe.

“The 9/11 Commission’s examination of the attack’s causes found that insular U.S. security agencies were poor at sharing relevant information. In its conclusion, the commission said: ‘As presently configured, the national security institutions of the U.S. government are still the institutions constructed to win the Cold War. The United States confronts a very different world today. Instead of facing a few very dangerous adversaries, the United States confronts a number of less visible challenges that surpass the boundaries of traditional nation-states and call for quick, imaginative, and agile responses.’

“Can anyone seriously say we are prepared for today’s challenges, which include everything noted in that 9/11 Commission warning?

“We are in a cold war with four traditional nation-states – China, Russia, Iran and North Korea.  Simultaneously the world – which alas includes the U.S. mainland – is beset almost weekly by ‘challenges that surpass the boundaries of traditional nation-states.’....

“FBI Director Christopher Wray warns repeatedly of the extramilitary threats from China.  On Monday, the U.S. government publicly accused China of using its hacker army to install malware in our civilian infrastructure and defense systems.*

“The 9/11 Commission said we have to be quick, imaginative and agile.  I would add one more requirement: We need to be willing.  Unless the U.S. is willing to make the political and military commitments necessary to counterbalance these multiple threats, we could get hit.  An underappreciated but emerging reality: American citizens are in the strike zone everywhere – Israel, Haiti, Russia, China, Mexico.

“Amid this global chaos, the U.S. political system has thrown up a 2024 presidential election pitting the hesitant, hobbled Joe Biden against an indeterminate, variable Donald Trump.  The Security Council’s cease-fire resolution, with its Biden-ordered abstention, didn’t demand that Hamas release its hostages, including U.S. citizens. At the same time, Trump allies in Congress are holding up passage of military aid for Ukraine.  In both instances, the message of irresolution to our enemies puts us at risk....

“It’s hard to blame those in the U.S. electorate who say they don’t want to hear it.  That we have problems at home, we’re tired of endless wars.  If only they were tired of endless wars. They’re just getting started.  Our military recruitment is dangerously down. Theirs is dangerously up.

“All roads lead back to the U.S. presidential race.   Mr. Biden is running around the country raising money, and Mr. Trump is sitting in courtrooms spending it.

“Joe Biden is president, Donald Trump was. Both know the details of the current threat.  America’s voters deserve to know what each is going to do about it.”

*On this topic....Editorial / Wall Street Journal

“What’s wrong with this split-screen picture? On Monday the U.S. and Britain imposed sanctions on Chinese hacking groups, accusing the country’s top spy agency of a long effort to place malware in America’s electrical grid and defense systems.  On Wednesday more than a dozen titans of U.S. industry met in the Great Hall of the People in Beijing for a pep talk from Chairman Xi Jinping about how much China values their investment in the People’s Republic.

“The CEOs included Blackstone’s Stephen Schwarzman and Broadcom’s Hock Tan, and it’s perhaps understandable that they want to protect their business in China by paying obeisance to Mr. Xi.  But we hope these business leaders understand that Mr. Xi’s promises aren’t worth much.  The Communist Party El Supremo needs foreign investment now to help the Chinese economy recover from its mistakes in blowing up a property bubble and politically punishing major private companies.

“But he and the Party can turn in a minute if it suits their political interests.  His assurances also won’t stop China’s continuing attempts to steal U.S. business and government secrets.  Planting malware is a hostile time bomb intended to cripple the U.S. economy if the U.S. and China get into a military confrontation.”

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This Week in Ukraine....

--Russia launched 57 missiles and drones on Ukraine on Sunday, including attacking Kyiv and the western region of Lviv, officials said.

Poland’s armed forces said one of Russia’s cruise missiles briefly violated Polish airspace.

Ukraine’s air forces destroyed 18 out of 29 Russia-launched missiles and 25 out of 28 attack drones, Ukraine’s air force said on Telegram.

Several explosions rocked Kyiv early on Sunday, with Ukraine air defense forces destroying about a dozen of Russia-launched missiles over the capital and its vicinity, Serhiy Popko, head of Kyiv’s military administration, said on Telegram.

“Russia continues to indiscriminately launch drones and missiles with no regard for millions of civilians, violating international law,” said U.S. ambassador Bridget Brink on X early on Sunday.

One of Russia’s cruise missiles launched at western Ukraine’s region of Lviv, violated Poland’s airspace Poland’s armed forces said on X. “During the entire flight, it was observed by military radar systems.”

The Polish foreign ministry demanded explanations from Russia. None was forthcoming.

--Debris from a Russian missile attack wrecked part of a three-story building in central Kyiv on Monday morning and wounded at least 10 people across the city, officials said.  Schoolchildren had to run for cover during the assault, Foreign Minister Dmytro Kuleba said.  The building held an art academy’s gym and exhibition hall, with the side of the building reduced to rubble.

The air force said it shot down two ballistic missiles fired from the Crimean peninsula, more than 300 miles away.

Once again President Zelensky called on Ukraine’s allies to supply more air defenses.

--The Ukrainian military said it hit two large Russian landing ships in attacks on the Crimea peninsula early on Sunday, as well as a communications center and other infrastructure used by the Russian navy in the Black Sea.  The statement did not say how it hit the targets, but a Moscow-installed official in the region reported a major Ukrainian air attack and said air defenses had shot down more than 10 missiles over the Crimean port of Sevastopol.

“The defense forces of Ukraine successfully hit the Azov and Yamal large landing ships, a communications center and also several infrastructure facilities of the Russian Black Sea Fleet in temporarily occupied Crime,” Ukraine’s military said.  Russia said one civilian was killed by debris hitting some homes.

Ukraine then said it hit an amphibious assault ship that was docked in Crimea on Tuesday, which it seems was under repair after the ship was seized from Ukraine in 2014 when Crimea was annexed by Russia.

As of March 26, Ukraine has hit 26 Russian military ships and one submarine, according to the Ukrainian General Staff.

--Wednesday, Russia may have used a new type of guided bomb in airstrikes on the northeastern city of Kharkiv that killed at least one person, local officials said.  At least 19 were wounded. The head of the Kharkiv regional police said Moscow may have used a type of guided bomb described as the UMPB D-30.

“This is something between a guided aerial bomb which they (the Russians) have used recently, and a missile. It’s a flying bomb so to say,” Volodymyr Tymoshko said.

Kharkiv and the surrounding region have been pummeled with missiles and drones the entire two years of war, and “Russian terror against the city is becoming increasingly heinous,” President Zelensky said on X.  He pleaded again for more air defenses and fighter jets.

“There is no rational explanation for why Patriots (missiles), which are plentiful around the world, are still not covering the skies of Kharkiv and other cities and communicates under attack by Russian terrorists,” he said.

--Friday, in an interview with the Moscow daily Izvestia, Russian Foreign Minister Sergei Lavrov said Ukraine’s proposed peace plan was pointless as it was based on unacceptable notions like Moscow’s withdrawal from areas it has captured.

Lavrov said a proposed peace summit would not succeed until its fundamental bases were changed, including allowing Russia to participate.

“We are in any case ready to hold discussions but not on the bases of Zelensky’s ‘peace formula,’” he told Izvestia.

“How could any serious politicians in Washington, Brussels, London, Paris or Berlin say that there is no alternative to the Zelensky formula,” Lavrov said.

The foreign minister dismissed as unacceptable the plan’s provisions, which call for Russia to withdraw from territory it has captured, including Crimea, annexed in 2014, and the restoration of Ukraine’s 1991 post-Soviet borders. It also calls for a means to bring Russia to account for its February 2022 invasion.

Also Friday, Ukrainian power grid operator Ukrenergo said Russia had struck again at energy facilities overnight and that power plants in the central and western regions were damaged.

The Ukrainian military said its air force had destroyed 58 Russia-launched attack drones from a total of 60, along with 26 of 39 missiles.

It was the previous Friday that Russia launched its biggest attacks of the war on the energy infrastructure.

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Israel and Hamas....

--Saturday, UN Secretary-General Antonio Guterres visited the Egyptian side of the Rafah crossing. It was time for Israel to give an “ironclad commitment” for unfettered access to humanitarian goods throughout Gaza, said Guterres, who also called for an immediate humanitarian ceasefire and the release of Israeli hostages held in Gaza.

--Israel’s military killed dozens of people in new attacks in Gaza, Palestinian medics said on Monday, and its forces maintained a blockade of two hospitals where they say Hamas militants are hiding.

The Israeli military said in a statement on Monday its forces were “continuing to conduct precise operational activity in the Al Shifa Hospital area (in Gaza City) while preventing harm to civilians, patients, medical teams, and medical equipment.”  It said its forces had killed over 170 gunmen and detained 500 people affiliated with Hamas and Islamic Jihad and had located weapons in the area.  The health ministry run by Hamas said hundreds of patients and medical staff had been detained at Al Shifa.

Palestinian health officials said the death toll was over 32,000, but there is never a breakdown on the number who are militants, though UNICEF said last week that 13,000 were children.

As Israel pressed its offensive, UN Secretary-General Antonio Guterres said there was a growing international consensus around telling Israel a ceasefire was needed and that an assault on Rafah would cause a humanitarian disaster.

Palestinian medics said 30 people had been killed in the previous 24 hours in Rafah, whose population has been swollen by displaced Palestinians escaping fighting elsewhere in Gaza.

Israel will invade Rafah “even if the entire world turns on Israel, including the United States,” said Ron Dermer, the nation’s strategic affairs minister and a confidante of Prime Minister Netanyahu.  Still, Dermer and other Israeli officials were scheduled to travel to the U.S. to hear the Biden administration’s concerns.

--Sunday, Israeli forces besieged two more Gaza hospitals, pinning down medical teams under heavy gunfire, the Palestinian Red Crescent said, and Israel said it had continued its assault at Al Shifa.  The Red Crescent said Israeli forces were demanding the complete evacuation of staff, patients and displaced people from Al Amal’s premises.

--Prime Minister Netanyahu on Monday then said he will not send a delegation as planned to Washington after the United States refrained from vetoing a UN Security Council proposal calling for a ceasefire in Gaza.  Netanyahu, according to a statement from his office, said that Washington’s failure to block the proposal was a “clear retreat” from its previous position, and would hurt war efforts against Hamas, as well as efforts to release over 130 hostages in Gaza captivity.

“In light of the change in the American position, Prime Minister Netanyahu decided the delegation would not leave,” his office said.

The UN Security Council voted to demand an immediate ceasefire between Israel and Hamas and the immediate and unconditional release of all hostages.  The United States abstained from the vote.  The White House denied that the U.S. abstention reflected a change in American policy.

The high-level delegation was due to travel to Washington to discuss a planned Israeli military operation in Rafah.  White House national security spokesperson John Kirby fielded queries about Israel’s decision to pull out of the meeting, which he called unfortunate and said the U.S. would bring up its concerns about Israel’s policies as part of ongoing discussions between the two governments.

In Israel, parliamentary opposition leader Yair Lapid accused Netanyahu of trying to divert attention away from a rift in his coalition over a military conscription bill at the expense of ties with the United States.  “It’s shocking irresponsibility from a prime minister who has lost it,” Lapid wrote on X.

--Israel recalled its negotiators from Doha after deeming mediated talks on a Gaza truce “at a dead end” due to demands by Hamas, a senior Israeli official said on Tuesday. The official, who is close to the Mossad spymaster heading up the talks, David Barnea, accused Hamas’ Gaza leader Yahya Sinwar of sabotaging the diplomacy “as part of a wider effort to inflame this war over Ramadan.”

The warring sides had stepped up negotiations, mediated by Qatar and Egypt, on a six-week suspension of Israel’s offensive in return for the proposed release of 40 of the 130 hostages still held by the Palestinian militant group in Gaza.

Hamas has sought a deal that would end the fighting and lead to the withdrawal of Israeli forces, which Israel has ruled out, saying it would eventually resume efforts to dismantle the governance and military capabilities of Hamas.  Hamas also wants hundreds of thousands of Palestinians who fled Gaza City and surrounding areas southward to be allowed back north.  And while Israel agreed to double the number of Palestinians it would release for the hostages to 700-800 prisoners and allow some displaced Palestinians to return to northern Gaza, Prime Minister Netanyahu’s office said Hamas had continued to make “delusional” demands.

Tuesday, the prime minister’s office said Hamas’ stance “clearly demonstrates its utter disinterest in a negotiated deal and attests to the damage done by the UN Security Council’s resolution.”

“Israel will pursue and achieve its just war objectives: Destroying Hamas’ military and governmental capacities, release of all the hostages, and ensuring Gaza will not pose a threat to the people of Israel in the future.”

Netanyahu is facing sharp criticism from his far-right coalition partners over any indication that he is hesitating in the war against Hamas or in the expansion of Israeli settlements in the occupied West Bank. Netanyahu and his far-right partners have made increasingly bellicose remarks against the Biden administration.  In a recent interview, the national security minister accused Biden of tacitly supporting Israel’s enemies.

Israel, Tuesday, said its military pressed on with its bombardment of Gaza, saying its fighter jets had struck “over 60 targets.”

--But in two days of meetings between the Israeli defense chief and senior officials in the White House and Pentagon, discussions on Israel’s planned military operation in Rafah centered on how to protect civilians during its rollout, not necessarily on how to stop it.

The Wall Street Journal reported, “The businesslike tone of the talks was a departure from previous weeks, when top U.S. officials bluntly warned Israel against an all-out defensive on Rafah...while Israel’s prime minister defiantly vowed to press ahead.”

So while Netanyahu pulled his delegation after the UN Security Council resolution, Israeli Defense Minister Yoav Gallant proceeded with his meetings on Monday and Tuesday, which had been previously scheduled.  Gallant is part of Israel’s three-member war cabinet that includes Netanyahu and Benny Gantz, the PM’s chief political rival.

A U.S. defense official said: “There is a sequence. The military aspect of the operation should not proceed until the humanitarian aspects have been fully addressed.”

--Also Tuesday, twelve people drowned trying to reach aid dropped by plane off a Gaza beach, Palestinian health authorities said on Tuesday, amid growing fears of famine nearly six months into Israel’s military campaign.

Video of the airdrop showed crowds of people running towards the beach, in Beit Lahia in north Gaza, as crates with parachutes floated down, then people standing deep in water and bodies being pulled on to the sand.

The Pentagon said three of the 18 bundles of airdropped aid into Gaza on Monday had parachute malfunctions and fell into the water, but could not confirm if anyone was killed trying to reach the aid.

--Wednesday, Iran-backed Hezbollah militants launched about 30 rockets from Lebanon toward the Israeli town of Kiryat Shmona, Israel’s military said Wednesday.    The attack killed at least one factory worker in what Reuters described as “the biggest escalation between the old enemies since a month-long conflict in 2006.”

Israeli airstrikes Tuesday had killed eight people in the Lebanese town of Hebbariyeh, including three Hezbollah fighters.

Friday, Israel struck a Hezbollah weapons site in Aleppo, Syria, with the Syrian Observatory for Human Rights saying it was the highest number of dead among Syrian forces in a single such “Israeli attack.”  The number killed was reported to be 38, including five Hezbollah fighters.

--A new Gallup poll has a majority of Americans, 55 percent, now disapproving of Israel’s war in Gaza.  In November, that number was 45 percent.

The number of those who approve of Israel’s handling of its war has dropped from 50 percent in November to just 36 percent today.

Editorial / Wall Street Journal

“In his State of the Union address, President Biden made a promise to the families of U.S. hostages held by Hamas: ‘We will not rest until we bring their loved ones home.’ At the United Nations on Monday, he undermined that pledge.

“The U.S. withheld its veto and abstained as the UN Security Council passed a resolution that demanded a cease-fire in Gaza but didn’t make the cease-fire contingent on Hamas releasing its 134 hostages.  That condition, on which the U.S. had previously insisted, had been dropped.

“Instead, the resolution’s two demands – ‘an immediate cease-fire for the month of Ramadan...leading to a lasting sustainable cease-fire’ and ‘the immediate and unconditional release of all hostages’ – each stand on their own.  To Hamas, the diplomatic pressure will be meaningless.  To Israel, it can be perilous, as Mr. Biden well knows.  His fence-sitting opens up Israel to more pressure to end the war while Hamas still reigns in part of Gaza.

“White House spokesman John Kirby says, ‘Nothing has changed about our policy – nothing.’  He explains that the U.S. abstained because the Security Council resisted a last-minute amendment condemning Hamas.  Yet the U.S. had previously vetoed resolutions that wouldn’t condemn Hamas for Oct. 7.  The moral arbiters at the UN still won’t do that.

“The reactions to the resolution tell the real story: Hamas welcomed it and Russia, China and Algeria voted for it, while Israel called it ‘a clear departure from the consistent U.S. position,’ adding that it ‘gives Hamas hope that international pressure will force Israel to accept a cease-fire without the release of our hostages.’  Israel also canceled some high-level meetings.

“Biden officials push the line that the resolution is nonbinding and Israel is overreacting.  Yet this is how Mr. Biden has turned against Israel: one half-step at a time.

“The President’s initial support for a ‘pause’ to free hostages morphed over time into Friday’s U.S. resolution for an ‘immediate, sustained cease-fire.’  The new resolution uses Ramadan as a fig leaf to sneak in a ‘lasting’ cease-fire that would let Hamas survive.

“Mr. Biden’s initial support for destroying Hamas has faded, such that Vice President Kamala Harris now refuses to rule out ‘consequences’ should Israel invade Hamas’ last stronghold of Rafah.  Administration leaks about international isolation and weapons embargoes drive home the point.

“If Mr. Biden thinks his escalating fight with Israel is risk-free, think again. The March Harvard CAPS Harris poll finds that 63% of voters support a cease-fire only after Hamas releases the hostages and is removed from power.  Two-thirds say Israel is trying to avoid civilian casualties in Gaza.

“Americans don’t want to see Hamas survive to repeat Oct. 7. The President can’t become Obstacle No. 1 to an Israeli victory without endangering his own in November.”

---

Wall Street and the Economy

Wednesday, after the market closed, Federal Reserve Governor Christopher Waller, a permanent voting member on the Open Market Committee, said there is no rush to lower interest rates, emphasizing that recent economic data warrants delaying or reducing the number of cuts seen this year.

Waller called recent inflation figures “disappointing” and said he wants to see “at least a couple months of better inflation data” before cutting. He pointed to a strong economy and robust hiring as further reasons the Fed has room to wait to gain confidence that inflation is on a sustained path toward the 2% target.

“In my view, it is appropriate to reduce the overall number of rate cuts or push them further into the future in response to the recent data,” Waller said in prepared remarks before the Economic Club of New York titled “There’s Still No Rush.”

“I see economic output and the labor market showing continued strength, while progress in reducing inflation has slowed,” Waller said.  “Because of these signs, I see no rush in taking the step of beginning to ease monetary policy.”

Waller used the term “no rush” four times in his remarks, including in the title.  The market is still betting the first rate cut will come in June.

So the next day, Thursday, we had the final revision on fourth-quarter GDP, 3.4%, better than the prior 3.2% estimate.

And the market then waited for Friday’s critical data on income, spending, and prices for February, the market otherwise closed for the holiday.

Personal income came in at 0.3%, but spending rose a whopping 0.8%, the highest pace since Jan. 2023.

As for the key personal consumption expenditures index, it rose 0.3% on both headline and core (ex-food and energy), and 2.5% and 2.8%, respectively, year-over-year, both exactly as forecast.

The core figure of 2.8% was a tick down from a revised 2.9% prior, while the headline figure of 2.5% compares with 2.4% in January.

No surprises for the Fed, but also in keeping with Governor Waller’s comments.

And about three hours after the release of the PCE figures, Chair Jerome Powell gave an interview to the San Francisco Fed, having seen the data, and he said the Open Market Committee (FOMC) will be careful about the rate cut decision “because we can be.”  He added the PCE figures were “more along the lines of what we want to see.”

“It’s good to see something coming in line with expectations,” Powell said.  The Fed Chair noted that he expects interest rates in the future will be lower than they are now but does not expect them to return to the “very, very” low levels from before the Covid pandemic.  He also doesn’t believe the economy has suffered much so far from the current high level of interest rates.

Earlier this week, February new home sales came in shy of expectations, 642,000 annualized, while January’s Case-Shiller home price data had the 20-city index up 0.1% month-over-month, and up 6.6% year-over-year.

February durable goods were in line, up 1.4%, and 0.5% ex-transportation. 

A first look at March manufacturing activity, the Chicago PMI, was a dismal 41.4, well below expectations, 50 the dividing line between growth and contraction.

Add it all up and the Atlanta Fed’s GDPNow barometer for first-quarter growth is at 2.3%.

Freddie Mac’s 30-year fixed-rate mortgage is 6.79%.

Lastly, as I alluded to above, and after I posted last Friday, the Senate passed the $1.2 trillion federal spending bill early Saturday morning (after midnight and technically missing a deadline to avoid a government shutdown).  The spending package easily cleared the upper chamber by a 74-24 margin after passage in the House earlier.  President Biden then signed it into law.

The government is thus financed through September.  But this all was supposed to have been finalized by last September 30.

Europe and Asia

No new important economic data for the eurozone.

Britain: The Office for National Statistics said Thursday that Britain’s economy entered a shallow recession last year, official figures confirmed on Thursday, leaving Prime Minister Richi Sunak with a challenge to reassure voters that the economy is safe with him before an election expected later this year.

GDP shrank by 0.1% in the third quarter and by 0.3% in the fourth, unchanged from preliminary estimates, but momentum has returned in 2024, with growth estimated to have grown in February and March after 0.2% growth in January (the UK releases monthly figures).

Turning to China...nothing of importance on the data front here either.  PMIs next week.

Japan reported retail sales for February rose 4.6% year-over-year, while industrial production fell 3.4% Y/Y.  The February unemployment rate was 2.6%.

Tokyo’s March core inflation rate (ex-food and energy) fell to 2.9% from 3.1% prior, good news for the Bank of Japan.

Street Bytes

--Further record highs this week, at least for the Dow Jones and S&P 500, Nasdaq just shy of its record.  For the holiday-shortened period, the Dow gained 0.8% to close at a record 39807, while the S&P 500 rose 0.4% to a new high of 5254.  Nasdaq lost 0.3%.

The S&P finished up 10.2% for the quarter, its best start to a year since 2019, and after rising 11.2% in the fourth quarter.  Nasdaq was up 9.1% for the first three months, the Dow up 5.6%.

Shares in Nvidia soared 82% in Q1.

--U.S. Treasury Yields

6-mo. 5.32%  2-yr. 4.62%  10-yr. 4.20%  30-yr. 4.34%

Yields were essentially unchanged on the week, both here and in Europe, and the PCE data shouldn’t disrupt the market next Monday.  But we do have a ton of other data looming, including a jobs report Friday that the Fed will be looking at closely.

--I commented on the potential impact of Ukraine’s attacks on Russia oil refineries in terms of the global energy picture last week and it seems now that the U.S. and Group of Seven have had an impact on Russian exports of crude as they have ratcheted up sanctions on the wider fleet of tankers.

India, Moscow’s second-biggest customer after China, is no longer accepting tankers owned by state-run Sovcomflot PJSC because of the risk posed by sanctions.  And according to analytics firm Kpler, dozens of those tankers that have been targeted are languishing ever since the tightening of the sanctions, and more barrels of Russia diesel are floating idly on the oceans than at any time since 2017.

Taken together, the moves will gradually constrict Russian petroleum revenues, a key goal of the U.S. and its allies as they seek to thwart Putin’s war machine.

While there’s no expectation of drastic supply cuts at this stage, the question is how far Western regulators will go in tightening the screws while oil prices head towards $90 a barrel and President Biden’s election campaign.

Russian Deputy Prime Minister Alexander Novak, the man in charge of his country’s oil, surprised a few people today when he said Russia will focus on reducing oil output rather than exports in the second quarter in order to evenly spread production cuts with other OPEC+ member countries.

Back to the Ukrainian attacks, Russia’s average daily oil refining rate fell to the lowest weekly level in ten months after the flurry of strikes on major facilities.

--Tuesday morning’s tragic disaster on the Francis Scott Key Bridge in Baltimore that killed at least six workers doing maintenance on the span, could have been worse but the crew of the 95,000 gross-ton, 948-foot container vessel, the Dali, was able to issue an urgent “mayday,” which gave first responders precious time to shut down most traffic on the four-lane bridge at about 1:30 a.m., before the Dali plowed into a bridge piling, causing multiple sections of the span to bow and snap in a harrowing scene captured on video.

“C13 dispatch, the whole bridge just fell down!” someone shouted on an emergency channel.

The Port of Baltimore is the biggest handler of U.S. imports and exports of cars and light trucks, some 750,000 cars and trucks in 2023, according to the Maryland Port Administration, and it’s unclear just yet which U.S. ports had additional capacity for the diverted traffic.   The nation’s No. 2 port for car carriers is in Brunswick, Georgia – about 700 miles south.

Because of Baltimore’s proximity to the Midwest’s major farm and construction equipment manufacturers, it has also become the leading U.S. port for importing combines, tractors, hay balers, excavators and backhoes, according to Dean Croke of DAT Freight & Analytics.

Just as importantly, companies like Amazon, FedEx, Under Armour, Home Depot, BMW and more all have warehouses near the now-collapsed bridge.

U.S. Transportation Secretary Pete Buttigieg said that the retouring would affect the national supply chain.  “The path to normalcy will not be easy,” he said. “It will not be quick, and it will not be inexpensive.”

Baltimore isn’t a huge port for containers – about 3% of the total on the East and Gulf Coasts – but aside from autos, it handles large volumes of coal, gypsum and lumber.  With total trade last year amounting to about $80 billion, every day Baltimore is closed is another $217 million that’s not crossing its docks.

And with the port closed, that is thousands without work, some 15,000 directly, including 2,400 members of the International Longshoremen’s Association, and another 139,000 workers are impacted in related industries.

Meanwhile, the Key Bridge carries more than 31,000 cars a day.

--Intel and Advanced Micro Devices could lose billions of dollars in sales if China limits the use of their chips and servers in government computers, Wall Street analysts said on Monday.

The Financial Times reported over the weekend China has introduced guidelines to phase out U.S. chips from the companies and also wants to sideline Microsoft’s Windows and foreign-made database software in favor of domestic options.

Beijing has been trying to reduce its reliance on foreign firms by building out its local semiconductor industry as it grapples with U.S. export curbs on technology including cutting-edge chips.  The latest move could make a big dent on the chip firms’ earnings as China was Intel’s largest market in 2023 with 27% of revenue, while AMD drew about 15% of its sales from the country.  Microsoft does not break out its revenue from China.

But after an initial decline, shares in Intel and AMD finished largely unchanged Monday, while Microsoft shares fell a bit for other reasons.

The question is how far restrictions initially placed on Chinese government devices could spread through the country’s huge state-owned and state-backed corporate sector as well as the wider market, and for now, the impact is deemed to be pretty minimal.

--Boeing announced Monday that CEO David Calhoun will step down at year end as part of a broad management shakeup, as the company deals with its most significant safety crisis in years.

Stan Deal, the head of the division that makes planes for commercial customers, will retire immediately and will be replaced by Stephanie Pope, the company’s chief operating officer, the company said in a statement.

Boeing also announced that chairman Larry Kellner would not stand for re-election.  The board elected Steve Mollenkopf, the former CEO of Qualcomm, as its new chairman.  In that role, he will lead the process of choosing Boeing’s next CEO.

The management overhaul comes less than three months after the Alaska Airlines incident where a door plug blew off a Boeing Max 9, which renewed questions about the safety of MAX planes and Boeing’s commitment to quality.  The Federal Aviation Administration has imposed limits on Boeing’s planned production increase of MAX planes.

An FAA audit of Boeing’s MAX production also found dozens of lapses and the agency gave the company 90 days to address its issues.

--Last week I wrote of how the CEOs of Ryanair and the parent of British Airways called for consolidation of the European airline industry, as the European Commission prepared to rule on Lufthansa’s bid for a minority stake in Italian rival ITA Airways.  But the EC on Monday said such a stake could harm competition and lead to higher prices.  Lufthansa needs to come up with stronger remedies, which it said it would “in a timely manner.”

“We remain confident that ITA will become part of the Lufthansa group family this year,” it said in a statement.  Remedies could include ceding slots, traffic rights and planes to a rival.  Regulators would then want to ensure that the rival acquiring such assets would start using them immediately before allowing airlines to close deals.

--TSA checkpoint numbers vs. 2023

3/28...112 percent of 2023 levels
3/27...111
3/26...109
3/25...109
3/24...109
3/23...110
3/22...109
3/21...109

--Sam Bankman-Fried was sentenced to 25 years in prison by a judge on Thursday for stealing $8 billion from customers of the now-bankrupt FTX cryptocurrency exchange he founded, the last step in the former billionaire wunderkind’s dramatic downfall.

A jury found Bankman-Fried, 32, guilty on Nov. 2 on seven fraud and conspiracy counts stemming from FTX’s 2022 collapse in what prosecutors have called one of the biggest financial frauds in U.S. history.

“He knew it was wrong,” said U.S. District Judge Lewis Kaplan before handing down the sentence.  “He knew it was criminal.  He regrets that he made a very bad bet about the likelihood of getting caught.  But he is not going to admit a thing, as is his right.”

--Top executives of General Motors and Ford gave upbeat outlooks for the U.S. auto market and their profit plans on Tuesday, saying U.S. consumer demand remains strong.

GM CFO Paul Jacobson said auto sales in March were “looking really strong” after a strong February as GM incentives come down.  “All in all, a really, really good start to the year and we feel good about where we’re trending,” Jacobson said.

Ford CFO John Lawler reaffirmed the company’s outlook for annual core profit of between $10 billion and $12 billion.  “Things are looking pretty good” in the U.S. market, and prices are holding up better than expected, he said.  However, demand for electric vehicles is “much lower than the industry expected,” he said.  Ford has cut production plans for its EV and will “match capacity with demand,” he said.

GM said it expects to achieve its annualized production rate target of between 200,000 and 300,000 EVs by the end of the year.

--Nissan said it would cut its electric vehicle manufacturing cost by 30% to be more competitive against Chinese rivals.  The Japanese carmaker has struggled to build affordable EVs and has lost ground in the Chinese market.  As part of a new business plan, the firm will launch 30 models over the next three years, including eight “new energy” vehicles in China.

--Meanwhile, Chinese EV maker BYD set a 3.6-million-unit sales target for 2024, a jump of 20% from its record-breaking sales last year.

The world’s largest EV manufacturer aims to sell 500,000 vehicles overseas this year, more than double last year’s total, and one million units in 2025, Chairman Wang Chuanfu told a BYD investor meeting on Wednesday, as reported by Reuters and other sources.

Wang’s remarks came after BYD posted its slowest quarterly profit growth in two years on Tuesday, as EV sales lost momentum in the world’s biggest auto market.

BYD stepped into the global spotlight after it became the world’s biggest EV seller late last year, overtaking Tesla. It also embarked on aggressive expansion into overseas markets such as Australia, worrying rivals who have seen how it has grabbed market share in China.  It has also become a relentless discounter in a price war against Tesla that began in China last year.  Wang told investors that the new energy vehicle industry had entered a “knockout round” with a battle in scale, cost and technology over 2024-26, the sources said. 

Over the next three to five years, the market share of foreign brands in China will fall from 40% to 10%, he estimated.  Wang also forecast that BYD’s vehicle margin would fall this year as the price war intensifies, but said the company would ensure its profitability remains stable by improving sales.  Reminder: Many of BYD’s vehicles are plug-in hybrids.

--Shares of Trump Media & Technology Group rose 11% in premarket trading on Wednesday, a day after their stellar debut.

The rise underscores the popularity of Donald Trump driving investor interest, but the platform Truth Social would need to show strong user growth to sustain the trajectory, most analysts say.

TMTG (symbol DJT), the company formed after a merger with blank-check firm Digital World Acquisition Corp., gained 16% to end at $57.99 on Tuesday in its debut. The stock climbed to a record high of $79.38 before ending near the lower end of the price swing that day, valuing the firm at nearly $8 billion.  DJT finished the week at $60.45.

Truth Social has 8.9 million signups, according to a regulatory filing on Feb. 14, but fewer than 500,000 monthly active users.  In comparison, X had 238 million daily active users as of June 2022, as per the latest available official data, while Facebook and Reddit had 2.1 billion and 73 million, respectively.

Trump Media took in just $3.3 million in revenue during the first nine months of last year, all from advertising on Truth Social, and recorded a loss of $49 million for the same period.  The market value as of the close Tuesday was nearly 2,000 times its estimated annual revenue.  Meta, by contrast, trades at a price-to-sales ratio of 7.  Nvidia of about 25.

Of course, the biggest beneficiary of the market action has been Mr. Trump, who owns about 60 percent of Trump Media, making him the largest shareholder.  His stake in the company was worth about $4.6 billion on paper after Tuesday’s debut.

But he can’t sell the stake immediately due to a six-month lock-up agreement, or borrow against the shares during that time, hindering his ability to monetize them and ease his present cash crunch.  It’s unclear, however, that since Trump controls the board, whether the board could authorize a waiver to allow him to sell, which at that point, the shares could crater (unless it was an orderly sale over many months).

--UPS forecast 2026 total revenue above estimates on Tuesday, as the world’s largest parcel delivery company unveiled a three-year plan prioritizing high-margin parcels and aggressive cost-cutting.  Shares of the company still dropped 8% Tuesday, as the guidance was a bit worse than investor expectations.

“After coming off a difficult market in 2023, the small package industry is poised to return to growth in 2024 and beyond,” UPS CEO Carol Tom said on Tuesday.  Over the next three years, the company expects to spend about $6 billion on its plan, dubbed “Network of the Future,” to further automate its facilities and using robotics to bag and sort packages.  “This will enable us to reduce our reliance on labor and drive the productivity flywheel, which should translate into about $3 billion in savings over 5 years with half of that by 2026,” the company said.

Earlier this year, UPS had forecast 2024 revenue below Wall Street’s target amid weak demand from its retail, manufacturing and high-tech customers. The company forecast 2026 revenue between $108 billion and $114 billion, above consensus of $102.1 billion, but clearly not good enough for the market.

--Ericsson will cut around 1,200 jobs in Sweden as it adjusts to a lower-volume environment.  The Swedish telecommunications-equipment company expects a challenging mobile networks market in 2024, with further volume contraction as customers remain cautious about spending.

The industry has seen work begin to dry up as network operators hold back spending on newer equipment with interest rates still high and economic activity stalling.

Vendors such as Ericsson and Nokia enjoyed bumper orders from U.S. operators in the initial shift to 5G as North America became the first major market to build the faster telecom networks, but when the early work had been completed the bulk of orders started coming from lower-margin developing markets such as India.  That helped revenue but held margins back.

And now the rapid phase of 5G deployments in India is moderating.

Ericsson had around 99,950 global employees at the end of 2023, of which just under 14,000 are in Sweden.

--Disney settled a long legal fight with a board appointed by Florida Republican Governor Ron DeSantis.  For decades Disney controlled a special district encompassing Disney World.  But in 2023, retaliating against Disney’s criticism of a law passed by his administration, DeSantis replaced the district’s governing board with his allies.  Under the settlement, Disney will drop or pause some litigation and negotiate a development plan with the new board.

--The number of New Yorkers commuting to work each week has reached a plateau, with the city’s offices consistently above 50% as full as they were before the pandemic.

Gotham’s in-office occupancy clocked in at 51.1% for the seven-day period ending March 13, after reaching its post-pandemic peak the week of Feb. 7, when office activity totaled 52.1% of what it was pre-pandemic; the data from real estate technology firm Kastle systems, which tracks badge swipes at commercial office buildings in 10 major U.S. cities.

Chicago is at 56.4% of prepandemic levels, while Austin (58.1%), Dallas (54.4%) and Houston (55.3%) also beat the Big Apple.  [Crain’s New York Business]

--NBC News scrapped its plan to make former Republican National Committee Chair Ronna McDaniel an on-air contributor to its political coverage.

“After listening to the legitimate concerns of many of you, I have decided that Ronna McDaniel will not be an NBC News contributor,” NBCUniversal News Group Chairman Cesar Conde said Tuesday in a memo to staff.

The decision to reverse course comes after a stunning rebuke of the plan by the division’s on-air talent. On Monday, nearly every opinion host on NBC’s progressive cable news channel MSNBC blasted the hiring of McDaniel because of her defense of Donald Trump’s false claims of fraud in the 2020 election.

--Shares of Krispy Kreme surged 39% on Tuesday after the company said it reached a deal to sell its doughnuts at McDonald’s.

McDonald’s said it would start rolling out the doughnuts in the second half of this year and they will be available across the country by the end of 2026.  McDonald’s had already begun testing Krispy Kreme doughnuts at some locations as early as 2022.

The deal is a boon for Krispy Kreme, which has been working to expand its distribution without driving up supply-chain costs.  CEO Josh Charlesworth said the partnership will double the company’s distribution, currently more than 14,000 access points, by the end of 2026.

Financial terms of the deal weren’t disclosed.

--Hershey, Mondelez and other candy-makers are trying to pitch non-chocolate Easter treats like cookies ‘n’ cream bunnies at a time when soaring cocoa prices threaten their profits and shoppers balk at high prices.

Cocoa prices have tripled over the past 12 months thanks to bean disease in West Africa, which continues to worsen, meaning companies are not expected to get relief anytime soon.  Sugar prices are also up some 7%.

Chocolate makers set their plans for this Easter last year, and have said they will hike prices again to cover the cocoa crunch.  But this is coming at a delicate time for inflation-weary consumers.

Easter sales of candy in the United States, the world’s biggest chocolate consumer, are expected to at least reach last year’s total of about $5.4 billion, although this will be driven mostly by price increases not volumes sold, according to the National Confectioners Association.

Easter is the third-biggest occasion in the U.S. for buying chocolate and candies, with Halloween taking the top spot, followed by the winter holidays.

Foreign Affairs, Part II

China: China’s coastguard said it had taken measures against Philippine vessels in disputed waters of the South China Sea on Saturday, while the Philippines decried the moves, including the use of water cannons, as “irresponsible and provocative.”

China’s actions led to “significant damage” and injury to personnel on a civilian boat hired to resupply troops, the Philippine task force on the South China Sea said in a statement.

The incident occurred in the Second Thomas Shoal and Spratly Islands waters, according to the Chinese coastguard.  The shoal is home to a small number of Filipino troops stationed on a warship that manila grounded there in 1999 to reinforce its sovereignty claims.

China claims almost the entire South China Sea, including the Second Thomas Shoal, which is within the Philippines’ 200-mile exclusive economic zone, and has deployed vessels to patrol the area.

A 2016 ruling by the Permanent Court of Arbitration found that China’s sweeping claims have no legal basis.

There will be a deadly skirmish in these waters before long and the United States will be forced to defend Philippine interests.

On a different topic, at least five Chinese nationals were killed in northern Pakistan on Tuesday when a car packed with explosives hit their van, Pakistani officials said, the latest in a string of attacks that have targeted Chinese interests in the country.

The suicide attack highlights the increasing security challenge China faces in countries such as Pakistan, a major recipient of Chinese investment.  As China has sought to expand its influence in Asia and Africa, such as in the Belt and Road initiative, Chinese workers have come under attack.  In Pakistan, local insurgents have targeted Chinese construction sites, citizens and symbols.

Separately, President Xi Jinping met with a group of American business executives in Beijing including Blackstone’s Stephen Schwarzman, FedEx CEO Raj Subramaniam, and Qualcomm’s Cristian Amon as China is seeking to restore confidence in the economy and keep relations with the U.S. on a stable footing.

China is trying to show it welcomes foreign business, but whipsawing tensions with the Biden administration, a shaky economic recovery and raids on consulting firms have dampened investor enthusiasm.  For the business leaders, the meeting was a chance to underscore interest in participating in the giant Chinese market despite the deepening tensions and moves in China to favor local competitors.

North Korea: Kim Yo Jong, the powerful sister of Kim Jon Un, said on Monday that Japanese Prime Minister Fumio Kishida had conveyed his intention to meet the North Korean leader, state media reported.

But Kim said that improving relations between the two countries will depend on whether Japan, which occupied the Korean peninsula from 1910-1945, can make practical political decisions.

“The prime minister should know that just because he wants to and has made a decision, it doesn’t mean he can or the leadership of our country will meet him,” Kim was quoted as saying in the KCNA report.  She was quoted as saying Kishida had made his intention known through “another channel,” without giving details.

“What is clear is that when Japan antagonizes the Democratic People’s Republic of Korea and violates its sovereign rights, it is considered our enemy and will become part of the target,” Kim added.

Asked about the media reports on Kim’s comment, Kishida reiterated the importance of a summit to resolve issues such as the matter of Japanese citizens kidnapped by Pyongyang’s agents decades ago.  “Nothing has been decided for now,” Kishida told reporters on Monday when asked about a summit.

North Korea admitted in 2002 to kidnapping 13 Japanese citizens decades earlier.  Five abductees and their families later returned to Japan, saying the others had died.  But Tokyo believes 17 Japanese were abducted, and continues to investigate the fate of those who didn’t return, according to Japanese media.

A top government spokesman said North Korea’s assertion that the abduction issues had been resolved is “totally unacceptable,” underscoring potential obstacles to mending ties.

Kishida has said he wants to hold talks with Kim Jong Un “without any preconditions.”  Such a summit would be the first in 20 years.

But then on Tuesday, Pyongyang said it is not interested in talks and rejected any further negotiations, state media said.  Kim Yo Jong said in a statement released by KCNA, “Japan has no courage at all to change history, promote regional peace and stability and take the first step toward a new relationship.”  She said there will be no breakthrough as long as Kishida’s government is engrossed in the abduction issue and interferes in the North’s “exercise of our sovereign right,” apparently referring to the North’s weapons testing activities.

Separately, Russia vetoed a UN resolution Thursday in a move that effectively abolishes the monitoring by United Nations experts of UN sanctions against North Korea aimed at reining in its nuclear program, though the sanctions themselves remain in place.

Russia’s vote sparked Western accusations that Moscow was acting to shield its weapons purchases from Pyongyang for use in its war against Ukraine, which violates UN sanctions.

Coincidentally, Defense One and NK News reported that “A large Russian cargo plane, one of the world’s largest, landed in North Korea one week ago. The same plane...was previously accused of delivering DPRK ballistic missiles for use against Ukraine.”

Iran: Last week I wrote that the Tehran-backed Houthis were providing Russian and Chinese vessels secure passage through the Red Sea, but then on Saturday, the Houthis attacked a Chinese-owned oil tanker in that body of water, according to U.S. Central Command, which made the announcement Sunday.

After the Houthis missed the ship using four anti-ship ballistic missiles before sunrise, a fifth missile is believed to have struck in the afternoon and caused “minimal damage,” igniting a fire on board that was extinguished, according to CENTCOM.  “No casualties were reported and the vessel resumed its course,” U.S. officials said.

Haiti: The UN human rights office said Thursday that gang violence in Haiti has killed over 1,500 people so far this year, including many children, while dozens have been lynched, stoned or burned alive by so-called defense brigades.  A report documents 4,451 killings last year and 1,554 through March 22 as violence has escalated.

Random Musings

--Presidential approval ratings....

Gallup: New numbers...40% approve of President Biden’s job performance, 55% disapprove, 34% of independents approve (March 1-20).  Prior split 38-59, 32.

Rasmussen: 40% approve, 59% disapprove (March 28).

--In a new nationwide survey of registered voters by Quinnipiac, President Biden has a 37% approval rating, 59% disapproval, compared to a 40-57 split in Quinnipiac’s Feb. 21 poll.

In a head-to-head matchup, 48% support President Biden and 45% support Donald Trump, virtually unchanged from the prior poll.

When the matchup is expanded to include independent and Green Party candidates, Trump receives 39%, Biden 38%, Robert F. Kennedy Jr. 13%, Green Party candidate Jill Stein 4%, and independent Cornel West 3%.

As in it’s too close to call either way.

On other issues addressed in the survey:

Forty-six percent say the system of democracy in the United States is working, and 49 percent say it is not working.

Given a list of 10 issues and asked which is the most urgent one facing the country today, immigration (26%) ranks first, followed by the economy (20%), and preserving democracy in the U.S. (18%).

Voters give the U.S. Supreme Court a negative 34-58 percent job approval rating.

A plurality of voters (47%) oppose a national ban of Tik Tok, while 41% support it.  Yours truly supports it.

--A new CNN survey of registered voters in the key states of Michigan and Pennsylvania had a dead-even race between Donald Trump and Joe Biden (46% each), with Trump ahead in Michigan (50% Trump to 42% Biden).

--House Speaker Mike Johnson will soon preside with an effective majority of just one seat*, after Rep. Mike Gallagher of Wisconsin announced he would resign in April to join the private sector.  This followed the departure of Colorado Republican Rep. Ken Buck.

*The GOP majority will fall to 217-213,  at least for a few months until special elections can be held, meaning Johnson can only afford to lose one Republican member on any particular vote if Democrats vote along party lines.  Republicans held a 222-213 majority after the 2022 midterm elections.

Speaker Johnson now has to deal with the conservative House Freedom Caucus, which has admonished the Speaker for negotiating with Democrats, and giving in to the likes of Senate Majority Leader Chuck Schumer.

The loss of Rep. Gallagher is a big one for the House overall.  I noted just a few weeks ago I wished he was running for president, or vice president on a legitimate third-party ticket.

Editorial / Wall Street Journal

“Two years ago the GOP won the House by a historically narrow margin. If they’d stuck together they could have used that leverage to extract more policy concessions from the Democrats who control the Senate and White House.  But (Rep. Marjorie Taylor) Greene and her faction are more interested in TV hits and internet donors. And once the GOP needs Democratic votes to pass a bill in the House, that gives even more leverage to Democrats.

“This is the political position former Speaker Kevin McCarthy found himself in, and the GOP firebrands ousted him for it. They elected Mr. Johnson, saying he was a true conservative and not some squish, but now he’s getting the same treatment.  Mr. Johnson’s sin is that he can do math.

“Politics isn’t the art of the impossible, but Ms. Greene and her crew of vandals prefer to scream and throw soup at the walls, like those climate-change protesters who think their ludicrous gestures are accomplishing something. They have no strategy for achieving the conservative victories they claim to want, beyond shutting down the government and shouting for the cameras that everyone else is a sellout.

“Ms. Greene on Friday called her motion to vacate the Speaker’s chair ‘more of a warning than a pink slip,’ and the House will go on recess for two weeks. When it returns, Mr. Johnson will have to decide whether to take up an aid bill for Ukraine, Israel and Taiwan.  Ms. Greene is essentially ordering the Speaker to forsake American allies that need U.S. military help, or she’ll pull the trigger on her motion.

“But after the weeks of tumult last fall following Mr. McCarthy’s removal, even Ms. Greene’s putative allies might be skeptical. Is this the vision for GOP governance that House Republicans want to offer in an election year?  If Mr. Johnson isn’t conservative enough to succeed as Speaker, who would be? Call her bluff.”

--Donald Trump received good news Monday when a New York appeals court handed the former president a lifeline, saying it would accept a far smaller bond of $175 million than the $454 million judgement imposed by a trial judge in his civil fraud case. 

Had the five-judge panel of appellate court judges denied his request for a reduction – and had he failed to obtain the full bond – Trump risked losing control over his bank accounts and, eventually, some of his marquee properties.

Trump has 10 days to secure the bond, and he is expected to do so.

--Separately in New York on Monday, a judge ruled that Trump will go on trial in Manhattan April 15 in the “hush money” criminal case against him.

Judge Juan Manuel Merchan had already agreed to postpone the trial until at least April 15 after Trump’s attorneys said they needed more time to delve into thousands of pages of newly disclosed evidence that were dumped on them by prosecutors relating to the case against Trump’s ex-fixer Michael Cohen.

--Robert F. Kennedy Jr. chose Nicole Shanahan on Tuesday to be his vice presidential pick as he mounts an independent White House bid that is spooking Democrats.

Shanahan, 38, is a California lawyer and philanthropist who was formerly married to Google co-founder Sergey Brin.  She has never held elected office.

Without the backing of a party, Kennedy faces an arduous task to get on the ballot, with varying rules across the 50 states.  He had to pick a running mate now because about half of the states require him to designate one before he can apply for ballot access.

RFK Jr. said that at age 70, he was “most importantly looking for a partner who is a young person.”

“I wanted that because I wanted Nicole to be a champion of the growing number of millennial and Gen Z Americans who have lost faith in their future,” he added.

Shanahan said, “I believe, very strongly, that focusing on the health and well-being of our youth is the key to a strong America. That means honestly looking at the root causes of where childhood development is being sidelined.”

Get everyone off their freakin’ phones, number one, if you want to improve the health of the youth, mused the still-registered Republican who will be voting for anyone but everyone mentioned in this column.

--In a shocking announcement for us New Jerseyans Sunday, First Lady Tammy Murphy (her husband Gov. Phil Murphy) said she was dropping her bid for the Senate seat currently held by indicted Democrat Bob Menendez.

Murphy was running in the Democratic primary, Menendez having said he’d run as an independent if he was cleared in his upcoming corruption trial, and Murphy was quickly deemed the frontrunner.

But she faced a stiff challenge from Rep. Andy Kim, and there were folks at the Democratic National Committee who weren’t thrilled with the progress of Murphy’s campaign, with insiders telling the Star-Ledger it wasn’t well run, “from top to bottom,” and it was becoming clear the pathway to victory was going to be, as one source put it, “unbelievably limited” and would take a lot of money.

Many of us Garden Staters weren’t thrilled that the governor’s wife actually thought she had some sort of divine right to run for the Senate in the first place, or that she was qualified to do so.

I mean this was frankly outrageous.

The Republican contender leading the pack is developer Curtis Bashaw, who I know zero about, but who everyone seems to believe was “going to be a tough candidate” to beat if Murphy was his opponent.

--President Biden was fact-checked again after claiming that he’s commuted over Baltimore’s Francis Scott Key Bridge “many, many times...either on a train or by car.”

I was watching when he said this from the White House and I immediately thought, “there weren’t any tracks attached to the bridge.”

The president, aided by former Presidents Obama and Clinton, raised an estimated $26 million on Thursday night in New York.

--A majority of the Supreme Court appeared deeply skeptical on Tuesday over efforts to curtail access to a widely used abortion pill, calling into question whether a group of anti-abortion doctors and organizations had a right to challenge the Food and Drug Administration’s approval of the medication.

Describing the case as an effort by “a handful of individuals,” Justice Neil M. Gorsuch raised whether it would stand as “a prime example of turning what could be a small lawsuit into a nationwide legislative assembly on an FDA rule or any other federal government action.”

The case put the issue of abortion once again before the court, less than two years after a conservative majority eliminated the constitutional right to abortion and said it would cede the question of access “to the people and their elected representatives.”

The current challenge involves mifepristone, a drug approved by the FDA more than two decades ago.  At issue is whether the agency acted appropriately in expanding access to the drug in 2016 and again in 2021.  The medication is used in nearly two-thirds of abortions in the country.

A decision is expected by late June, or, the Supreme Court could throw out the case beforehand, which some seemed to think after Tuesday’s oral arguments.

--Simon Harris, 37, is set to become the youngest person ever to lead the Republic of Ireland, after the shock resignation of Leo Varadkar, who was the first openly gay Taoiseach (prime minister), ten days ago. 

Harris will take over when parliament reconvenes in April.

Varadkar said his sudden resignation was not because of some imminent scandal.  But he really didn’t say why he opted to step down.

--We note the passing of a New York City Police Officer this week, Jonathan Diller, 31, three years on the force, father of a young child, who was gunned down by a career criminal during a traffic stop in Queens.

The NYC Sergeants Benevolent Association warned city council members to skip his funeral this weekend – accusing them of being complicit in Diller’s “completely avoidable death.”

SBA President Vincent J. Vallelong said the council members would “shed a few crocodile tears” and use the event as a “good photo opportunity.”

“The Council members who are vehemently and inexplicably against public safety are responsible for the carnage in the streets and the heartbreak brought about by PO Diller’s completely avoidable death,” Vallelong insisted.

Mr. Vallelong is right.

--Finally, we also note the passing of a great American, former Senator Joe Lieberman, 82, who died of complications from a fall (which should have you thinking of the potential ending for the current occupant of the White House, or his opponent).

Lieberman, the first Jewish American nominated to a major party’s presidential ticket as Al Gore’s 2000 running mate, was a man of character who stuck to his principles and faith.

Gore said in a statement: “He was a truly gifted leader, whose affable personality and strong will made him a force to be reckoned with. That’s why it came as no surprise to any of us who knew him when he’d start singing his favorite song: Frank Sinatra’s ‘My Way.’ And doing things Joe’s way meant always putting his country and the values of equality and fairness first.”

Lieberman drew the ire of many Democrats with his support for the Iraq war, his open support for John McCain in 2008, and his divergence from the Democratic Party line on healthcare.

The former senator also said recently he was surprised by how “viciously” Democrats have reacted to his efforts with No Labels, which he co-chaired.

“I don’t have any need for revenge, but I’m pained by what’s happened to the American political system, and I think, honestly, it threatens our future,” he told the Wall Street Journal in an interview.  “And I’m grateful for the opportunity that No Labels* has given me to try to bring the system back to where it was, before it got so damned partisan.”

*No Labels, unfortunately, is imploding as it can’t find a top-tier presidential candidate or lay out a public path to finding one; Chris Christie the latest to turn them down.

When I heard of Lieberman’s passing, I immediately thought of a special moment in 2004, Manchester, New Hampshire, when I went to a bar (as I’m wont to do) to hear Lieberman speak, accompanied by then-Sen. Christopher Dodd, as Lieberman was attempting, futilely it turned out, a run for the Democratic nomination for president.

It was there I met Rich L., as I’ve noted before, and we exchanged notes Thursday saying we each had the same thought.  We’ll always associate Lieberman with our meeting each other.

The senator was his usual jovial self, self-deprecating, but also very serious regarding the issues.

Just a real good man.  America was lucky he served for so long.  RIP.

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

Pray for Ukraine and the innocent in Gaza.

God bless America.

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It has been one year since Wall Street Journal reporter Evan Gershkovich was imprisoned by Vladimir Putin and his goons for the crime of being a journalist.

We are with you, Evan!

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Gold $2254...new record
Oil $83.12...highest weekly close since October

Bitcoin: $69,300 [1:30 PM ET, Friday]

Regular Gas: $3.53; Diesel: $4.04 [ $3.46 / $4.24 yr. ago]

Returns for the week 3/25-3/29

Dow Jones  +0.8%  [39807]
S&P 500  +0.4%  [5254]
S&P MidCap  +1.8%
Russell 2000  +2.5%
Nasdaq  -0.3%  [16379]

Returns for the period 1/1/24-3/29/24

Dow Jones  +5.6%
S&P 500  +10.2%
S&P MidCap  +9.5%
Russell 2000  +4.8%
Nasdaq  +9.1%

Bulls 60.6
Bears 15.2

Hang in there. 

Happy Easter!

Brian Trumbore

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