Week in Review

---

Week in Review

04/20/2024

For the week 4/15-4/19

[Posted 4:30 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 1,305

Saturday night, as currently scheduled, while many of us will be watching NBA and Stanley Cup playoff action, I, and I know many of you, will also be keeping an eye on the news and C-Span as the House votes on separate critically needed aid packages for Ukraine, Israel, and Taiwan (including the Indo-Pacific).

House Speaker Mike Johnson has finally summoned the courage to buck the far-right in his party, at the potential cost of his speakership, to do the right thing for the nation and the world.

More than anything, this is about Ukraine, today.  Without aid, Ukraine could actually fall this year.  It might already be too late, depending on how quickly weapons, ammunition and air defense systems can get into the country.

President Biden said Wednesday that he strongly supports Johnson’s plan.

“I will sign this into law immediately to send a message to the world: We stand with our friends, and we won’t let Iran or Russia succeed.”

As the Wall Street Journal editorialized:

“The need is urgent because Ukraine’s position is deteriorating.  Ukrainian shortages in air defenses are letting the Russian military dominate the air for the first time in two years.  Ukraine’s cities are at risk, and its defenses could take down only seven of 11 Russian projectiles in a recent volley at a power plant. The other four destroyed the plant....

“ ‘Ukraine cannot hold the present lines now without the rapid resumption’ of American help, as Fred Kagan noted in a Tuesday report at the Institute for the Study of War.  Only the U.S. has the stocks to provide weapons quickly, and, in the numbers required. The Russians have seized an area roughly the size of Detroit since January, and a Russian breakthrough is possible by summer.

“The House Republicans who are threatening to oust Mr. Johnson over Ukraine imagine that they can defeat aid and return without consequence to pounding Joe Biden about the crisis at the southern border.  They are wrong, and the sad irony is that such delusions about the world are usually reserved for the progressive left.

“On current trend the Kremlin will eventually win the war, and Mr. Putin won’t be satisfied with Ukraine’s east.  He wants to subdue the entire country, as he planned when he first tried to take Kyiv.  He has no incentive to negotiate now that he thinks the U.S. may abandon Ukraine....

“Amid all the political infighting on Capitol Hill, Republicans have a binary choice between helping America’s friends in Kyiv or abandoning them to Mr. Putin’s empire. The latter would be a disaster for the United States, and the GOP will own it as thoroughly as Democrats owned the collapse of Saigon in 1975.”

---

Last Sunday’s attack by Iran on Israel could have been catastrophic, but Israel’s air defenses and the cooperation of its key allies saved the day.  Iran claimed it was just going after military targets but that clearly was not the case.  Thankfully, the attack failed...badly.

But Tehran clearly telegraphed the attack in advance and whether Israel can replicate its performance under the conditions of an all-out war, including from Hezbollah, right across the border, is still an open question, as is Israel’s ability to defend itself without outside help.

Israel generated a lot of goodwill in its successful defense and its retaliation on Friday against Iranian military targets at Isfahan was appropriate.  Most importantly, Israel exposed Iran’s largely Russian air defenses as not being up to the level of Israel’s, the U.S., UK et al.

Isfahan and the surrounding region are the site of many of Iran’s nuclear facilities, including Natanz, but Israel was not targeting them.  It sent a needed message that it can strike inside Iran whenever it wants to.

The attack came hours after Iran’s foreign minister, Hossein Amir-Abdollahian, warned in an interview on CNN that any further “adventurism” on the part of the Israeli regime would lead to a “decisive” military response from his country’s military.

“We could have given a much harsher response [early Sunday] to the Israeli regime and following that we announced that this response is within the framework of legitimate defense according to international laws,” he told Erin Burnett in an interview conducted in the Iranian Permanent Mission to the United Nations, in New York.

“We will not continue however unless the Israeli regime embarks on that adventurism again and takes action against the interests of Iran.  The next response will be immediate and at a maximum level. It will be decisive.”

Well, Israel listened to this and gave its response.

Over 12 hours later...nothing from Tehran other than a lack of transparency on exactly what Israel hit.

So now the full story and opinion....

Israel attacked by Iran....

After nearly two weeks awaiting retaliation, the Iranian military conducted its first-ever direct attack on Israel around midnight Sunday morning local time; first direct military attack on Israeli territory since the Islamic revolution of 1979.

Some 320 drones (an estimated 170), cruise missiles (est. 30) and ballistic missiles (est. 120) were launched from Iran, Iraq, Syria, and Yemen toward Israeli targets, according to Israel.

Israel’s military claimed to have shot down 99% of the projectiles, thanks to the varied work of Israeli air defense systems – including the Iron Dome, Arrow 2 and 3 systems, David’s Sling, Iron Beam, Patriot and fighter jets – and the work of a quickly cobbled together allied coalition including the United States, Britain, France, Jordan and others not immediately identified, but said to include Saudi Arabia and the UAE.  Jordan called its action ‘self-defense.’

At least 80 of the drones and a half dozen ballistic missiles were shot down or intercepted by U.S. forces in the region, officials from Central Command said Sunday.  Some of those elements were moved closer to Israel in the days ahead of the attack, President Biden said in a statement Saturday.  Of the 120 or so ballistic missiles Iran is believed to have fired at Israel, about half “failed to launch or crashed” short of their targets, U.S. officials told the Wall Street Journal.

Not one of the 200+ drones or cruise missiles entered Israeli territory. A small number of ballistic missiles did.

The shortest distance from Iran to Israel is about 620 miles across Iraq, Syria and Jordan.

“Thanks to these deployments and the extraordinary skill of our servicemembers, we helped Israel take down nearly all of the incoming drones and missiles,” Biden said. “While we have not seen attacks on our forces or facilities today, we will remain vigilant to all threats and will not hesitate to take all necessary actions to protect our people,” he added.

Speaking after the attack, Israeli Prime Minister Benjamin Netanyahu said: “In recent years, and especially in recent weeks, Israel has been preparing for a direct attack by Iran.  Our defensive systems are deployed; we are ready for any scenario, defensively and offensively. The State of Israel is strong.  The IDF is strong. The public is strong.

“We appreciate the U.S. standing alongside Israel, as well as the support of Britain, France and many other countries.  We have determined a clear principle: Whoever harms us, we will harm them. We will defend ourselves against any threat and will do so level-headedly and with determination.”

“The fact that Israel’s air defense proved to be superior does not change the brutality of Iran’s attack,” Israeli Ambassador to the United Nations Gilad Erdan said Sunday.  His Iranian counterpart Amir Saeid Iravani told the UN Security Council Tehran “does not seek escalation or war in the region,” but if attacked, it would “respond to any such threat or aggressions vigorously and in accordance with international law.”

Israel’s Nevatim and Negev air force bases were reportedly hit, with minimal damage, and were said to be the prime targets of Iran’s attack. 

“The Iranian military operation against Israel was limited and aimed at squadrons of F-35 aircraft,” Tehran’s foreign minister reportedly said afterward.  Iran believes those aircraft were used to attack the Iranian consulate in Damascus on April 1, killing senior officials from the elite Islamic Revolutionary Guard Corps.

Mona Yacoubian, vice president of the Middle East and North Africa center at the U.S. Institute of Peace said of the situation: “Both (Iran and Israel) are able at this point to claim victory and step down off the precipice, particularly since there were no Israeli civilians killed.”

Turkish, Jordanian and Iraqi officials said that Iran gave wide notice days before its drone and missile attack on Israel, but U.S. officials said Tehran did not warn Washington and that it was aiming to cause significant damage.

Iranian Foreign Minister Hossein Amir-Abdollahian said on Sunday that Iran gave neighboring countries and the U.S. 72 hours’ notice it would launch the strikes.

A U.S. official said, “That is absolutely not true,” that Iran gave notice.  “They did not give a notification, nor did they give any sense of... ‘these will be the targets, so evacuate them.’”

Tehran sent the United Sates a message only after the strikes began and the intent was to be “highly destructive” said the official, adding that Iran’s claim of a widespread warning may be an attempt to compensate for the lack of any major damage from the attack.

The Biden administration has been having contact with Iran through Swiss intermediaries.

“We received a message from the Iranians as this was ongoing, through the Swiss.  This was basically suggesting that they were finished after this, but it was still an ongoing attack.  So that was (their) message to us,” the U.S. official said, according to the Wall Street Journal.

Turkey’s Foreign Ministry said it had spoken to both Washington and Tehran before the attack, adding it had conveyed messages as an intermediary to be sure reactions were proportionate.

“Iran said the reaction would be a response to Israel’s attack on its embassy in Damascus and that it would not go beyond this. We were aware of the possibilities. The developments were not a surprise,” said a Turkish diplomatic source.

Israel’s war cabinet met Sunday, Monday, Tuesday, and Wednesday.  Striking back hard on Iranian soil could invite far more devastating retaliation.  But not responding at all, or too weakly, could also erode deterrence, making Israel and others more vulnerable to future Iranian barrages.

--Tuesday, Netanyahu told ministers from his Likud party that Israel would retaliate for the Iranian attack but that this had to be done judiciously.  “The Iranians are the ones who need to be on edge, but just as they caused us to be on edge,” the prime minister said.

Iranian President Ebrahim Raisi said Tuesday that Tehran would respond to an Israeli attack.  “We categorically declare that the smallest action against Iranian interests will certainly be met with a severe, widespread and painful response against any perpetrator,” he said.

Iran’s deputy foreign minister, Ali Bagheri Kani, said Tehran’s counteroffensive following any Israeli retaliation would be “a matter of seconds as Iran will not wait for another 12 days to respond,” in reference to the time taken by Iran to respond to the attack on the Iranian embassy compound in Damascus, attributed to Israel.

Israeli Foreign Minister Yisrael Katz said he was “leading a diplomatic offensive against Iran” and called on the international community to impose sanctions on Iran’s missile programs and declare the Islamic Revolutionary Guard Corps a terrorist organization.

--Israelis were divided on the need to respond.  A poll found that 52 percent of Israelis believed their country should hold fire.

--Tuesday, Iraqi Prime Minister Mohammed Shia al-Sudani said Iraq has not received any reports or indications that missiles or drones were launched from Iraq during Iran’s attack on Israel.

Iraqi airspace was a main route for the attack and Iraqi officials say Iran informed them ahead of the attack.

“Our position is clear, and we will not allow Iraq to be thrown into the arena of conflict,” al-Sudani said in a statement.

--British Foreign Minister David Cameron, who met with Israeli President Isaac Herzog, told reporters after, “It’s clear the Israelis are making a decision to act,” adding, “We hope they do so in a way that does as little to escalate this as possible” and that is “smart as well as tough.”

Iran said on Wednesday that its military is ready to meet any attack with a “severe response.”

Netanyahu Wednesday said his country would be the one to decide whether and how to respond to Iran, brushing off calls for restraint from close allies.

“I want to be clear: we will make our decisions ourselves.  The state of Israel will do whatever is necessary to defend itself,” he said.

Meanwhile, Hezbollah fired a volley of rockets on northern Israel, wounding at least 14 Israeli soldiers, six seriously, the IDF said.

--The U.S., UK and EU announced new sanctions on Iran targeting its drone program, including 16 individuals and two entities enabling Shahed drone production.

--Just hours before the drone and missile attack, Iranian special forces hijacked another ship in the Strait of Hormuz, the Portuguese-flagged container vessel MSC Aries as it traveled from the UAE to India.  MSC leases the seized vessel from Gortal Shipping, which is an affiliate of Zodiac Maritime. And “Zodiac is partly owned by Israeli businessman Eyal Ofer,” Reuters reported.

According to Iran’s foreign ministry, “The vessel was diverted into Iran’s territorial waters as a result of violating maritime laws and not answering calls made by Iranian authorities,” a spokesman said Monday.

With 17 crew members from India, Iran is now working to ease tensions with New Delhi, the BBC reports. The detained crew also includes citizens from Pakistan, the Philippines, Russia and Estonia, White House officials said Saturday.

--While Treasury Secretary Janet Yellen talked of new sanctions on Iran, dramatic sanctions were not expected on Iran’s oil exports due to worries about boosting oil prices and angering top buyer China, some analysts said.  High oil prices also hurt President Biden’s re-election hopes.

--Early Friday morning local time, Israel retaliated against Iran in the above-noted measured way.

Editorial / Wall Street Journal

“Iran’s drone and missile assault on Israel Saturday night into Sunday is an open act of aggression, but it isn’t the start of this conflict. It’s an escalation of the war Iran has been waging against Israel for months through its Middle East proxies. The difference now is that Iran’s imperialistic face is in the open rather than in the shadows, and that should change calculations in Washington in particular.

“Supreme leader Ali Khamenei and the Islamic Revolutionary Guard Corps have been the puppet masters of Middle East mayhem, the better to avoid direct culpability.  Israel’s strike on April 1 against IRGC generals in Syria, was apparently more than the mullahs could tolerate. The weekend attack is truth in advertising at last, and it is an ominous sign that Iran is willing to take new escalatory risks.

“It should also be clarifying to Western leaders about Iran’s malevolent intentions.  Thousands of American citizens live in Israel and could have been casualties. Iran’s bombardment wasn’t discriminate or limited to military targets, unlike Israel’s precision strike that killed the IRGC generals.

“The fact that most of the drones and missiles were intercepted is a relief, but it isn’t reassuring against future swarm attacks.  Israeli air defenses were a spectacular success, aided by assets from the U.S, U.K., Jordan, and perhaps others.  But what happens if the next attacks come all at once from Hezbollah in Lebanon and Syria as well as Iran?

“This is another case of failed U.S. deterrence.  President Biden had warned Iran not to attack after U.S. intelligence detected signs of preparation in Tehran.  ‘Don’t,’ Mr. Biden said.  But like Vladimir Putin in Ukraine, Iran went ahead anyway, no doubt confident that Mr. Biden wouldn’t respond militarily.  And sure enough, the word Sunday is that his main message in a call to Israeli Prime Minister Benjamin Netanyahu Saturday was not to strike back....

“The attack on Israel also underscores the failure of Mr. Biden’s Iran policy. He tried to mollify the mullahs by easing sanctions, freeing tens of billions in frozen funds, and trying to renegotiate the 2015 nuclear deal.  Iran spied weakness and has mobilized its proxy forces against Israel, U.S. troops in Syria and Iraq, and commercial ships in the Red Sea.  The U.S. has responded with pinprick bombing raids, and now Iran is escalating again.

“Imagine how Iran would behave if it acquires nuclear weapons. At a minimum a nuclear-armed Tehran would be less restrained in its proxy wars and terrorism.  It is also a messianic regime bent on spreading Shiite revolution.  Such a regime might be all too willing to risk Armageddon to destroy the Jewish state.

“ ‘Take the win,’ Mr. Biden reportedly told Mr. Netanyahu.  But is it a win if Iran can directly attack Israel without consequences?  Israel shouldn’t have to wait in a defensive crouch until Iran decides to attack again.  Israel is justified in attacking Iran’s assets, including military targets in Iran....

“Leaders in both parties should also start telling the truth to Americans about the new world of global threats.  Russia, China, Iran and North Korea are all on the march and working together.  That won’t magically change if Mr. Trump wins.  The U.S. needs an urgent program of rearmament to restore deterrence.  Saturday’s attack won’t be the last against our allies or the U.S. homeland.”

Walter Russell Mead / Wall Street Journal

“ ‘Take the win,’ President Biden reportedly advised (Netanyahu) after Iran’s unprecedented missile and drone attacks against Israel sputtered shambolically to an ignominious end.

“As the world waits on tenterhooks for Israel’s response, two things seemed clear. It would be political suicide for Mr. Netanyahu to take the president’s advice, and it would be national suicide for any Israeli prime minister to do so.  Mr. Biden is primarily worried about his re-election, a cause he conveniently if sincerely conflates with the survival of democracy in the U.S. and of freedom in the world.  Israel is worried about something more tangible – the survival of the world’s only Jewish state....

“What the president appears not yet to understand is that Iran has become so powerful, and America’s reputation as a source of sound policy and reliable support so weak, that only resolute American backing of our allies can turn the tide.  This problem has been decades in the making.  George W. Bush’s mismanagement in Iraq removed the one regional power capable of containing Iran on its own – without building an effective replacement.  Barack Obama’s feckless Syria policy gave Iran and its new best friend, Russia, a commanding position in the heart of the Middle East.  Mr. Trump’s support for the Abraham Accords and tough policies toward Iran pointed in the right direction, but were mostly a case of too little, too late, and too erratic.  Mr. Biden’s support for Israel is appreciated in Arab capitals as well as in Jerusalem, but his vacillations with Iran have further strengthened the ayatollahs and undercut America’s much-diminished prestige....

“From an Arab point of view, there are two things that make Israel valuable at a time of diminished confidence in the U.S.  First, Israel sees the common fight against Iran as part of its own fight for survival.  It will be a reliable ally because it has no choice.  Second, Israel offers the mix of strength and relentlessness without which Iran cannot be stopped.  At a time when liberal opinion in the U.S. was elegantly wringing its hands about Israeli ruthlessness in Gaza destroying any possibility of Arab-Israeli cooperation, Jordan and Saudi Arabia leapt to Israel’s defense against the Iranian attacks. The fastest way for Israel to lose friends in the Middle East would be to start thinking like American liberal foreign-policy hands.

“This isn’t an ideal situation by any standard, and one may hope that better times will bring nobler views, but people fighting for their survival against an utterly amoral opponent will do what they must. Americans eager to critique what they see as the immorality of the region’s governments should reflect on the part our own choices have played in the deterioration of Middle Eastern security to its current abysmal state.

“Meanwhile, Mr. Biden will continue trying to save the world by getting re-elected and will evaluate developments abroad by their projected effect on Wisconsin and Michigan.  Mr. Netanyahu will have to steer a course between the disastrous alternatives of alienating Mr. Biden by ignoring his preferences or endangering Israel by taking his advice.”

David Ignatius / Washington Post

“After six frustrating months in Gaza, Israel finally won a decisive victory against its adversaries by blunting Iran’s all-out missile attack Saturday night with an astonishing display of high-tech military prowess.

“ ‘A good defense is the best offence’ is a truism in sports.  Israel demonstrated that this precept might apply to modern warfare, as well.  In neutering an Iranian barrage...Israel showed that in combat, the shield can be as powerful as the sword....

“The missile war this weekend was the bookend to Israel’s bold but risky April 1 airstrike on Tehran’s consulate in Damascus, which killed seven officers in Iran’s Islamic Revolutionary Guard Corps, including two senior leaders.  Now, Israel’s stunning success at fending off Iran’s reprisal for that attack could mark a psychological turning point in the trauma of the Gaza war.  Israel has felt weak and embattled since Hamas’ Oct. 7 terrorist attack, and increasingly isolated internationally as it tried to crush Hamas in the lairs underneath a desperate Palestinian civilian population.  But the symbolic imagery reversed Saturday night.”

Daniel Henninger / Wall Street Journal

“Allow me to identify who saved the people of Israel last weekend from Iran’s missile barrage: Ronald Reagan.

“In 1983, President Reagan in a televised speech proposed what he called the Strategic Defense Initiative.  Its core idea was that the U.S. would build defense systems that could shoot down nuclear-armed ballistic missiles, then expected to be fired by the Soviet Union at the U.S. mainland.

“Democrats and much of the defense establishment mocked the idea, with Sen. Ted Kennedy naming it ‘Star Wars.’  Sen. Joe Biden summed up the opposition in a 1986 speech to the National Press Club.

“ ‘Star Wars represents a fundamental assault on the concepts, alliances and arms-control agreements that have buttressed American security for several decades, and the president’s continued adherence to it constitutes one of the most reckless and irresponsible acts in the history of modern statecraft.’

“By universal acclamation, the hero of last weekend was Israel’s missile-defense systems.  The world watched in real time Saturday night as Reagan’s commitment to shooting down missiles protected Israel’s population from the more than 300 drones and ballistic and cruise missiles fired by Iran and its proxies at cities across Israel.

“No nation more quickly recognized the necessity of missile defenses than Israel, a small, population-packed country that couldn’t afford the conceit of some U.S. politicians, then and today, that the American landmass is somehow safe from missile attacks.  Within two years of Reagan’s announcement, Israel signed a memorandum of understanding with the U.S. to develop missile defenses.  The fruits of that four-decade partnership couldn’t be clearer.

“Though the U.S. didn’t develop a space-based system, the technology has enabled an arsenal of ground-, air- and sea-based interceptors.  Israel – with a capable scientific establishment dedicated to the country’s survival – developed a multilayered missile-defense system.  Iron Dome protects from short-range missiles of the sort fired from Lebanon by Hezbollah, which reportedly possesses more than 100,000 missiles and rockets of Iranian, Russian and Chinese origin.  David’s Sling protects from short- to medium-range missiles, while the Arrow 2 and Arrow 3 systems hit missiles at high altitudes.

“Reagan’s experience with the Strategic Defense Initiative has lessons for the U.S. today, with the unmissable irony that ardent SDI foe Joe Biden is pocketing its political benefit this week....

“Reagan’s missile-defense legacy does have an important advocate: Donald Trump. As president in 2019, Mr. Trump revived the U.S. missile-defense program, and he restated that commitment, citing Reagan, during this year’s New Hampshire primary.

“Mr. Biden deserves credit for helping Israel repel Iran’s missiles and drones.  It’s clear, though, that the world has entered a new era of state-sponsored missile attacks – first Russia into Ukraine and now Iran’s swarmed assault on Israel. To meet that threat, Mr. Biden would have to admit Reagan was right.  That isn’t going to happen.”

Israel and Hamas....

--Israel said Hamas had rejected the latest cease-fire proposal from mediators, Sunday, as tensions escalated following Iran’s failed attack the night before.

While Mossad didn’t directly say the Iran drone and missile strikes were to blame, it said Hamas’ leader in Gaza, Yahya Sinwar, “is continuing to exploit the tension with Iran” and “does not want a humanitarian deal and the return of the hostages.”

The statement from Mossad, which is leading Israel’s negotiations with Hamas, was published by the office of Prime Minister Netanyahu.

Hamas said it is sticking to its demands that any agreement must end the war: “We...reaffirm our adherence to our demands and the national demands of our people; with a permanent ceasefire, the withdrawal of the occupation army from the entire Gaza Strip, the return of the displaced to their areas and places of residence, intensification of the entry of relief and aid, and the start of reconstruction,” the Islamist faction said.

The talks are being brokered by the U.S., Qatar and Egypt.

There have been stories that as few as 20-25 hostages are still alive of the 133 believed to be held in Gaza (30 or so of them already reported to be dead).  As in Hamas has been playing a cruel game in negotiations.

Thursday, Qatar said it is reassessing its role as a mediator between Israel and Hamas.

“Qatar is in the process of a complete reevaluation of its role,” the gulf state’s prime minister, Mohammed bin Abdulrahman bin Jassim Al Thani, told a Doha news conference, according to Agence France-Presse.

“There is exploitation and abuse of the Qatari role,” he said, adding Qatar had been the victim of “point-scoring” by “politicians who are trying to conduct election campaigns by slighting the state of Qatar.”

Qatar, which has hosted Hamas’ political leadership since 2012 with the blessing of the United States, has rebuffed frequent criticism of its mediation from Israel including by Prime Minister Netanyahu.

--Israeli tanks pushed back into parts of the northern Gaza Strip on Tuesday, which they had left weeks ago, while warplanes conducted air strikes on Rafah, the Palestinians’ last refuge in the south, killing and wounding several people, medics and residents said.

Later Tuesday, Palestinian health officials said an Israeli air strike had killed 11 Palestinians in the Al-Maghazi refugee camp in the central Gaza Strip.

--Israel’s military said it had facilitated the entry of 126 aid trucks into northern Gaza late on Monday from the south.  It also said it was working in collaboration with the World Food Program to facilitate the opening of two more bakeries in northern Gaza after the first began operations on Monday with WFP help.

--Britain condemned the killing of Israeli teenager Binyamin Achimair and is alarmed by the “shocking levels of violence” in the occupied West Bank after his death, the country’s defense department said in a statement on Tuesday.

“These killings, and subsequent actions, are escalating violence in the Occupied West Bank and the wider region at a critical time.  It is vital that Israeli authorities restore calm and conduct urgent and transparent investigations into all deaths,” the statement added.

The violence in the West Bank has picked up considerably over already high levels post-Oct. 7.

Armed Israeli settlers shot dead two Palestinians in the West Bank, hours after Israeli forces killed a Palestinian teen during a military raid, officials said.

--Thursday, the United States vetoed a widely backed UN resolution that would have paved the way for full United Nations membership for Palestine, a goal the Palestinians have long sought.

The vote in the 15-member Security Council was 12 in favor, the U.S. opposed and two abstentions, from the UK and Switzerland.  U.S. allies France, Japan and South Korea supported the resolution.

U.S. deputy ambassador Robert Wood told the council the U.S. veto “does not reflect opposition to Palestinian statehood, but instead is an acknowledgement that it will only come from direct negotiations between the parties.”

---

This Week in Ukraine....

--The war is at a critical juncture as the lack of further military support from Ukraine’s Western partners increasingly leaves it at the mercy of the Kremlin’s bigger forces.

Through the winter months, Russia made no dramatic advance along the 1,000-kilometer (620-mile) front line, focusing instead on attritional warfare.  However, Ukraine’s shortage of artillery ammunition, troops, armored vehicles, and air defenses has allowed Russia to gradually push forward, military analysts say.

The hold-up in Washington of approval for an aid package is the reason.  It can’t be said enough.

According to the Institute for the Study of War, a Washington-based think tank, Ukraine’s need is now acute.

“The Russians are breaking out of positional warfare and beginning to restore maneuver to the battlefield because of the delays in the provision of U.S. military assistance to Ukraine,” the ISW said in an assessment late Tuesday.

“Ukraine cannot hold the present lines now without the rapid resumption of U.S. assistance, particularly air defense and artillery that only the U.S. can provide rapidly and at scale,” it said.

--President Zelensky, in an interview with PBS, said a lack of air defenses prevented Ukraine from thwarting a Russian missile attack the prior week that destroyed the biggest power plant in the region around the Kyiv.

“There were 11 missiles flying. We destroyed the first seven, and four (remaining) destroyed Trypillia.  Why?  Because there were zero missiles. We ran out of missiles to defend Trypillia,” he said.

Without aid from Congress, Zelensky said, “we’ll have no chance of winning.  Today, our artillery shell ratio is 1-10.  Can we hold our ground?  No.  In any case, with these statistics, they will be pushing us back every day.”

Ukrainian forces are digging in, building fortifications in anticipation of a major Russian offensive that Kyiv officials say could come as early as next month.

As for the U.S. aid package, House Speaker Mike Johnson has been trying to cobble together a coalition of Democrats and mainstream Republicans to pass legislation that mirrors the $95 billion aid bill the Senate passed two months ago with aid to Ukraine, Israel, Taiwan and other American allies – but broken down into three separate pieces that would each be voted on individually.

Wednesday, Johnson said there would be a vote on the Ukraine, and other aid packages, Saturday night.

In a joint statement issued by six key committee GOP House chairs urging quick passage, they said in part:

“There is nothing our adversaries would love more than if Congress were to fail to pass critical national security aid.  We don’t have time to spare when it comes to our national security.  We need to pass this aid package this week,” the lawmakers said.

--The mayor of Kharkiv said the nation’s second-largest city is at risk of becoming “a second Aleppo” unless U.S. politicians vote for fresh military aid to help Ukraine’s air defenses needed to prevent long-range Russian attacks.

Ihor Terekhov said Russia had switched tactics to try to destroy the city’s power supply and terrorize its 1.3 million residents by firing into residential areas, with people experiencing unscheduled power cuts for hours at a time.

Aleppo is a reference to the Syrian city heavily bombed by Russian and Syrian government forces at the height of the country’s civil war a decade ago.

--Six civilians were killed across Ukraine in three different regions by Russian missile and drone attacks on Sunday.

--Ukraine’s eastern front, including Kharkiv, has “worsened significantly in recent days,” the top military commander said in a statement Sunday.  The Russians are trying to capture a location called Chasiv Yar and they want to do it by May 9, he said.  [That’s the Soviet anniversary of victory over the Nazis.]  Seizing Chasiv Yar, which lies on high ground and is regarded as a strategic point for Ukraine’s defense in the area to the west of Bakhmut, would open up a path to another region, Kramatorsk, said Ukrainian Gen. Oleksandr Syrsky.

A spokesman for the forces battling on the eastern section of the front said in remarks on Ukrainian television that Russia’s army was attacking using all types of weapons, from artillery to tanks, drones and guided aerial bombs, Nazar Voloshyn said, adding, “The enemy is trying to exhaust the Ukrainian Army.”

Many analysts believe Russia is planning its first large-scale offensive since 2022 this summer, targeting Kharkiv and Odesa on the Black Sea coast.

--Three Russian missiles slammed into a downtown area of the northern Ukrainian city of Chernihiv on Wednesday, hitting an eight-floor apartment building and killing at least 16, over 80 injured in the morning attack, the city’s acting mayor said.

Chernihiv lies 90 miles north of Kyiv, near the border with Russia and Belarus, and has a population of around 250,000 people.

--Europe is planning for what happens if Ukraine loses.  It’s ugly, Defense One’s Patrick Tucker reports. For example, “The Russians have actually managed to really ramp up the defense industry capability, put it on a war footing,” Hanno Pevkur, Estonia’s Defense Minister, told reporters Friday.  “Then the unfortunate and quite dark logic arises from that: Once you’ve done all these things, once you’ve ramped up your economy or put it on a war footing, then there’s not an easy way of going back.  So, they will probably have to maximize,” he said.

--Ukrainian Prime Minister Denys Shmyhal told the BBC there will a “Third World War” if Ukraine losses its conflict with Russia, as he urged Congress to pass the long-stalled aid bill.

“If we will not protect...Ukraine will fall,” he said.  “So, the global system of security will be destroyed...and all the world will need to find...a new system of security.

“Or there will be many conflicts, many such kinds of wars, and in the end of the day, it could lead to the Third World War.”

--Friday, President Zelensky said he visited a Ukrainian military command post used by troops defending embattled Chasiv Yar that Russian forces are bearing down on.

Kyiv is stepping up efforts to build defense lines in preparing for Russia’s looming offensive.

--A major Russian missile attack on Ukraine’s central Dnipropetrovsk region killed at least nine people, including three children, while injuring more than 25 and damaging critical infrastructure facilities, officials reported on Friday.

President Zelensky said the attack damaged multiple stories of a residential building and a train station in the regional capital, Dnipro, as he called again for additional air defenses.

The region’s governor, Serhiy Lysak, said air defenses shot down 11 out of 16 missiles and nine out of 10 drones.

[Ukraine claims it shot down a Russian strategic bomber 185 miles from its border on Friday after the warplane took part in the airstrike on Dnipropetrovsk.]

--Russian missiles today, Friday, hit the port of Pivdennyi in Ukraine’s southern Odesa region, destroying grain storage facilities and foodstuffs they contained, President Zelensky said.

Zelensky in a post on X said the goods had been intended for export to Asia and Africa, and that the attack was “part of a deliberate Russian strategy” to harm Ukraine and countries relying on its food exports.

“Dear partners in the Global South, this is Russia’s true attitude towards you, your food security, and well-being,” he wrote.  “Russia is willing to harm people in your countries in order to achieve its insane goal of destroying our country at any cost.”

--The Ukrainian military says Russia has ramped up its illegal use of riot control agents on the front to try to clear trenches as it begins to make bigger advances in the east.  Riot control agents such as tear gas are banned on the battlefield by the International Chemical Weapons Convention, which Russia and Ukraine are signatories to.

While civilians can escape tear gas when used to break up riots or protests, soldiers stuck in trenches without gas masks must either flee under enemy fire or risk suffocating on the gas.  Ukrainian Colonel Serhii Pakhomov said Kyiv had recorded around 900 uses of riot control agents by Russia in the past six months out of over 1,400 since the Feb. 2022 invasion.

--A recent CBS poll conducted last week revealed four of five Republicans (79%) say they trust Donald Trump for accurate information about Ukraine – while only a third (33%) say they trust journalists actually deployed inside Ukraine’s war zone.  By contrast, 74% of Democrats said they trust war-zone reporters.  This is depressing.

--A BBC analysis concluded that Russia’s military death toll in Ukraine has now passed the 50,000 mark.  The BBC found the body count was nearly 25% higher in the second year than in the first year; more than 27,300, according to their findings – a reflection of how territorial gains come at a huge human cost.

The overall death toll of more than 50,000 is eight times higher than the only official public acknowledgement of fatality numbers ever given by Moscow in September 2022.

The BBC notes the actual number of Russian deaths is likely to be much higher.

---

Wall Street and the Economy

Federal Reserve Chair Jerome Powell said on Tuesday the Fed may need to keep interest rates higher for longer than previously thought, given what he called a “lack of further progress” this year towards the 2% inflation target.

“The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell told a forum in Washington.

“Right now, given the strength of the labor market and progress on inflation so far, it’s appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us,” he said.

And Powell said: “If higher inflation does persist, we can maintain the current level of restriction for as long as needed.  At the same time, we have significant space to ease should the labor market unexpectedly weaken.”

Fed Vice Chair Philip Jefferson in earlier remarks Tuesday, omitted any mention of rate cuts in a speech to a research conference, and said the Fed was ready to keep its tight monetary policy in place if inflation fails to slow as expected.

Jefferson said “if incoming data suggest that inflation is more persistent than I currently expect it to be, it will be appropriate to hold in place the current restrictive stance of policy for longer. I am fully committed to getting inflation back to 2%.”

In prior comments, Jefferson had echoed a staple of recent Fed communications – that “if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back our policy restraint later this year.”

Fed Bank of New York President John Williams said that there’s no rush to lower interest rates and economic data will determine the timing.

Williams said monetary policy is in a “good place.”  When asked at a forum in Washington about the possibility of raising borrowing costs, Williams said it is not his baseline expectation, but added it’s possible if the economic data warrant it to reach the Fed’s inflation goal.

For now, “We’ve got interest rates in a place that is moving us gradually to our goals, so I definitely don’t feel the urgency to cut interest rates.”

While no one expected the Fed to move at its next Open Market Committee meeting April 30-May 1, there were still a few looking for Chair Powell and Co. to offer some hope for a cut in June, but that is now off the table, at least for this week, because on Monday we had a super strong March retail sales figure, 0.7%, well above consensus, plus February was revised up from 0.6% to 0.9%.  Ergo, the economy is strong, witness the Atlanta Fed’s GDPNow barometer for the first quarter, which is up to 2.9% from 2.5% last week and 2.1% a few weeks prior.

We also had some housing data this week for March and it wasn’t good, with housing starts coming in much lower than expected, a 1.321 million annualized pace, the prior figure a revised 1.549m.  March existing home sales fell 4.3% over February to a 4.19 million level, down 3.7% from a year ago.

The median existing home price rose 4.8% from March 2023 to $393,500, the highest ever for the month.

Prospective home buyers are facing mortgage rates above 7% once again, Freddie Mac’s latest 30-year fixed-rate mortgage at 7.10% this week, the first time over 7% since early December.

Next week the Fed’s preferred inflation barometer, the personal consumption expenditures index (PCE) for March.

Separately, the International Monetary Fund expects U.S. GDP to expand 2.7% in 2024, up from an October forecast of 1.5%.  The IMF said the U.S.’s outperformance is due in part to a boost in the labor supply from immigration, as well as robust government spending.

In its latest world economic outlook, the IMF said the global economy is remarkably resilient, with one caveat: Inflation has yet to be tamed.

The IMF raised its global economic growth forecast by 0.1 percentage from its outlook in January to 3.2% this year and next, though this anemic historically.

The IMF pegs China at 4.6% this year (4.1% next); the euro area at 0.8% in 2024, 1.5% 2025; Germany just 0.2% this year; the UK 0.5%; and Japan 0.9%.

Ergo, the U.S. is indeed shining relative to the other big economies.

But the IMF says the U.S. fiscal stance is out of line with long-term fiscal sustainability and creates both short-term risks to efforts to bring down inflation as well as longer-term fiscal and financial stability risks for the global economy.

“The exceptional recent performance of the United States is certainly impressive and a major driver of global growth,” the IMF said.  “But it reflects strong demand factors as well, including a fiscal stance that is out of line with long-term fiscal sustainability.”

Washington’s overspending, the report said, risks reigniting inflation and undermining long-term fiscal and financial stability around the world by ratcheting up global funding costs.

“Something will have to give,” the IMF cautioned.

Europe and Asia

We had key inflation data for the eurozone in March, via Eurostat, with the rate down to 2.4% from 2.6% in February (2.8% in January).  A year earlier, the rate was 6.9%.

Ex-food and energy, the rate was 3.1% compared with 3.3% the month prior, 3.6% in January.

Headline inflation....

Germany 2.3%, France 2.4%, Italy 1.2%, Spain 3.3%, Netherlands 3.1%, Ireland 1.7%.

The European Central Bank seems determined to cut rates in June.

Inflation in the UK came in at 3.2%, down from 3.4% in February, but core inflation, ex-food and energy, was still 4.2%, though down from 4.5% the month before, according to the Office for National Statistics.

The Bank of England will probably remain patient before cutting for now, but the economy’s growth rate is stagnant.

February industrial production in the EA20 rose 0.8% over January, but was down 6.4% from a year ago.

Turning to Asia...we had a slew of important data out of China, including GDP for the first quarter, 5.3% vs. 5.2% prior, and better than consensus of 5.0%.  The government has set a target of “around” 5% for this year. 

But March industrial production, up 4.5% year-over, and retail sales, 3.1% Y/Y, were weaker than anticipated. Fixed asset investment was in line, 4.5% year-to-date vs. 2023. 

The unemployment rate was 5.2%.

The prior week’s inflation readings indicated deflation remains a threat.

Meanwhile, President Biden called for raising tariffs on imports of steel and aluminum from China, another pure campaign ploy which he announced on a visit to swing-state Pennsylvania (though China is dumping excess steel as its property market craters).  The tariff will be raised to 25% from 7.5%.  This is on top of a separate 25% tariff on steel and a 10% duty on aluminum imposed under the Trump administration.

The Biden administration is looking to raise tariffs on a range of Chinese exports to the U.S., including electric vehicles, batteries and solar products.

The president has kept in place most of Trump’s tariffs.

China then announced on Friday it would levy anti-dumping penalties of over 40% on imports of a chemical (propionic acid) from the U.S. used in foods, pesticides, pharmaceuticals and drug intermediaries.

Japan reported on March exports, up 7.3% year-over-year, while imports fell 4.9% Y/Y.  Nothing earth shattering here.

Inflation in March came in at 2.7%.  Ex-food and energy the figure was 2.9%, an improvement over February’s 3.2% pace and the first time below 3% since November 2022, so good news for the Bank of Japan.

Street Bytes

--Stocks finished mixed, barely, thanks in no small part to American Express’ positive influence on the Dow Jones today, the Dow finishing up a whopping 3 points on the week to 37986.

But the S&P 500 fell 3.0%, and Nasdaq 5.5%; the latter’s worst week since Nov. 2022.

Nasdaq also fell for a fourth consecutive week, six in seven, amid concerns over the global semiconductor/chip outlook.  Shares in Nvidia cratered 10% today and are now down 22% from their March 8 high.

--U.S. Treasury Yields

6-mo. 5.36%  2-yr. 4.97%  10-yr. 4.61%  30-yr. 4.71%

The key 10-year was up 10 basis points to its highest weekly close since November.

--Crude oil fell from its recent $86-$87 level on West Texas Intermediate as, despite the turmoil caused by Iran’s attack on Israel, and Israel’s muted retaliation, geopolitical tensions for the moment decreased and there has been a surge in U.S. oil inventories, per EIA data, that showed them increasing to their highest levels since June.  Weaker economic data from China for March also dampened the demand outlook.

WTI closed the week at $83.22.

Separately, the Biden administration, specifically the Interior Department, issued a final rule limiting future oil and gas drilling across more than 13 million acres of the National Petroleum Reserve-Alaska, the nation’s largest expanse of public land, in another moved aimed at protecting sensitive ecosystems and wildlife.

The president is hoping that in further curbing fossil fuel development on federal lands, he can court young voters, after many climate activists criticized the administration’s approval of a massive drilling project on Alaska’s North Slope last year.

Interior also announced that it will block a controversial road crucial to operating a planned copper and zinc mine in northern Alaska, saying it would threaten indigenous communities and fragment wildlife habitat.

So how do the indigenous people feel? Did anyone ask them their views beforehand?

As reported by the Washington Post, Doreen Leavitt, director of natural resources for the Inupiat Community of the Arctic Slope, said the administration did not adequately consult Alaska Natives about the economic benefits of fossil fuel development in this remote region.  Taxes on oil and gas infrastructure have funded local schools, police officers, firefighters and sanitation services.

“We’re barely 50 years away from getting indoor plumbing, and that was brought by oil and gas,” Leavitt said, adding, “We feel that our voices haven’t been listened to.”

--Goldman Sachs’ first-quarter profit jumped 28%, bolstered by strong performance in investment banking and its growing business of managing money and investments for wealthy clients.

Net revenue in the quarter was up 16% to $14.21 billion, vs. a $12.92bn consensus view from the Street.  Net earnings came in at $4.13 billion, $11.58 per share, up 28%, and vs. the $8.56 per share expected by analysts.

Investment banking revenue was $2.08 billion, up 32% from a year ago, led by equity and debt underwriting, though the bank said its backlog of future banking revenue fell from the end of 2023.

“CEOs need to make strategic decisions for their firms, companies of all sizes need to raise capital, and financial sponsors need to transact to generate returns for their investors,” CEO David Solomon said on a call with analysts Monday.  “Where we stand today it’s clear that we’re in the early stages of reopening the capital markets.”

Trading revenue of $7.6 billion was up 10%, powered by lending to institutional clients, such as hedge funds and private-equity firms.

The bank’s revenue from its second-largest division, asset and wealth management, increased 18% to $3.79 billion, helped by record fees. Assets in the division grew to a record $2.85 trillion.

Investment banks have struggled with a dearth of deal activity since the Fed started hiking interest rates in 2022. The first quarter showed signs of improvement, and, globally, the total deal value of mergers and acquisitions in Q1 rose 35% compared with the same period last year but remained down from 2022, according to Dealogic.

Goldman shares rose 3% on the news.

--Bank of America’s first-quarter top- and bottom-line results fell year-over-year amid a drop in net interest income, which the bank said will likely hit a trough in the current quarter before rebounding later this year.

Revenue dipped to $25.82 billion for the three months ended March 31 from $26.26 billion a year ago but topped the $25.39 billion average analyst estimate.

Net interest income, or NII, was $14.03 billion, down from $14.45 billion a year ago.  NII rose from $13.95 billion sequentially.

BAC recorded $1.3 billion in provisions for credit losses, compared with $931 million in the same period of 2023.

By segment, consumer banking revenue decreased 5% to $10.17 billion, driven by lower deposit balances.  Global banking revenue dropped 4% on an annual basis to $5.98 billion on lower net interest income. Global markets’ revenue increased 5% to $5.88 billion, driven by stronger investment banking fees, sales and trading revenue.  Global wealth and investment management advanced 5% to $5.59 billion, reflecting higher asset management fees on elevated market levels and strong assets under management flows.

--Morgan Stanley’s first-quarter profit beat estimates on Tuesday, fueled by a resurgence in investment banking led by equity underwriting where revenue more than doubled, sending its shares up 3% before the bell. 

Investment banking revenue climbed 16% from a year ago, while fixed-income underwriting remained a bright spot for the second quarter in a row, driven by higher bond issuance.

“As a result of strong net new asset growth, the firm has reached $7 trillion of client assets across wealth and investment management,” CEO Ted Pick said on Morgan Stanley’s first quarter under his helm.

The Wall Street giant reported profit of $2.02 per share, sailing past analysts’ average estimate of $1.66.

Total revenue rose to $15.14 billion compared with $14.5 billion a year ago.  Total revenue for the institutional securities division that houses investment banking, equities and fixed income stood at $7 billion, compared with $6.8 billion a year ago.  Fixed income trading revenue slid 4%, while equities rose 4%. 

Wealth management revenue rose to $6.9 billion from $6.6 billion a year ago.  As I noted last week, the unit is reportedly facing higher regulatory scrutiny, with multiple U.S. regulators probing whether Morgan Stanley is vetting its clients and knows the origins of their wealth.

MS has built its wealth business into a powerhouse that generates more stable revenue and helps smooth out revenue from more volatile businesses such as trading and investment banking.

--United Airlines late Tuesday reported a smaller-than-expected first-quarter loss despite a $200 million hit from the temporary grounding of the Boeing 737 MAX 9, while the airline updated its long-term fleet strategy to smooth out its aircraft delivery schedule.

The company’s adjusted per-share loss narrowed to $0.15 during the three months ended March 31 from $0.63 a year earlier. Consensus was at a $0.57 loss.  Operating revenue climbed 9.7% to $12.54 billion, ahead of analysts’ $12.39 billion estimate. The stock rose 5% in response.

“The demand environment remained strong with a double-digit percentage increase in business demand quarter over quarter, as compared to pre-pandemic,” United said in a statement.  “Additionally, the company was able to take advantage of a number of opportunities to adjust domestic capacity which drove meaningful improvements in first-quarter profitability.”

The company said it would have reported a profit without the $200 million impact from the Boeing 737 MAX 9 grounding.  In January, the FAA temporarily grounded MAX 9 planes after an aircraft operated by Alaska Airlines suffered a mid-air panel blowout.

UAL said it updated its fleet plan to allow for “a more consistent delivery schedule” of approximately 100 narrow-body aircraft per year from 2025 to 2027.

United anticipates reporting adjusted earnings of $3.75 to $4.25 per share for the second quarter.  The Street is at $3.70.  The airline maintained its full-year EPS outlook at $9 to $11, versus market expectations of $9.40.

--Boeing’s safety culture and manufacturing quality, both at the center of a corporate crisis following the Alaska Air incident, were scrutinized on Wednesday in two U.S. Senate hearings.

Testimony at the Senate Permanent Subcommittee on Investigations raised questions about Boeing’s treatment of whistleblowers, records surrounding the blown-out door plug on the Alaska Airlines 737 MAX 9 and production concerns over two separate widebody jets, the 777 and 787.

Former Boeing engineer Ed Pierson said he turned over records, sent to him from an internal whistleblower, to the FBI that he said provided key information about the Alaska Airlines door plug.  Boeing said the documents were never created.  The National Transportation Safety Board, which is investigating the blowout, said it “has not received any such documentation from Boeing or any other entity.”

During the hearing, whistleblower Sam Salehpour, a Boeing quality engineer who raised questions about two of its widebody jets, claimed he was told to “shut up” when he flagged safety concerns. He has said he was removed from the 787 program and transferred to the 777 jet due to his questions.

Salehpour has claimed Boeing failed to adequately shim, or use a thin piece of material to fill tiny gaps in a manufactured product, an omission that could cause premature fatigue failure over time in some areas of the Boeing 787 Dreamliner...as in a catastrophic failure at 35,000 feet.

Boeing has challenged Salehpour’s claims against the 787 and 777, which are used mostly on international flights, arguing on Monday it has not found fatigue cracks on nearly 700 in-service Dreamliner jets that have gone through heavy maintenance.  In a statement on Wednesday, Boeing defended the planes’ safety, noting the global 787 fleet has safely transported more than 850 million passengers, while the 777 has safely flown more than 3.9 billion travelers.

The FAA said in a statement that every aircraft flying is in compliance with the regulator’s airworthiness directives.

--Speaking of Alaska Air, the company reported a smaller-than-expected first-quarter loss despite a $162 million hit tied to the January incident with the mid-air blowout.

Operating revenue ticked up 2% to $2.23 billion, topping the Street’s view.

For the second quarter, Alaska Air expects earnings to be in a range of $2.20 to $2.40 per share, with EPS in between $3.25 and $5.25 for the full year.

The stock rose over 4%.

--Operations at Dubai airport were severely disrupted as all-time high heavy rains battered the United Arab Emirates and neighboring countries.

The storm pounded the UAE on Tuesday, flooding roads and sections of the busy international airport (the world’s second busiest next to Hartsfield-Jackson Atlanta International).

Flash floods killed at least 20 people in Oman and one in the UAE.

While some inbound flights resumed on Thursday, on the whole, Dubai International airport was barely functional.

The UAE saw its heaviest rainfall in the 75 years that records have been kept, with up to 10.2 inches of rain falling on the usually arid country on Tuesday.  [More in one day than Dubai normally receives in 18 months!]

Anne Wing, a British tourist who was with her husband and three children hoping to fly to London Heathrow, told the BBC: “It’s horrific, we are squashed in like animals – it is dangerous and inhumane.”

She added: “Passengers were shouting and rioting at the connection desk, and there were no staff to be seen.”

There was no food in the airport...just some “small cartons of water”...because the roads to the airport were all flooded.

It hasn’t been heavily reported, but one reason for the deluge, which was worst in the UAE, could have been “cloud seeding,” in which small planes flown by the government go through clouds burning special salt flares, which can increase precipitation.

Meteorologists at the National Center for Meteorology were quoted as saying they flew six or seven cloud-seeding flights before the rains.  Flight-tracking data analyzed by the Associated Press showed one aircraft affiliated with the UAE’s cloud-seeding efforts flew around the country Sunday.

The UAE relies heavily on energy-hungry desalination plants to provide water and conducts cloud-seeding in part to increase its dwindling, limited groundwater.

--TSA checkpoint numbers vs. 2023

4/18...106 percent of 2023 levels
4/17...105
4/16...104
4/15...103
4/14...103
4/13...101
4/12...107
4/11...108

--Tesla is laying off more than 10% of its global workforce, an internal memo revealed on Monday, as it grapples with falling sales and an intensifying price war for electric vehicles.

The world’s largest automaker by market value had 140,470 employees globally as of December 2023, its latest annual report shows.  The memo did not say how many jobs would be affected.  Some staff in California and Texas have already been notified of layoffs (for which CEO Elon Musk had to apologize due to the size of the severance packages).

“As we prepare the company for our next phase of growth, it is extremely important to look at every aspect of the company for cost reductions and increasing productivity,” Musk said in a memo.  “As part of this effort, we have done a thorough review of the organization and made the difficult decision to reduce our headcount by more than 10% globally,” he said.

Energy giant BP has also cut over a tenth of the workforce in its EV charging business after a bet on rapid growth in commercial EV fleets didn’t pay off, underscoring the broader impact of slowing EV demand.

[Tesla stock had another awful week and is now down 40% for the year.]

--In keeping with the above, new-vehicle registrations dropped to 1.38 million units last month in Europe, the European Automobile Manufacturers’ Association said Thursday. Sales of battery-powered cars fell 11 percent as consumers in Germany, Sweden and Norway pulled back.

The decline in new-car sales is the second in four months and underscores the pressure carmakers face amid higher interest rates, weaker economic growth and the phasing out of generous subsidies to stoke demand for EVs.  Volkswagen, Mercedes-Benz and Tesla have all reported lower EV sales in the first quarter.

--Netflix blew past Wall Street expectations on new customers for the second straight quarter on Thursday but signaled the positive surprises could be over, forecasting revenue growth slightly below analyst targets. The shares were down about 6% at the open Friday after Thursday’s after-the-close release and closed down 9%.

The company said its ad-supported streaming plans helped bring in 9.3 million new customers, nearly double the consensus forecast of analysts.  For the current quarter, Netflix projected revenue of $9.49 billion compared with analyst estimates that were a bit higher at $9.54 billion.

Earnings per share for January through March came in at $5.28, compared with $2.88 a year earlier.  Revenue rose 14.8% to nearly $9.4 billion during the period.  Operating income totaled $2.6 billion, a year-over-year increase of 54%.

Analysts had expected Netflix to add roughly 5 million subscribers around the world during the quarter, after record gains at the end of 2023. The additions brought Netflix’s total subscribers to 269.6 million at the end of March.

But the company said it will stop reporting subscriber additions each quarter starting with the first quarter of 2025, and instead will announce them only when major milestones are reached.  Analysts said the decision won’t please investors, witness the share price, as this was always the metric that investors watched most closely.  Netflix counters that the number has become less meaningful with its current offering of multiple plans at various price points.

Just an incredibly stupid PR/Investor Relations move on their part.

--ASML Holding, the Dutch company which provides semiconductor-making machinery to chip makers, posted orders below analysts’ expectations for the first quarter as chip makers wait for demand to recover before securing key production equipment for the coming years.

ASML said orders slipped to $3.83 billion in the first quarter, with consensus at $5.41 billion, a big miss.

The company’s lackluster orders show that its customers, major chip makers like Taiwan Semiconductor Manufacturing Co., Intel and Samsung Electronics, are for now shying away from buying up hardware for semiconductor production in anticipation of better demand.

TSMC, the world’s largest contract chip maker, reported an 8.7% contraction in revenue last year.  Chip makers have been grappling with an inventory glut in recent months as manufacturers of smartphones, computers and other personal-electronic devices held off ordering more chips that they had stockpiled in recent years.

But now these companies are digesting their inventories, offering hope that demand for semiconductors is set to recover.  TSMC expects revenue this year to grow by more than 20%.

Meanwhile, the Biden administration is handing out billions of dollars in subsidies to companies such as TSMC, Intel and Samsung, to invest in chip-making facilities in the U.S. in a move aimed at reviving hardware manufacturing in the U.S.

--More specifically on TSMC, it posted higher first-quarter profit following three straight declines, as the global boom in artificial intelligence creates a surge in demand for advanced chips.

So just as the above was about a gloomy 2023 with the inventory glut, TSMC has started to expand again amidst the sudden surge in demand from AI.

TSMC said first-quarter revenue from its high-performance computing segment, which includes AI chips as well as other chips used in large computing centers, rose slightly from the previous quarter.

But it forecasts second-quarter sales may rise as much as 30% as it rides the AI wave. [20% for the year, as noted above.]

“Almost all the AI innovators are working with TSMC to address the insatiable AI-related demand for energy efficient computing power,” CEO C.C. Wei said during the company’s earnings call.

“AI-related data center demand is very, very strong,” he said, adding that the shift from traditional servers to AI servers is “favorable” to TSMC.

For 2024, the company said it expects revenue to rise in the low- to mid-20% range in dollar terms.

TSMC saw January-March net profit rise to $6.98 billion from about $6.40bn a year earlier.

First-quarter revenue rose 13% year-on-year to $18.87 billion, better than the company’s earlier forecast.

The shares fell, however, because management later mentioned that the overall semiconductor market is enduring a more gradual recovery than previously expected.

TSMC mentioned that traditional server demand is lukewarm and the automotive industry continues to suffer from excessive inventory.

And the company said capital spending would be in the range of $28-$32 billion, a noticeable shift compared to the over $40bn of CapEx throughout the pandemic years.

So, bottom line, AI demand is surging, but it is not making up for the shortfall – compared to during the pandemic – across other facets of the semiconductor industry.

--UnitedHealth Group said on Tuesday it was expecting to take a hit of up to $1.6 billion ($1.15 to $1.35 per share) this year related to a data breach at its Change Healthcare unit, in its first full public disclosure of the financial impact of the cyberattack.

Despite the disruptions, the healthcare conglomerate beat estimates for first-quarter adjusted profit and maintained its 2024 forecast, sending shares higher by 5%.  The stock had fallen nearly 15% since it disclosed the ransomware attack on Feb. 21.

The hack at Change, which operates one of the largest clearing houses, disrupted payments to doctors and healthcare facilities nationwide for a month while taking a harsh toll on community health centers serving 30 million poor and uninsured patients.

UNH said it had already booked $872 million in costs related to the data breach, and will accrue more, but the company backed its 2024 adjusted profit forecast at $27.50 to $28 per share.

For the quarter, UnitedHealth reported an adjusted profit of $7.16 per share, ex- a 25-cent hit from business disruptions caused by the hack, compared with estimates of $6.61.

UnitedHealth’s medical care ratio, which is used to measure medical costs as a percentage of premium revenue, reached 84.3% vs. 82.2% in the 2023 quarter, due to Medicare funding reductions and the cyberattack. 

--Johnson & Johnson tightened its full-year outlook on Tuesday after the healthcare products conglomerate reported first-quarter sales slightly below market expectations.

Adjusted earnings are now set to come in between $10.57 and $10.72 a share for 2024, compared with the company’s previous projections of $10.55 to $10.75.  Sales ex- the Covid-19 vaccine are pegged at $88 billion to $88.4 billion vs. the prior guidance range of $87.8 billion to $88.6bn.

The consensus among analysts is for $10.66 per share on revenue of $88.42 billion and thus the stock did little in response.

JNJ beat estimates for first-quarter adjusted earnings at $2.71 vs. the Street’s view for $2.65. Sales rose to $21.38 billion from $20.89 billion the year before, but were just shy of analysts’ estimate of $21.39 billion.

--Dow Jones component American Express helped today by rising 5% after reporting first-quarter results increased on a yearly basis and topped market estimates, while AXP reiterated its full-year outlook for earnings and revenue growth.

Per-share earnings came in at $3.33 for the three months through March 31, rising from $2.40 the year before and ahead of the consensus for $2.96.  Revenue climbed 11% to $15.8 billion.

The company reported 6% growth in goods and services spending and 8% growth in travel and entertainment spending.”

Provisions for credit losses totaled $1.27 billion, compared with $1.05 billion in the 2023 quarter.

American Express continues to anticipate earnings in a range of $12.65 to $13.15 per share for 2024 and revenue to grow between 9% and 11%, Chief Financial Officer Chrisopher Le Caillec adding, “While we do continue to see a softer spend environment, our spending volumes are tracking in line with our expectations to support our revenue guidance for the full year.”

--Several Google employees were arrested and placed on administrative leave late Tuesday after staging 10-hour sit-ins at offices in New York and Sunnyvale, California to protest the company’s $1.2 billion cloud contract with Israel.

The pro-Palestinian employees, who are affiliated with a group called “No Tech For Apartheid,” posted several videos and live-streams of the protests – including the moment they were issued final warnings and arrested by local police for trespassing.

The shocking protests included a complete takeover of Google Cloud CEO Thomas Kurian’s office in Sunnyvale by workers wearing traditional Arab headscarves.

A Google spokesperson said the Tuesday protests “were part of a longstanding campaign by a group of organizations and people who largely don’t work at Google.”

“Physically impeding other employees’ work and preventing them from accessing our facilities is a clear violation of our policies, and we will investigate and take action,” the Google spokesperson said in a statement.

“These employees were put on administrative leave and their access to our systems was cut,” the spokesperson said.  “After refusing multiple requests to leave the premises, law enforcement was engaged to remove them to ensure office safety.”

Multiple reports had 28 employees being fired.

Last month, Google fired a software engineer who publicly blasted one of the company’s Israel-based executives during a tech conference in New York City.

Separately, Google is laying off an unknown number of workers as part of a “pretty large-scale” restructuring in which the tech giant is moving some jobs overseas.

CFO Ruth Porat sent an email to employees announcing that the company would create “growth hubs” in India, Mexico and Ireland.

--Samsung displaced Apple as the world’s biggest phonemaker in the first quarter of 2024.  The South Korean firm, which had lost the top spot to its American rival in the previous quarter, shipped more than 60 million smartphones.  Apple only sold 50m, a 10% decrease over the same period last year.  Global smartphone sales grew by 8% overall.

--Late reporting today has Nike laying off a whopping 740 people from its Oregon headquarters.

--In an annual survey provided by shipping data provider Alphaliner on the world’s 30 busiest container terminals, Shanghai retained the top spot, a position it has held since 2010 when it overtook now second-place Singapore.  In total, six of the top 10 spots were held by mainland Chinese cities – Ningbo, Qingdao, Shenzhen, Guangzhou, Tianjin and Shanghai – with Busan in South Korea, Los Angeles in the U.S., and Dubai rounding out the list.

Hong Kong, once the world’s busiest port, failed for the first time to rank among the world’s top 10 ports in 2023, knocked to No. 11 by Dubai’s Jebel Ali port.

Foreign Affairs, Part II

China: Beijing may further militarize the South China Sea, analysts said, after the “surprising” deployment of a U.S. mid-range missile launcher in the Philippines, putting mainland China and Taiwan in striking distance.

The U.S. Army Pacific said on Monday the service “successfully” deployed its Mid-Range Capability (MRC) missile system, also known as the Typhoon Weapon System, on the northern Philippine island of Luzon on April 11.

The launcher can fire the Standard Missile 6 (SM-6) and the Tomahawk Land Attack Missile (TLAM), with operational ranges of more than 240km (150 miles) and 2,500km, respectively.

Washington began developing new intermediate-range missiles after it withdrew from the Intermediate-Range Nuclear Forces (INF) Treaty in 2019, citing Moscow’s alleged violations of the agreement, and amid China’s increasing military activity in the Indo-Pacific region, most notably the expansion of its missile forces, according to a Pentagon report.  [South China Morning Post]

On a different matter, China’s aviation regulator said on Friday it had opened new air routes to the Chinese cities of Xiamen and Fuzhou, routes which are situated very close to the Taiwan-controlled islands of Kinmen and Matsu, in a move designed to anger Taipei. Taiwan expressed anger in January after China “unilaterally” changed a flight path called M503 close to the sensitive median line in the Taiwan Strait.

The new routes to Xiamen and Fuzhou connect to the M503 flight route.  China does not recognize the ‘median line’s’ existence and regularly sends its fighter jets and other aircraft over it to harass Taiwan.

Well, I have experience in this matter. I’ve flown from Hong Kong to Fuzhou three times and all my flights hugged the coast.  Now they won’t necessarily have to, and if you were sitting on the right side of the plane, you’d see the Taiwan-controlled islands, if not Taiwan itself.

Lastly, this little factoid, courtesy of The Economist:

“Nearly half of China’s big cities are sinking, according to new research.  In a study published in the journal Science, researchers used satellite data to estimate that 45% of the country’s urban land is subsiding by 3mm a year.  That is largely because of water extraction and the weight of buildings.  Together with rising sea levels, sinking cities put millions of people at risk of flooding.”

Granted, this is infinitesimal, but the pace could speed up.

North Korea: Kim Jong Un said Sunday that he affirmed his position to develop long-standing ties with China, according to state media KCNA, citing Kim in his meeting with Chinese top legislator Zhao Leji.  Zhao is the highest-ranking Chinese official to visit the North since 2018.

Kim expected the two countries to “steadily carry forward and develop this durable tradition of friendship” so the two countries would see “responsible progress and successful fruition of the Year of DPRK-China Friendship,” KCNA said. [DPRK: Democratic People’s Republic of Korea]

Kim also extended thanks to President Xi Jinping for sending a high-ranking delegation and a large-scale art troupe, KCNA said.

Singapore: Prime Minister Lee Hsien Loong said Monday that he will step down on May 15 after two decades at the helm and hand power to his deputy Lawrence Wong.

Lee, 72, announced in November he would retire this year and had already named Wong as his designated successor.

Wong is currently deputy prime minister and finance minister.  He has the unanimous support of lawmakers in the long-ruling People’s Action Party and will be sworn in the same day.

Lee had previously said he wanted to retire at age 70.  [Hint hint to Joe Biden, 81...82 on November 20.]

Singapore has long punched above its weight in terms of influence in the region.

Random Musings

--Presidential approval ratings....

Gallup: 40% approve of President Biden’s job performance, 55% disapprove; 34% of independents approve (Mar. 1-20).

Rasmussen: 40% approve, 58% disapprove (April 19).

--In a New York Times/Siena College national poll of registered voters, Donald Trump leads Joe Biden 46% to 45%.  In late February, Trump led Biden 48-43 in the same survey.

Biden is now winning 89% of his 2020 supporters compared with 94% for Trump.

The share of voters who view the nation as headed in the wrong direction remains a high 64%.  Almost 80% of voters still rate the nation’s economic conditions as fair or poor, including a majority of Democrats.

--A new Fox News poll of registered voters in some battleground states revealed that Trump is up on Biden in Michigan and Georgia.

In a head-to-head matchup, Trump received 49% in Michigan compared to Biden’s 46%.  With third-party candidates included, Trump’s lead is down to 42% to 40%.

In Georgia, Trump leads Biden 51% to 45% in a head-to-head.  In a five-way race, the former president’s lead increased by a point, 46%-39%.

In Pennsylvania, with just two in the ring, both candidates are tied with 48% each. With third-party candidates in play, Trump is on top, 44% to 42%.

Biden and Trump are tied in a two-way race in Wisconsin, also 48% apiece.

However, in a five-way race, Trump leads 43% to 41%.

--The first criminal trial facing former President Trump is underway in New York, the hush-money case, and a new AP-NORC Center for Public Affairs Research poll finds that only about one-third of U.S. adults say Trump did something illegal, while close to half think he did something illegal in the other three criminal cases pending against him.

Still, half of Americans would consider Trump unfit to serve as president if he is convicted of falsifying business documents to cover up hush money payments to a woman who said he had a sexual encounter with her.

Seven jurors (out of 18 needed...12 members, six alternates) were selected this week, a faster pace than expected.

Oops, wrote that too soon.  We went from seven to six Thursday morning, and then five.  One was excused after saying she felt intimidated because some aspects of her identity had been made public, the judge overseeing the case said.  The juror told the court that family, friends and colleagues had contacted her after deducing through press accounts that she was on the jury.

“I don’t believe at this point that I can be fair and unbiased, and let the outside influences not affect my decision-making in the courtroom,” said the juror.

Judge Juan Merchan had to remind news outlets not to report where prospective jurors said they worked!

Another juror was less than truthful on their questionnaire, as was discovered after being selected for the jury.

Prosecutors argued Thursday that Trump had violated the gag order seven times over the past week with his social media posts.

But by the end of Friday, a full jury had been seated (12 plus six alternates).  Opening arguments slated for Monday.

The former president complained the court was “freezing” Thursday.  Personally, I side with him.  I like it warm and the courtroom temp was no doubt set at 67 or so, the better to keep everyone awake.

Trump is the first former president to face a criminal trial.

[I was watching CNN to get the jury story before I posted and unfortunately then saw the incident across from the courthouse, with a man in flames.  I wish I hadn’t seen it.  We are beginning to learn about him and there is no reason for me to comment, other than to say he has issues.]

--A recent Wall Street Journal poll of seven battleground states found that 39% of suburban women cite abortion as a make-or-break issue for their vote – making it by far the most motivating issue for the group.  Nearly three-quarters of them say the procedure should be legal all or most of the time, and a majority thinks Trump’s policies are too restrictive.

--The Senate dismissed all impeachment charges against Homeland Security Secretary Alejandro Mayorkas, ending the Republican push to remove the Cabinet secretary from office over his handling of the U.S.-Mexico border.

The two votes ended the trial before arguments ever began.  Senators voted separately to dismiss the two articles of impeachment, arguing that they were unconstitutional.

Republicans had argued for a full impeachment trial against Mayorkas.

--Last Friday, after I posted, Donald Trump held a press conference with Speaker Mike Johnson at Mar-a-Lago, with Trump throwing his support behind the Speaker as he sought to halt an attempt from within their own party to oust the Republican leader, who appeared with the former president in a show of solidarity ahead of the presidential election.

“It’s not an easy situation for any speaker, I think he’s doing a very good job, he’s doing about as good as you’re going to do,” Trump said.

“I’m sure that Marjorie understands that,” Trump added, alluding to Rep. Marjorie Taylor Greene (R-Ga.), calling her “a very good friend of mine.”

Johnson used the opportunity of standing next to the former president to promote a bill Republicans are introducing in Congress to prevent what the speaker said is a “threat of fraud” from noncitizens voting, a threat that doesn’t exist.

Trump has claimed without evidence that he would have won the popular vote in 2016 “if you deduct the millions of people who voted illegally.”  He then offered similar false claims of voter fraud as the basis of his rejection of his defeat in 2020.

A 2017 study from the Brennan Center for Justice at New York University found that only two of 42 jurisdictions studied had improper noncitizen voting.  There were 30 cases, out of more than 23 million votes cast, accounting for .0001% of the votes in those places.

The Brennan Center study also looked at Virginia, New Hampshire and California – three states Trump alleged had “serious voter fraud” in 2016.  “No official we spoke with identified an incident of noncitizen voting in 2016,” the study said, referring to conversations with elections administrators in those states. [Erin Mansfield / USA TODAY]

In 2017, Texas prosecuted a permanent resident and mother of four for voting illegally, and sentenced her to eight years in prison. The woman came to the U.S. as an infant, and her lawyer told the New York Times she did not know she wasn’t eligible to vote.

Federal law already prohibits noncitizens from voting in federal elections.

--Democratic New Jersey Sen. Bob Menendez is preparing to throw his wife under the bus in his federal corruption case.

In a ruling last week by U.S. District Judge Sidney Stein, Menendez and his wife, Nadine, were going to have separate trials, the senator’s beginning May 6, Nadine’s July 8, due to Nadine needing to have surgery.

It turns out the senator laid out his possible defense strategy in a motion filed in January, but only Tuesday was it unsealed following a request by more than a dozen media organizations.

“At trial, as part of his defense, Senator Menendez may elect to testify to communications with his wife that serve to materially decrease any inference of culpability on Senator Menendez’s part,” the motion states.

--The number of Chinese migrants illegally crossing the U.S.-Mexico border, mostly in San Diego County, CA, has hit a new record with 24,200 arrested in the last six months, according to federal data.

The huge influx is already equal to the number of Chinese people arrested for illegally crossing into the U.S. in 2023 – which itself set a record for being more than in the previous ten years combined.

Taking advantage of holes in the border wall and the administration’s lax enforcement, Chinese are buying plane tickets to Mexico and then paying smugglers to take them to the areas where its easiest to cross into California.

--Sydney, Australia police identified the assailant who stabbed and killed six people at a busy Sydney shopping center before a police officer fatally shot him.

New South Wales Police said that Joel Cauchi, 40, suffered from yet unspecified mental health issues and investigators weren’t treating the attack as terrorism-related.

--Homicides in American cities are falling at the fastest pace in decades, bringing them close to levels they were at before a pandemic-era jump.

Nationwide, homicides dropped around 20% in 133 cities from the beginning of the year through the end of March compared with the same period in 2023, according to crime data analyst Jeff Asher, co-founder of criminal justice consulting firm AH Datalytics, who tabulated statistics from police departments across the country.

Philadelphia saw a 35% drop in killings as of April 12 compared with the same period last year, police data show.  In New York City, homicides fell 15% through April 7.  Baltimore saw a 30% drop through April 8.

--Indonesia’s Mount Ruang erupted at least three times this week, forcing the evacuation of hundreds of people, the volcano’s eruption on Wednesday shooting ash nearly 70,000 feet high, possibly spewing aerosols into the stratosphere, the atmosphere’s second layer.

The volcano is part of Indonesia’s North Sulawesi province, and is located about 60 miles northeast of Manado, the province’s capital.

The pictures of the eruption and the lightning strikes it has generated are phenomenal, and rather scary. Godzilla stirred.

Indonesia’s National Disaster Management Agency posted on X that the situation corresponded to a Level 3 on a 1-to-4 scale, with 4 being the most severe.

As for the ash clouds, which can disrupt air travel, Australia’s Bureau of Meteorology wrote that they expected “two volcanic ash layers” to dissipate within 12 to 18 hours.

---

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.

---

Gold $2405
Oil $83.22

Bitcoin: $64,300 [4:00 PM ET, Fri.]

Regular Gas: $3.67; Diesel: $4.05 [$3.68 / $4.20 yr. ago]

Returns for the week 4/15-4/19

Dow Jones  +0.01%  [37986]
S&P 500  -3.0%  [4967]
S&P MidCap  -2.2%
Russell 2000  -2.7%
Nasdaq  -5.5%  [15282]

Returns for the period 1/1/24-4/19/24

Dow Jones  +0.8%
S&P 500  +4.1%
S&P MidCap  +2.0%
Russell 2000  -3.9%
Nasdaq  +1.8%

Bulls 56.5
Bears 14.5

Hang in there.

Brian Trumbore

---