Week in Review

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Week in Review

04/17/2021

For the week 4/12-4/16

[Posted 10:00 PM ET, Friday]

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Edition 1,148

This was as heavy a news week as we’ve had in ages when you weigh all the geopolitical issues together with the pandemic and violence in America.

President Joe Biden tackled Afghanistan and his predecessor’s May 1 deadline for withdrawing our troops and, as expected, Biden punted…but only until Sept. 11 or sooner.  It is a tragic mistake and it leaves the Afghan people with a looming disaster.

I understand why the president acted in the way he did, but that in no way makes it right.  The term “endless wars” is such a bunch of bull.  For years, we have literally lost a handful of American soldiers in that theater each year (versus hundreds of thousands here at home for simply not wearing masks), and in turn we’ve kept the homeland from suffering another 9/11-style attack.

In the same fashion our troops in South Korea, Japan, and Germany have helped prevent a catastrophe on the Korean Peninsula and/or World War III.

The Afghans, especially the women in the country, deserve better. 

I have far more below on the topic.  Ditto Iran, where we have Israel attempting to torpedo talks in Vienna between Iran and the P5+1 signatories to the Iran nuclear deal of 2015, the U.S. on the outside, but in the middle of discussions through go-betweens.

Iran’s nuclear posture has only worsened since Donald Trump pulled the U.S. out of the accord  three years ago. 

At the same time we’ve had growing tensions between Washington and Moscow, and Washington and Beijing, with very real concerns over Ukraine and Taiwan, respectively.

All four major issues were in play this week…Afghanistan, Iran, Russia and China…with Kim Jong Un sitting back in Pyongyang thinking, ‘Don’t forget about me.’  I’m just waiting for someone to light the fuse.

Meanwhile, early in the week, WHO Director-General Tedros Adhanom Ghebreyesus said the pandemic is a long way from over, as all the statistics bear out.

“We too want to see societies and economies reopening, and travel and trade resuming,” Tedros told a news briefing.  “But right now, intensive care units in many countries are overflowing, and people are dying, and it’s totally avoidable.”

“The Covid-19 pandemic is a long way from over.  But we have many reasons for optimism. The decline in cases and deaths during the first two months of the year show that this virus and its variants can be stopped,” Tedros added, saying transmission was being driven by “confusion, complacency and inconsistency in public health measures.”

And then we have the issue of vaccine equity.  The WHO said a week ago that more than 87 percent of the over 700 million doses administered globally thus far have gone to high-income and upper middle-income countries, while the low-income countries have received just 0.2 percent of the shots.  [A fourth group, lower-middle income nations, have received 12.8 percent.]

Today, Tedros said at his regular briefing, “Around the world, cases and deaths are continuing to increase at worrying rates.  Globally, the number of new cases per week has nearly doubled over the past two months.  This is approaching the highest rate of infection that we have seen so far during the pandemic.”

Biden’s Agenda

--Democrats have introduced bills in the House to expand the Supreme Court from nine to 13 justices, and for D.C. statehood, which would give Democrats two more Senate seats, but neither initiative is going anywhere and I’m not going to spend a lot of time on them.

President Biden did unveil plans for a bipartisan commission on possible changes at the Supreme Court last week, and some of us would like to see term limits, set at 18 years.

On statehood, the full House is expected to vote next week but it’s going nowhere in the Senate.  For starters, not all Democrats are on board.

But it does make every Senate election going forward even more critical.

--Editorial / Washington Post

“His bold initiatives to juice the U.S. economy and overhaul the country’s infrastructure suggest that Joe Biden’s presidency is marked by ambition and a stiff spine.  On admitting refugees from the world’s most violent and bedraggled countries, however, he has been timid. Whatever the reason, the White House is mum.

“This nation was built by refugees, and for decades they have been admitted legally – thoroughly vetted, carefully placed and backed by a bipartisan majority in Congress.  On taking office, Mr. Biden signaled that he intended to go big on refugees, reversing his predecessor’s un-American campaign to slam the door on them. And then…nothing.

“Having alerted Congress that he would accept up to 62,500 refugees – quadruple the latest cap set by President Donald Trump – in the remaining months of the current fiscal year, which ends Sept. 30, Mr. Biden then failed to sign a routine follow-up directive to activate that plan. At the current snail’s pace of admissions, the Biden administration will take in roughly 4,500 refugees in the current fiscal year, barely a third of the already record-low number who arrived in Mr. Trump’s final, covid-cramped year in office.

“The numbers are a blatant betrayal of Mr. Biden’s public commitment, and they have real-world impacts.  Pregnant women in Africa and the Middle East who, based on his position, had every reason to think they would soon board a plane bound for the United States, may now be in their third trimester, ineligible to fly.  Clearances for other refugees may also lapse owing to the delay. In the meantime, the suffering will only deepen for Iraqis who assisted U.S. Special Operations forces, Syrians fleeing a civil war’s devastation, and Somalis, Congolese and others eager to build new lives after having escaped the world’s most shattered places.

“Mr. Trump slashed refugee caps in each year he was president – to a record low of 15,000 he set for 2021, from the 110,000 he inherited from President Barack Obama in 2017.  Actual refugee admissions also plummeted during his tenure, to fewer than 12,000 in fiscal year 2020 from nearly 54,000 the year he took office.

“It’s extraordinary to think that Mr. Biden, who recognized the United States’ commitment to its history as a safe harbor and promised to rebuild the refugee program, would further decimate it. At the moment, however, he is on course to do just that.

“The White House has offered no explanation for his inertia, perhaps because none would suffice.  It is true that by slashing the numbers of refugees the United States accepted, Mr. Trump gutted the agencies charged with resettling them.  Yet Mr. Biden could at least get the rebuilding process started.  It is likely that some Republicans would seize upon a revived legal refugee program, conflating it with the unauthorized surge of thousands of Central American minors and families crossing into this country at the southern border. But that would suggest political cowardice on the president’s part, for which he has supplied scant evidence on other issues so far in his term.

“Mr. Biden owes an explanation for what has started to look like his administration’s most consequential flip-flop.  The optics are bad enough.  The actual costs, in real distress and suffering, are incalculable.”

So the above was written a few days ago, and then this afternoon, Biden finally signed the order, but to keep the cap at the 15,000 level set by his predecessor, not the 62,500 he had promised.

The administration said that its review of the U.S. Refugee Admissions Program it inherited revealed “it was even more decimated than we’d thought, requiring a major overhaul in order to build back toward the numbers to which we’ve committed,” as an administration official put it.

Well, many progressive Democrats in particular were livid that the promise wasn’t being kept, so the White House was forced to scramble, and then issued a statement saying a final cap for the fiscal year would be set by May 15, though achieving the original goal was unlikely.

This is an early black mark on the Biden record and the administration was caught flat-footed in misgauging the reaction.

--As to the crisis on the Mexican border, nearly 19,000 children traveling alone were stopped in March, smashing previous highs set during periods of heavy child migration in 2014 and 2019.

Border encounters – a widely used but imperfect gauge that tells how many times U.S. authorities came across migrants – rose sharply during Donald Trump’s final months as president, from an unusually low 17,106 last April to 74,108 in December.  They soared during President Biden’s first months in office.  Encounters totaled more than 172,000 in March, up from about 100,000 the previous month and the highest since March 2001.

Families and children traveling alone, who have more legal protections and require greater care, became a bigger part of the mix after Biden took office. They accounted for more than 40% of all encounters in March, up from 13% three months earlier.

According to the Border Patrol, 18,890 unaccompanied children were encountered in March, well above the previous high of 11,475 in May 2019 and 10,620 in June 2014.

--Republican senators blasted President Biden’s $2 trillion infrastructure plan as a “dog’s breakfast of slush funds.”

Senate Minority Leader Mitch McConnell called the spending proposal Biden’s “latest misleadingly titled legislation” and said that “Democrats have decided it’s the English language that has to change.

“They’re embarking on an Orwellian campaign to convince everybody that any government policy whatsoever can be labeled infrastructure,” he said.

McConnell also repeated his assertion that the massive spending plan was a “Trojan horse” full of tax increases.

“The White House has lumped together a motley assortment of the left’s priciest priorities,” he said.

The Pandemic

Last week I highlighted India and Brazil.  This week we had the following.

Editorial / Washington Post

“The United States, Britain and a few other nations appear to be just barely fighting their way out of the coronavirus pandemic with robust vaccination campaigns and other measures.  But a wildfire of infection is spreading elsewhere in the world.  According to the World Health Organization, the globe has seen seven consecutive weeks of increasing cases, and last week was the fourth-highest number of cases in a single week so far.

“India is engulfed, but more than 2 million people, largely without face masks or social distancing, bathed in the river Ganges in the Indian city of Haridwar during the largest bathing day of the Hindu religious festival Kumbh Mela on Monday.  Police said they tried to keep worshipers apart, but could not enforce social distancing; videos showed large, unmasked crowds of men and women jostling for space to stand.  India’s infections have soared past a record 160,000 a day*, one of the worst in the world.  News reports say sick people are lying in the streets outside of some hospitals, unable to find a bed, amid warnings from doctors that supplies of oxygen and ventilators are low.

*Ed. India had 233,000 new cases today!

“In Brazil, the seven-day rolling average of deaths has smashed through a record 3,000 a day, and daily new cases are hovering near peaks of 70,000* after President Jair Bolsonaro refused to impose lockdowns.  A newspaper reports that intensive care units in most Brazilian states are above 90 percent capacity.  Both India and Brazil are enormous viral conflagrations, and both nations are behind the curve on vaccinations.  Other outbreaks are also worrisome: Cases have suddenly spiked in Cambodia, and parts of Europe are grappling with the surge.”

*Ed. Try nearly 100,000.

Today, Brazil asked women to delay getting pregnant until the worst of the pandemic passes, saying the virus variant that is devastating the country appears to affect expectant mothers more than earlier versions of the coronavirus.

And while countries such as Poland and Ukraine finally appear to have peaked, though at tragically high levels, nations such as Turkey and Peru (a la India), are hitting new case and death totals nearly every day.

Covid-19 death tolls, as of tonight….

World…3,011,483
USA…579,942
Brazil…369,024
Mexico…211,213
India…175,673
UK…127,225
Italy…116,366
Russia…104,795
France…100,404
Germany…80,387
Spain…76,981
Colombia…67,564
Iran…66,008
Poland…61,208
Argentina…59,084
Peru…56,454
South Africa…53,663
Indonesia…43,196
Ukraine…39,096
Turkey…35,320
Czechia…28,317
Romania…25,937
Chile…24,923
Hungary…24,762
Belgium…23,636
Canada…23,541

Source: worldometers.info

U.S. daily death tolls…Sun. 276; Mon. 460; Tues. 819; Wed. 915; Thurs. 895; Fri. 887.

Covid Bytes

--The U.S. has administered more than 200 million doses of Covid-19 vaccine.  Just under 40% have had at least one dose, and about a quarter completed the one- and two-dose vaccinations, according to the White House Dovid-19 director.

--But this week the Food and Drug Administration and the Centers for Disease Control and Prevention called for a pause in the use of the Johnson & Johnson vaccine, citing six cases of severe blood clots, including one death, among the 6.8 million Americans who received the shot.

Yes, a more than one-in-a-million shot at being affected, plus all the victims were women between the ages of 18 and 48, but the review is important.

FDA acting commissioner Janet Woodcock said, “These events appear to be extremely rare, but the agency’s caution reflects a serious consideration of “all reports of adverse events following vaccination.”  In the long run it should add to confidence among the public, but for now it won’t and that’s not good.  We’ve got to get to herd immunity.

--Members of the health panel looking into the Johnson & Johnson vaccine voiced concerns over resuming use of the J&J shot, even as a Food and Drug Administration scientist said warnings could mitigate the risk of rare but serious blood clots.

Dr. Lynn Batha, an epidemiologist at the Minnesota health department, and several others spoke in favor of extending the pause to gather more safety information.

“By having more robust information, I think we can be more confident about how we talk about the safety of this vaccine,” she told other members of the Centers for Disease Control and Prevention advisory panel, which is considering whether to vote on a change in policy regarding the shot.

So no decision made as of week’s end on resumption.

--Meanwhile, France said it will use the J&J vaccine as planned despite its suspension in the United States, with a government spokesman saying Wednesday that France had received a first shipment of 200,000 doses.

France expects to receive 600,000 does of the J&J vaccine by the end of the month, according to health ministry data.

--The European Union, which has had a pathetic vaccine rollout to date, said it will get 50 million extra doses of the Pfizer/BioNTech vaccine in the second quarter.

The additional shots were originally expected in Q4, but Pfizer and BioNTech agreed to move up the deliveries.

The Pfizer/BioNTech vaccine supply is even more important because AstraZeneca slashed the number of Covid-19 shots it will deliver to the EU this week by almost half…1.3 million, down from 2.6 million forecast for the week, according to the Financial Times.

--The coronavirus variant first identified in the UK spreads more easily than older strains but doesn’t lead to more severe disease among hospitalized patients, a new study found.

People infected late last year with the variant, B.1.1.7, had more virus in their bodies than patients infected with older strains, a sign the newer variant is more infectious, according to the study published by the medical journal the Lancet Infectious Diseases.  But the patients hospitalized with B.1.1.7 didn’t die at higher rates or have worse outcomes overall.

The Lancet study did not look at the South African or Brazilian variants that have sparked concern.

--Pfizer CEO Albert Bourla predicted Thursday that people who have received the company’s Covid vaccine will “likely” need a third booster shot within a year to maintain protection against the virus.

“It is extremely important to suppress the pool of people that can be susceptible to the virus,” Bourla told CNBC.

The pharmaceutical chief said it’s also possible that people will need to get inoculated every year against coronavirus.

“There are vaccines like polio where one dose is enough,” Bourla said.  “And there are vaccines like flu that you need every year. The Covid virus looks more like the influenza virus than the polio virus.”

Pfizer had said back in February it was testing booster shots in case it was determined they would be needed.

--Getting sick with Covid-19 carries an eight to tenfold higher risk of developing blood clots in the brain than the vaccine does, a new study suggest.

The study out of Oxford University found that “the risk of experiencing a blood clot in the brain was about 95 times higher for people who contract Covid-19 than in the general population. Even flu aftermath carries a higher risk of clotting than the coronavirus vaccines do, researchers said.

--The head of China’s Centers for Disease Control admitted that the efficacy of Chinese coronavirus vaccines is “not high,” and they may require improvements, marking a rare admission from a government that has staked its international credibility on its doses.

The thing is, China has already distributed hundreds of millions of doses to other countries, even though the rollout has been dogged by questions over why Chinese pharmaceutical firms have not released detailed clinical trial data about their efficacy. 

The vaccine is being heavily used in Brazil, for example, which is scary. The UAE, skeptical on the effectiveness, has experimented administering three shots of the Chinese Sinopharm vaccine.

According to Chile’s government, Sinovac’s Covid-19 vaccine CoronaVac was 67% effective in preventing symptomatic infection in the first real-world study of the Chinese shot, as announced today in Santiago.  The vaccine was 85% effective in preventing hospitalizations and 80% effective in preventing deaths, the government said in the report prepared by the Chilean health ministry.

--At least 300,000 more people died last year in Russia during the pandemic than were reported in Russia’s most widely cited official statistics.

Not all of those deaths were necessarily from the virus, but they belie President Putin’s contention that the country has managed the virus better than most.

Since day one, many of us have questioned Russia’s death toll.  Many deaths there are labeled “viral pneumonia, unspecified.”

Wall Street and the Economy

In remarks Wednesday for a virtual event hosted by the Economic Club of Washington, Federal Reserve Chairman Jerome Powell said the Fed will likely scale back its bond purchases before considering raising interest rates, hardening expectations on the sequence of its eventual exit from aggressive policy support.

“We will reach the time at which we will taper asset purchases when we’ve made substantial further progress toward our goals from last December, when we announced that guidance,” Powell said.  “That would in all likelihood be before – well before – the time we consider raising interest rates. We haven’t voted on that order but that is the sense of the guidance.”

Sunday, in an appearance on “60 Minutes,” Powell said the economy appears to have turned a corner toward faster growth amid widening vaccinations, but central bankers would not be in a hurry to remove their support.

“We feel like we’re at a place where the economy is about to start growing much more quickly and job creation coming in much more quickly, so the principle risk to our economy right now really is that the disease would spread again,” Powell said.

Policy makers will wait until inflation has reached 2% sustainably and the labor-market recovery is complete before considering lifting interest rates, and the combination is unlikely to happen before 2022, Powell said, noting on “60 Minutes” that the unemployment rate for the bottom 25 percent of wage earners is still about 20 percent; the low-wage service-sector jobs that have been the last to return.

“I think we need to keep in mind, we’re not going to forget those people who were left on the beach really without jobs as this expansion continues,” Powell said.  “We’re going to continue to support the economy until recovery is really complete.”

So on the data front, we had the release on consumer prices for the month of March, up 0.6%, 0.3% ex-food and energy.  For the last 12 months, the CPI is up 2.6% on headline, the highest since Aug. 2018, but just 1.6% on core.  Gasoline prices jumped 9.1% in March, a big factor in the overall numbers. 

The Fed continues to maintain the recent figures on consumer and producer prices, well over 2% on headline, are “transitory,” and certainly the bond market hasn’t been throwing a fit the last two weeks.

Industrial production in March was less than expected, up 1.4%.

But March retail sales surged 9.8%, ex-autos up 8.4%, vs. a prior month revised figure of -2.7% amid February’s historically bad weather.  Yes, thank the stimulus checks.

Today, we got the figure for March housing starts, 1.739 million annualized, above forecasts.

Jobless claims for the week were greatly improved, 576,000, the lowest since the pandemic, though the prior week was revised upward to 769,000.

Add it all up and the Atlanta Fed’s GDPNow barometer for first-quarter growth rose to 8.3%.

Lastly, the U.S. budget deficit grew to a record $1.7 trillion in the first half of the fiscal year (starting Oct. 1, 2020) as a third round of stimulus payments sent federal spending soaring last month.

The deficit for March was $660 billion.  Revenue rose 13% to $268 billion, but spending increased 161% to $927 billion – the third-highest total on record, after June and April of last year.

For the six months from October through March, outlays rose to $3.4 trillion, an increase of 45%.  Receipts rose 6% to $1.7 trillion.

The budget gap will be widening further, following enactment of the $1.9 trillion aid package passed last month, let alone anything on infrastructure.

The Congressional Budget Office currently projects a deficit for the fiscal year ending Sept. 30 of $2.3 trillion.

Europe and Asia

A few broad readings for the euro region, EA19. 

Industrial production for February was down 1.0% over January; down 1.6% year-over-year.

February retail sales for the EA19 rose 3.0%, but were down 2.9% Y/Y.

A final reading on March inflation for the eurozone came in at 1.3%, annualized, up from 0.9% in February.  A year earlier, the rate was 0.7%.

European Central Bank President Christine Lagarde said on Wednesday that the eurozone economy is still standing on the “two crutches” of monetary and fiscal stimulus and these cannot be taken away until it makes a full recovery.

“You don’t want to remove either crutch,” Lagarde said at a Reuters event, “the fiscal or the monetary, until the patient can actually walk fine, and to do that means support well into the recovery.”

Sound familiar?

Brexit: Brexit and the pandemic have damaged the Republic of Ireland’s trading relationship with Britain with the latest trade numbers showing a major fall-off in exports and imports.  The figures also point, however, to a surge in trade between the Republic and the North.

According to the Central Statistics Office, the value of goods from Britain fell by 57 percent during the first two months of 2021 compared with the same period last year, while exports declined by 12 percent.

The largest decreases were in the imports of food and live animals, machinery and transport equipment while the weaker exports were driven by a fall-off in food exports.

The reduction in trade is being attributed to a combination of factors, including the challenges of complying with customs requirements.

Meanwhile, the figures show a sizeable pick-up in trade between the Republic and Northern Ireland, suggesting firms appear to be using the North as a channel to move goods between the Republic and Britain since Brexit.

Separately, a new survey of over 2,000 British voters conducted online by JL Partners for Bloomberg found that 67% of respondents said the EU behaved in a “hostile” way toward Britain in the dispute over vaccine supplies. Almost two-thirds believe that being outside the EU helped the UK’s vaccination program to succeed.

The findings reveal the extent of the damage done to British-European relations by the tensions over trade and vaccines that have defined the first three months since Britain left the EU’s single market and customs regime at the end of last year.

Turning to Asia…in China, all kinds of important economic news, starting with a report on first-quarter GDP, a record 18.3% compared to the same quarter in 2020.  It’s the biggest jump in GDP since China started keeping quarterly records in 1992.

However, Friday’s figures were below expectations, and they are heavily skewed, and less indicative of true growth, given the comparison to last year’s huge economic contraction amidst China’s lockdown.  In the first quarter of 2020, the economy shrank 6.8%.

The National Bureau of Statistics noted: “We must be aware that the Covid-19 epidemic is still spreading globally and the international landscape is complicated with high uncertainties and instabilities.”

Most importantly, GDP was up only 0.6% compared with the fourth quarter of 2020.

In other important measurements, again, distorted by the year ago comparison, industrial output for March rose 14.1%, and retail sales grew 34.2%.

Fixed asset investment (big ticket items like roads, bridges, airports) surged 25.6% in the first three months from the same period a year earlier.

Separate data on Friday showed China’s new home prices rose at a faster pace in March, even as authorities take measures to clamp down on property speculation.  Prices in March on a year-over-year basis rose 4.6% for China’s 70 major cities index.

And we had trade data for March.  Exports rose 30.6% year-over-year, while imports surged 38.1% Y/Y.

Again, this is coming off last March’s low base, but is reflective of soaring global demand for medical goods and work-from-home equipment.

Exports to the United States rose 53.3% last month, Y/Y, while imports soared 75.1%.

China has set an economic growth target of 6% for 2021, but virtually all outside experts say it will be closer to 8%.

In Japan, it’s all about the Olympics.  Tokyo’s Olympics chief said today that Japan was committed to holding a safe Games this summer, even as a surge in Covid-19 cases prompted an expansion of contagion controls and with fresh calls for the Games to again be postponed or canceled.

The government expanded quasi-emergency measures to 10 regions as a fourth wave of infections spread, casting more doubt on whether the Olympics can be held in Tokyo in less than 100 days.

“We’re not thinking of cancelling the Olympics,” Tokyo 2020 President Seiko Hashimoto said, speaking on behalf of the organizing committee.

Only 0.9% of the Japanese public have received their first Covid shot so far, compared with 2.5% in South Korea, and 48% in the United Kingdom.

On the data front, Japan’s wholesale/producer price index for March rose 1.0% year-over-year.  Trade data comes out early next week.

Street Bytes

--Propelled by fresh signs of economic growth and strong corporate earnings, the Dow Jones and S&P 500 once again finished the week at new record highs, with Nasdaq now just shy of its highwater mark; the results overcoming the setback on the vaccine front with the issues surrounding the Johnson & Johnson shot, as well as rising cases in the U.S., and around the world.

The Dow Jones added 1.2% to 34200, the S&P rose 1.4% to 4185, and Nasdaq was up 1.1%.  The next two weeks will see a flood of earnings, including from the big tech players.

--U.S. Treasury Yields

6-mo. 0.04%  2-yr. 0.16%  10-yr. 1.58%  30-yr. 2.26%

For a second straight week, the bond market shrugged off strong inflation data, seemingly agreeing with the Fed that the spike in prices is “transitory.”

--The International Energy Agency has sharply raised its world oil demand estimate for 2021, pointing to further signs that the global economy is recovering faster than previously expected, particularly in the U.S. and China.

Stronger economic forecasts and “robust” indicators of prompt demand mean global demand will grow 230,000 b/d faster than previously forecast, the IEA said in its latest monthly oil market report published Wednesday.

World oil demand is now expected to expand by 5.7 million b/d in 2021 to 96.7 million b/d, following a collapse of 8.7 million b/d last year, the IEA said.

Supported by a quick vaccine rollout and a massive economic stimulus package, the IEA said it revised up its U.S. demand forecast for the second half of the year by around 365,000 b/d.  Its Chinese oil consumption forecast for 2021 was also raised by 160,000 b/d.

The IEA said OECD industry stocks fell for the seventh consecutive month in February, down 55.8 million barrels, or 2 million b/d, led by a sharp draw in product inventories.

The IEA cautioned that oil prices could yet come under “renewed pressure” in the coming months as world oil supplies are set to ramp up and shift the market from deficit towards balance.  In the U.S., the Energy Information Administration on Wednesday reported a second consecutive substantial drawdown in inventories, which has aided prices.

Separately, the EIA said output in the Permian Basin, the U.S.’s most prolific shale patch, will hit levels not seen since the start of the pandemic, with output reaching 4.466 million barrels in May, the most in a year, with rig counts touching a one-year high.  Total American crude production peaked at over 13 million barrels a day last year before the pandemic hit.

The industry has recovered in the Permian Basin from February’s severe weather shock.

At the end of the week, the price on West Texas Intermediate stood at $63.07, up about $3.70 on the week.

--It was big bank earnings week.  JPMorgan Chase & Co.’s first-quarter results on Wednesday sailed past Wall Street expectations by reporting a nearly 400% increase in quarterly profit.  The gains came from JPMorgan releasing more than $5 billion it had set aside to cover potential coronavirus loan losses that have not materialized, as well as a continued boom in capital-markets activity.

However, its loan book shrank, with the average interest it collects from loans decreasing and its ratio of loans to deposits of 44%, about half what big banks ideally want to see.

JPM CEO Jamie Dimon described the dynamic as a good one, with individuals and businesses ready to start spending and investing again, even if that means banks experience a temporary pause in loan demand.

“The consumer has so much money to pay down their credit card loan, which is good,” he said on a call with journalists, noting that consumers have $2 trillion more in their checking accounts than they did pre-pandemic.  Their balance sheet is in excellent, outstanding shape.  Coiled, ready to go, and they are starting to spend money. That’s not the same as loan demand when the economy is weak.”

JPMorgan expects loan demand to pick up later this year and for deposits to grow further as the Fed keeps expanding its balance sheet, executives said.

The situation is much better than a year ago, when banks were worried about the pandemic causing widespread loan defaults.

JPMorgan’s profit rose to $14.3 billion, or $4.50 per share, in the quarter ended March 31, up from $2.9 billion, or 78 cents a share, a year earlier.  [Excluding the reserve releases, the earnings per share were about $3.31, still well above analysts’ estimates of $3.10.]

JPM’s Corporate & Investment Banking division posted a 46% rise in revenue.  Industry-wide investment banking fees hit an all-time high during the quarter.

The bank’s Consumer & Community Banking unit reported a 6% decline in revenue, as overall credit card balances were down.

--Wells Fargo had its best quarter in a year and a half, posting a profit of $4.74 billion and freeing up more than a billion dollars that had been set aside for potential loan defaults.

The San Francisco-based bank earned $1.05 per share on revenue of $18.06 billion, both surpassing the Street’s forecasts.

The biggest U.S. mortgage lender had net interest income of $8.8 billion, a more than 22% decline from the $11.3 billion in the same period last year.  Although interest rates have ticked up recently, they remain low with the Fed having signaled plans to keep its benchmark borrowing rate near zero until 2023.

The consumer bank released $1.6bn from its loan loss reserves, acknowledging an improving economy amid millions getting vaccinated and governments scaling back pandemic-related business restrictions.  Last year it set aside nearly $4 billion in loan loss provisions.

--Goldman Sachs saw its profits nearly quintuple in the first quarter, driven by a massive surge of revenue from its core investment banking and trading operations.

Goldman had a profit of $6.71 billion, compared to a profit of $1.12 billion a year ago.   Total net revenue was $17.7 billion, compared with $8.74 billion a year earlier. The results reflect the health of the stock and bond markets compared to a year earlier, as markets across the world plunged sharply in March 2020.

In investment banking, Goldman had revenues of $3.57 billion, more than double the $1.74 billion in the year-ago quarter.  Trading revenues rose 60% from a year earlier as well. [68% on equities trading.]

Goldman doesn’t have a significant consumer finance division, or sell mortgages, as compared to its Wall Street counterparts, so it only had a small $70 million benefit to its results from it releasing money from its loan-loss reserves.  The bank is only sitting on $4.24 billion in loan-loss reserves, overall, whereas JPMorgan has $26 billion in reserves.

--Bank of America saw first-quarter earnings and revenue climb year-on-year, topping the Street’s estimates.  Revenue came in at $22.82 billion from $22.77 billion a year earlier, while net income climbed to $0.86 a share compared with $0.40 in Q1 2020.

“While low interest rates continued to challenge revenue, credit costs improved and we believe that progress in the health crisis and the economy point to an accelerating recovery,” said CEO Brian Moynihan.

BofA’s provision for credit losses were a benefit of $1.9 billion after the company released $2.7 billion in the reserves that had been set aside to manage during the pandemic.

--Citigroup’s profits more than tripled in the first quarter, helped by the release of billions of dollars from its loan-loss reserves.

Citi earned a profit of $7.94 billion, well above 2020’s levels and the Street’s forecasts.  The bank had a $2.06bn one-time gain from releasing its loan-loss reserve, reflecting the improving economic outlook.

Citigroup saw lower revenue and interest income in its global banking division, as its customers more aggressively paid down their debts.

Citi has a substantial credit card business and a significant chunk of Americans used their government stimulus payments to pay them down.  Revenues from credit cards fell 18% from a year ago.

Separately, the bank announced it would be slimming down its global consumer banking franchise to focus on four geographic markets: Singapore, Hong Kong, the United Arab Emirates and London.  The change does not impact Citi’s consumer banking operations in the U.S.

--Friday, Morgan Stanley reported earnings for Q1 that doubled over the year before to $2.19 per share, crushing the $1.58 expectation, while revenue surged 66% to $15.7 billion.

Alas, the company announced it suffered a black eye in the Archegos affair, a $911 million hit, after a fund run by it collapsed, but that event is now in the rearview mirror and not a serious risk factor going forward.

MS reported investment banking revenue soared 128%, driven by a spate of SPAC deals and investors’ insatiable appetite for technology and healthcare IPOs. Equity trading revenue was up a more pedestrian 17%.  But fixed income trading net revenue was rose a robust 44%.

MS’s blockbuster acquisition of E*TRADE continued to pay dividends, with net revenue for the Wealth Management segment growing by 47%, primarily die to the addition of E*TRADE.

--Bank of New York Mellon reported year-on-year declines in its first-quarter results today, although the outcome still topped the Street’s expectations as the asset management firm said business momentum is picking up.

Revenue fell 5% to $3.92 billion, with earnings decreasing to $0.97 a share from $1.05 in the same period a year earlier.

“We delivered a strong quarter and continue to see momentum across our businesses, despite the ongoing impact of low interest rates,” Chief Executive Todd Gibbons said in a statement.  “Our business model has proven to be resilient and operating margin was essentially flat at 29%, compared to the first quarter of 2020 when we saw exceptional pandemic-related volumes and volatility.”

Assets under management climbed 23% to $2.2 trillion, with assets under custody or administration jumping 18% to $41.7 trillion.

--BlackRock Inc.’s first-quarter profit beat expectations, as a continued rally in global financial markets and broad-based strength in the asset manager’s businesses helped vault the firm’s assets under management to a record $9.01 trillion.

“The broadness of our platform is really resonating with clients,” BlackRock CEO Larry Fink said in an interview.

Clients, who a few years ago came to BlackRock mainly for its index and fixed income active business, are now looking to the firm for a range of needs including investing in alternatives, active equities, risk management and technology, Fink said.

The firm reported a record $172 billion in net inflows to its various funds during the quarter with strength in its iShares and alternative assets businesses.  Net income rose to $1.2 billion, from $1.03 billion a year earlier.

--On Saturday, China imposed a record $2.75 billion fine on Alibaba amid a crackdown on technology conglomerates, signaling a new era after years of laissez-faire approach.  The penalty was for placing illegal restrictions on its vendors on its shopping sites.

The e-commerce giant has come under intense scrutiny since billionaire founder Jack Ma’s public criticism of the Chinese regulatory system in October.

Alibaba said it accepted the penalty and “will ensure its compliance with determination.”  The fine is more than double the $975 million paid in China by Qualcomm, the world’s biggest supplier of mobile phone chips, in 2015 for anticompetitive practices.

Alibaba CEO Daniel Zhang said on Monday he does not expect any material impact from the change of exclusivity arrangement imposed by China’s regulators, after an anti-trust probe found the firm had abused its dominant market position.

China’s largest e-commerce company will introduce measures to lower entry barriers and business costs faced by merchants on its platforms, Zhang told an online conference of media and analysts.

By announcing the reduction in its service charges to vendors, Alibaba is demonstrating its willingness to move in line with Chinese regulators’ broad demands.  But it is also showing how, despite the company’s hundreds of millions of customers, it is still competing fiercely for merchants’ business against a host of other e-commerce venues in China.

Chinese regulators then ordered Ant Group, a financial affiliate of Alibaba, to become a financial holding company to ease financial oversight amid stepped up scrutiny of technology firms.

In a meeting Monday, the central bank and other financial regulators also ordered Ant to cease anti-competitive behavior in its payments business and improve its risk management and corporate governance, according to a statement on the website of the People’s Bank of China.

The guidance follows a decision by regulators last November to suspend a planned $34.5 billion initial public offering just days before Ant’s trading debut.  Officials cited changes in the regulatory environment.

Ant Group is the world’s largest financial technology company.  It was valued at $150 billion after a 2018 fundraising round, and its valuation later rose to $280 billion ahead of its now ill-fated IPO.

The regulators told Ant to rectify unfair competition in its payments business and reduce the balance of its money-market fund, which at one point was the largest in the world.  It also was ordered to break its information monopoly and to minimize the collection and use of personal data and to stop any illegal credit, insurance and wealth-management activities.

In a statement on its official WeChat social media account, Ant said, “Under the guidance of financial regulators, Ant Group will spare no effort in implementing the rectification plan, ensuring that the operation and growth of our financial-related businesses are fully compliant.”

Ant is one of the two leading companies in the online payments business in China, the other being rival Tencent.  The company says more than 1 billion people use its Alipay service, which offers a slew of functions including bill payments, purchases online and offline and money transfers.

--Coinbase Global Inc. was valued at $86 billion at the end of its highly-anticipated Nasdaq debut on Wednesday, in a choppy day of trading when its valuation went as high as $112 billion.

Coinbase’s stock market debut comes amid a surge in the value of cryptocurrencies which has lured a bunch of mainstream, top-tier firms that have dived into the space.  Coinbase’s stock opened at $381 per share, up 52% from a reference price of $250 per share set on Tuesday, though only marginally above the $343.58 the shares were trading at privately in the first quarter of 2021.  The stock closed Wednesday at $328.28, giving it a fully diluted valuation of $85.78 billion, and finished the week at $344.

By comparison, New York Stock Exchange owner Intercontinental Exchange Inc. has a market cap of around $66 billion.

Founded in 2012, the San Francisco-based firm boasts 56 million users globally and an estimated $223 billion in assets on its platform, accounting for 11.3% of crypto asset market share, regulatory filings showed.

Coinbase was valued at just under $6 billion as recently as September but has surged in line with bitcoin’s gains this year.

Bitcoin hit a record of over $64,000 on Tuesday and has more than doubled in value this year as banks and companies warmed to the emerging asset.  It’s around $62,000 as I go to post.

Coinbase’s share price will be closely correlated to the price of bitcoin over time, if you’re looking for a pure play.

--As much as $1 trillion a year in federal taxes may be going unpaid because of errors, fraud and lack of resources to enforce collections adequately, Internal Revenue Service Commissioner Charles Rettig told lawmakers Tuesday.

Appearing before the Senate Finance Committee, Rettig said much has changed since the IRS last formally published data on the so-called tax gap – the difference between taxes owed and tax collected – using returns from tax years 2011 to 2013.  That reporting, to be updated next year, showed annual losses of $441 billion.

The growth of cryptocurrencies and foreign-source income, as well as outside estimates that suggest a tax gap of $7.5 trillion over the next decade, means past IRS research has almost certainly undercounted the losses.

Sen. Ron Wyden (D-Ore.), the committee’s chairman, called the $1 trillion figure “jaw dropping” as he pushed for additional funding for the agency for audits and other enforcement.  President Biden’s budget proposal calls for a roughly 10% increase for the IRS.

The IRS collected more than $3.5 trillion in taxes in the 2019 fiscal year.  Past estimates from the agency have suggested that it could bring in an additional $5 to $7 in revenue for each added dollar spent on enforcement.

Rettig said the agency was often “outgunned” by corporations and high-income earners.

“We have about 6,500 frontline revenue agents who handle the most complex, sophisticated individual and corporate matters,” he said.  “Substantially, every one of them are dedicated to either high-income individuals, the most egregious cases, or their largest corporations.”

--On the positive side involving tax revenues, a year ago, when New York’s economy was put in a coma, state budget officials braced for the worst.

But a year later, the state Comptroller’s Office reported this week that tax revenues for the fiscal year that just ended fell by only $513.3 million, a less than 3% decline. They clocked in $6.8 billion higher than forecast in May and $3 billion higher than February’s revised estimate.

Wall Street enjoyed its second-most profitable year ever in 2020, according to the Comptroller’s Office, and as trading and investment-banking activities account for 18% of the state’s tax revenue, this is good.

--Amazon.com CEO Jeff Bezos, said in his final shareholder letter as a chief executive, that the company aims to be the best employer and safest place to work on the planet by creating a “better vision” for employees.

“We have always wanted to be earth’s most customer-centric company. We won’t change that,” Bezos said in the letter on Thursday.  “But I am committing us to an addition.  We are going to be earth’s best employer and earth’s safest place to work.”

Amazon workers last week voted against forming a union at an Alabama warehouse. It would have been the first union to represent Amazon employees in the U.S.

“While the voting results were lopsided and our direct relationship with employees is strong, it’s clear to me that we need a better vision for how we create value for employees – a vision for their success,” said Bezos.

Bezos said in early February that he will step down as CEO, effective in the third quarter of this year, to become executive chairman. Andy Jassy, the head of Amazon Web Services, will succeed him in the top post.

--Egypt has seized the container ship that last month blocked the Suez Canal, the vessel’s owner said Tuesday, amid a dispute over how much compensation the country is owed following the weeklong shutdown of the waterway.

The move turns up pressure on Ever Given’s Japanese owner to negotiate a settlement that Egyptian authorities are claiming should be roughly $1 billion for damage to the canal and lost business while the stuck ship blocked the critical artery for global trade.

--TSA checkpoint travel numbers vs. 2019….

4/15…57 percent of 2019 levels
4/14…50
4/13…49
4/12…59
4/11…64
4/10…67
4/9…60
4/8…61

--Delta Air Lines lost $1.2 billion in the first quarter but executives said Thursday that the airline could be profitable by late summer if the budding recovery in air travel continues.

CEO Ed Bastian said ticket sales have been stronger in the last two weeks than at any time since the pandemic hit the U.S. last year. Right now, it’s mostly vacationers booking trips to mountains, beaches and resorts, but he expects business travel to come back by late summer or fall as more Americans are vaccinated against Covid-19.

“It’s clear that our business is turning the corner and we’re moving into an active recovery phase,” Bastian said in an interview.  “We see the business continuing to improve as consumer confidence grows.”

Several airlines have reported that bookings began to pick up in February and gained speed in March. Delta’s bookings doubled from January to March, with U.S. leisure sales recovering to 85% of pre-pandemic levels.

The only threat Bastian sees to the recovery is a resurgence of the virus.  Delta sees a path to profitability in the September quarter, assuming the U.S. reaches so-called herd immunity and slows the spread of Covid by late spring or early summer.

As bookings rise, Delta on May 1 will stop blocking middle seats, a policy it adopted in the early days of the pandemic.

Bastian expects corporate-account customers to return in large numbers by late summer or early fall.  International travel will come back more slowly.

In the first quarter, Delta’s revenue fell 60% from a year ago, to $4.15 billion, topping analysts’ expectation of $3.94bn.  It expects Q2 revenues to be down by about 50% to 55% vs. Q2 2019 levels.

--In line with the above, American Airlines Group said Wednesday it expects to fly over 90% of its domestic seat capacity and 80% of its international seat capacity this summer, compared with 2019, due to strong demand.

The airline will operate over 150 new routes this summer. There will be 17 new domestic routes available for sale beginning on April 19 and eight new routes to Orlando, Fla., on June 5.

American also said it will operate more wide-body aircraft from Miami to meet the demand in Latin America and the Caribbean.

--Boeing Co. announced today it had found potential electrical flaws in two additional areas of the 737 MAX’s cockpit, a week after a similar manufacturing defect prompted a temporary flying halt for recently delivered jetliners.

The maintenance for the new issue isn’t expected to be time-consuming or complicated, requiring only basic hardware such as nuts and bolts, according to a MAX customer briefed by Boeing.

But Boeing and the Federal Aviation Administration have to come up with an action plan before the repairs are made.

--French regulators voted late on Saturday to abolish domestic flights on routes that can be covered by train in under two-and-a-half hours, as the government seeks to lower carbon emissions even as the air travel industry reels from the pandemic.

The measure is part of a broader climate bill that aims to cut French carbon emissions by 40 percent in 2030 from 1990 levels.

The vote came days after the state said it would contribute $4.76 billion to the recapitalization of Air France, more than doubling its stake in the flag carrier, to shore up its finances after over a year of Covid-19 travel curbs.

There are a number of votes to take place in the National Assembly before the domestic flight measure becomes law.

--Dell Technologies Inc. said Wednesday it would take a long-anticipated step and spin off its stake valued at $52 billion in cloud-software company VMWare Inc., in a deal the PC-maker said would strengthen its financial position as it looks at new markets and ways to reach clients revamping their digital strategies.

Dell is paying a special cash dividend to its shareholders, with Dell holding roughly an 81% stake in VMWare.  The company plans to pay down debt with its net cash from the dividend.

Dell said the deal would bolster its capital structure as it looks to take advantage of higher spending on PCs and technology infrastructure and clients’ longer-term efforts to remake their businesses using new computing tools and systems.

--Microsoft said on Monday it would buy artificial intelligence and speech technology firm Nuance Communications Inc. for about $16 billion, as it expands cloud solutions for healthcare customers.  The deal comes after the companies partnered in 2019 to automate clinical administrative work such as documentation.  It shows Microsoft’s ambition to extend its leadership into an industry where digital transformation has picked up speed during the pandemic.

“This acquisition brings our technology directly into the physician and patient loop, which is central to all healthcare delivery.  The acquisition will also expand our leadership in cross-industry enterprise AI and biometric security,” Microsoft CEO Satya Nadella said on an investor call.

Microsoft’s offer represented a premium of nearly 23% to Nuance’s closing price last Friday.

Nuance, headquartered in Burlington, Mass., is known for pioneering speech technology and helping launch Apple Inc.’s virtual assistant, Siri.  The company is now focused on the healthcare field, serving 77% of U.S. hospitals, providing intelligent solutions including clinical speech recognition, medical transcription and medical imaging.

--The CEO of Emergent BioSolutions, the troubled manufacturer at the heart of Johnson & Johnson’s coronavirus vaccine production problems, was nonetheless paid $5.6 million in total compensation in 2020.  Robert Kramer received $893,000 in salary, a $1.2 million bonus, $2.1 million in stock awards, and $1.4 million in stock options.

The company said in its filing for investors that Emergent’s response to the pandemic last year played a role in Kramer’s bonus, citing the expansion of its contract manufacturing business and other advances, including a successful bond offering.  It had a 41 percent increase in revenue in 2020.  Kramer rose to the top job at the company in 2019 after serving in a number of other high-level executive jobs there since 2012.

As a federal contractor specializing in biodefense and emergency response, Emergent’s 2020 financial success was fueled in large part by a burst of federal spending to fight the pandemic.

It received $628 million in a federal contract to upgrade and reserve capacity.  It also signed vaccine manufacturing agreements with Johnson & Johnson and AstraZeneca at its Baltimore manufacturing facility as those companies raced to develop and produce vaccines to fulfill government orders.

But then problems emerged after Emergent ruined a large volume of J&J’s raw vaccine substance – representing up to 15 million doses.  Federal officials said it was contaminated with ingredients from the AstraZeneca vaccine.

The cascade of negative events occurred after Kramer received his 2020 compensation.  But government officials had been warning of problems at the company all last year, including employees not being adequately trained, and testing procedures not being properly followed.

--Uber Technologies reported record monthly bookings for March as Covid-19 vaccination rates accelerated across the U.S.

The company said Monday that it received more bookings in March than in any single month since it was founded in 2009.  Uber’s mobility business, which was decimated during the pandemic and includes its core ride-hailing operations, had its best month since March 2020.  Meanwhile, its food-delivery unit posted record monthly bookings, with business more than doubling year-over-year.

Rival Lyft Inc. said last month that its weekly rides bookings in March had rebounded to pre-pandemic levels.

But both companies face a daunting challenge: not enough drivers to meet surging demand. The companies don’t employ their drivers, relying instead on gig workers to ferry their passengers.  As demand for Uber and Lyft rides plummeted during the pandemic, many gig workers turned to work for grocers and food-delivery providers, among other businesses that surged during the health crisis.

The latest round of stimulus checks may also have adversely affected driver supply.

--NASA said on Friday it has awarded billionaire Elon Musk’s private space company SpaceX with a $2.9 billion contract to build a spacecraft to fly astronauts to the moon, picking it over Jeff Bezos’ Blue Origin and defense contractor Dynetics Inc.

Bezos had partnered with Lockheed Martin Corp., Northrop Grumman and Draper.  It’s a big loss for him, especially as he is now more focused on his space venture after announcing he was stepping down as CEO at Amazon.com.

Musk has outlined an ambitious agenda for SpaceX and its reusable rockets, including landing humans on Mars.  But in the near term, SpaceX’s main business has been launching satellites for Musk’s Starlink internet venture, and other satellites and space cargo.

Unlike the Apollo lunar landings from 1969 to1972, NASA is now gearing up for a long-term presence on the moon that it envisions as a steppingstone to an even more ambitious plan to send astronauts to reach Mars.

NASA in December designated 18 astronauts for possible participation in planned NASA missions to return to the moon’s surface, with a target date of 2024.

Meanwhile, Musk has had problems in getting the Starship prototype rocket to land safely after various test launches.

--Bernie Madoff died.  He was 82.  At one time he was a senior statesmen on Wall Street who became the face of the financial crisis of 2007-09 for running the largest and most devastating Ponzi scheme in financial history. 

Madoff was serving a 150-year prison sentence and was not permitted early release last year when he said in a filing he had less than 18 months to live after entering the final stages of kidney disease.

In phone interviews with the Washington Post at the time, Madoff expressed remorse for his misdeeds, saying he had “made a terrible mistake.”

Madoff’s enormous fraud began among friends, relatives and country club acquaintances in Manhattan and on Long Island – a population that shared his professed interest in Jewish philanthropy – but it ultimately grew to encompass major charities like Hadassah, universities like Tufts and Yeshiva, institutional investors and wealthy families in Europe, Latin America and Asia.

Madoff produced elaborate financial statements and a deep reservoir of trust from his investors and regulators.

But it was the financial crisis of 2008 that proved his undoing.  Hedge funds and other institutional investors, pressured by demands from their own clients, began to take hundreds of millions of dollars from their Madoff accounts. By December 2008, more than $12 billion had been withdrawn, and little fresh cash was coming in to pay redemptions.

Faced with ruin, Madoff confessed to his two sons that his supposedly profitable money-management firm was “one big lie.”  They reported his confession to law enforcement, and the next day, Dec. 11, 2008, he was arrested at his Manhattan penthouse.

A court-appointed trusted has recovered more than $13 billion of an estimated $17.5 billion that investors put into Madoff’s business. At the time of his arrest, fake account statements were telling clients they had holdings worth $60 billion.

A former chairman of the Nasdaq stock market, he attracted a devoted legion of investment clients – from Florida retirees to celebrities such as director Steven Spielberg, actor Kevin Bacon and Hall of Fame pitcher Sandy Koufax.  Mets fans are all too familiar with the ties the team’s former owners had to Madoff, which crippled the franchise for years.

He died in federal prison in Buttner, N.C., and has gone straight to hell.

Foreign Affairs

Iran: An Atomic Energy Organization of Iran spokesman said an “accident” occurred in the electricity distribution network at the Natanz nuclear facility, the country’s main uranium enrichment facility.

There were reports from Israeli media it was a cyberattack.  Natanz has been targeted by Israeli cyber operations in the past, including the 2010 Stuxnet virus attack in a joint operation with the United States that destroyed over 1,000 centrifuges. And then there was a 2020 explosion at the plant, also supposedly the work of Israel.  Iran vowed revenge.

There was also talk of an explosion Sunday.

The day before, Iranian President Hassan Rouhani announced that Iran had begun injecting uranium hexafluoride gas into advance centrifuges at Natanz.

The bottom line was that Iran seemed to still be active at the site, regardless of what the ‘incident’ really was.  Iran’s last word was that a number of centrifuges were destroyed and there was a temporary electrical blackout.

Israeli Prime Minister Benjamin Netanyahu has warned multiple times in the past week that Israel would defend itself against Iranian threats, but the state has not formally commented on Sunday’s Natanz incident.  And to me it is totally unclear what actually happened.

There was an obvious connection between the Natanz incident and the following, Israel attempting to torpedo the discussions. 

To wit:

Iran and global powers resumed talks on Thursday to rescue the 2015 nuclear deal in an effort potentially complicated by Tehran’s decision to ramp up uranium enrichment and what it called Israeli sabotage at its nuclear site.  Casting a shadow over the Vienna talks, Tehran on Tuesday announced its decision to enrich uranium at 60% purity, a big step closer to the 90% that is weapons-grade material, in response to Israel’s actions against its key Natanz facility on Sunday.

Calling the move “provocative,” the United States and the European parties to the deal warned that Tehran’s increasing enrichment was contrary to efforts to revive the accord abandoned by Washington three years ago.

Tehran’s refusal to hold direct talks with the United States forced European intermediaries to shuttle between separate hotels in Vienna last week when Iran and other signatories – Britain, China, France, Germany and Russia – held what they described as a first round of “constructive’ negotiations.

Tehran has repeatedly said that all sanctions must be rescinded first, warning that it may stop negotiations if the measures are not lifted. Washington wants Iran to reverse the breaches of the deal that it made in retaliation for tough sanctions imposed by former President Donald Trump.

“Iran’s seriousness of purpose in pursuing diplomacy was tested in the three years since Trump withdrew from the nuclear accord,” Iranian Foreign Minister Mohammad Javad Zarif said on Twitter.  “Iran – by remaining in the deal – passed with flying colors.  The Biden administration, however, has only shown a commitment to Trump’s maximum pressure.”

The UN nuclear watchdog said on Wednesday that Iran has “almost completed preparations” to start enriching uranium to 60% purity at an above-ground plant at Natanz and plans to add 1,024 first-generation IR-1 centrifuges underground there.

“The Agency today verified that Iran had almost completed preparations to start producing UF6 enriched up to 60% U-235 at the Natanz Pilot Fuel Enrichment Plant,” the International Atomic Energy Agency said in a statement, referring to uranium hexaflouride, which is the form in which it is fed into the centrifuges.

Friday, the speaker of Iran’s parliament said Tehran had successfully enriched 60% uranium.  “I am proud to announce that at 00:40, Iranian scientists were able to produce 60% enriched uranium,” Mohammad Qalibaf said on Twitter.

Afghanistan:  In a speech Wednesday, President Biden announced, “It is time to end America’s longest war. It is time for American troops to come home.”

“While we will not stay involved in Afghanistan militarily, our diplomatic and humanitarian work will continue.”

“We will continue to support the Government of Afghanistan.”

A senior administration official said: “After a rigorous policy review, President Biden has decided to draw down the remaining troops from Afghanistan and finally end the U.S. war there after 20 years.

“We will begin an orderly drawdown of the remaining forces before May 1 and plan to have all U.S. troops out of the country before the 20th anniversary of 9/11.”

All NATO troops will depart at the same time. 

The administration plans to leave “sufficient” forces in the region to conduct counterterrorism missions and check the Taliban but those decisions have not been finalized.  Such a decision will come from the Pentagon and not necessarily that quickly.

The decision was welcomed by veterans’ groups on both sides of the political spectrum, who often advocated together for an end to the military’s presence in Afghanistan.

“While we still believe a full withdrawal by the May 1st deadline in the Doha agreement best serves America’s interests, we are pleased to hear President Biden is firmly committed to bringing our troops home within the next few months.  America has more pressing priorities at home and elsewhere, and President Biden must keep his promise to end our endless war in Afghanistan,” said Dan Caldwell, senior adviser to Concerned Veterans for America, a conservative-leaning veterans group.

Security analysts, though, have long warned a withdrawal could cause Afghanistan to fall back into Taliban control, and cost gains made in women’s rights and self-governance, which is weighed  against the long-term cost on U.S. service members and taxpayers on the 20-year military engagement.

Sen. Jim Inhofe, R-Okla., the ranking member of the Senate Armed Services Committee, called Tuesday’s announcement “dangerous.”

“No one wants a forever war, but I’ve consistently said any withdrawal must be conditions-based.  Arbitrary deadlines would likely put our troops in danger, jeopardize all the progress we’ve made, and lead to civil war in Afghanistan,” Inhofe said.

The departure also raises questions about the welfare of thousands of locals who have worked with U.S. forces as translators or in other capacities over the last two decades, and what the U.S. is willing to do to protect them as forces depart.

David Petraeus, former commanding general of U.S. and NATO troops in Afghanistan and former CIA director, harshly criticized President Biden’s decision, saying he worries that the “endless war” will only worsen.

“I’m really afraid that we’re going to look back two years from now and regret the decision,” Petraeus said on a call promoting retired admiral William McRaven’s new book (McRaven having overseen the 2011 mission to find Osama bin Laden).

“I understand the frustrations very much that have led to the decision,” said Petraeus. “Nobody wants to see a war ended more than those who have actually fought it, and been privileged to command it and also write the letters of condolence home every night to America’s mothers and fathers.  But I think we need to be really careful with our rhetoric, because ending U.S. involvement in an endless war doesn’t end the endless war.  It just ends our involvement. And I fear that this war is going to get worse.”

Petraeus said he worries the Taliban will go on the offensive, ungoverned spaces will grow, and the terrorist organizations that use them will flourish.  “I don’t see how you withdraw and maintain the capabilities that one would like to have there still.”

“Frankly, we’re also going to lose that platform that Afghanistan provides for the kind of regional counterterrorism campaign,” he said.  “I’m really afraid that we’re going to look back two years from now and regret the decision and just wonder if whether we might not have sought to manage it with a modest, sustainable, sustained commitment that could have ensured that al-Qaeda and the Islamic State would not re-establish sanctuaries from which they undoubtedly will try to figure out over time how to conduct operations that go after the us, our allies, and our partners.”

McRaven said any decision incurs risk.  He added that if the U.S. military is still tasked to respond to terrorism inside Afghanistan, he hopes the U.S. will retain the necessary capabilities in the country and the region.

“If you gave me the resources, I could figure out how to do this,” McRaven said, adding that he has spoken to key players close to the president about it.

“I will tell you from all my conversations with folks that are kind of in the inner circle, they have considered all of those problems,” he said.  “All of the warts have been exposed to the president.  He understands the risk that he’s taken.”

“Now, are we going to need some people on the ground?  Yeah, we are,” McRaven said.  “We’re going to need at least some small footprint at a Bagram [Air Base].  We’re going to need a small footprint, obviously, in the capital. We’re going to need intelligence resources. I think the administration will figure out how to manage that.”

Editorial / Washington Post

“President Biden faced a painful dilemma in Afghanistan when he took office.  Having committed the United States to removing all its troops from the country by May 1, then-President Donald Trump reduced the force to a bare minimum by January, even though Taliban insurgents had failed to fulfill their side of the withdrawal deal.  Mr. Biden’s choice was to leave U.S. forces in place, risking renewed conflict with the Taliban, or go forward with the pullout – even though it could lead to the collapse of the Afghan army and government.

“After a brief and seemingly halfhearted effort at diplomacy, Mr. Biden has decided on unconditional withdrawal, a step that may spare the United States further costs and lives but will almost certainly be a disaster for the country’s 39 million people – and, in particular, its women.  It could lead to the reversal of the political, economic and social progress for which the United States fought for two decades, at a cost of more than 2,000 American lives and hundreds of billions of dollars.  And, according to the U.S. intelligence community and a study commissioned by Congress, it could allow al-Qaeda to restore its base in Afghanistan, from which it launched the attacks of Sept. 11, 2001.

“The bargain struck by the Trump administration with the Taliban required it to break all ties with al-Qaeda and other terrorist groups.  According to UN and U.S. military officials, it has not done so. Nor has it been willing to negotiate seriously with the Afghan government about a peaceful settlement.  It rejected a Biden administration proposal for a conference in Turkey to jump-start those talks, and it ridiculed U.S. proposals for a power-sharing arrangement with the government, as well as for new elections.  The group’s leaders project the conviction that they will easily rout the government militarily once the United States leaves, and restore a harsh ‘Islamic emirate’ such as the one they fashioned in the 1990s.

“U.S. officials offer various rationalizations for abandoning the elected government of Ashraf Ghani to what will be, at best, a bloody fight for survival.  Mr. Ghani also has resisted U.S. peace proposals, and his rule has been feckless. A strategy of leaving troops in the country in an effort to force the Taliban to compromise could extend the U.S. commitment for years without achieving a durable peace.  Perhaps, too, some officials say hopefully, the Taliban will moderate its denial of women’s rights and other repressive policies to preserve international aid, without which Afghanistan’s economy would implode.

“If that assessment proves wrong, Mr. Biden’s decision to remove U.S. forces by the symbolic date of Sept. 11, 2021, may simply result in the restoration of the 2001 status quo, including terrorist bases that could force a renewed U.S. intervention.  At a minimum, it will mean an abandonment of those Afghans who believed in building a democracy that guaranteed basic human rights – and the nullification of the sacrifices of the American servicemen who were killed or wounded in that mission.  Mr. Biden has chosen the easy way out of Afghanistan, but the consequences are likely to be ugly.”

Editorial / Wall Street Journal

“The White House announced Tuesday that President Biden plans to withdraw all U.S. troops from Afghanistan by Sept. 11. The symbolic but arbitrary date shows the decision is driven less by facts on the ground than a political desire that is also a strategic gamble.  History suggests U.S. interests will suffer.

“The target date 20 years to the day after the 9/11 attacks is meant to underscore that at long last the Afghan war will end. But of course it won’t.  The country will see its civil war escalate, as the Taliban seek to retake Kabul and reestablish the Islamic Emirate of Afghanistan. If the country again becomes a sanctuary for al-Qaeda and Islamic State, don’t be surprised if U.S. troops have to return as they did in Iraq after Barack Obama’s 2011 withdrawal led to the rise of ISIS.

“Mr. Biden inherited a bad situation as President Trump had negotiated a May 1 withdrawal date. As the U.S. drew down its forces, the Taliban failed to cut ties with al-Qaeda and have captured military bases around the country.

“Today some 10,000 foreign forces remain, including as many as 3,500 Americans.  A U.S. departure means NATO and other partner troops will leave too.  The U.S. says it will stay diplomatically engaged, but the withdrawal almost surely means the peace talks between the Taliban and Kabul will fail. The Taliban will feel no pressure to make concessions, and Afghan President Ashraf Ghani has no reason to negotiate his own execution.

“Whether the U.S.-backed government can survive is unknowable, though it’s unlikely to have much influence outside Kabul. The Afghan army and police may lose confidence without foreign backing, and the Northern Alliance will reform as protection against the Taliban.

“John Sopko, the Pentagon’s special inspector general for Afghanistan reconstruction, said last month that without U.S. support the government ‘probably would face collapse.’  The intelligence community’s 2021 Threat Assessment, published Tuesday, suggests that ‘the Afghan Government will struggle to hold the Taliban at bay if the coalition withdraws support.’

“As the Taliban and militias around the country gain more influence amid a governing vacuum, millions will lose access to basic services and humanitarian relief.  Hard-fought progress for women will vanish.  Iran will become more influential in Herat, and Pakistan, which has supported the Taliban for years, will face a reckoning as Islamists are strengthened.

“But the U.S. invaded in 2001 mainly to destroy al-Qaeda safe havens and remove the group’s sponsors from power.  If much of Afghanistan again becomes a security vacuum, al-Qaeda and ISIS will have a freer hand to plot terrorist attacks against the U.S.

“In January the U.S. Treasury said al-Qaeda was ‘gaining strength in Afghanistan while continuing to operate with the Taliban under the Taliban’s protection.’  It added that the group ‘capitalizes’ on its relationship with the Taliban through its network of mentors and advisers who are embedded with the Taliban, providing advice, guidance, and financial support.’

“Mr. Biden’s advisers say that while the Taliban is a problem, the U.S. can still strike terrorists with standoff weapons and can better use limited resources to deter China and Russia.  The U.S. will maintain some counterterrorism capabilities.  But the rise of ISIS in Iraq showed the limits of what can be done without a physical presence. Congress should ask some hard questions of U.S. military leaders, who need to level with Americans about the security risks of withdrawal.

“As for Beijing and Moscow, the message they receive may be the opposite of what Mr. Biden intends.  They may see U.S. withdrawal as a sign that Mr. Biden is keen to retreat from America’s global commitments.

“The tragedy is that there is a reasonable alternative to withdrawal. The bipartisan Afghanistan Study Groups said this year that 4,500 American troops would be enough ‘for training, advising, and assisting Afghan defense forces; supporting allied forces; conducting counterterrorism operations; and securing our embassy.’  That’s not a commitment that prevents the U.S. from dealing with other adversaries.

“In the short term, many Americans will welcome Mr. Biden’s retreat as the end of a ‘forever war.’  But the President’s exit means he will have to take responsibility for what happens next.  We hope it doesn’t betray the great sacrifices so many have made.”

David Ignatius / Washington Post

“Afghanistan nagged at Joe Biden 10 years ago. He thought the Pentagon was muscling a new president, Barack Obama, into adding more troops for an unwinnable war.  He believed the United States’ interests in Afghanistan should be focused on preventing another attack against the homeland.

“This week, as president himself, Biden decisively reversed the choices made a decade ago and decided to withdraw all troops by Sept. 11, the 20th anniversary of the ghastly al-Qaeda attacks that skewed U.S. foreign policy for two decades.  It’s a gutsy move because the price of being wrong is enormous.

“Military advisers, now as a decade ago, have been warning Biden of the dangers.  Intelligence analysts predict that civil war may quickly erupt, and the Kabul government may collapse.  They predict that al-Qaeda and other terrorist groups could reestablish havens within two years.  They fear that Islamist militants around the world, who have been on the defensive since the defeat of the Islamic State, will be emboldened by what the Taliban will claim as a victory.

“Many military leaders have been urging that Biden announce a conditions-based withdrawal. Biden, in the end, rejected that course, deciding that linking withdrawal to conditions on the ground, in the words of a senior administration official who briefed reporters today, ‘is a recipe for staying in Afghanistan forever.’

“Biden sometimes comes across as a genial gaffer, pliable in the way of a career politician. But Tuesday’s announcement shows that he is also a stubborn and resolute man.  Friends say he was bruised by the Afghanistan battles of a decade ago and took away some grudges.  When convinced he’s right, he’s prepared to take big risks – as he has this week.

“The military, for all its worries about withdrawal, has hated the meat grinder of Afghanistan.  Most of today’s Army and Marine commanders have fought there, and many of their sons and daughters have, too.  They share Biden’s desire to get the hell out.  But that’s checked by a feeling that the only thing that’s worse than remaining in what seems an unwinnable stalemate is pulling out troops – and then having to go back in.

“That’s what happened in Iraq after the withdrawal of U.S. forces in 2011. They were back five years later, dealing with the slaughterhouse that was the Islamic State. And if Biden was right about Afghanistan 10 yeas ago, he was dead wrong about getting out of Iraq, which he also strongly advocated.

“That’s the awful danger of this decision.  Sometimes cutting the knot and removing U.S. troops opens the way for peace; more often, in recent years, it has been a prelude to greater bloodshed.

“The downside is easy to imagine: a spiral of violence in which provincial capitals fall, one by one, leading to a deadly battle for Kabul – a fight in which the people who believed most in the United States intervention will be at greatest risk, and pleading for help. Closing our eyes and ears to that catastrophic situation – turning away from the desperate appeals, especially from the women of Afghanistan, who fear new oppression – will require cold hearts and strong stomachs.

“Biden decided this week that Afghanistan’s fate, in the end, will be determined by its people. Those who suspect that the country will quickly tumble back into the Middle Ages and primitive version of Islam are wrong, I suspect. The years of war have modernized Afghanistan.  It’s now a richer, more urban country, connected by modern communications.  People who gained their freedom in the two decades under a U.S. umbrella won’t give it up easily.

“The real test of Biden’s policy is whether the core national interest he has embraced – of limiting U.S. involvement in Afghanistan to preventing another 9/11-type attack on the homeland – can be achieved without U.S. troops on the ground.

“Officials have been arguing this question back and forth for weeks. Can the CIA maintain a clandestine force in Afghanistan that’s strong enough to operate against al-Qaeda and other terrorist groups?  Will drones be effective, if they must now be based in the Persian Gulf, with long flight times to Afghanistan and much shorter periods over potential target areas?  We don’t know the answers. Biden is rolling the dice.

“Presidents have a few moments in office where they must make gut decisions about the nation’s security. Because the future is unknowable, a commander in chief must trust his instincts.  Fred Charles Ikle titled a book about ending the quagmire of Vietnam, ‘Every War Must End.’  Now that Biden has made his choice, he must pray that the troops he is bringing home will never have to go back.”

Ashraf Ghani, President of Afghanistan, responded to the withdrawal announcement: “The Islamic Republic of Afghanistan respects the U.S. decision and we will work with our U.S. partners to ensure a smooth transition.  As we move into the next phase in our partnership, we will continue to work with our U.S./NATO partners in the ongoing peace efforts. Afghanistan’s proud security and defense forces are fully capable of defending its people and country, which they have been doing all along, and for which the Afghan nation will forever remain grateful.”

Zabihullah Mujahid, spokesman, The Taliban: “The Islamic Emirate of Afghanistan seeks the withdrawal of all foreign forces from our homeland on the date specified in the Doha Agreement. [Ed. May 1.]  If the agreement is adhered to, a pathway to addressing the remaining issues will also be found. If the agreement is breached and foreign forces fail to exit our country on the specified date, problems will certainly be compounded and those who failed to comply with the agreement will be held liable.”

Senator Jeanne Shaheen (D-N.H.): “I’m very disappointed in the President’s decision to set a September deadline to walk away from Afghanistan.  Although this decision was made in coordination with our allies, the U.S. has sacrificed too much to bring stability to Afghanistan to leave without verifiable assurances of a secure future.

“It undermines our commitment to the Afghan people, particularly Afghan women.”

Senator Lindsey Graham (R-S.C.): “What do we lose by pulling out?  We lose that insurance policy against another 9/11.  There’s no great outcomes, but this is the worst possible outcome – to pull out and hope that things will turn out well.  With all due respect, President Biden, you have not ended the war.  You have extended it.”

CIA Director William Burns, in congressional testimony: “When the time comes for the U.S. military to withdraw, the U.S. government’s ability to collect and act on threats will diminish. That’s simply a fact.”

China: Taiwan President Tsai Ing-wen told a visiting delegation of former senior U.S. officials on Thursday the Chinese military’s activities have threatened regional peace and stability.  Former Senator Chris Dodd and former Deputy Secretaries of State Richard Armitage and James Steinberg were sent to Taipei at President Biden’s request as a signal of the U.S. commitment to Taiwan and its democracy, which ticked off Beijing.

China warned on Tuesday it was determined to stop Taiwan getting close to Washington with the use of military action, prior to the visit by the American officials.

A Chinese government official, Ma Xiaoguang, said the recent deployment of the largest fleet of warplanes to Taiwan’s air defense identification zone (ADIZ) was to tell Taiwan that moving closer to the U.S. to seek independence would fail.

Beijing sent 25 warplanes into Taiwan’s ADIZ on Monday, including 18 fighter jets, four bombers and two anti-submarine warfare planes, along with airborne early warning and control aircraft.

It was the biggest ever incursion by People’s Liberation Army warplanes into the ADIZ.

In Hong Kong, media tycoon Jimmy Lai was sentenced to 14 months in prison for his role in two unauthorized assemblies that took place during 2019’s anti-government protests, while four former opposition lawmakers who joined one or both of the demonstrations were also sent to prison.

As he entered the court on Friday, dissident Martin Lee, who helped launch the city’s largest opposition Democratic Party in the 1990s and is often called the former British colony’s “father of democracy,” said: “I feel completely relaxed, I’m ready to face my sentence.”  Lee was given a suspended 11-month sentence.

Lai, the Apple Daily founder, 73, and Lee, 82, were charged alongside seven former lawmakers with organizing and taking part in an unauthorized assembly by turning an approved gathering, attended by some 300,000 people, into an illegal procession on August 18, 2019.

The seven were jailed for between eight and 18 months, respectively, for the first march but the sentences imposed on three of them were suspended.

On a different matter, Beijing warned that it might take action in response to Japan’s decision to dump radioactive water from the wrecked Fukushima nuclear plant into the sea, adding to already strained ties between the two neighbors.

China’s foreign ministry on Tuesday blasted the Japanese government for being “extremely irresponsible” in its decision to release 1 million tons of wastewater into the Pacific Ocean in two years, a decision that has prompted fierce opposition from the local fishing industry as well as neighboring countries, including South Korea, and environmental groups.  However, the United States said the approach was acceptable.

Japanese Prime Minister Yoshihide Suga told a cabinet meeting on Tuesday that the decision, long delayed by public opposition and safety concerns, was the “most realistic option.”  This comes a decade after the worst nuclear disaster since Chernobyl was triggered by a huge earthquake and tsunami that ripped through northeastern Japan in 2011.

The plant’s operator, Tokyo Electric Power Company Holdings Inc., and government officials say tritium, a radioactive material that poses little risk to human health in low concentrations, cannot be removed from the water.  Other more radioactive materials, including strontium and caesium, can be eliminated from the water before its release.  The work to release the water will begin in about two years, the government said, and the whole process is expected to take decades.

Relations between China and Japan have been strained in recent months with Tokyo being forced to postpone its Olympics last summer because of Covid-19, first reported in China, while Tokyo has voiced its concern over alleged human rights violations in Hong Kong and Xinjiang, as well as China’s passage of a law allowing its coastguard to fire on foreign vessels.

Lastly, U.S. Secretary of State Antony Blinken said it was “premature” to discuss a boycott of the Beijing-hosted Winter Olympics in 2022, but that the U.S. would take “concrete actions” to ensure it was not using products made in Xinjiang over its human rights abuses there.

In an interview on NBC’s “Meet the Press,” Blinken said: “We need to be looking at products that are made in that part of China to make sure that they’re not coming here; but we also have to make sure that we are dealing with all of our interests, and what is the best way to effectively advance our interests and our values,” Blinken said.

“We have to be able to deal with China on areas where those interests are implicated and require working with China, even as we stand resolutely against egregious violations of human rights or, in this case, acts of genocide.”

North Korea:  The Biden administration has messaged North Korea that it is reviewing U.S. policy and that it “will be prepared to engage,” but Pyongyang hasn’t responded yet.

David Ignatius / Washington Post

“Biden’s approach to foreign policy seems to be solving one problem at a time.  He decided to withdraw U.S. troops from Afghanistan, ending an almost 20-year headache at some risk to the homeland, but an enormous relief to a war-weary country.  He’s begun addressing Iran, seeking a ‘compliance for compliance’ deal that would reimpose limits on its nuclear program and ease U.S. sanctions. And he’s trying to balance penalties against Russia with diplomacy, through a proposed summit with President Vladimir Putin.

“Lowering expectations on what’s achievable now with North Korea makes sense, but it’s not a policy. Biden needs a formula that balances competing interests – tough enough to bolster Japan, but not so aggressive that it frightens South Korea.  Just matching Trump’s success in getting North Korea to stop its nuclear testing would be an achievement.

“North Korea seems to be in the ‘too hard’ folder for now. But one thing we’ve learned about Kim is that he doesn’t like to be ignored for long.”

Japanese Prime Minister Yoshihide Suga and President Biden agreed in their talks at the White House today to insist that Pyongyang abide by UN resolutions on its nuclear and missile programs.

The two also reaffirmed the importance of peace and stability in the Taiwan Strait.

Russia/Ukraine: The Biden administration imposed a raft of new sanctions on Russia, in retaliation for alleged misconduct including the SolarWinds hack and efforts to disrupt the U.S. election.

The sanctions reflect an attempt to balance the desire to punish the Kremlin for past misdeeds but also to limit the further worsening of the relationship, especially as tensions grow over the military buildup near Ukraine.  The U.S. is expelling 10 Russian officials and diplomats from the country, some of whom are known spies.

Regarding Ukraine, NATO Secretary-General Jens Stoltenberg called on Russia on Tuesday to withdraw troops that the alliance says Moscow is massing on Ukraine’s borders, ahead of an emergency meeting of allied foreign and defense ministers.

“In recent weeks Russia has moved thousands of combat-ready troops to Ukraine’s borders, the largest massing of Russian troops since the illegal annexation of Crimea in 2014,” Stoltenberg said.  “Russia must end this military build-up in and around Ukraine, stop its provocations and deescalate immediately.”

Russian Defense Minister Sergei Shoigu was cited by news agencies as saying on Tuesday that Russia is taking measures to respond to what it calls threatening military action by NATO, which is laughable.

Editorial / Washington Post

“President Biden pledged he would end former President Donald Trump’s inexcusable refusal to hold Russia accountable for intervening in U.S. elections, hacking government agencies and, quite possibly, sponsoring attacks on U.S. soldiers and diplomats.  On Thursday, Mr. Biden acted – in a distinctly measured way.  The White House announced the expulsion of 10 Russian diplomats and sanctions on a number of companies and individuals. But it did not target the foundations of Vladimir Putin’s power, and so did less than it could have to deter Mr. Putin’s malign activities.

“The administration called the new sanctions ‘sweeping,’ and compared with the grudging steps previously taken by Mr. Trump, they were.  But punches were pulled.  U.S. banks were banned from purchasing ruble-denominated Russian debt, but only in the primary market; other international investors will likely still buy Russian bonds knowing they can be resold to U.S. institutions.  Six Russian cyber firms were targeted, all of which have close ties to the military or intelligence agencies.  But Russian energy and mineral firms that bring in the bulk of the country’s foreign earnings were left untouched – as were the several dozen oligarchs who prop up the regime and manage Mr. Putin’s personal wealth.

“The administration did not respond at all to the most serious allegations concerning Russia: that it paid bounties for the killing of U.S. soldiers in Afghanistan, and sponsored the mysterious attacks that seriously injured U.S. diplomats and spies in Moscow, Havana and China. Officials explained they had only low-to-moderate confidence about the Afghanistan operation, while CIA Director William J. Burns told Congress Wednesday he was still seeking to ‘get to the bottom’ of the injuries of his officers and diplomats. The lack of any response, if it persists, will be glaring….

“Perhaps Mr. Putin will react to Mr. Biden’s relative restraint with some of his own.  If he pulls back troops from Ukraine and frees Mr. Navalny, as the United States and its allies have called for, the administration’s initiative will be judged a success.  If the Russian leader shrugs off these measures that have no effect on his power base, and continues seeking to disrupt the U.S. economy, political system and alliances, the Biden administration will have to be ready with fresh sanctions – ones with more bite than bark.”

Editorial / Wall Street Journal

“China poses the greatest threat to U.S. national security, but that doesn’t mean other adversaries should get a pass. Credit then to President Biden for imposing costs on Russia over a wide range of malfeasance.

“Sanctions are often a half-measure, but some of the retaliatory actions announced by the Biden Administration Thursday will have serious consequences.  Most important is a ban on American financial institutions purchasing new bonds from the Russian finance ministry, central bank or sovereign-wealth fund after June 14.  The executive order also allows the U.S. government to sanction any part of the Russian economy, which will make U.S. firms think twice about doing business in Russia.  The weakness of the plan is that U.S. traders will still be able to access Russian debt in secondary bond markets.

“Russia summoned the U.S. Ambassador to Moscow, and a foreign ministry spokeswoman warned, ‘Washington must realize that the degradation of bilateral relations will have to be paid for.  The responsibility for what is happening lies entirely with the United States.’  This is a predictable tactic: Attack the U.S. – then blame the victim for retaliating.

“In reality this is well-deserved and long overdue.  The White House said the new sanctions are a response to Russia’s election interference, cyber espionage, transnational corruption, targeting dissidents abroad, and violation of other countries’ sovereignty….

“The European Union and NATO issued statements expressing solidarity with the U.S., but the Continent could be doing more.  Mr. Biden opposes the Nord Stream 2 gas pipeline between Russia and Germany but hasn’t convinced Berlin to abandon the project. Deepening European dependence on Russian energy was always a bad idea, but Vladimir Putin’s recent behavior makes Berlin’s intransigence hard to explain….

“Russian opposition leader Alexei Navalny, who was arrested on trumped-up charges upon his return to Russia in January, has seen his health deteriorate in a Russian penal colony.  Meantime, Russia has deployed tens of thousands of troops and heavy weapons near Ukraine, and its intentions remain unclear.

“On a Tuesday call with Mr. Putin, the President suggested a summit meeting in a third country in the coming months.  The Kremlin said the sanctions could blow up Mr. Biden’s offer, but don’t count on it. As Russia’s economy stumbles along, Mr. Putin needs a summit more than Washington does.  Mr. Biden shouldn’t accept a meeting absent a change of behavior from his Russian counterpart.

“The world would be a safer place if Washington and Moscow got along.  A natural place to start would be cooperation against Islamic extremism or Chinese adventurism. But getting to that point will require Russia to act like a responsible country.”

For its part, the Kremlin said on Wednesday that a proposed summit between Biden and Putin was contingent on the United States taking certain steps; the Kremlin not saying what those steps were.  Biden responded in his own way Thursday.

Russia’s Foreign Ministry then said it would respond in the near future to U.S. sanctions and the response came this afternoon, as the Kremlin announced it would expel 10 U.S. diplomats and bar a number of senior U.S. officials from entering the country.

“The latest attack on our country undertaken by the Biden administration, of course, cannot remain unanswered,” the Foreign Ministry said in a statement. “Washington, it seems, doesn’t want to put up with the fact that in the new geopolitical realities there is no place for unilateral dictatorship.”

Eight high-ranking officials, including Attorney General Merrick Garland and FBI Director Christopher Wray, were indefinitely barred.

In addition, John Bolton, the former UN ambassador and national security adviser, was banned from entering Russia.

Foreign Minister Sergei Lavrov said Russia had the ability to take actions that would be painful for U.S. business, but would keep them “for future use.”

Today, however, the Kremlin also said that there were fewer ceasefire violations in eastern Ukraine where Russian-backed separatists have faced off against Ukrainian government forces since 2014, a slight olive branch in tone.

But Dmitry Peskov, the Kremlin spokesman, said there were not yet grounds to fully relax and signaled Russia, with its troops massed on the border, would continue to watch the situation closely.

The leaders of Ukraine, France and Germany were to hold three-way talks Friday about the conflict.

Jordan: King Abdullah and former crown prince and half-brother Prince Hamza made their first joint appearance since a rift shook the country, attending a ceremony on Sunday marking 100 years of independence.  State media showed the monarch and other members of the royal family laying wreaths at the memorial to the unknown soldier and tombs of royalty in Amman.

Myanmar: The European Union’s top diplomat said on Sunday Russia and China were hampering a united international response to Myanmar’s military coup and that the EU could offer more economic incentives if democracy returns to the country.

“It comes as no surprise that Russia and China are blocking the attempts of the UN Security Council, for example, to impose an arms embargo,” EU foreign policy chief Josep Borrell said in a blog post.  “Geopolitical competition in Myanmar will make it very difficult to find common ground.  But we have a duty to try.” 

Borrell speaks on behalf of the 27 EU member states.

Last weekend in the town of Bago, 82 people were killed, which press reports described as a “killing field.”

“The world watches in horror, as the army uses violence against its own people,” Borrell said.

An estimated 776 have been killed in the protests since the Feb. 1 coup.

Cuba: Raul Castro confirmed he was handing over the leadership of the all-powerful Cuban Communist Party to a younger generation that was “full of passion and anti-imperialist spirit” at its congress that kicked off today.

In a speech opening the four-day closed door event, excerpts of which were broadcast on state television, Castro, 89, said he had the satisfaction of handing over the leadership to a group of party loyalists that had decades of experience working their way up the ranks.

“I believe fervently in the strength and exemplary nature and comprehension of my compatriots, and as long as I live, I will be ready with my foot in the stirrups to defend the fatherland, the revolution and socialism,” Castro told hundreds of party delegates gathered in Havana.

I’m assuming at the end of the four days, we will find out that Raul Castro’s protégé, Miguel Diaz-Canel, is handed the top job.

Random Musings

--Presidential approval ratings….

Rasmussen: 49% approve of President Biden’s job performance, 49% disapprove (April 16).

A new Pew Research Center survey, however, has Biden’s job approval at 59%, while 39% disapprove.  The approval figure is up from 54% in March.

Far more Americans say they like the way Biden conducts himself as president (46%) than say they don’t (27%), while another 27% have mixed feelings about his conduct. Similarly, 44% say he has changed the tone of political debate for the better, while 29% say he has made the tone of debate worse.

88% of Democrats and those who lean Democrat give Biden high marks on the vaccine distribution, while 55% of Republicans and Republican leaners do so.

Voters by a 67-32 margin approve of the $1.9 trillion coronavirus relief package.

--Self-assessments made by two polling groups in recent days conclude that they undercounted Republicans and Trump supporters in 2020 and there is no firm answer yet for how to fix the problem, as reported by the Wall Street Journal.

The examinations come after many pollsters significantly understated Republican strength in the 2020 presidential and congressional elections.  One report, released Tuesday by five Democratic polling firms, finds that their surveys undercounted voters who viewed former President Donald Trump as “presidential.”  Another, by the nonpartisan Pew Research Center, concluded that obtaining the proper representation of Republicans in surveys has become more difficult.

The groups suggest that the problem will be hard to resolve: Even when pollsters in 2020 reached Republican voters or those in GOP-leaning groups, such as white voters without college degrees, those who chose to answer surveys didn’t represent a full range of views. Those who participated in the surveys tended to be less supportive of Trump, while those who declined surveys tended to more firmly back the president.

So you can see how this isn’t easy to fix.

Courtney Kennedy, director of survey research at the Pew Research Center, said, “The Republicans who are saying yes to pollsters don’t seem to be a representative mix,” though this isn’t backed by hard data.

The pollsters feel like they are reaching survey voters who don’t have four-year college degrees, but they may be getting responses from those working in office settings, more so than construction workers, which could skew results.

--Speaking of Donald Trump, last Saturday at a Republican Party gathering of top donors at his Mar-a-Lago resort, Trump gave the closing speech and proceeded to insult the party’s Senate leader and his wife.

Ahead of the invitation-only speech at the Republican National Committee’s weekend donor summit (which was held at a different resort nearby, with attendees then bused to Mar-a-Lago for Trump’s closing address) his advisors said the former president would emphasize his commitment to his party and Republican unity.

Trump then veered sharply from prepared remarks and instead slammed Senate Minority Leader Mitch McConnell as a “stone-cold loser” and a “dumb son of a bitch”, while mocking McConnell’s wife, Elaine Chao, who was Trump’s Transportation secretary.

“If that were Schumer instead of this dumb son of a bitch Mitch McConnell they would never allow it to happen.  They would have fought it,” Trump said.

Trump then once again claimed falsely that he won the Senate election for McConnell. 

As for Chao, Trump said: “I hired his wife. Did he ever say thank you?”  He then mocked Chao for resigning in response to the Jan. 6 events and Trump’s behavior that day.

“She suffered so greatly,” he said, his voice dripping with sarcasm.

And Trump also said he was “disappointed” in his vice president, Mike Pence, according to multiple people in attendance who were not authorized to publicly discuss what was said in a private session. 

“I wish that Mike Pence had the courage to send it back to the legislatures… I like him so much. I was so disappointed,” Trump said.

Trump said he recently told Pence that he was still disappointed in him for not intervening to stop the congressional certification of President Biden’s election win – something the VP didn’t have the authority to do.

[We learned Thursday that Pence had surgery to receive a pacemaker after he experienced “symptoms associated with a slow heart rate.”  He is expected to return to normal activity “in the coming days.”]

Trump’s team had reported before that his remarks were intended to reinforce his continued leadership role in Republican affairs, a sharp break from past presidents.

But Trump also continued to insist that the last election was “stolen” from him, repeating false claims that Joe Biden won the election only because of voter fraud.  He polled the room on whether they believed he won.  Obviously, they gave him the resounding ‘yes’ he craved.

He even said the crowd at his rally preceding the Capitol attack was so large – falsely claiming that “some people say it was over a million people” – because supporters were upset about fraud.  He expressed no regrets for his actions that day, nor about those of the rioters.

And Trump had to lay into Dr. Anthony Fauci.  “Have you ever seen anybody that is so full of crap?”

Trump also said, without saying who, that someone recently suggested to him that the vaccine should be called the “Trumpcine.”  He bragged about his handling of the pandemic, dismissing the criticism of his approach and not mentioning more than 550,000 who have died of Covid.

He then praised Republican Governors Kristi Noem (S.D.) and Ron DeSantis (Fla.) for ignoring public health concerns about opening and reopening their states.

Trump also called immigrants “murderers, rapists and drug dealers.”

“They’re coming in from the Middle East. They’re not sending their best people.  You have murderers, you have rapists, you have drug dealers,” he said.

And he had to add, since this was his “Greatest Hits, Vol. 48,” that he was impeached “over a perfect phone call.”

Rep. Liz Cheney (R-Wyo.) was among 10 House Republicans who joined every Democrat in voting to impeach Trump for inspiring the Jan. 6 attack.

“The former president is using the same language that he knows provoked violence on Jan. 1. As a party, we need to be focused on the future, we need to be focused on embracing the Constitution, not embracing insurrection,” Cheney told CBS’ ‘Face the Nation.’

Trump has raised roughly $85 million since the election, rivaling the RNC’s bank account, as he continues to tease the prospect of another presidential run in 2024, but has also positioned himself to play the role of kingmaker for Republicans who may run if he does not.

--Michael Gerson / Washington Post

“Some in the Republican Party hope that it can eventually maintain the Trump coalition without the toxic excesses of Donald Trump’s disordered personality. Already, a variety of talented and calculating figures – Sens. Josh Hawley (Mo.) and Tom Cotton (Ark.) come to mind – are trying to model populism minus the psychopathy.  They are clearly imagining a day when a working-class and fundamentalist cultural revolt can be channeled into constructive public purposes.  As one Republican congressional staffer has said: ‘Trump has changed the party forever, but that doesn’t mean he will control the party forever.’

“It is a rational instinct. It also strikes me as a nearly impossible task. And Tucker Carlson illustrates why.

“Every mention of the Fox News host, of course, plays into his career advancement strategy.  He is the prime example of a professional troll.  The Anti-Defamation League has demanded Carlson’s firing for his unapologetic embrace of ‘replacement theory.’  Here is how Carlson defined this idea in the process of defending it last week: ‘The Democratic Party is trying to replace the current electorate of the voters now casting ballots with new people, more obedient voters from the Third World.’

“Why people should be offended by this mystifies Carlson.  ‘Everyone wants to make a racial issue out of it,’ he continued.  ‘No, no, no, this is a voting-rights question.  I have less political power because they are importing a brand-new electorate.  Why should I sit back and take that?  The power that I have as an American, guaranteed at birth, is one man, one vote, and they are diluting it.’

“There is a reason, of course, that ‘everyone’ wants to make a racial issue out of this.  Because it is a putrescent pile of racist myths and cliches.  Nearly every phrase of Carlson’s statement is the euphemistic expression of white-supremacist replacement doctrine.  ‘The Democratic Party’ means liberals, which translates into Jews.  They are importing ‘new people’ from the ‘Third World’ means people with black and brown skin. Those kinds of people, in the racist trope, are ‘obedient,’ meaning docile, backward and stupid. Their votes do not constitute real democracy because they are replacing the ‘current electorate’ – which is presumably whiter and less docile. These paler, truer Americans are thus deprived of their birthright of political dominance.  And fighting back – making sure the new Third World people have less power – becomes a defense of the American way.

“This is what modern, poll-tested, shrink-wrapped, mass-marketed racism looks like.  Carlson is providing his audience with sophisticated rationales for their worst, most prejudicial instincts.  And the brilliance of Carlson’s business model is to reinterpret moral criticism of his bigotry as an attack by elites on his viewers.  Public outrage is thus recycled into fuel for MAGA victimhood.  And so the Fox News machine runs on and on….

“In Carlson’s version of the MAGA worldview, politics is played for the highest of stakes.  ‘Western civilization’ is under attack from liberalism.  ‘America isn’t falling to foreign invaders,’ Carlson has said.  ‘It is rotting from within because the people in charge don’t think it is worth preserving.’  And one of the main instruments that liberalism uses to secure power and undermine Western culture is elevation of ‘diversity’ as a social ideal.  In fact, according to Carlson, people from non-Western countries dilute and adulterate America’s culture and heritage.  Immigration makes the country ‘poorer and dirtier and more divided,’ he said in 2018… Mass migration, according to Carlson, is not merely a threat: the promotion of mass migration is a political conspiracy.  Liberals are attempting to control the country by changing its ethnic makeup and polluting its culture.  And this deprives true Americans – those with, say, the racial makeup of Fox News viewers – of their rightful place of social and economic influence.

“Each day, Carlson gives a pure, accurate depiction of Trumpism. This viewpoint is not focused on the working-class economic dislocation caused by globalization, or even the moral panic resulting from rapidly changing cultural norms. It is an argument in favor of cultural purity, of social hygiene.  Note Carlson’s use of ‘dirtier’ in describing immigrants… Trumpism is an argument that Western society, and American society in particular, is being infected by dirty outsiders who are destroying the country’s very nature.”

--The fatal shooting of a 20-year-old Black man, Daunte Wright, in a Minneapolis suburb Sunday appeared to be an “accidental discharge,” though the 26-year-old veteran police officer, Kim Potter, was arrested and charged with second-degree manslaughter.

The attempted arrest of Wright, who police say was stopped due to an expired car registration, occurred not far from where the trial of Derek Chauvin, the former white Minneapolis police officer charged with murdering George Floyd, is taking place.

Brooklyn Center, ten miles from Minneapolis has seen five consecutive nights of violence in response to the Wright shooting.  At first, the police chief and officer Potter resigned, before Potter was then arrested.

Video footage from the officers’ body camera showed an officer trying to handcuff Wright next to the car, before he broke free and got back inside the car. At that point, Potter, whose body camera was shown to the public, yells, “Taser, Taser, Taser,” before firing a single shot from her handgun.  “Holy shit, I just shot him,” the policewoman is heard to yell as the car rolls away.

Former police chief Tim Gannon, who would resign, said, “This appears to me, from what I viewed and the officers’ reaction and distress immediately after, that this was an accidental discharge that resulted in the tragic death of Mr. Wright.”

But what we’ve seen this week is that no one in Brooklyn Center, a town of about 31,000, seems to be competent, including Mayor Mike Elliott, and there’s been nothing but chaos after the police chief resigned.

Editorial / Washington Post

“Police said they stopped Mr. Wright because he had expired registration tags.  They discovered he had an outstanding arrest warrant for a misdemeanor offense and say he resisted police.  He seems to have posed no immediate danger, and he surely could have been found at another time if serving the arrest warrant was so vital. Was the use of force a prudent decision?  Part of the way police have traditionally been trained is to think they have to win at any cost, but that cost is far too high.”

--Former Minneapolis police Officer Derek Chauvin chose not to take the stand as testimony at his murder trial ended Thursday, passing up the chance to explain to the jury what he was thinking in pressing his knee against George Floyd’s neck.

Closing arguments are set to begin Monday, after which the racially diverse jury will begin deliberating at a barbed wire-ringed courthouse in a city on edge, compounded by the shooting of Daunte Wright ten miles away.

The most serious charge against Chauvin, second-degree murder, carries a maximum penalty of up to 40 years in prison, though state guidelines call for about 12.

--The gun violence continued later in the week, as eight people were shot and killed in a late-night shooting at a FedEx facility in Indianapolis on Thursday, the shooter then killing himself.  He was apparently a former employee who had known mental health issues, but no motive has been given.

--The Covid-restricted funeral for Prince Philip is Saturday morning, Eastern Time, and all eyes will be on Prince William and Prince Harry.  With attendance held down to 30, rather than the 800 on the original list, this funeral having been planned years in advance, even Prime Minister Boris Johnson won’t be among the select few.

William said in a statement this week: “I will miss my Grandpa, but I know he would want us to get on with the job.  My grandfather was an extraordinary man and part of an extraordinary generation.  My grandfather’s century of life was defined by service; to his country and Commonwealth, to his wife and Queen, and to our family.”

Harry praised his grandfather for his “dedication to Granny” and for “always being yourself” in a statement released on his return to Britain for the funeral.  “He has been a rock for Her Majesty The Queen with unparalleled devotion, by her side for 73 years of marriage, and while I could go on, I know that right now he would say to all of us, beer in hand, ‘Oh get on with it!’ So, on that note, Grandpa, thank you for your service, your dedication to Granny, and for always being yourself.”

Harry and William are not going to be sitting together, and there is no sign as yet of the two having repaired their royal rift.

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

Special thanks to our healthcare workers and first responders.

God bless America.

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Gold $1777
Oil $63.07

Returns for the week 4/12-4/16

Dow Jones  +1.2%  [34200]
S&P 500  +1.4%  [4185]
S&P MidCap  +1.9%
Russell 2000  +0.9%
Nasdaq  +1.1%  [14052]

Returns for the period 1/1/21-4/16/21

Dow Jones  +11.7%
S&P 500  +11.4%
S&P MidCap  +18.0%
Russell 2000  +14.6%
Nasdaq  +9.0%

Bulls 61.4
Bears 16.8…prior week’s split, 60.8 / 16.7

Hang in there. Wear a mask where appropriate…wash your hands.

Brian Trumbore

 

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