Saturday Hark Back - 25 Feb 2023
Capturing the themes of the week when there’s time to digest them.
Ukraine - One year on
Lest we forget the conflict in Ukraine has reached its one-year anniversary amid many tributes to the bravery of the Ukrainian citizens and soldiers coupled with much condemnation of Putin’s aggression and hostility.
It has been the war that has shaken Europe and shattered its confidence that the borders that have stood for over 30 years are in fact not as set in stone as many had thought. Estonia had been very vocal on such matters prior to the conflict, and many other countries are now left feeling vulnerable.
The sheer numbers drive home the extent of the conflict:
Over 100,000 Russian service personnel dead, with Ukraine suffering 13,000 losses on top of 7,000 civilian deaths;
8m refugees displaced from Ukraine, close to 20% of the population;
at the peak of the invasion, in the early weeks, Russia controlled approximately 27% of Ukrainian territory although, after many counter-offensives, the Ukrainians have reduced that to approximately 18%; and
$170bn has been pledged in humanitarian and military aid to assist Ukraine.
The numbers alone make a mockery of Putin’s early predictions that the Russians would be marching on Kyiv in a matter of days.
Below I post some fascinating articles on the build-up to the conflict itself and some thoughts on China’s recent “peace proposal”—also a piece from The Economist detailing the extent of the fighting across the country in great detail.
Timothy Ash - China's PR peace plan revealed
Politco - An oral history of the lead up to the war
Politico Podcast - Russia's war in Ukraine one year on
The Economist - Satellite data reveals the extent of the fighting in Ukraine
What next for The Fed - more to do
The main highlight of the week was the Fed minutes, and in keeping with the rest of the week, they did little to excite. They did, however, help to confirm the market’s newly held view that there will more than likely be a further three 25bp hikes from the Fed by mid-year and then let’s see.
The coming weeks’ February data prints will be critical to gauge if that hiking streak will stretch even further into the second half of the year or whether that long-awaited pause will at last arrive.
January data was ushered in by that bumper payrolls print which set the trend for an impressive run of beats, in particular, retail sales and the new orders component of services ISM. The January data was helped by a milder month of weather and potentially, we shall see some payback in the February data. However, given Friday’s Core PCE number, it feels like inflation is not disappearing anytime soon, and the Fed hiking sequence looks like continuing well into the middle distance. 50bps in March anyone?
I post some links below to some articles and podcasts that delve deeper into the Fed’s inflation troubles.
Nomura Podcasts - Can US data keeping surprising higher
MacroVoices - Julian Brigden on opportunistic disinflation
Fortune - Jamie Dimon scaremongering on the Fed's fight with inflation
Stay at Home Macro - Can the Fed bring down inflation alone?
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Harkster - do you really believe that 100,000 Russian troops have died, and yet only 17,000 Ukraine troops and civilians? Get your head out of your ass. Russia is not going to lose this war. Take a look at videos by Col. Douglas MacGregor. Russia has a constant supply of ammunition, rockets, missiles, (materiel in general). They are not going to lose. Secondly, the US does not have a dog in the fight, nor should we. Russia wants to get rid of all 30+ US funded bioweapon labs, and kill all the Nazis in Ukraine. We should not make this our problem. Next, Ukraine is in Russia’s back yard - not ours. They have the logistical advantage, not us. Anyone that thinks we should send Ukraine anything has not thought this through, and I have a bridge to sell you.
The early HOPE of 2023 is fading in the light of unending War in Ukraine
and unending Inflation.
Both could have been avoided or at least minimized, but the Policy mistakes
and arrogance of many US and European leader, have led us here.......