Source:
Credit Bubble Bulletin
Weekly Commentary
February 4, 2022
by Doug Noland
My edited easy to read summary follows
Ye Editor
For the week ending February 4, 2022:
GLOBAL STOCK INDEXES:
S&P500 rallied 1.5% (down 5.6% y-t-d)
Dow Industrials up 1.0% (down 3.4%)
Utilities gained 0.9% (down 5.0%)
Banks jumped 4.2% (up 5.9%)
Transports rose 1.1% (down 7.7%)
S&P 400 Midcaps up 1.7% (down 7.7%)
Small cap Russell 2000 up 1.7% (down 10.8%)
Nasdaq100 advanced 1.7% (down 10.0%)
Semiconductors jumped 4.5% (down 12.5%)
rose 2.7% (down 7.9%).
With bullion rallying $17,
the HUI gold stock index
recovered 2.5%
(down 4.9%).
U.K.'s FTSE up 0.7% (up 1.8% y-t-d).
Japan's Nikkei rallied 2.7% (down 4.7%).
France's CAC40 slipped 0.2% (down 2.8%)
German DAX 1.4% (down 4.9%).
Spain's IBEX 35 declined 0.2% (down 1.4%).
Italy's FTSE MIB little changed (down 2.7%).
Brazil's Bovespa added 0.3% (up 7.1%)
Mexico's Bolsa gained 1.2% (down 3.8%).
South Korea's Kospi up 3.3% (down 7.6%).
India's Sensex up 2.5% (up 0.7%).
China's Shanghai closed for holiday (down 7.6%).
Turkey's Istanbul National 100 fell 2.0% (up 4.6%).
Russia's MICEX declined 0.5% (down 8.4%).
US BONDS:
Three-month Treasury bill rates
ended the week at 0.22%.
Two-year government yields
rose 15 bps to 1.31% (up 58bps y-t-d).
Five-year T-note yields
jumped 16 bps to 1.77% (up 51bps).
Ten-year Treasury yields
gained 14 bps to 1.91% (up 40bps).
Long bond yields
rose 14 bps to 2.21% (up 31bps).
Fannie Mae MBS yields
surged 19 bps to a 26-month high 2.74%
(up 67bps).
Federal Reserve Credit last week
declined $11.0bn to $8.828 TN.
Over the past 125 weeks,
Fed Credit expanded $5.101 TN, or 137%.
US MORTGAGES:
Freddie Mac 30-year fixed mortgage rates
were unchanged at 3.55% (up 82bps y-o-y).
Fifteen-year rates
declined three bps to 2.77%
(up 56bps).
Five-year hybrid ARM rates
added a basis point to 2.71%
(down 7bps).
Jumbo mortgage 30-year fixed rates
down three bps to 3.75%
(up 88bps).
COMMODITIES:
February 2
– Bloomberg
“Energy-rich countries from Qatar to Azerbaijan have all pledged emergency gas supplies to Europe, but the region is quickly figuring out it can’t replace top supplier Russia.
The Bloomberg Commodities Index
jumped 2.3% (up 10.5% y-t-d).
Spot Gold gained 0.9% to $1,808 (down 1.1%).
Silver up 0.2% to $22.52 (down 3.4%).
WTI crude surged $5.49 to $92.31 (up 23%).
Gasoline jumped 5.4% (up 20%)
Natural Gas declined 1.4% (up 23%)
Copper rallied 4.1% (up 1%).
Wheat dropped 2.9% (down 1%)
Corn fell 2.4% (up 5%).
Bitcoin recovered $2,937, or 7.8%,
this week to $40.738 (down 12%).
Doug Noland's Weekly Commentary
(highly edited)
“Euro zone inflation rose to a new record high last month, defying expectations for a big drop and piling pressure on the European Central Bank to finally admit that price growth is not as temporary and benign as it has long predicted. Inflation is now 5% versus the ECB's 2% target.”
“The world's top central banks are about to embark on ‘the largest quantitative tightening in history’, analysts at Morgan Stanley said…, estimating that $2.2 trillion worth of support would disappear over the next 12 months.
Ten-year US Treasury yields jumped 14 bps this week to a more than two-year high 1.91% (2-yr yields up 15bps to 1.31%).
There has been a proliferation of tens of thousands of loss-making ventures whose existence depends on easily accessible finance. In Austrian economic terms, it’s a “Bubble economy” structure that has been feasting on ever larger amounts of cheap and indiscriminate money and credit.
SUMMARY OF NEWS
“The world's top central banks are about to embark on ‘the largest quantitative tightening in history’, analysts at Morgan Stanley said…, estimating that $2.2 trillion worth of support would disappear over the next 12 months.
Ten-year US Treasury yields jumped 14 bps this week to a more than two-year high 1.91% (2-yr yields up 15bps to 1.31%).
There has been a proliferation of tens of thousands of loss-making ventures whose existence depends on easily accessible finance. In Austrian economic terms, it’s a “Bubble economy” structure that has been feasting on ever larger amounts of cheap and indiscriminate money and credit.
SUMMARY OF NEWS
FROM LAST WEEK:
Coronavirus Watch:
January 31
– Wall Street Journal
“Two years into the Covid-19 pandemic, America’s death toll is closing in on one million. Federal authorities estimate that 987,456 more people have died since early 2020 than would have otherwise been expected, based on long-term trends. Unlike the 1918 flu pandemic or major wars, which hit younger people, Covid-19 has been particularly hard on vulnerable seniors.”
February 2
Coronavirus Watch:
January 31
– Wall Street Journal
“Two years into the Covid-19 pandemic, America’s death toll is closing in on one million. Federal authorities estimate that 987,456 more people have died since early 2020 than would have otherwise been expected, based on long-term trends. Unlike the 1918 flu pandemic or major wars, which hit younger people, Covid-19 has been particularly hard on vulnerable seniors.”
February 2
– Financial Times:
“Scientists who track coronavirus mutations are closely monitoring an uptick in cases of an Omicron sub-variant named BA.2, just as countries were beginning to hope the worst of the latest wave of coronavirus infections had passed. The strain has been detected in 57 countries…, and now accounts for about a tenth of Sars-Cov-2 genome sequences uploaded to the global repository Gisaid. The original version of Omicron, designated as BA.1, is still responsible for most cases. Nevertheless, BA.2 has become the dominant variant in Denmark, India and South Africa.”
Market Mania Watch:
February 1
– Bloomberg:
“U.S. junk bonds just posted their worst start to a year ever… The Bloomberg U.S. Corporate High Yield Bond Index lost 2.73% last month on a total return basis, the biggest January decline on record and the worst month of any kind since the pandemic rocked markets in March 2020… And, to be sure, junk did have a better January than the 3.37% plunge experienced by U.S. high-grade debt. But that’s little comfort to high-yield investors now eyeing substantial portfolio losses.”
Market Instability Watch:
January 31
“Scientists who track coronavirus mutations are closely monitoring an uptick in cases of an Omicron sub-variant named BA.2, just as countries were beginning to hope the worst of the latest wave of coronavirus infections had passed. The strain has been detected in 57 countries…, and now accounts for about a tenth of Sars-Cov-2 genome sequences uploaded to the global repository Gisaid. The original version of Omicron, designated as BA.1, is still responsible for most cases. Nevertheless, BA.2 has become the dominant variant in Denmark, India and South Africa.”
Market Mania Watch:
February 1
– Bloomberg:
“U.S. junk bonds just posted their worst start to a year ever… The Bloomberg U.S. Corporate High Yield Bond Index lost 2.73% last month on a total return basis, the biggest January decline on record and the worst month of any kind since the pandemic rocked markets in March 2020… And, to be sure, junk did have a better January than the 3.37% plunge experienced by U.S. high-grade debt. But that’s little comfort to high-yield investors now eyeing substantial portfolio losses.”
Market Instability Watch:
January 31
– Bloomberg:
“The U.S. Treasury debt managers now expect to borrow $729 billion in the January-through-March period, about $254 billion more than the $476 billion in net marketable debt issuance it anticipated in November.”
Inflation Watch:
February 1
“The U.S. Treasury debt managers now expect to borrow $729 billion in the January-through-March period, about $254 billion more than the $476 billion in net marketable debt issuance it anticipated in November.”
Inflation Watch:
February 1
– Bloomberg:
“ Outsize residential rent increases spreading from new leases to existing ones has been a distinct pattern in places like the Atlanta and Detroit metro areas, where rents rose in 2021 at the fastest pace in decades… In 2022, the pattern is set to become a nationwide phenomenon, as landlords recoup bargaining power they lost in the early part of the pandemic, when unemployment surged and governments responded by enacting eviction bans.”
January 31
“ Outsize residential rent increases spreading from new leases to existing ones has been a distinct pattern in places like the Atlanta and Detroit metro areas, where rents rose in 2021 at the fastest pace in decades… In 2022, the pattern is set to become a nationwide phenomenon, as landlords recoup bargaining power they lost in the early part of the pandemic, when unemployment surged and governments responded by enacting eviction bans.”
January 31
– Bloomberg:
“Oil had its biggest January gain in at least 30 years as robust demand outpaced fresh supply. The global benchmark settled above $91 a barrel, posting a 17% gain this month. The combination of booming demand, scratchy supply and dwindling stockpiles has helped crude soar this month, with top banks and oil companies saying prices may soon pass $100 a barrel.”
January 30
“Oil had its biggest January gain in at least 30 years as robust demand outpaced fresh supply. The global benchmark settled above $91 a barrel, posting a 17% gain this month. The combination of booming demand, scratchy supply and dwindling stockpiles has helped crude soar this month, with top banks and oil companies saying prices may soon pass $100 a barrel.”
January 30
– Wall Street Journal:
“Drugmakers raised list prices by an average of 6.6% in the first few weeks of this year on cancer, diabetes and other prescription medicines, sticking with more moderate increases while lawmakers scrutinize pricing practices. In all, about 150 drugmakers raised prices on 866 products in the U.S. through Jan. 20, according to… Rx Savings Solutions…”
January 31
– Bloomberg:
“Drought is shrinking the American cattle herd, meaning consumers are unlikely to get relief from near-record beef prices anytime soon. Abnormally dry conditions last year in the northern U.S. Plains squeezed supplies of hay and feed for cattle, prompting some ranchers to sell to slaughterhouses animals usually held for breeding. Now, deepening drought in the southern part of the Plains -- where most cattle in the U.S. are raised -- could force another round of herd reductions later this year."
Biden Administration Watch:
February 2
– Bloomberg:
“The Biden administration and European allies are searching the world for surplus natural gas to send to Europe in the event conflict erupts over Ukraine, including approaching China about its supplies, according to people familiar with the matter.”
February 2
– Reuters:
“China has failed to meet its commitments under a two-year ‘Phase 1’ trade deal that expired at the end of 2021, and discussions are continuing with Beijing on the matter, Deputy U.S. Trade Representative Sarah Bianchi said… ‘You know, it is really clear that the Chinese haven't met their commitment in Phase 1. That's something we're trying to address,’ Bianchi told a virtual forum… Through November, China had met only about 60% of that goal, according to trade data compiled by Peterson Institute for International Economics senior fellow Chad Bown.”
U.S. Bubble Watch:
February 1
– CNN (Matt Egan):
“America's national debt is now above $30 trillion … The national debt has surged by about $7 trillion since the end of 2019. It's impossible to know how much debt is too much, and economists remain divided over how big of a problem this really is."
February 2
– CNBC:
“Companies cut jobs in January for the first time in more than a year as the spread of the Covid omicron variant appeared to hit hiring, payroll processing firm ADP reported … The pandemic-sensitive leisure and hospitality industry was responsible for more than half of the decline, as companies reported a drop of 154,000. Trade, transportation and utilities cut 62,000 while the other services category declined by 23,000.”
February 1
– Reuters:
“A measure of U.S. manufacturing activity fell to a 14-month low in January amid an outbreak of COVID-19 cases, supporting the view that economic growth lost steam at the start of the year. ... Timothy Fiore, chair of the ISM manufacturing business survey committee, noted ‘shortages of critical intermediate materials, difficulties in transporting products and lack of direct labor on factory floors due to the COVID-19 Omicron variant.’ The ISM's index of national factory activity dropped to a reading of 57.6 last month, the lowest since November 2020, from 58.8 in December.”
February 3
– Bloomberg:
“Growth in the U.S. services sector pulled back in January to the slowest pace in nearly a year as a surge in Covid-19 cases and lingering supply constraints weighed on business activity. The Institute for Supply Management’s gauge of services activity fell to 59.9, the lowest since February of last year, from 62.3 a month earlier… The moderation in growth last month followed a 6.1-point plunge that was the sharpest since April 2020…”
Fixed-Income Bubble Watch:
February 1
– Reuters:
“A record amount of more than half a trillion dollars of debt was raised in January by companies as issuers scrambled to take advantage of attractive funding conditions before global central banks led by the U.S. Federal Reserve begin a tightening cycle. Including financial institutions, investment-grade companies raised $532 billion globally in January, the highest amount on record for the first month of the year, according to… Refinitiv…, eclipsing the previous record at $530 billion last year."
China Watch:
February 2
– Caixin Global:
“China’s real estate market continued its downward spiral in first month of 2022, as total sales of China’s top 100 property developers fell 39.6% year-on-year by value. China Real Estate Information Corp. (CRIC)…, said sales could shrink further in February. Most of the top 100 property companies recorded lower January sales than last year, and the value of monthly sales was lower than the 2021 average by 43%... China Evergrande Group, whose debt woes made it a poster child for China’s property slump, recorded 2.95 billion yuan ($460 million) in January sales, sinking to the 49th place. In 2021, Evergrande ranked fifth in total sales, amounting to 435.63 billion yuan and averaging more than 36 billion yuan per month…”
January 31
– Reuters:
“The opening last year of the world's largest artificial resort island, developed by China Evergrande Group for nearly $13 billion, was the realisation of the ambitions of founder Hui Ka Yan, who sketched a design for the project himself. Now Evergrande is in default to global bondholders, the former Communist Party secretary of the small Hainan island city where Ocean Flower Island was built is serving a life sentence for bribery, and officials in Danzhou city have ordered 39 of the project's towers - roughly 3,900 of the island's 65,000 homes - to be demolished over environmental and construction violations.”
Central Banker Watch:
February 3
– Associated Press:
“The Bank of England raised interest rates for the second time in three months…, putting the United Kingdom far ahead of the rest of Europe and the U.S. in moving to tame surging inflation that is squeezing consumers and businesses. The bank’s monetary policy committee voted 5-4 to boost its key rate to 0.5% from 0.25%, with the dissenting members arguing for a bigger increase. It also voted unanimously to begin reducing the bank’s holdings of U.K. government debt and corporate bonds… U.K. consumer prices rose 5.4% in the year through December, the highest inflation rate in almost 30 years.”
Emerging Markets Watch:
February 3
– Associated Press:
“Turkey’s annual inflation came in at nearly 49%..., hitting a nearly 20-year high and further eroding people’s ability to buy even basic things like food. The… consumer price index increased by just over 11% in January from the previous month. The yearly increase in food prices was more than 55%...”
January 31
– Bloomberg:
Back in recession. Mexican output shrank 0.1% in the three months through December…, after a 0.4% contraction in the previous period. Brazil’s $1.6 trillion economy… fell into recession in the second quarter of 2021 and is forecast to flatline all through this year. Pandemic policy in the two countries could hardly have been more different. Brazil shelled out more cash than other emerging economies, and many rich ones. Its stimulus measures added up to about 12% of gross domestic product…, translating into a historically large budget deficit.”
February 1
– Bloomberg:
“India’s benchmark bond yields surged to the highest in two and a half years after the government unveiled plans to issue record amount of bonds in the next financial year… Elevated bond sales will worsen debt supply worries in a year when the Reserve Bank of India is expected to wind back on its monetary stimulus.”
Europe Watch:
January 31
– Financial Times:
“Sharp increases in energy and food prices led to annual German inflation of 5.1% in January, down from 5.7% in December… Annual inflation in Spain also remained higher than expected at 6.1% in January, down from 6.5% in December.”
Japan Watch:
February 2
– Reuters:
“Japan's services sector activity contracted at the fastest pace in five months in January in a sign businesses faced pressure from a record surge in new coronavirus infections due to the Omicron variant. The world's third-largest economy has seen COVID-19 cases surge in recent weeks, forcing the government to roll out tougher curbs across much of the country…”
Geopolitical Watch:
February 2
– CNBC:
“Ukraine’s President Volodymyr Zelenskyy has warned that any military confrontation with its neighbor Russia would amount to ‘a full-scale’ war. Speaking after a meeting with U.K. Prime Minister Boris Johnson…, Zelenskyy said that any conflict with Russia, which has massed more than 100,000 troops along its border with Ukraine, would affect the whole of Europe. ‘There will be, unfortunately, a tragedy if the escalation against our state begins. That is why I openly say: this will not be a war between Ukraine and Russia — this will be a war in Europe, full-scale war, because no one will give up their territories and people anymore,’ the president said…”
February 3
– Reuters:
“NATO said Russia had stepped up deployments to Ukraine's northern neighbour Belarus in recent days and was expected to have 30,000 troops there for joint military exercises this month.”
January 30
– Financial Times:
“The Ukraine crisis ‘will be a historic opportunity for us to solve the Taiwan problem’, said a Chinese nationalist blogger known as Huashan Qiong Jian last week. The events were a huge drain on the energy of the US and had diverted Washington’s attention away from China, the commentator wrote. ‘War in Ukraine will be a historical window for the unification of the motherland which we must not miss.’ Diplomats and longtime observers of Chinese policy dismiss the idea. But both the US and some of China’s neighbours worry that a war in Ukraine would make an already assertive Beijing even stronger.”
January 30
– Reuters:
“North Korea confirmed… it had launched a Hwasong-12 ballistic missile, the same weapon it had once threatened to target the U.S. territory of Guam with, sparking fears the nuclear-armed state could resume long-range testing… It was the seventh test conducted by North Korea this month and the first time a nuclear-capable missile of that size has been launched since 2017.”
“Drugmakers raised list prices by an average of 6.6% in the first few weeks of this year on cancer, diabetes and other prescription medicines, sticking with more moderate increases while lawmakers scrutinize pricing practices. In all, about 150 drugmakers raised prices on 866 products in the U.S. through Jan. 20, according to… Rx Savings Solutions…”
January 31
– Bloomberg:
“Drought is shrinking the American cattle herd, meaning consumers are unlikely to get relief from near-record beef prices anytime soon. Abnormally dry conditions last year in the northern U.S. Plains squeezed supplies of hay and feed for cattle, prompting some ranchers to sell to slaughterhouses animals usually held for breeding. Now, deepening drought in the southern part of the Plains -- where most cattle in the U.S. are raised -- could force another round of herd reductions later this year."
Biden Administration Watch:
February 2
– Bloomberg:
“The Biden administration and European allies are searching the world for surplus natural gas to send to Europe in the event conflict erupts over Ukraine, including approaching China about its supplies, according to people familiar with the matter.”
February 2
– Reuters:
“China has failed to meet its commitments under a two-year ‘Phase 1’ trade deal that expired at the end of 2021, and discussions are continuing with Beijing on the matter, Deputy U.S. Trade Representative Sarah Bianchi said… ‘You know, it is really clear that the Chinese haven't met their commitment in Phase 1. That's something we're trying to address,’ Bianchi told a virtual forum… Through November, China had met only about 60% of that goal, according to trade data compiled by Peterson Institute for International Economics senior fellow Chad Bown.”
U.S. Bubble Watch:
February 1
– CNN (Matt Egan):
“America's national debt is now above $30 trillion … The national debt has surged by about $7 trillion since the end of 2019. It's impossible to know how much debt is too much, and economists remain divided over how big of a problem this really is."
February 2
– CNBC:
“Companies cut jobs in January for the first time in more than a year as the spread of the Covid omicron variant appeared to hit hiring, payroll processing firm ADP reported … The pandemic-sensitive leisure and hospitality industry was responsible for more than half of the decline, as companies reported a drop of 154,000. Trade, transportation and utilities cut 62,000 while the other services category declined by 23,000.”
February 1
– Reuters:
“A measure of U.S. manufacturing activity fell to a 14-month low in January amid an outbreak of COVID-19 cases, supporting the view that economic growth lost steam at the start of the year. ... Timothy Fiore, chair of the ISM manufacturing business survey committee, noted ‘shortages of critical intermediate materials, difficulties in transporting products and lack of direct labor on factory floors due to the COVID-19 Omicron variant.’ The ISM's index of national factory activity dropped to a reading of 57.6 last month, the lowest since November 2020, from 58.8 in December.”
February 3
– Bloomberg:
“Growth in the U.S. services sector pulled back in January to the slowest pace in nearly a year as a surge in Covid-19 cases and lingering supply constraints weighed on business activity. The Institute for Supply Management’s gauge of services activity fell to 59.9, the lowest since February of last year, from 62.3 a month earlier… The moderation in growth last month followed a 6.1-point plunge that was the sharpest since April 2020…”
Fixed-Income Bubble Watch:
February 1
– Reuters:
“A record amount of more than half a trillion dollars of debt was raised in January by companies as issuers scrambled to take advantage of attractive funding conditions before global central banks led by the U.S. Federal Reserve begin a tightening cycle. Including financial institutions, investment-grade companies raised $532 billion globally in January, the highest amount on record for the first month of the year, according to… Refinitiv…, eclipsing the previous record at $530 billion last year."
China Watch:
February 2
– Caixin Global:
“China’s real estate market continued its downward spiral in first month of 2022, as total sales of China’s top 100 property developers fell 39.6% year-on-year by value. China Real Estate Information Corp. (CRIC)…, said sales could shrink further in February. Most of the top 100 property companies recorded lower January sales than last year, and the value of monthly sales was lower than the 2021 average by 43%... China Evergrande Group, whose debt woes made it a poster child for China’s property slump, recorded 2.95 billion yuan ($460 million) in January sales, sinking to the 49th place. In 2021, Evergrande ranked fifth in total sales, amounting to 435.63 billion yuan and averaging more than 36 billion yuan per month…”
January 31
– Reuters:
“The opening last year of the world's largest artificial resort island, developed by China Evergrande Group for nearly $13 billion, was the realisation of the ambitions of founder Hui Ka Yan, who sketched a design for the project himself. Now Evergrande is in default to global bondholders, the former Communist Party secretary of the small Hainan island city where Ocean Flower Island was built is serving a life sentence for bribery, and officials in Danzhou city have ordered 39 of the project's towers - roughly 3,900 of the island's 65,000 homes - to be demolished over environmental and construction violations.”
Central Banker Watch:
February 3
– Associated Press:
“The Bank of England raised interest rates for the second time in three months…, putting the United Kingdom far ahead of the rest of Europe and the U.S. in moving to tame surging inflation that is squeezing consumers and businesses. The bank’s monetary policy committee voted 5-4 to boost its key rate to 0.5% from 0.25%, with the dissenting members arguing for a bigger increase. It also voted unanimously to begin reducing the bank’s holdings of U.K. government debt and corporate bonds… U.K. consumer prices rose 5.4% in the year through December, the highest inflation rate in almost 30 years.”
Emerging Markets Watch:
February 3
– Associated Press:
“Turkey’s annual inflation came in at nearly 49%..., hitting a nearly 20-year high and further eroding people’s ability to buy even basic things like food. The… consumer price index increased by just over 11% in January from the previous month. The yearly increase in food prices was more than 55%...”
January 31
– Bloomberg:
Back in recession. Mexican output shrank 0.1% in the three months through December…, after a 0.4% contraction in the previous period. Brazil’s $1.6 trillion economy… fell into recession in the second quarter of 2021 and is forecast to flatline all through this year. Pandemic policy in the two countries could hardly have been more different. Brazil shelled out more cash than other emerging economies, and many rich ones. Its stimulus measures added up to about 12% of gross domestic product…, translating into a historically large budget deficit.”
February 1
– Bloomberg:
“India’s benchmark bond yields surged to the highest in two and a half years after the government unveiled plans to issue record amount of bonds in the next financial year… Elevated bond sales will worsen debt supply worries in a year when the Reserve Bank of India is expected to wind back on its monetary stimulus.”
Europe Watch:
January 31
– Financial Times:
“Sharp increases in energy and food prices led to annual German inflation of 5.1% in January, down from 5.7% in December… Annual inflation in Spain also remained higher than expected at 6.1% in January, down from 6.5% in December.”
Japan Watch:
February 2
– Reuters:
“Japan's services sector activity contracted at the fastest pace in five months in January in a sign businesses faced pressure from a record surge in new coronavirus infections due to the Omicron variant. The world's third-largest economy has seen COVID-19 cases surge in recent weeks, forcing the government to roll out tougher curbs across much of the country…”
Geopolitical Watch:
February 2
– CNBC:
“Ukraine’s President Volodymyr Zelenskyy has warned that any military confrontation with its neighbor Russia would amount to ‘a full-scale’ war. Speaking after a meeting with U.K. Prime Minister Boris Johnson…, Zelenskyy said that any conflict with Russia, which has massed more than 100,000 troops along its border with Ukraine, would affect the whole of Europe. ‘There will be, unfortunately, a tragedy if the escalation against our state begins. That is why I openly say: this will not be a war between Ukraine and Russia — this will be a war in Europe, full-scale war, because no one will give up their territories and people anymore,’ the president said…”
February 3
– Reuters:
“NATO said Russia had stepped up deployments to Ukraine's northern neighbour Belarus in recent days and was expected to have 30,000 troops there for joint military exercises this month.”
January 30
– Financial Times:
“The Ukraine crisis ‘will be a historic opportunity for us to solve the Taiwan problem’, said a Chinese nationalist blogger known as Huashan Qiong Jian last week. The events were a huge drain on the energy of the US and had diverted Washington’s attention away from China, the commentator wrote. ‘War in Ukraine will be a historical window for the unification of the motherland which we must not miss.’ Diplomats and longtime observers of Chinese policy dismiss the idea. But both the US and some of China’s neighbours worry that a war in Ukraine would make an already assertive Beijing even stronger.”
January 30
– Reuters:
“North Korea confirmed… it had launched a Hwasong-12 ballistic missile, the same weapon it had once threatened to target the U.S. territory of Guam with, sparking fears the nuclear-armed state could resume long-range testing… It was the seventh test conducted by North Korea this month and the first time a nuclear-capable missile of that size has been launched since 2017.”
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