by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM EST] | PDF

Good morning! In today’s report, we continue our coverage of the Russian invasion of Ukraine. We next discuss some non-Ukraine news, including the Iran nuclear deal and the upcoming election in South Korea. We conclude with our pandemic coverage.

Russian forces continue to make advances in Ukraine. After intense fighting, Russian troops took over the Zaporizhzhia nuclear power plant on Friday. The attack at the power plant sparked concerns about a possible nuclear explosion after a fire broke out. Ukraine has 15 nuclear sites, and attacks on the country could raise the possibility of another Chernobyl. Following the attack, the U.N. nuclear watchdog stated there was no radiation release, relieving concerns of a possible nuclear crisis. In addition, Russia appears to be making inroads in Ukraine’s second- largest city of Kherson and the southern city of Mariupol; however, the convoy outside Kyiv remains stalled.

As Russian troops continue their fight with Ukraine, Putin is struggling to maintain alliances. In a phone call with Saudi Arabia’s Crown Prince Mohammed bin Salman, Putin urged OPEC not to politicize the global energy supply. The comment was meant to dissuade Saudi Arabia from using the war as an opportunity to take more market share, while Russia is struggling to find buyers for its oil. Currently, there are potentially two countries with excess capacity that have the ability to take advantage of the situation, Saudi Arabia and the United Arab Emirates, and the West is pressuring them to boost production. Additionally, higher prices are also an opportunity for both countries to cash in on their oil. If this would happen, Russia’s economic woes would likely worsen, as it may be forced to sell its oil at an even steeper discount.  As a result, it isn’t clear that the OPEC and Russia’s alliance, also known as OPEC+, can be sustained as prices continue to rise.

In addition to potentially losing OPEC as an ally, it appears other countries are becoming more cautious regarding aligning themselves with Russia. China’s infrastructure investment bank has halted all business with Russia and Belarus. The move is to reduce exposure to Russian assets as the fallout from the Ukraine invasion persists. China is still trying to contain the collapse of its property market, so its appetite for risk is limited. Furthermore, the possibility of sanctions from the U.S. forced India to cancel its orders for Russian jets. Lastly, Putin’s relationship with Turkish President Recep Tayyip Erdogan has frayed after Turkey sold drones to Ukraine for its fight against Russia and has locked Russian warships out of the Black Sea. As Russia becomes more isolated, its need for a quick conclusion to the Ukraine war becomes more dire.

Although there are concerns that Russia will eventually retaliate against countries, the drawn-out war makes that outcome less likely to happen. Prior to Russia’s invasion into Ukraine, there were fears that Putin would stop supplying Europe with gas in retaliation for the sanctions. However, that will probably hurt Russia even more than the sanctions. Although Europe purchases 40% of its gas imports from Russia, Russia depends on Europe for trade. In 2020, 37% of Russia’s global trade went to Europe. Thus, cutting off Russian gas to Europe, especially when other countries are reluctant to buy it, is becoming a less viable option as Russia’s economy suffers the consequences of the country’s invasion of Ukraine. In the meantime, it appears Europe has started taking steps to diversify its supplies away from Russia.  The EU is set to adopt a new strategy to help boost its energy security and prepare for disruptions.

Non-Ukraine News

• Saudi Crown Prince Mohammed bin Salman, also known as MBS, is resisting pressure from the U.S. to increase oil production in an attempt to gain concessions from President Biden. MBS wants the President to recognize him as the rightful leader of Saudi Arabia and provide his country with weapons to fight Houthi rebels in Yemen. The U.S. has been urging OPEC, which includes Saudi Arabia, to increase output even before the Ukraine crisis. However, the Russian invasion has made the situation more dire, as oil prices have risen above $100 a barrel for the first time since 2013. Although MBS claims to be holding out for concessions from the U.S., there is speculation that Saudi Arabia may not have the ability to increase production to offset Russia. Saudi Arabia has shown in recent months that it can produce more oil, but it is unclear how much capacity it actually has.
• The Iran nuclear deal is on the verge of being completed. A major sticking point in talks is the end to a probe into Iran’s undeclared nuclear activity. The head of the UN’s nuclear watchdog is expected to visit Tehran on Saturday. If he determines that the issue regarding nuclear activity has been resolved, it may remove the final obstacle preventing a deal. The removal of sanctions could make it easier for Iran to sell oil in the global market.
• The invasion of Ukraine may complicate manufacturers’ ability to produce more semiconductors. Ukraine is one of the largest suppliers of neon gas in the world. It produces over 50% of the world’s supply, and neon is indispensable in chipmaking. As a result, the semiconductor shortage may be a consistent problem in 2022.
• On Friday, South Korea started early voting for its election. Front-runners to winning the presidential nominations are conservative Yoon-Seok-youl and Lee Jae-myung of the ruling Democratic Party. The outcome is closely being watched by China, North Korea, and the U.S.; the new president could change Korea’s foreign policy stance. A win by the Yoon could lead to South Korea taking a tougher stance toward North Korea and China and a more amicable relationship with the U.S., while a win by Lee would likely keep the country on its current policy path. The latest opinion polls show the two are almost tied, with Lee leading Yoon by one percentage point (38% vs. 37%). The election will take place on March 9.
• Senator Joe Manchin (D-WV) has expressed openness to a much smaller spending bill. The new bill will feature prescription savings and a way to tax the wealthy.
• Following his visit to Taiwan, former Secretary of State Mike Pompeo has called on the U.S. to recognize Taiwan.

View PDF

by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM EST] | PDF

Good morning! Today’s report begins with the latest developments of the Ukraine Crisis. We will then go over recent central bank news. Afterward, we will discuss economic and policy updates and conclude with our standard pandemic coverage.

Russia-Ukraine

Entering its 8th day, fighting in Ukraine has intensified. The latest reports show that Russia may have seized the provincial capital of Kherson, although Ukrainian officials have denied these accounts. Ukraine’s second-largest city, Kharkiv, continues to be pummeled with a barrage of indiscriminate airstrikes. Meanwhile, Russian troops are reportedly having an easier time moving through the southern part of Ukraine as it tries to take over the country. Despite Russian advances, Ukraine appears to be having some success.  In a battle against Russian Forces, Ukrainian troops recovered a document reportedly showing Moscow planned a 15-day war from February 20 to March 6. The document revealed call signals, an invasion map, and a personnel list. The information could not be independently verified for its accuracy, but a U.S. intelligence report suggested that Russia planned to invade Ukraine after the Beijing Olympics, which concluded on February 20.

The fallout from the invasion appears to be spreading throughout the financial markets. Russian energy firms that have not been sanctioned are finding it hard to find places to sell their products. Even with steep discounts, refineries have reduced or stopped purchasing Russian oil altogether due to concerns that the sector will eventually be sanctioned. Additionally, dockers have expressed an unwillingness to unload the cargo from destinations that may have originally sourced from Russia. The inability to find buyers for Russian products has pushed up commodity prices worldwide. Crude oil is on the verge of surpassing $120 a barrel, wheat prices rose above $11 a bushel, and zinc hit a new record at $4000 a ton. The ceiling for commodities isn’t clear, as Russia’s end game is still unknown.

However, the uncertainty regarding the extent of Russian hostility throughout eastern Europe has already started to impact bond markets. On Thursday, an image showed Belarusian President Alexander Lukashenko standing in front of a map showing a planned invasion into Moldova’s breakaway region of Transnistria. Meanwhile, Russia has threatened Bosnia that it will retaliate if the country attempts to join NATO. The growing instability in Europe has led to an increased demand for U.S. treasuries over the last few weeks. The ten-year U.S. Treasury yield has fallen as much as 30 bps since reaching its two-year high on February 16. This flight to safety has started to gum up the financial plumbing. Treasury traders have failed to follow through on their purchase agreement by the greatest number since the start of the pandemic. Meanwhile, U.K. traders have been forced to use safeguard repo facilities as short-dated gilts are becoming scarcer. Although there doesn’t seem to be a funding crisis, if this problem persists it could force the Federal Reserve to reconsider ending quantitative easing.

• Members of the European Union and the G-7 have explored ways to block Russians from using digital assets as a way to evade sanctions. Crypto exchanges have stated they were willing to honor sanctions but have resisted calls for a blanket ban. The concerns of possible crypto regulation led the rise in digital assets to slow down.
• Russia’s pariah status is becoming more accepted across the world. The MSCI and FTSE both decided to cut Russian stocks out of its emerging market indexes, while the London Stock Exchange has suspended dozens of Russian depositary receipts from trading. The push to exclude Russian equities is because of the growing sentiment that these firms may be uninvestable in the future in light of growing sanctions.
• India is considering allowing Russia to bypass sanctions through rupee-ruble trade that will allow the countries to avoid sanctions and prevent trade disruptions.

Central Bank Policy

• U.S. economic activity expanded at a moderate to a modest pace in mid-January, according to the Federal Reserve Beige Book. The publication looks at the economic conditions across the 12 Federal Reserve Districts. Despite the expansion of economic activity, many districts reported a temporary slowdown due to heightened absenteeism related to the surge in COVID-19 cases. Additionally, firms have expressed an increased willingness to raise prices as a way to mitigate the impact of rising wages and input prices.
• The Federal Reserve is expected to hike rates in March, according to Fed Chair Jerome Powell. In a testimony to the U.S. House of Representatives Financial Services Committee, Powell stated the Ukraine situation would not deter another rate hike. Investors responded positively to Powell after he stated he does not favor an increase above 25 bps.

 Economic Policy and News

• Support for sanctioning Russian energy is growing. Senators Lisa Murkowski (R-AK) and Joe Manchin (D-WV) have called on the U.S. to stop importing crude oil from Russia even if it means higher prices. So far, countries have avoided targeting Russian energy due to fears of political blowback; however, this could change as Russia becomes more emboldened.
• The Pentagon postponed a launch of an intercontinental ballistic missile to avoid further escalating tension with Russia. The launch could have been viewed as provocative given Moscow’s decision to put nuclear forces on high alert. Additionally, the Pentagon has also delayed the release of its defense strategy as it tries to incorporate renewed Russian hostility.

COVID-19:  The number of reported cases is 441,048,833, with 5,976,554 fatalities.  In the U.S., there are 79,143,885 confirmed cases with 954,519 deaths.  For illustration purposes, the FT has created an interactive chart that allows one to compare cases across nations using similar scaling metrics.  The CDC reports that 691,012,865 doses of the vaccine have been distributed, with 553,778,476 doses injected.  The number receiving at least one dose is 253,752,684, while the number of second doses is 215,775,839, and the number of the third dose, granting the highest level of immunity, is 94,552,155. The FT has a page on global vaccine distribution.

• New Zealand is beginning to see a surge in cases after avoiding it for most of the pandemic.
• Senator Tim Kaine announced plans to introduce a bill that will look into the causes for long COVID. The senator has been suffering from COVID-related symptoms since contracting the virus in 2020. Little is known regarding why some people are able to feel symptoms of the virus for long periods, but millions reportedly suffer from the sickness.

View PDF

by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM EDT] | PDF

Our Comment today opens with an update on the Russia-Ukraine war, in which Russia appears to be ratcheting up its attacks on civilians.  We next review a range of international and U.S. developments that have the potential to affect the financial markets today.  We wrap up with the latest on the coronavirus pandemic.

Russia-Ukraine:  As the Russian army continues to face obstacles to its military objectives, we see increasing evidence that it has shifted its focus toward attacks on Ukraine’s civilian infrastructure and population in order to create mass terror.  For example, it killed multiple civilians yesterday in a missile attack on Kyiv’s main television antenna, and today it has stepped up a fierce aerial assault on Kharkiv, Ukraine’s second-biggest city.  Russia has also claimed that it has taken control of the key southeastern city of Kherson, although Ukrainian officials have denied that.  Meanwhile, Russian and Ukrainian representatives plan to meet again this afternoon on the Belarusian border to discuss peace, although we have seen no indications that would suggest those talks will be successful.  To put added economic pressure on Russia, President Biden said in his State of the Union address last night that the U.S. will join with the EU in banning Russian planes from its airspace.  Western companies also continue to announce they are ending or cutting back their business dealings in Russia, but in an effort to stop that, the Russian government said it would temporarily ban foreign firms from selling their assets in the country.

• Separately, the International Energy Agency yesterday said its member countries have agreed to release 60 million barrels of oil from their strategic reserves to help reduce the volatility in global oil markets set off by Russia’s invasion of Ukraine.  Even though Western sanctions have largely exempted Russian energy sales, global traders have essentially adopted a self-imposed embargo on Russia.  While that has left Russian crude trading at a steep discount (see chart below), it’s also pushing up demand and prices for non-Russian supplies.  Brent crude prices today have already surpassed $110 per barrel for the first time since 2014.  U.S. equities have weathered the war crisis to date relatively well.  U.S. investors typically have little or no exposure to Russia, and U.S. companies rely little on revenues from Russia.  However, if global energy supplies are disrupted further and prices keep rising, the negative impact on the U.S. and European economies could push U.S. stock values lower again.

• Finally, we want to follow up on the report from RIA Novosti that we cited yesterday.  As that report suggested, Russian officials believed they would be in Kyiv in short order, that the war would be over quickly, and that Ukraine would be under Russian control with a minimum of bloodshed.  The actions of Russia’s military tend to confirm this notion.  Russian units moved quickly on open roads, often outrunning their logistical support.  Social media pictures of Russian tanks on the side of the road, stuck for lack of fuel, began to circulate.  It seemed the plan was to move into Kyiv quickly, arrest the political leadership, and declare victory.  Likely, the goal was to move so quickly that the West would not have time to apply significant sanctions and would be forced to accept the fall of Kyiv as a fait accompli.
  • Obviously, things didn’t go according to plan.  The Ukrainians have put up valiant resistance.  The attacking forces, lacking logistical support, were thwarted in their aims.   The Russian military appeared disorganized and inept.  Western political leaders, impressed and emboldened by the bravery of Ukrainian President Zelensky, reacted with devastating sanctions.  Russia is isolated on the world stage, facing an economic calamity.
  • However, the newfound optimism about Ukraine’s ability to thwart Russia is probably misplaced.  The war isn’t over.  Russia now understands it is facing stiff resistance, so, if it intends to subdue the country, it will likely have to deploy “scorched earth” tactics.  If this is the case, we would expect Russian firepower to be trained on the major cities of Ukraine with devastating effects.  The loss of life could be horrific.  Russia bombed Chechnya indiscriminately in the Second Chechen War.  It would not be a huge surprise to see similar tactics deployed in the current situation.
  • Thus, investors should be prepared for a war of attrition against Ukraine.  We expect Russia to prevail but at an enormous cost.   The population of Ukraine will likely suffer huge losses, and Russian military casualties will also be high.  The West is already well on the way to making Russia a pariah state; if a war of attrition does result, expect sanctions to deepen and remain in place indefinitely.  Based on the ideas in this must-read assessment of President Putin’s psychology, we think investors should be prepared for even more dramatic moves by the Russians.

Hong Kong:  As a reminder that China is also flexing its authoritarian muscles, though not as brutally as Russia, former Hong Kong Bar Association President Paul Harris has left the city abruptly after being questioned by national security police.  Harris had become a target for pro-Beijing politicians and state-run media, who accused him of being “anti-China” for suggesting changes to the new national security law imposed on Hong Kong by China.  The sudden departure of Harris has raised concern about a new crackdown on political dissent within the city’s legal profession.

United States-China:  In its annual trade policy agenda, the Office of the U.S. Trade Representative said it would focus on a “holistic and pragmatic” approach to U.S.-China relations in order to achieve long-term benefits for American workers.  Separately, administration officials said the White House would soon announce a series of measures to confront China on its industrial subsidies and protect America’s edge in new technologies.

• As part of that effort, the White House is also weighing heightened scrutiny of U.S. companies’ investments in China, tighter export controls on sensitive technologies, and greater cooperation with European and Asian allies and partners on subsidies and other issues.
• As we’ve noted before, even policies aimed at protecting the U.S. economy from China’s unfair competitive practices could impose at least short-term costs on some companies and investors.  Regulatory risks related to the U.S.-China geopolitical rivalry remain high.

U.S. Politics:  In his State of the Union address last night, President Biden not only called for unity on the Russia-Ukraine war and the need to keep opposing President Putin, but he also hinted that the coronavirus pandemic could be coming to an end.  He pledged to combat rising prices by boosting domestic production of automobiles and semiconductors and rebuilding the nation’s roads and bridges.  Biden also called on Congress to work with him on priorities that were part of his stalled “Build Back Better” plan—though he no longer uses that term—including cutting the cost of prescription drugs, reducing energy costs, and lowering the cost of childcare.

U.S. Monetary Policy:  In testimony to be delivered to Congress today and tomorrow, Federal Reserve Chair Powell will argue that it would be appropriate for the central bank to raise its benchmark interest rate at its meeting in two weeks because of high inflation, strong economic demand, and a tight labor market.  In contrast, he’ll say it is too soon to tell how Russia’s invasion of Ukraine and the strict economic curbs imposed by the West against Moscow would influence the U.S. economy.

• While investors have rightly been focused on the Russia-Ukraine crisis over the last two weeks, Powell’s statement is a reminder that monetary policymakers have become quite hawkish on inflation and consider it urgent to hike interest rates.
• All the same, the Russia-Ukraine crisis is consistent with our view that the Fed may not hike rates as far or as fast as the bond market had suggested prior to the war.  As Powell suggests, blowback from the war could weigh on the U.S. economy and financial markets, potentially precluding too many rate hikes.  Bond values have already strengthened because of the war, but if the Fed signals that its rate hikes won’t go very far, it will help keep those values up.  Indeed, many investors have already begun to ratchet down their expectations for monetary tightening going forward.

COVID-19:  Official data show confirmed cases have risen to  438,870,727 worldwide, with 5,966,478 deaths.  In the U.S., confirmed cases rose to 79,092,025, with 952,509 deaths.  (For an interactive chart that allows you to compare cases and deaths among countries, scaled by population, click here.)  Meanwhile, in data on the U.S. vaccination program, the number of people who are considered fully vaccinated now totals 215,677,777, equal to 65.0% of the total population.

• In the U.S., the seven-day average of people hospitalized with a confirmed or suspected COVID-19 infection fell to 47,560 yesterday, down 44% from two weeks earlier and down 70% from the all-time peak of 159,000 early this year.
• More than a month after the Omicron surge peaked and began to decline, and as states are lifting pandemic restrictions, hospitals across the country are unexpectedly facing a continued shortage of nurses and other staff, leaving fewer beds available for patients.
• According to a new study, the vaccine jointly developed by Pfizer (PFE, $45.75) and BioNTech (BNTX, $146.73) was highly effective at reducing the risk of severe disease in children 17 years and younger during the Omicron surge, but it didn’t work as well at preventing infection.
  • The two-dose vaccine reduced the risk of hospitalization in children aged 5 to 11  by 74% and by 92% or higher in children aged 12 to 17.
  • However, the vaccine was only 51% effective at reducing the risk of infection among 5- to 11-year-olds, while Omicron was predominant, and between 34% and 45% effective in children 12 to 17 years old, depending on the age, for the first five months after the second dose.

View PDF

by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM EST] | PDF

Our Comment today opens with an extensive update on the Russia-Ukraine crisis.  Among many significant developments over the weekend, the Russian offensive seems to have stalled, prompting talks between Russian and Ukrainian officials this morning.  All the same, the U.S. and its allies have imposed sweeping sanctions against Russia, contributing to disruptions in many financial markets so far today.  Given our expansive treatment of the Russia-Ukraine crisis, we provide only a limited overview of some other important U.S. and international developments.  We wrap up with the latest on the coronavirus pandemic.

Russia-Ukraine:  Some developments over the weekend were positive, and some were negative, but on balance, we judge that security, economic, and financial-market risks have increased.  Among the positive developments, multiple reports suggest the Russian offensive has stalled out because of stronger-than-anticipated resistance from the Ukrainians and the Russian military’s own logistical, tactical, and morale shortcomings (for a map of Russia’s surprisingly limited military gains so far, see below).  Additional strong sanctions by Western governments and corporations announced over the weekend may help explain why both sides have agreed to negotiations on Monday at the Belarusian-Ukrainian border.  On the negative side, however, it appears Russian President Putin has become so frustrated with Russia’s slow progress that he is increasingly apt to adopt stronger, more dangerous measures.  On Sunday, he announced he was putting Russia’s nuclear forces on heightened alert, and many observers believe he will try to reinvigorate the Russian invasion by unleashing much more destructive attacks against civilian targets.  It also appears he is making sure that Belarusian President Lukashenka helps with his dirty work.  Over the weekend, Lukashenka pushed through constitutional changes that would increase his power and rid Belarus of its non-nuclear status, which would allow Russia to base nuclear missiles there.  Reports indicate Belarus will also send troops into Ukraine to support the Russian forces there.  In any case, the tensions continue to push energy prices sharply higher today and are weighing on most major equity markets.  The tensions also threaten new supply shortages that could push prices up for a range of globally traded commodities.

• The sanctions announced by Western governments over the weekend included a ban on transactions with the Russian central bank, which will inhibit liquidation of the country’s international reserves and shut key Russian banks out of the SWIFT global payment system.  This will inhibit international trade and capital flows with Russia.  Even though the sanctions provide exemptions for certain energy-related transactions, their overall impact will likely be highly disruptive to the Russian financial markets and economy.
  • In early trading today, the ruble tumbled more than 25% to approximately 118 per dollar before partially recovering to about 102.  Since President Putin became Russia’s leader some 20 years ago, the ruble has fallen almost 75% (see chart below).
  • To arrest the decline, the Russian central bank has implemented an emergency rate hike, boosting its benchmark short-term interest rate to 20% from 9.5%.

• Among the longer-term impacts of the crisis, multiple European governments have recognized their military vulnerabilities after decades of excessively low defense spending, and they are now hiking their military budgets.
  • Summing up the change, former NATO Deputy Secretary-General Alexander Vershbow said in an interview that “Real power comes from military power. Putin certainly feels that way. And I think NATO is going to have to develop a culture of readiness and start talking Putin’s language.”
  • This change of policy is already driving up defense stocks.  Given how much military modernization and rebuilding will be necessary for some NATO countries, we suspect the trend could be attractive for investors for an extended period.
• Even more fundamentally, it appears to us that the crisis has profoundly altered Western assessments of the threat from authoritarian leaders in key countries like Russia and China and galvanized Western resolve to oppose them.
  • At one level, Western perceptions are being driven by the leadership of Ukrainian President Zelensky, who has vowed to stay in the capital city of Kyiv and fight shoulder-to-shoulder with his countrymen until the end.  Few would argue that this former television comedian is perfect, but people worldwide have embraced his patriotic commitment to defending Ukraine.  In a quote that will live for the ages, Zelensky, over the weekend, responded to Western offers to help him escape by saying, “The fight is here . . . I need ammunition, not a ride.”
  • Broadly, the sight of Ukrainian popular resistance and self-sacrifice is proving to be an inspiration.  Examples include a video of Ukrainian civilians facing down Russian tanks, Ukraine’s “Ghost of Kyiv” air force pilot who has already downed six Russian jets, and the story of 13 Ukrainian border guards who responded to a Russian navy ship’s radioed demand to surrender by responding, “Russian Navy Ship:  Go f*** yourself,” at which point they were killed.  Some of those stories have already been called into question, but that’s not the point.  The point is that the Ukrainians fighting for their independence and democratic government have proven to be a sympathetic underdog that only serves to highlight the ugliness of authoritarian aggression.  As we’ve mentioned before, the result will probably be a continued rift between the world’s liberal democracies and the authoritarian blocs led by Russia and China.  Complete globalization is now dead, and the result is likely to be a world in which the liberal democracies are largely decoupled from the Russian and Chinese blocs, the defense industry is growing and invigorated, and global supply chains are shorter and costlier.

U.S. Economy:  New research from the Atlanta FRB shows the country’s youngest workers are securing the fastest wage increases of any age group.  Median hourly wages for workers aged 16 to 24 were 10.6% higher in January than a year earlier, far exceeding the 4% overall gain for all workers.  The gains largely reflect the post-pandemic economic recovery, especially at restaurants and other venues that employ a lot of younger people.

Australia:  Huge rainstorms over the weekend have submerged cities and towns in Queensland and New South Wales, triggering thousands of insurance claims and stoking criticism of Prime Minister Morrison’s stance on climate change.

China:  New research by consultancy AidData highlights the extent to which President Xi’s “Belt and Road Initiative” of big infrastructure loans to generally poor countries leaves them saddled with debt and under the influence of China.  The new research shows that BRI contracts have not only required collateral in the form of escrow accounts funded by the projects themselves, but also accounts funded by the overall revenues of a borrowing entity.

North Korea:  According to Japanese and South Korean intelligence officials, North Korea launched a suspected ballistic missile off its east coast on Sunday morning, restarting weapons tests after nearly a month of inaction and highlighting that destabilizing military activity remains a threat in the Asia-Pacific region.

COVID-19:  Official data show confirmed cases have risen to  435,483,792 worldwide, with 5,950,144 deaths.  In the U.S., confirmed cases rose to 78,939,203, with 948,397 deaths.  (For an interactive chart that allows you to compare cases and deaths among countries, scaled by population, click here.)  Meanwhile, in data on the U.S. vaccination program, the number of people who are considered fully vaccinated now totals 215,457,016, equal to 64.9% of the total population.

• In the U.S., data continues to suggest that the highly transmissible Omicron mutation is in retreat.  The seven-day average of people hospitalized with a confirmed or suspected COVID-19 infection fell to 52,909 yesterday, down 43% from just two weeks ago.
• With the downward trend in U.S. infections, New York City Mayor Adams said the city’s mask mandate for public schools and its vaccine requirement for restaurants, fitness centers, and entertainment venues could be lifted on March 7, provided that infections keep falling.  New York Governor Hochul said the statewide school mask requirement would end on March 2.
• In contrast, the massive outbreak in Hong Kong continues.  Hong Kong’s total cases since the start of the pandemic are now twice the amount in mainland China, leading to overflowing morgues and extreme strain on the healthcare system.

View PDF