Feb 24 update

President Vladimir Putin said Russia would bolster its nuclear forces in a speech on “Defender of the Fatherland Day”, a public holiday. According to Mr Putin Russia will deploy the Sarmat intercontinental ballistic missile, nicknamed “Satan 2”. On Tuesday Mr Putin withdrew from New START, Russia’s last nuclear-reduction treaty with America. Meanwhile Ukraine said it had held off Russian incursions across the frontline ahead of the anniversary of Russia’s invasion on Friday.

The Israeli army launched air strikes on Gaza in retaliation for the firing of six rockets towards Israel by Palestinian militants. On Wednesday, Israeli forces had killed 11 Palestinians and injured scores more in a daytime raid in the West Bank. Five of the rockets were shot down by Israel’s air defences. Israel and Palestine have experienced an uptick in violence this year.

President Joe Biden nominated Ajay Banga, a former chief executive of Mastercard, as president of the World Bank. David Malpass, the previous head, resigned last week, a year before his term was set to expire, amid concerns that he did not take climate change seriously. The bank’s largest shareholders, including America, are seeking to expand its operations to focus on combating global warming.

Brazil announced that it would temporarily halt exports of beef to China after detecting a case of mad cow disease in the northern state of Pará. Brazil, which is the world’s largest beef exporter, previously suspended exports to China for more than three months in 2021 because of an outbreak. The suspension will hurt Brazilian food producers as China is their largest export market.

Police in Northern Ireland suspect that the gunmen who critically injured an off-duty officer were members of the New IRA, a militant group. John Caldwell, a police detective, was shot repeatedly by two men in the town of Omagh on Wednesday. Tensions have been rising as Rishi Sunak, Britain’s prime minister, pushes to reform Northern Ireland’s post-Brexit trade arrangements with the European Union.

The European Commission ordered all staff to remove TikTok, the Chinese-owned social-media app, from their work phones citing concerns over data security. Employees will also have to delete TikTok from their personal phones if they have work-related apps installed. Western governments worry that TikTok shares the data it gathers from users with Chinese authorities; America banned the app on government phones.

Britain’s government confirmed it will establish an independent regulator to oversee English football. The proposed regulator’s tasks will include ensuring a fairer distribution of revenues between clubs and preventing them from joining breakaway competitions, such as the European Super League. More details will be revealed in the government’s white paper on football governance, set to be released on Thursday.

Fact of the day: 40%, the percentage of the Philippines’ electrical grid owned by Chinese firms. Read the full story.

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PHOTO: DPA

The euro zone’s volatile inflation data

Tech problems are especially embarrassing when everyone is watching. As the world awaited the release of the euro zone’s January inflation figures on February 1st, Eurostat, the EU’s statistics bureau, announced that Germany’s contribution was missing because of a technical problem that had forced the agency merely to estimate the country’s figure. On Thursday the euro area’s price data was updated and released.

Inflation came in slightly higher than the estimate, at 8.6% compared to 8.5%. Germany published its full January figures on Wednesday. They show consumer prices rising by 9.2% year-on-year, or 0.5% on the previous month (not seasonally adjusted). The energy data show why. As a one-off government rebate on utility bills ran out, energy prices increased by 8.3% between December and January. Energy costs have come down in wholesale markets, but it is not clear if or when that decline will be passed on to consumers. Europe’s inflation data over the coming months may be volatile, IT problems or not.

PHOTO: DAVE SIMONDS

The Fed’s magical disappearing act

When the Federal Reserve publishes new balance-sheet figures on Thursday, they will probably show another step downwards. Since mid-2022 the Fed has shrunk its assets from $9trn to $8.4trn. This carefully managed decline is known as quantitative tightening (QT), the reverse of the quantitative easing (QE)—purchases of bonds on a massive scale—used by the Fed to support the economy during downturns.

The Fed wants QT to play out quietly. It plans to shrink its balance-sheet by about $2.5trn in total by mid-2024 in order to bring it closer to its pre-covid size. But the Fed’s monetary operations may soon get trickier. Many investors think that it will shift from raising interest rates to cutting them later this year as economic growth falters. That could create a conflict in which the Fed is cutting rates (a form of easing) at the same time as shrinking its assets (a form of tightening). Markets would go from QE to QT to Q-confusion.

PHOTO: AP

Alibaba looks to the future

China’s reopening after three years of zero-covid measures is great news for consumer-tech giants like Alibaba and Tencent. The attempt by the country’s president, Xi Jinping, to shut out the pandemic depressed consumption, and these companies suffered. The extent to which they braced the pain became clearer on Thursday when Alibaba reported its final quarterly earnings of 2022.

The results were better than expected. Revenue grew 2% year-on-year when many analysts had predicted a decline; its net income of 46.8bn yuan ($6.8bn) was also above expectations. The company’s figures were partly buoyed by ruthless cost-cutting measures as it shed nearly 20,000 jobs in 2022. Still, investors will hope the worst is nearly over. Some believe that opening up will result in a consumption boom, boosting sales on Alibaba’s platforms of discretionary goods such as clothing and cosmetics. Others hope Mr Xi’s crackdown on big tech is over.

PHOTO: GETTY IMAGES

BAE and the race to arm Ukraine

Britain’s FTSE 100 share index has been on a tear of late, but few of its companies have done as well as BAE Systems. The share price of Europe’s biggest defence contractor has risen by more than 50% over the past year. And its financial results for 2022, released on Thursday, showed that revenues rose 8.9% year-on-year. As a manufacturer of everything from frigates and fighter jets to electronic-warfare systems, it has done very well out of Russia’s invasion of Ukraine.

A BAE product, the 155mm howitzer shell, is at the heart of the West’s struggle to keep Ukraine’s arsenal stocked. Having exhausted their Soviet-era ammunition, Ukraine’s army increasingly relies on NATO countries for such shells. Yet America and Europe combined currently make enough in a year only to maintain a three-month barrage. That is a worry as Ukraine faces the prospect of a new Russian offensive. BAE’s earnings will interest investors. But of more general concern is how fast it can ramp up production.

PHOTO: VIVIAN YOON

A confessional K-pop podcast

Growing up, Vivian Yoon hid a secret behind her baggy jeans and emo records. The Korean-American was raised in Los Angeles’s K-town, the centre of its Korean diaspora. But one thing she would never reveal: she loved K-pop.

For more than a decade now, K-pop has been globally popular and Ms Yoon (pictured) is ready to confess. A writer and actor, her new podcast, “K-pop Dreaming”, recounts the rise of K-pop and Korean-Americans’ contribution to it. The first two episodes, released on Thursday, suggest that both the music and the diaspora have been explored better elsewhere. But then the podcast’s real subject is Ms Yoon herself. Her attempts to figure out how her Korean heritage and K-Town upbringing have shaped her life are the podcast’s most compelling elements, and perhaps its most divisive. Listeners charmed by Ms Yoon’s openness will enjoy her frequent autobiographical recollections. For others, her confessional style may be a distraction from her musical and sociological themes.