Little Hope for Ukraine Breakthrough; New Covid Controversy in the U.S.

by Greg Valliere, AGF Management Ltd.

Insights and Market Perspectives

WISHFUL THINKING: Staggering Russian losses in recent weeks apparently will not dissuade Vladimir Putin, who is likely to boast today of progress in the Donbas region while rejecting any serious talks toward a settlement.

NEWS AGENCIES ARE REPORTING this morning that the traditional May 9 military parade celebrating the defeat of Nazi Germany in 1945 will be far less impressive than in recent years.

THE REASON, SIMPLY, IS THAT RUSSIA HAS FEWER tanks, helicopters and other weapons — and has suffered well over 20,000 fatalities, with thousands more wounded or captured. Still another Russian general was killed last week; perhaps a dozen have perished as the war slogs on in the east.

WITH WESTERN COUNTRIES pouring weapons and financial aid into Ukraine, an imminent settlement seems very unlikely. Volodymyr Zelensky wants to win; he announced this past weekend that his peace terms would include a return to pre-war borders, a non-starter for Putin, who is content to bomb civilians indiscriminately.

THUS THE WAR is likely to last until Russia runs out of conscripts and weapons, with a threat that Putin could declare war and call up even more bewildered reservists. Young men are leaving the country in droves.

RUSSIA WILL EVENTUALLY CAPTURE WHAT’S LEFT OF Mariupol, while the Ukrainians are making progress near Kharkiv. Our bottom line has not changed since February — Russia cannot win this war by any conventional concept of winning; Putin continues to grossly miscalculate Russia’s staggering military and economic losses.

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JUST WHEN IT SEEMED THAT the Covid pandemic was in the rear-view mirror, two new controversies have erupted in Washington. One involves a budding dispute between Anthony Fauci and the new White House Covid coordinator, Ashish Jha; the other focuses on an incredible estimate of potential new cases this winter.

FAUCI RAISED EYEBROWS LATE LAST WEEK when he criticized the more relaxed climate in Washington, where 2,500 attended the White House Correspondents dinner; several notable attendees have subsequently contracted Covid.

FAUCI DID NOT ATTEND THE DINNER, but Jha did, noting that participants were required to be fully vaccinated and recently tested. In an off-the-record phone call that was reported by Politico and others, Fauci expressed frustration with the sanguine message that the dinner sent.

JHA’s MORE UPBEAT MESSAGE seems to contradict the Biden Administration’s call for a $22.5 billion spending package for more vaccines and Covid aid; funding for both may run out later this year. Without more aid, the White House says, there could be upwards of 100 million new Covid cases this winter, a shockingly alarmist figure that many experts reject.

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

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This post was first published at the AGF Perspectives Blog.