To Be Or Not To Be

News flow was comparatively sparse as equities looked to wrap up their best week since 2020.

China, which is coping with the country’s worst outbreak since the onset of the pandemic, will stick with its “dynamic” COVID-zero policy despite the economic impact, which Wang Hesheng, vice head of the National Health Commission, described as “short-term” and confined to regions where containment protocols have been implemented. Another official from the commission said a revised treatment protocol doesn’t represent a relaxation of China’s existing policies.

Various reports suggest Xi Jinping is considering the adoption of a more flexible approach in order to shore up the economy, but Wang told reporters the current strategy is “scientific” and continues to “work well.”

Speaking of “scientific” strategies that won’t be abandoned anytime soon because their practitioners insist they’re effective, Haruhiko Kuroda on Friday said there’s “absolutely no need” for the BoJ to raise rates or otherwise change course at a time when the bank’s developed market peers are all pivoting hawkish. Inflation may hit 2% this year, he said, but the bank revised its economic assessment lower a mere two months after upgrading it. A weaker yen is a good thing for the Japanese economy, Kuroda remarked. Cost-push inflation, on the other hand, is “not good.”

Also “not good” were reports out of Ukraine, where Russia is set to target weapons shipments. Missiles were fired at areas in the country’s far-west, near the border with Poland. “We said clearly: Any cargo moving into Ukrainian territory which we believe to be carrying weapons is fair game,” Sergei Lavrov told RT.

In addition to reporting news, RT was also making it. The UK’s communications regulator revoked the outlet’s broadcast license. “We consider the volume and potentially serious nature of the issues raised within such a short period to be of great concern, especially given RT’s compliance history, which has seen the channel fined £200,000 for previous due impartiality breaches,” Ofcom said, in a statement, referencing 29 ongoing investigations. This is a good time to remind readers: RT and Sputnik aren’t akin to CNN or The Guardian or AFP, as too many Western citizens have been led to believe. Rather, RT and Sputnik are pure propaganda. It’s not just “spin.” It’s state media. They’re controlled and directed by the Kremlin.

Vladimir Putin on Friday accused Ukraine of playing for time in peace talks. Ukraine, Putin told Olaf Scholz, is “stalling” and their demands are “unrealistic.” That, coming from a man whose own demands, implicit or explicit, have included the ceding of entire regions and the installation of a new government friendly to his own against the wishes of the local citizenry, many of whom are currently fighting in the streets to keep control of their capital.

Despite no sign of a ceasefire, global equities were on track for their best weekly gain since November 2020 (figure on the left, below).

European stocks have erased their losses logged following Russia’s invasion (figure on the right).

“After a tumultuous few months, European and US benchmarks are now about neck-and-neck for year-to-date returns,” Bloomberg’s Michael Msika said, on the way to suggesting the Fed’s hiking cycle, the read-through for the euro and “favorable investor positioning” could entail outperformance for European shares.

Goldman, though, cautioned that the rally and the accompanying decline in oil prices from recent highs “points to a significant relaxation in the market’s assessment of the global implications” of Putin’s gambit. “Our downside case is no longer well reflected in many areas,” the bank’s Dominic Wilson warned.

Poland, meanwhile, is working to cut Russia off completely. “We’re beginning full derussification of Poland’s economy,” Prime Minister Mateusz Morawiecki told a press conference in Warsaw. The sweeping overhaul will be “costly,” the government said, “but this is a ‘to be or not to be'” moment not just for Poland, but for the whole of Europe.