Russia/Ukraine War Update - June 9th, 2022

 *** MILITARY SITUATION ***

-Ukrainian forces battling Russian troops in a key eastern city appeared on the cusp of retreat Wednesday, though the regional governor insisted they are still fighting “for every centimeter” of the city. The urban battle for Sievierodonetsk testified to the painstaking, inch-by-inch advance by Russian forces as they close in on control of the entire Luhansk region, one of two that make up the industrial heartland known as the Donbas. Luhansk Gov. Serhiy Haidai acknowledged the difficulties in Sievierodonetsk on Wednesday, telling The Associated Press “maybe we will have to retreat, but right now battles are ongoing in the city.” Earlier, on the Telegram messaging app, he said Ukrainian forces were fighting “for every centimeter of the city.” He indicated they could pull back to positions that are easier to defend. The city across the river, Lysychansk, sits on higher ground.

-Ukrainian forces have been pushed back by a Russian bombardment in the frontline eastern city of Sievierodonetsk and now only control its outskirts, according to the governor of Luhansk, Serhiy Haidai. Russian forces have seized residential quarters of the key eastern city and are fighting to take control of an industrial zone on its outskirts and the nearby towns, Russian defence minister Sergei Shoigu said.

-Western-supplied artillery systems are already making a difference on the ground for Ukraine and it is “just a question of time” before its forces win back significant ground in the south, the governor of the Mykolaiv region said on Wednesday.

*** ECONOMIC & POLITICAL ***

-A military aircraft of unspecified type crashed on Wednesday in California’s Imperial County, about 30 miles north of the Mexican border. The five people on board are presumed dead. Preliminary reports mentioned “nuclear material” on board. While the US Marine Corps confirmed there was a crash, no details have been officially released. Local news stations reported on Wednesday afternoon that a military plane came down near the community of Glamis, about 150 miles east of San Diego, citing the Imperial County Sheriff’s Office.

-The Joe Biden administration planned to use its now-shelved Disinformation Governance Board (DGB) to make social media platforms remove posts the government deemed false, according to leaked documents obtained by Republican lawmakers.  GOP Senators Chuck Grassley (Iowa) and Josh Hawley (Missouri) cited the whistleblower files in an open letter to Department of Homeland Security chief Alejandro Mayorkas published on Wednesday, in which they pressed for more details on the controversial DGB. The department “planned to coordinate efforts to leverage ties with social media platforms to enable the removal of user content,” the senators said in a press release, adding that it sought to use Big Tech sites to “enforce its agenda.” First floated in April, the board was quickly paused after a strong public backlash in which critics likened it to a state-run ‘Ministry of Truth’. The lawmakers said the leaked documents raised “serious concerns” about the initiative. US puts ‘disinformation board’ on hold READ MORE: US puts ‘disinformation board’ on hold

“The DGB was established to serve as much more than a simple ‘working group’ to ‘develop guidelines, standards, [and] guardrails’ for protecting civil rights and civil liberties,” they wrote. “In fact, DHS documents show that the DGB was designed to be the Department’s central hub, clearinghouse and gatekeeper for Administration policy and response to whatever it happened to decide was ‘disinformation.’” Grassley and Hawley argued that the Biden administration has offered no clear definition of “disinformation,” and that the DHS board had shown serious bias even in its earliest stages, despite assurances it would remain apolitical.

-Bulgaria says it's "done enough" for Ukraine and has no plans to send heavy weapons, a Tuesday statement from Bulgarian Prime Minister Kiril Petkov indicated. "We’ll do what we have promised to do and there’s no need to reignite the debate every two weeks," Petkov said. "We’ve supported the incoming refugees, we have sent all kinds of humanitarian aid, we have also been involved with repairing Ukraine’s heavy weapons and we’re in line with all sanctions against Russia." The pushback from Bulgaria's leader comes amid growing pressure after most NATO countries have ramped up their military supplies to Kiev, including some Baltic and Western European states transferring heavy weapons, up to an including even tanks. Since the war's start and Western calls for heavier armaments to help Ukrainian forces repel the Russian invasion, the question of aid to Ukraine has threatened to fracture Petkov's ruling coalition government, resulting in an earlier agreement that Sofia would refrain from supplying arms or ammunition.

-New White House press secretary Karine Jean-Pierre was delivering her third on-camera goodbye to a departing staffer in less than 24 hours when she quipped to reporters, “I promise we will have a press shop.” She added, “Not everyone is leaving.” It’s a dynamic playing out across the White House complex this month — and more evidence that not even the White House is immune from what has been called “the great resignation” as employers struggle to fill vacancies and workers jump to new jobs at record rates. The administration is undergoing a period of unusually high staff turnover as President Joe Biden nears 18 months in office. Long hours, low morale and relatively low pay are taking a toll on both the ranks of the senior staff and the more numerous junior aides who keep the White House functioning. It’s not unusual for staff to turn over at this point in a presidency, but the swiftness of the change has been stark at times: Two-thirds of the White House press shop, much of the COVID-19 response team, two of the deputy counsels to the president, even the staffer who manages the White House Twitter account are all leaving within a few weeks of each other.

-Several European heads of military cyber defence forces agreed on Wednesday (June 8) that Russia has been far less effective than expected in employing digital combat capabilities in their offensive against Ukraine. "Among cybersecurity experts we were pretty sure that there would be a cyber Pearl Harbour based on past experience of Russian behaviour and capabilities," said General Karol Molenda, head of Poland's National Cyber Security Centre.

-US stocks finished lower with participants cautious amid higher yields and ahead of risk events, while catalysts were light for macro sentiment although lows in stocks were seen in the wake of the new SEC rules on markets as it takes a tighter grip on regulation. DXY eked marginal gains alongside upside in yields and continued advances in USD/JPY, although gains were capped for the DXY as EUR marginally strengthened ahead of tomorrow’s ECB. OECD cut its world economic growth view in which it sees 3.0% growth in 2022 (prev. 4.5%) and sees 2.8% growth in 2023 (prev. 3.2%). Looking ahead, highlights include Chinese Trade Balance, Exports & Imports, South Korean Unemployment, Japanese Money Supply & Enhanced Liquidity JGB Auction.

-White House said it expects elevated inflation numbers to be released on Friday, according to Reuters.

-US President Biden administration senior official said supply chain negotiation is to be a key part of the new economic agenda for Americas and said they will advance competitive aims against China in the region as Beijing's diplomatic efforts backfire, according to Reuters.

-US Treasury Secretary Yellen said that inflation at 8% is unacceptable and sees no way in which inflation is a decade-long problem, according to Reuters.

White House's Sullivan said the US is watching very closely the continued possibility of a North Korean nuclear test, to which the US would have a robust response, according to Reuters.

-UAE Energy Minister said the situation is not encouraging when it comes to the amounts of crude OPEC+ can bring to the market and noted that conformity with the OPEC+ deal is more than 200%, according to Reuters.

-The explosion at Freeport LNG at Quintana Island has forced operations at the oil and gas export facility to be halted "for a minimum of three weeks," according to local news KPRC. Freeport receives about 2 billion cubic feet of gas per day or roughly 16% of the total US LNG export capacity. This means LNG exports will shrink and result in more supply on the grid, pushing down natural gas prices.

-Two British men captured by Russian forces while fighting alongside Ukrainian soldiers in Mariupol face 20 years in prison, according to a video shared by Russian state media. Aiden Aslin, 28, and Shaun Pinner, 48, appeared in court in the separatist Donetsk People’s Republic (DPR).

-Ukraine has received the first billion dollars of the $40 billion aid package that the US Congress approved last month. In a tweet on Wednesday, US ambassador to Ukraine Bridget A Brink said: “Supporting Ukraine means strengthening its economy. Direct support of $1 billion is already here to help Ukraine and its people move forward.”

-Russia’s foreign minister, Sergei Lavrov, said Moscow was willing to open corridors to allow grain exports from Ukraine, but that these efforts relied on the Ukrainian side to remove mines from their ports.

-At a moment global humanitarian and hunger relief groups are warning of a "catastrophe" for already vulnerable populations particularly in Africa and the Middle East which rely heavily on Ukrainian and Black Sea region grain exports, the United Nations has said it will likely take "months" to de-mine Ukraine's ports. The war-torn country is the fourth biggest exporter of grain in the world. Hundreds of merchant vessels had been stranded in the war's opening months at Ukrainian ports following the Russian invasion, and still nearly 100 remain stuck along with their crews. This week a special advisor on maritime security at the UN's International Maritime Organization told Bloomberg: "Even if the ports wanted to reopen tomorrow it would take some time until ships could enter or depart." But it remains that before this, "Completely removing sea mines in the port areas would take several months."

-A Russian-backed official in Ukraine’s partially occupied southeastern region of Zaporizhzhia said Russia has begun to send grain from occupied areas to Turkey and the Middle East through Crimea. A Russian official in Crimea, Oleg Kryuchkov, said the first train carrying grain had arrived from Melitopol, a city in Zaporizhzhia. The Kremlin also claimed shipments of grain will restart in the coming days from the Russian-occupied Ukrainian port of Berdiansk after work to de-mine the area.

-One of the most pernicious consequences - if primarily for the anti-Russia west - resulting from the Ukraine war, has been the unprecedented spike in fertilizer prices which among other things, has sparked a historic surge in food prices and collapse in supply chains around the globe, as we discussed in these articles published over the past few months:

-A British former intelligence officer said he doesn’t see Vladimir Putin still being president of Russia “three to six months from now”. Putin’s days will be “numbered” once western sanctions on Russia, especially energy measures, begin to take effect, Christopher Steele told the BBC. Steele pointed to “signs that Putin’s health is failing” and said if US and UK sources are correct, the Russian leader could be “incapacitated” in that time.

-Beijing has rejected a report by the Washington Post claiming that a Chinese naval base is being secretly built in Cambodia. “China and Cambodia are comprehensive strategic cooperative partners enjoying open, transparent, logical and legitimate cooperation in various sectors,” Chinese foreign ministry spokesperson Zhao Lijian said during a briefing on Tuesday. The joint work by Beijing and Phnom Penh has been “a good example of building a new type of international relations and a community with a shared future for mankind,” he insisted.

-Another week, another collapse in the pace of mortgage applications as the Mortgage Bankers Association (MBA) reports a 6.5% week-over-week drop in mortgage applications - the fourth straight weekly drop - to its lowest since 2000. Purchases fell more than refis, tumbling 6.1% WoW (refis fell 5.6% WoW). Outside of the COVID lockdown collapse in mortgage applications - where offices were forced to close by the government - this is the weakest level for purchase applications since Nov 2016.

-Turkey says that a plan being brokered under UN auspices to set up safe 'grain corridors' to open Ukraine ports for Black Sea transit has yet to be finalized, but that it's "feasible". Turkey has offered to escort maritime convoys as a neutral power from blockaded Ukraine ports. Turkish Foreign Minister Mevlut Cavusoglu while speaking alongside Russian Foreign Minister Sergey Lavrov in a Wednesday news conference said that for the plan to finally proceed, there would have to be direct negotiations between Moscow and Kiev.

-Kyiv has dismissed assurances from Russia’s foreign minister, Sergei Lavrov, that Moscow will not use the situation to its advantage if Ukraine allows grain shipments to leave safely via the Black Sea as “empty”.

COVID CASES USA 7-DAY AVG
116,077 JUN 07 2022
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