With futures sinking for a third day and set to take out the 200dma (S&P cash at 3938), traders are bracing for a potential air pocket lower in today’s session, one which could drag stocks sharply lower if 3900 is also taken out. And while we will have more to say about the technicals in a follow up post, here is a quick snapshot from the trading desk of the largest US bank, JPMorgan.

We start with the overnight market snapshot from JPM index trader Jason Hunter who writes that the move lower can accelerate rapidly if key support around 3,900 is taken out:

The S&P 500 Index slide from anticipated resistance in the 4100s threatens key chart levels surrounding 3900. A move through that support has the strong potential to accelerate bearish price pressures, in our view. Other markets that have been sensitive to the China rebound story are testing key chart levels as well. A break there has the potential to feedback into western markets as global macro sentiment may sour.

Even after the recent setback, the S&P 500 Index still looks overvalued relative to the shape of the money market curve. We have used versions of regression models based on that relationship to not only show the limited upside for the index (4100-4200 resistance), but also show asymmetric downside risk that is still present on the residual chart.

An 18-month relationship that uses the expected terminal rate and overall amount of easing priced after terminal rate is achieved currently shows the index fair value just below 3800. A retest of the 3491 4Q22 low would roughly equate to 2 standard deviations oversold, all else equal. That study has a 0.75 r-squared and 160pt standard error.

And here is some additional color from JPM TMT trader Ron Adler who notes that “This tape is nearing max frustration” to wit:

This tape is nearing max frustration. The desk and TMT are again very balanced from a flow perspective. We continue to see LO demand in the MegaCap, some idiosyncratic positioning in software ahead of tonight. A TON of paper hit the market (I believe ~$2.9B), and this doesn’t account for the heightened VC distributions seen as windows open post earnings. Yields are the issue today (though the dollar is not reacting in tow, though EUR/USD is stronger); still, all things considered, the market is hanging in ok (famous last words)

The red headline guy has almost hit the “send” button on the “10-year yields hit 4% for the first time since November 2022” headline 17 times today. Growth investors anxiously await that catalyst to sell the stocks they sold in November again (you know, the same ones they subsequently bought in January). That trigger finger is very, very itchy.

APP BASED DELIVERY | Received a few questions on the NYC Minimum wage issue. Remember that time when NYC said it would decide about a minimum wage for delivery workers by February 15, then on February 15 changed the language on the website to say it “now expects to issue a final rule by February 2023.” Today is March 1. I haven’t seen anything yet (language on the website still says end of February .

Finally, as a bonus, here are the key factors that Goldman’s equity desk is focusing on:

• DESK ACTIVITY… B/S skew on the floor finished roughly flat. LOs finished 320bps better to buy driven by mega-cap tech and ETFs (ETF volumes tracked ~36% of the tape). HFs finished 415bps better to buy, with notable buy skews in HC and tech. Continue to see corporates and sponsors monetize in block form – desk saw blocks in OPCH & HAYW post close
• CHINA…China will make a push at the G20 foreign ministers meeting on Thurs for peace talks to commence in the Ukraine war, but Washington is very skeptical Russia has any intention to negotiate in good faith and end its aggression – NYT.
• PB ONE LINERS…Looking back on Feb: Overall Prime book saw the largest notional net selling in 8 months (-1.2 SDs one-year), driven by elevated short sales outpacing long buys ~4 to 1. Single Stocks were net bought for a 3rd straight month and saw the largest notional net buying in 5 months (+0.9 SDs one-year), driven by risk-on flows with long buys outpacing short sales ~6.5 to 1 (in contrast to January during which short covering dominated the flows).
• GEOPOLITICAL TENSIONS…Tensions continue to simmer, reportedly the US is sounding out close allies about the possibility of imposing new sanctions on China if Beijing provides military support to Russia for its war in Ukraine. However, on the bright side the WSJ reports that a senior Treasury Department official recently traveled to Beijing and met with Chinese counterparts for technical, staff-level discussions on macroeconomic and financial issues. Meanwhile, China’s Vice Minister of Commerce said his country is willing to conduct candid talks with the US to reduce trade and investment restrictions, in order to implement consensus reached by leaders of the two countries in Bali. (TY Fred Yin).
• CTAs…Updated numbers: In a flat tape ($27B for SALE – $20B in SPX).
• 10 YEAR YLDS…3.4% to start Feb…4.08% currently…

The Kremlin has condemned what it called a new terrorist attack on its soil Thursday carried out by Ukrainian saboteurs who allegedly breached a border region. 

Russian presidency spokesman Spokesman Dmitry Peskov said militants entered the Bryansk Oblast in Western Russia and attacked villages there, resulting in the death of one civilian and another wounded. “This is an attack by terrorists,” Peskov said.

Conflicting initial reports indicated Russia’s Federal Security Service engaged in a gun battle with  the infiltrators, with the Kremlin saying “Measures are currently underway to eliminate these terrorists.”

The Associated Press describes based on national media that “Tass, citing Russian law enforcement, reported earlier that the saboteurs were holding up to six people hostage.”

“The local governor said the group had fired on a vehicle there, killing one man and wounding a 10-year-old,” AP continues. The report details further:

Thursday’s apparent incursion was also embarrassing for Russian President Vladimir Putin, coming days after he ordered the Federal Security Service to tighten controls on Russia’s border with Ukraine.

Tass reported, citing an unnamed security official, that two villages in the Bryansk region — Sushany and Lyubechane — were under attack by “several dozen armed fighters.”

Alexander Bogomaz, the governor of the Bryansk region, which borders Ukraine, said the group fired on a vehicle in Lyubechane, killing one man and wounding a child. He also said that a Ukrainian drone struck a house in the Sushany, setting it ablaze.

Multiple war monitoring accounts have picked up on the below video which is widely being flagged as showing one of the alleged attackers:

🚨BREAKING: A Ukrainian terrorist attack is underway in Bryansk, Russia.

The attackers said on video they wouldn’t kill civilians, but there are reports of hostages and mass casualties.

President Putin has convened an emergency meeting of the Security Council. 🚨 pic.twitter.com/Zfi74Y80c8

— Clint Ehrlich (@ClintEhrlich) March 2, 2023

Peskov said in response to a question over what action Moscow could take in the international arena, “On the international arena, [we] have drawn and continue drawing the attention of the world public to those terror attacks that these people [Ukrainian terrorists] carry out.”

Putin also directly addressed the cross-border terror attack in a video address after convening his national security council to be briefed on the matter…

“They opened fire on civilians,… they saw that there were children in the car,” Putin said.

⚡️Putin called what happened today in the Bryansk region a terrorist attack pic.twitter.com/XXHpevnUir

— War Monitor (@WarMonitors) March 2, 2023

The incident comes after Monday into Tuesday a series of drone attacks on Russian facilities, believed launched by the Ukrainians, triggered air alert sirens in various locations across the country. One or more even reached to within 100km of Moscow. 

Concerning the drone attacks, Russia’s Deputy Minister of Foreign Affairs has charged that the Ukrainians had covert help from the United States in carrying out the sophisticated drone operations, one of which damaged an oil facility some 500km inside Russian territory. “Attack of drones on aviation facilities in Saratov and Ryazan could not have been carried out without the active assistance of the United States,” Ryabkov said in a press statement.

Authored by Charles Hugh Smith via OfTwoMinds blog,

So sorry, but the lifestyle of low-cost credit and all the goodies it could buy is permanently out of stock.

In focusing on geopolitics, we lose sight of the dependence of every economy on a functioning global economy of low-cost goods, services, materials, shipping, transport, capital, labor and financial instruments, all flowing freely across borders and around the world.

Russia, China, the U.S., and indeed every economy are equally dependent on access to a functioning global economy to obtain essential goods, services and capital and sell surplus production.

The irony here is the “poor” subsistence villagers with very limited access to global markets will manage the breakdown of the global economy far better than the “wealthy” urban dwellers who are totally dependent on free-flowing global trade. (The villagers will be frustrated by spotty cell service; the urban dwellers will be hard-pressed to obtain enough food and fuel to survive.)

What few seem to realize (or acknowledge) is the forces already in motion will upend the global economy, and there is no reverse gear. These forces are:

1. De-globalization

2. De-financialization

3. Real-world scarcities that cannot be overcome with financial trickery.

4. Diminishing returns on what worked in the past: financial stimulus and other trickery.

5. Asymmetries that can no longer be papered over.

Each of these forces is multi-faceted and complex. Each has the unstoppable momentum of cause and effect. The financial trickery of the past 30 years has created a delusional faith that there are no real-world scarcities or difficulties that can’t be resolved with some new financial stimulus or gimmick. This is a compelling delusion, for we all want magic that makes the real world do what suits us.

The central delusion is that “money” (credit/currency) from somewhere can magically extract as many materials and goodies as we want from somewhere else. This is hyper-globalization and hyper-financialization in a nutshell: hyper-financialization is the global commoditization of credit, leverage and trickery, enabling the vast expansion of credit, leverage and trickery which has fueled the astounding expansion of speculative frenzy which is now the engine of the global economy.

Hyper-globalization is the fulfillment of the neoliberal fantasy that commoditizing self-regulating (ha-ha, you mean cartels and monopolies, correct?) markets would permanently lower costs and expand credit, consumption and prosperity. In this hyper-version of global trade (which has existed for thousands of years), the mass commoditization of credit and capital flowing freely around the world, plucking (and exploiting) the most profitable opportunities wherever they might be (luxury resort in Timbukthree, count us in, at least until we can find a sucker to buy our commoditized debt instruments) will all by itself lower costs and boost production and consumption forever.

Nice, but financial trickery eventually runs into real-world constraints and asymmetries it cannot resolve. Once the cheap-to-get resources have been depleted, it costs more to extract, process and transport them, even with technological advances.

Other constraints are economic, political and social in nature. Local populaces eventually realize their resources are being plundered by corporations from afar who arbitrage vast asymmetries in the cost of capital, labor costs, environmental standards and currency valuations (to name a few) to stripmine locals and leave them the “dividends” of hyper-globalization and hyper-financialization such as polluted wastelands and unpayable debts.

Nations eventually awaken to the risks of becoming dependent on others for essentials, and so onshoring, friend-shoring and reshoring all become national-defense policies, never mind the corrupting neoliberal fantasies of everyone singing Kumbaya around the hyper-globalization and hyper-financialization campfire.

Creating a billion units of currency doesn’t automatically conjure up a billion units of fresh water, wheat or oil. When there were unexploited reserves of these essentials, then massive infusions of capital from somewhere else could fund their extraction, but when the easy-to-get reserves have been depleted, then cheap capital doesn’t translate into cheap goodies.

The reversal of these forces has a funny consequence which we call inflation. Let’s start by setting aside economic fantasies such as “inflation is always a monetary phenomenon.” If a primary source of oil happens to be blown to bits and oil jumps $50 a barrel overnight, costs will rise in a manner that has nothing to do with the expansion or contraction of the money supply. “Inflation” is simply this: a unit of labor / currency buys fewer goods and services, or buys goods and services of lower quality.

However you wish to put it, labor and money lose purchasing power: each unit of labor/currency buys less than it did in the past.

Inflation has many sources, but let’s focus on the reversal of hyper-globalization and hyper-financialization. The reversal of financialization increases the cost of capital (interest rates, cost of mitigating rising risk) and the reversal of globalization increases the costs of goods and services.

The global realities of depletion and scarcity also push costs higher.

Simply put, each of these forces is highly inflationary as a matter of cause and effect. There is no way to conjure a hat-trick of financial gimmicks to reverse these forces of higher costs, i.e. inflation: every unit of labor and currency buys less than it did in the past.

Authorities have been trained by the golden decades of abundance and low costs to do more of what worked in the past, i.e. financial stimulus of one kind or another. Just flood the land with credit and currency, and the magic will fix whatever is broken or hobbling.

But the returns on these artifices have diminished to the point that the gimmicks are not just failing, they are actively making the problems worse. Thanks to the globalization of “The Fed Put,” moral hazard is now the context of every global financial decision. Financial stimulus inflates speculative bubbles, which inevitably pop, generating waves of distress which additional waves of financial stimulus only accelerate.

The notion that speculative bubbles can painlessly fuel abundance and prosperity is bankrupt, and the collapse of this appealing delusion will collapse the entire global structure of hyper-financialization.

In a delicious irony, stimulus in any form is now inflationary. Doing more of what worked in the past will now accelerate the “problem” central banks and governments are trying to solve: inflation. This reality drives a stake through the heart of all the hopes that doing more of what worked in the past will magically work, even as it adds fuel to the bonfire of higher costs.

Lastly, there is a broad spectrum of destabilizing asymmetries which can no longer be papered over with gimmicks. These include (but are not limited to) profound asymmetries in risk premiums, liquidity and valuations, resource reserves, political stability, dependencies on global markets for buyers of last resort and so on.

The bottom line is there are few if any nations that could survive intact should hyper-globalization and hyper-financialization collapse and scarcities increase. As I explained in Weaponizing Global Depression, real-world resources and financial, poltical and social systems that are transparent and adaptable are the necessary foundations for the shift from dependence to self-reliance.

So sorry, but the lifestyle of low-cost credit and all the goodies it could buy is permanently out of stock. The banquet of consequences is being served even if no one has the appetite for what is about to be forced down their throats by constraint, asymmetries and cause-and-effect.

New Podcast: Turmoil Ahead As We Enter The New Era Of ‘Scarcity’ (53 min)

*  *  *

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century.

Read the first chapter for free (PDF)

Become a $1/month patron of my work via patreon.com.

Despite the ongoing headlines of layoffs across all industries, US jobless claims data continues to refuse to show anything but an extremely strong labor market, with initial claims at 190k last week (better than the 195k expected) and continuing claims at 1.655mm (below the 1.669mm expected)

Source: Bloomberg

Kentucky and California saw the biggest drop in claims while Massachusetts and Rhode Island saw the largest rise…

The total number of Americans on some form of unemployment benefits continues to hover around one-year highs…

Source: Bloomberg

More problematically for Powell and his pals, unit labor costs for Q4 (final) printed +3.2% QoQ (double the expected 1.6% rise), up for the 7th quarter in a row.

Source: Bloomberg

We’re gonna need a bigger rate-hike!

AI-related stocks have dipped in the pre-market after a report by The Wall Street Journal, with a scary-sounding headline, prompted more concerns about the future of AI use.

MSFT (which invested in OpenAI) and NVDA (which makes the chips that AI needs) are among the day’s early losers on this headline but the story is not quite as terrifying for the future of ChatGPT as one might imagine.

The App in question is called BlueMail which has a new AI feature uses OpenAI’s latest ChatGPT chatbot to help automate the writing of emails using the contents of prior emails and calendar events.

WSJ reports that Apple has delayed the approval of an email-app update with AI-powered language tools over concerns that it could generate inappropriate content for children, according to communications Apple sent to the app maker.

“Your app includes AI-generated content but does not appear to include content filtering at this time,” Apple’s app-review team said last week in a message to the developer reviewed by the Journal.

The app’s restriction is currently set for users 4 years old and older. Apple’s age restriction for 17 and older is for categories of apps that may include everything from offensive language to sexual content and references to drugs.

Ben Volach, co-founder of BlueMail developer Blix Inc., said many other apps that advertise a ChatGPT-like feature listed on Apple’s App Store don’t have age restrictions.

“We want fairness,” said Mr. Volach.

“If we’re required to be 17-plus, then others should also have to.”

The rejection is notable though as Apple’s attempt to set an age restriction to help moderate content from a language-model-based AI is an indication the tech giant is closely watching the new technology and the risks it poses.

Investors are bracing for longer inflation.

The Federal Reserve indicated that more restrictive monetary policy is in the cards amid strong employment gains. In Europe, while inflation has fallen, it is still far above the 2% target. Across the Euro area inflation is estimated to have reached 8.5% in January.

At the same time, as Visual Capitalist’s Dorothy Neufeld and Sam Parker detail below, some countries have managed to tamp down inflation. Slower growth, cheaper import costs, and foreign exchange policy are some of the factors keeping inflation subdued.

As price pressures rattle global markets, the infographic below maps inflation rates globally using data from Trading Economics, focusing in on the countries with the lowest inflation levels.

World’s Lowest Inflation Rates

Many of the lowest inflation rates around the world are located in Asia, including Macau, China, Hong Kong, and Taiwan. In this region, widespread lockdowns strained growth and consumer spending, lessening inflationary pressures. Last year, Chinese consumers saved $2.2 trillion in bank deposits during these restrictions which were lifted earlier this year.

Inflation in the region was impacted by several other factors. Earlier on in the pandemic, Asian countries including China were less impacted by rising food costs, services inflation, and supply-chain disruptions, unlike what was seen in North America and Europe.

But now as China has reopened, some signs of inflation are beginning to appear. Food prices are up 4.8% annually in December, and hotel rates are rising.

*Inflation rates based on latest available data.

Globally, one outlier is South Sudan. Political instability and violence have depressed growth and inflation, which stood at -11.6% in December. As it faces a severe humanitarian crisis, the country has the lowest inflation rate worldwide.

Oil-producing nation Oman has also seen low inflation, at 2.1%. One reason for this is that the Omani rial is pegged to the U.S. dollar, keeping the currency anchored. Inflation has remained moderate over the last decade in the country.

The Country With the Lowest Inflation, by Region

In Europe, Switzerland has the lowest inflation rate, at 2.8%, or roughly one-third of the Euro area’s. It is also the lowest rate in the OECD. The country’s strong currency has shielded it from inflationary pressures and high import prices.

Meanwhile, Swiss production prices have risen marginally above inflation, to 4.1% annually in mid-2022. Last year, the Swiss central bank raised interest rates for the first time since 2007 from -0.75% to -0.25% following 20 years of deflation.

Panama has the lowest rate in Latin America. The dollarization of the Panamanian balboa has helped quash price pressures. In July, the government regulated the price of 72 items to keep the cost of living from rising after three weeks of protests as inflation climbed as high as 5.2% during the course of 2022.

With the lowest inflation in Asia, Macau witnessed the tourism industry fall off a cliff given lockdown measures, and the economy saw both its GDP and inflation collapse in 2022. Its real GDP is projected to have fallen close to 30% for the year.

Future Gazing

The IMF estimates that 84% of countries around the world will have lower inflation than last year. By 2024, both headline and core inflation are projected to remain above pre-pandemic levels at 4.1%.

Opposing forces of China’s reopening and weaker global growth could offset inflationary pressures, yet this interplay—among a host of other factors—remains to be seen.

Authored by Kyle Anzalone via The Libertarian Institute,

American weapons provided to Ukraine have been captured by Russia on the battlefield, a top Department of Defense official told Congress on Tuesday. Over the past year, Washington has provided Kiev with nearly $45 billion in military aid. 

Undersecretary of Defense for Policy Colin Kahl claimed Moscow was capturing American weapons and selling them on the black market. “Our assessment is if some of these systems have been diverted it’s by Russians who have captured things on the battlefield, which always happens,” he said. 

After Russian forces invaded Ukraine just over a year ago, the Joe Biden administration began providing Kiev with unprecedented weapons transfers. The US has provided Ukraine with $44.3 billion in military assistance from January 24, 2022, to January 15, 2023, according to The Kiel Institute for the World Economy. 

Kahl went on to assert that “no evidence” has surfaced to suggest Kiev was responsible for the weapons finding their way to the black market. 

In the early months of the war, CNN reported that the US lacked oversight over the arms sent to Ukraine. A source told the outlet in April, “we have fidelity for a short time, but when it enters the fog of war, we have almost zero. It drops into a big black hole, and you have almost no sense of it at all after a short period of time.”

That same month, Jonas Ohman, founder and CEO of Blue-Yellow, a Lithuania-based organization that has been meeting with and supplying frontline units with military aid in Ukraine told CBS News, “All of this stuff goes across the border, and then something happens, kind of like 30% of it reaches its final destination.” 

In May, the Washington Post reported Ukraine is infamous for black market weapon sales. “The US government is well aware of the country’s challenges with weapons proliferation, though it has been vague in describing the precautions it’s taking,” the outlet wrote. 

Kahl was confronted by Congressman Matt Gaetz over the weapons ending up in the hands of neo-Nazis. Gaetz cited a 2018 article from Global Times that found American arms were being used by the Azov Battalion, a neo-Nazi militia that was absorbed into Ukraine’s national guard. Kahl dismissed Gaetz’s question by asserting the claim was “Beijing’s propaganda.”

Matt Gaetz “Are there CIA in Ukraine?”

“Is the AZOV BATTALLION getting access to U.S. Weapons?” 🔥

Ro Khanna “There are laws on the books against providing arms and training assistance to the NEO-NAZI AZOV BATTALLION fighting in Ukraine.” 🔥

Zelenski 🪖 pic.twitter.com/7Ya1UGABmt

— Joni Job (@jj_talking) February 28, 2023

The Azov Battalion has been photographed with Western-made anti-tank weapons. In March, NEXTA tweeted, “A shipment of NLAW grenade launchers and instructors from #NATO countries arrived in Kharkiv. The Azov regiment was the first to learn about new weaponry.” The post included photos of Ukrainian soldiers wearing Nazi patches on their uniforms. 

In July, the Stimson Center – an American organization – warned US arms could flow to “avowed neo-Nazis.” “[The Azov Battalion’s] role in key Ukrainian theatres creates risks that arms could be diverted to Azov troops in contravention of US law,” the report said. 

Kahl claimed the weapons are tracked by Ukraine with scanners provided by Washington, and the data is transferred to American officials at the embassy in Kiev. He added the officials complete some inspections outside of the embassy. 

Additionally, Kahl discussed the White House’s strategy for its proxy war in Ukraine. He said the Department of Defense does not believe Russian forces will make significant territorial gains in the coming months. “You may see small portions of territory change hands in the coming weeks and months.” He told Congress, “I do not think that there’s anything I see that suggests the Russians can sweep across Ukraine and make significant territorial gains anytime in the next year or so.”

He explained that the Biden administration was committed to arming Ukraine, though the timetable for providing fighter jets was at least a year and a half. Kahl added that the price tag to provide Kiev with F-16s was $11 billion and the fighter jet was not one of Ukraine’s “top three priorities.”

Authored by Dave DeCamp via AntiWar.com,

The State Department at the started of this week reaffirmed its opposition to countries upgrading their ties with the government of Syrian President Bashar al-Assad, even if it is an effort to aid Syria’s earthquake relief.

“Our position on the Assad regime has not changed. Now is not the time for normalization. Now is not the time to upgrade relations with the Assad regime,” State Department spokesman Ned Price said in response to the news of Egypt’s foreign minister visiting Syria and Turkey.

“We believe we can fulfill and that countries around the world can fulfill both of these imperatives, addressing the humanitarian needs of the Turkish people, addressing the humanitarian needs of the Syrian people, without changing or upgrading their relationship with the Assad regime,” Price added.

The death toll from the earthquake stands at over 5,900 people in Syria and over 44,000 in Turkey, but the numbers are expected to rise. When the earthquake first hit, Price said the US would not work with Assad’s government on the relief effort, saying it would be “counterproductive.”

As it’s become clear that the US-backed regime change effort against Assad has failed, more countries in the region have been engaging with his government. Engagement with Assad has stepped up since the earthquake as Syria’s neighbors are looking to help out.

The US has issued a 180-day exemption for its sanctions on Syria that applies to transactions related to earthquake relief.

But UN experts say the exemption isn’t enough and are calling for the US to fully lift the sanctions, which are specifically designed to prevent Syria’s reconstruction.

#Syria
Arab Parliamentary Delegation Meets Syria President

A number of parliament speakers of Arab states visited #Damascus in an unprecedented move during the last 12 years aiming at showing support for Syria and held talks with Bashar al-Assad.

Detail: https://t.co/CiWXmRM4wG pic.twitter.com/g5X1I09gfU

— IWN (@A7_Mirza) February 28, 2023

US sanctions on Syria have had a devastating impact on the Syrian people, as recently detailed by Alena Douhan, a UN special rapporteur on unilateral coercive measures, who visited the country in the fall.

NATO Secretary-General Jens Stoltenberg gave some less than surprising public comments Tuesday regarding Ukraine’s eventual entry into the western military alliance. Brussels has previously approached the controversial subject with some level of ambiguity, given it remains a central issue for Moscow in terms of motive for the Ukraine invasion. 

Stoltenberg in the remarks alongside Finnish Prime Minister Sanna Marine reaffirmed NATO wants to eventually admit Ukraine, hearkening back to promises first made in 2008. “NATO allies have agreed that Ukraine will become a member of our alliance, but at the same time that that is a long-term perspective,” the NATO chief said from Helsinki. 

“What is the issue now is to ensure that Ukraine prevails as a sovereign, independent nation, and therefore we need to support Ukraine,” Stoltenberg added.

Ukraine’s Zelensky has been pressing for a ‘fast-tracked’ process, despite the reality of being engaged in a hot war with Russia, and having long had a conflict in its eastern regions which goes back to at least 2014. NATO has never admitted a country which had an active conflict on its border, given this would automatically trigger Article 5 immediately after the country entered.

But even Sweden and Finland have been held up in their applications. Stoltenberg in the Tuesday press conference addressed the holdout countries of Turkey and Hungary: “My message has been for a long time … that time has come to finalize the ratification process. The time is now to ratify in both Budapest and in Ankara,” he said.

Finnish Prime Minister Sanna Marin, however, attempted to give Ukraine a boost in saying, “I see that the future of Ukraine is to be part of the European Union and also a member of NATO.”

However, as CIA Director William Burns warned in a 2008 cable, Ukraine’s entry into NATO remains the “brightest of all red lines”:

“Ukrainian entry into NATO is the brightest of all redlines for the Russian elite (not just Putin),” Burns wrote in a cable that was later made public by WikiLeaks. “I have yet to find anyone who views Ukraine in NATO as anything other than a direct challenge to Russian interests.”

The process even for Ukraine joining the EU is likely to be years or decades, some have predicted. Meanwhile…

The media before and after 2022 pic.twitter.com/xTKw4Qodwu

— kanekoa.substack.com (@KanekoaTheGreat) February 25, 2023

Officials in Kiev have been saying that Ukraine is already a de facto member given all the arms and training it has received thus far from NATO countries. The Kremlin has tended to agree, hence Putin’s rationale of wanting to ‘demilitarize’ the country as among his key invasion objectives.