US stocks spiked, with spoos rising above both the closely watched 200DMA and the descending channel resistance level, after Bloomberg reported that echoing the Fed, the ECB is also “starting to consider a slower pace of interest-rate hikes than President Christine Lagarde indicated in December” citing officials with knowledge of their discussions. As the report notes,

While the report notes that the 50 bps hike in February remains likely, “the prospect of a smaller 25-point increase at the following meeting in March is gaining support, the officials said.”

And although the sources were quick to add that “any slowdown in monetary tightening shouldn’t be viewed as the ECB going soft on its mandate” and that “no decisions have been taken, and that policymakers may still deliver the half-point move for the March meeting that Lagarde penciled in on Dec. 15”, the market immediately read between the lines and – realizing that the global tightening wave is almost over – immediately sent expectations for an ECB March rate hike tumbling…

… and sent futures to session highs…

… pushing spoos above both the 200DMA and the descending channel resistance level which had proven insurmountable for the S&P since last April.

Naturally, yields promptly tumbled.

Weaker-than-expected inflation in the euro area, a drop in natural gas prices and the prospect of gentler tightening by the US Federal Reserve have brought some comfort to policymakers as they ponder how to continue the most aggressive rate hikes in ECB history.

While officials opted to slow the pace of increases in December with a 50-basis-point move, they coupled that decision with a sense of heightened vigilance on price stability. Lagarde said then that available data “predicate” a 50-basis-point hike at the Feb. 2 meeting “and possibly at the one after that” — cautioning that decisions will continue to be data-dependent.

As Bloomberg notes, economists currently anticipate moves of that magnitude at the next two meetings, with money markets betting on a half-point hike next month and placing more than 80% odds on a similar increase in March, with the deposit rate expected to peak below 3.5% by July.

Whether and how inflation prospects have shifted will only become apparent with the new forecasts in March, which might help justify a less aggressive pace. That may be one reason for policymakers to be cautious about departing from their outlined hike in February.

Authored by Alex Kimani via OilPrice.com,

• British buyers are indirectly buying Russian crude refined by Indian refineries.

• High diesel prices in Europe and cheap Russian crude offer a window of opportunity for Indian refiners.

• Kpler: the Jamnagar refinery on India’s west coast imported 215 shipments of crude oil and fuel oil from Russia in 2022.

Russia’s 2022 invasion of Ukraine has forced a dramatic restructuring of energy markets in the west, with many European nations vowing to wean themselves off Russian energy products. The UK has been one of the more successful countries in achieving this target after committing to end imports of oil and coal from Russia by the end of 2022 and even recently legislated for a ban on Russian gas. By October, UK imports of Russian energy were down to a trickle, with the country buying just £2 million of oil, but zero coal or gas from Russia. But reports have now emerged that India has been offering a back-door for imports of Russian oil into Britain, blunting the country’s efforts to restrict funding for the Kremlin. Some British buyers have effectively replaced imports directly from Russia with imports from Russian-fed refineries, thereby indirectly supporting the Russian oil industry. 

Although such a supply chain is actually legal under UK rules, still it cannot be overlooked because this is another covert way to fund Putin’s war. Before the war began nearly a year ago, it was pretty rare for Indian refiners to process Russian crude. The refiners have always exported to Europe, but they are now exporting even more because it’s more attractive as Europe’s diesel prices are higher and also buying more Russian crude because Russia is offering heavy discounts.

Indeed, Oleg Ustenko, adviser to Ukraine’s president Volodymyr Zelensky, says these companies are “exploiting weaknesses in the sanctions regime”.

“The UK must close the loopholes that undermine support for Ukraine by allowing bloody fossil fuels to continue flowing across our borders. About one in five barrels of the crude oil that they process is Russian. A big chunk of that diesel they produce now will be based on Russian crude oil,’’ he has said.

Kpler data has revealed that the Jamnagar refinery on India’s west coast imported 215 shipments of crude oil and fuel oil from Russia in 2022, 4 times as much as it bought in the previous year. Meanwhile, the UK has imported a total of 10m barrels of diesel and other refined products from Jamnagar since the war began, 2.5 times what it bought during 2021 with Trafigura, Shell Plc , BP Plc , PetroChina Co. and Indian multinational conglomerate Essar Group the key buyers.

According to Bloomberg’s oil strategist Julian Lee, Russia’s flagship Urals have been trading at a massive discount of as much as 40% to the international Brent crude oil. In contrast, in 2021, Urals traded at a much smaller discount of $2.85 to Brent. Urals is the main blend exported by Russia. Indeed, Moscow could be losing ~$4 billion a month in energy revenues as per Bloomberg’s calculations.

Europe Importing Russian LNG

But the UK is hardly the only culprit in Europe as far as helping fund Putin’s war machine goes. Whereas supplies of Russian pipeline gas–the bulk of Europe’s gas imports before the Ukraine war–are down to a trickle, reports have emerged that Europe has been hungrily scooping up Russian LNG.

Europe has been working hard to wean itself off Russian energy commodities ever since the latter invaded Ukraine. The European Union has banned Russian coal and plans to block most Russian oil imports by the end of 2022 in a bid to deprive Moscow of an important source of revenue to wage its war in Ukraine.

But ditching Russian gas is proving to be more onerous than Europe would have hoped for, with the Wall Street Journal estimating that the bloc’s imports of Russian liquefied natural gas jumped by 41% Y/Y in the year through August.

“Russian LNG has been the dark horse of the sanctions regime,” Maria Shagina, research fellow at the London-based International Institute for Strategic Studies, has told WSJ. Importers of Russian LNG to Europe have argued that the shipments are not covered by current EU sanctions and that buying LNG from Russia and other suppliers has helped keep European energy prices in check. 

Although Russian LNG has accounted for just 8% of the European Union and UK’s gas imports since the start of March, the trade runs counter to the EU’s efforts to deprive Russia of fossil-fuel revenue.

Authored by Lance Roberts via RealInvestmentAdvice.com,

The “pain trade” is likely higher over the next few weeks. I touched on this topic in this past weekend’s “Bull Bear Report:” Not surprisingly, the “bullish” short-term outlook garnered a substantial amount of pushback. However, there is more to this outlook than just “rosie optimism.”

Let’s review what I wrote, and then we will expand on why we believe the “pain trade” is higher over the next few weeks.

“From the bullish side of the ledger, the outlook for 2023 has statistical support for a positive outcome. After having a negative year in 2022, the markets were visited by “Santa Claus,” although very late, and the first 5-days of January turned out to be a positive return. As the table below shows, there are only a few periods in history where this has occurred, and each yielded positive returns in the following year.”

Critically, just because something has always occurred in the past does not mean it MUST happen this time. However, as investors, we must focus on statistical tendencies and invest according to the probabilities rather than the possibilities. At the moment, there are many “possibilities” bullish investors are betting on in the short-term, which have a larger potential “probability” of being wrong.

• The Fed will pivot and start cutting rates and reversing QT.

• The economy will avoid a recession.

• The yield curve inversions (shown below) are wrong this time.

• The housing market will remain robust.

• Employment will continue to remain strong.

• Households will continue to spend despite inflationary pressures.

• Most importantly, corporate earnings and profits will NOT mean revert.

Notably, 90% of the 10-most economically significant yield curves are inverted. Such has never previously occurred without a recession occurring. Of course, in a recession, economic demand slows as the consumer contracts leading to a contraction in earnings. Such is problematic for the bullish view.

Yes, it is entirely possible this time could be different. However, the probabilities are it likely won’t be. Notably, with valuations still elevated from a historical perspective, prices still need to correct to accommodate higher rates.

However, in the short term (over the next 1-3 months), the technicals are becoming more bullish, suggesting the “pain trade” remains higher.

Bullish Technicals

It is called the “pain trade” because it is the opposite of how investors are currently positioned. Investor sentiment, as shown in the chart of net bullish sentiment (an index of both professional and retail investors), remains historically bearish despite improvement since the October lows.

With investors bearishly positioned, including a large amount of short positioning in the market, it becomes increasingly painful to fight the tape as the market rises. As the market continues to improve, the “pain trade” forces a reversal of positioning, pushing prices higher. As prices increase, the pain rises, causing additional positioning reversals and further increasing prices. The cycle repeats until it is exhausted.

The “pain trade” is usually swift and occurs over one to three months. Once that cycle is complete, the underlying fundamental and economic trends will retake control of the markets.

Such is where we are currently.

From a purely technical perspective, a bullish pattern is developing in the S&P 500. The market has recently established a higher low and potentially formed a “right shoulder” of an “inverse head-and-shoulders” technical pattern.

With the market approaching the downtrend line from last year’s peak, and as shown below, a higher low and tightening consolidation suggests a higher move is possible. While the market is short-term overbought, the MACD buy signal continues to suggest the “pain trade” is higher for now.

Importantly, this is just an improving technical picture for the market short-term.

The breakouts have not happened yet, and may not.

However, given the technical improvement, a break above the downtrend and the 200-DMA will set targets between 4200 (50% retracement) and 4360 (61.8% retracement) of last year’s decline.

There are also improving internals that suggests the “pain trade” may continue for a bit longer.

Additional Support For A “Painful Trade” Higher

Another indicator that suggests a continued move higher is the number of stocks on “bullish” buy signals. As more stocks begin to participate in the move higher, such tends to feed upon itself. As shown, 63% of the stocks in the S&P 500 have registered bullish buy signals. This indicator has shown marked improvement since the lows of 2022.

Furthermore, earnings estimates have been cut sharply over the last couple of quarters, and S&P is now expecting a -6.4% decline in earnings from Q3. As shown, as investors begin to bet on a “soft landing” scenario for the economy, expectations are this quarter will be the worst part of the earnings reversion cycle. (Those expectations will likely prove wrong.)

We also discussed previously one of the essential supports of the financial markets: share buybacks.To wit:

“Since 2011, 40.5% of the markets advance is attributable to corporate share buybacks. In other words, in the absence of share repurchases, the stock market would not be pushing record highs of 4600 but instead levels closer to 2700.”

In a slow-growth economic environment, there is little incentive to increase capital expenditures, make risky acquisitions, or drastically increase wages and compensation. Therefore, share repurchase announcements, which benefit corporate insiders, have surged. Such translates into roughly $4.8 billion per day of repurchases in 2023. ($1.2 Trillion divided by 250 trading days)

Adding all these things together provides the support necessary for a “pain trade” higher.

The question is, what happens next?

The Contrarian Trade

We have said before that one of our biggest concerns going into the end of 2022 was that EVERYONE was extraordinarily bearish and confident of a recession. As Bob Farrell once quipped:

“When all experts agree, something else tends to happen.”

With everyone extremely bearish and confident of a recession, such puts the markets into a position where there are few buyers and an overwhelming number of sellers. From a contrarian investment view, that is an ideal setup for a “pain trade” higher, which we have discussed as a rising possibility.

Fortunately, we are now seeing a reversal of that extremely bearish view and, as recently noted by Zerohedge:

“Everyone and their pet rabbit was waiting for a ‘dip’ to buy but there was no ‘dip’ and so everyone is now under-exposed to a FOMO-led rally as talk of a ‘soft landing’ becomes the new narrative.”

Such is precisely the point we discussed previously:

“Interestingly, seemingly terrified investors are still unwilling to sell for the ‘fear of missing out.’ It is worth noting that during previous bear markets, equity allocations fell as investors fled to cash. Such has not been the case in 2022.

Investors seem more afraid of missing the bottom should the Federal Reserve suddenly reverse course on monetary policy. Much like Pavlov’s dogs, after years of being trained to ‘buy the dip,’ investors are awaiting the Fed to ‘ring the bell.’“

While there is support for the current “pain trade,” the rally still has many risks.

• The Fed is still tightening its policy and reducing its balance sheet.

• The rate hikes of last year have yet to impact the economy fully.

• Economic growth is slowing.

• Earnings and profit margins are still historically deviated from long-term growth trends.

• The massive supports of fiscal stimulus are no longer available.

Such is especially the case as we head into earnings season and the next Fed meeting. Therefore, it is important to remain cautious until the markets declare themselves.

We remain overweight in cash, and our bond duration remains short of our benchmark index. However, we will adjust our holdings accordingly if these technical patterns mature.

While the “pain trade” is higher for now, the challenge we have with the market “Fighting the Fed” is that historically such has not worked out well.

The death toll from the Dnipro apartment strike, which happened Saturday afternoon as the latest weekend Russian aerial attacks against Ukraine’s energy infrastructure unfolded, has risen to at least 44 killed, including four children. An additional 79 people were injured, with reports that many residents are still missing and unaccounted for.

The city’s mayor, Borys Filatov, issued the update on Tuesday after two days of rescue workers frantically trying to pull people from the rubble. Ukrainian President Volodymyr Zelensky blamed Moscow for the attack which he called a “war crime”, vowing justice for the large number of civilian casualties.

The Dnipro strike now ranks among the single deadliest attacks of the entire war. “The rescue operation, the demolition of the rubble, will not end until the bodies of all the dead are found,” deputy head of the presidency Kyrylo Tymoshenko said.

But on Monday the Kremlin vehemently denied that it targeted and struck a civilian residential building in Dnipro, instead pointing to the likelihood of a Ukrainian anti-air missile falling on the building: 

“The Russian armed forces do not strike residential buildings or social infrastructure, they strike military targets,” Kremlin spokesman Dmitry Peskov told reporters, before referring to the “conclusion of some representatives of the Ukrainian side” that the strike could have been caused by air defense.

Kiev responded by emphasizing the strike was “direct” and not the result of one of its own errant missiles. However, there has been division and controversy in the Ukrainian response, as noted by Peskov’s statement.

An adviser to Ukrainian President Volodymyr Zelensky actually initially said the apartment block in Dnipro was hit by an errant Ukrainian anti-air defense missile which had been fired in an attempt to intercept an inbound Russian rocket. The presidential aide, Oleksiy Arestovych, unleashed immediate controversy and anger from fellow officials in making the public remarks which aired live on a national television broadcast, and which were picked up in Russian media.

Ukraine officials say the rocket was a Kh-22, and argued that its forces lack the capability to shoot down this particular projectile. In the wake of the controversial statements Arestovych apologized to the nation and stepped down:

“I wrote a letter of resignation. I want to set an example of civilized behavior. A fundamental mistake means resignation,” Oleksiy Arestovych, posted on Facebook alongside a photo of his resignation letter.

Arestovych said further he made “a serious mistake, made during a live broadcast” in the initial TV interview with those comments. “I sincerely apologize to the victims and their relatives, the residents of the Dnipro and everyone who was deeply wounded by my premature error version of the reason the Russian missile hit a residential building,” he added.

But he also still sought to defend himself to some degree, saying, “The level of hate directed at me is incomparable with the consequences of the on-air mistake,” and said his apology was not issued specifically toward “the people who are spinning this issue.”

Below are the brief comments from the interview which unleashed controversy, and led to the Zelensky aide’s essentially forced resignation…

Zelensky’s adviser admits that the destruction of the apartment building in Dnipro was the result of the actions of the Armed Forces of Ukraine.
Aleksey Arestovich: “No, it [the missile] was shot down. It fell on the building. When it fell, it exploded.”

(via @thecoppermountain) pic.twitter.com/7yh28SEKsa

— the Lemniscat (@theLemniscat) January 15, 2023

Russian state media and Kremlin officials have also picked up Arestovych’s initial explanation of an errant Ukrainian missile hitting the apartment building, given that in coming during candid remarks from a high-ranking Ukrainian official, it’s a significant indicator that Russia’s denials and explanation are plausible. 

Authored by Thomas Brooke via Remix News,

The U.K. government has announced it will use a constitutional mechanism for the first time to block controversial gender reform legislation passed by the Scottish government to make it easier for people to change their gender.

The Gender Recognition Reform (Scotland) Bill was approved by 86 votes to 39 in Holyrood shortly before Christmas. If enacted, it would have removed the requirement for a diagnosis of gender dysphoria from a doctor in order to apply for a gender recognition certificate (GRC).

It would also have reduced the time an applicant must live in their preferred gender from two years to just three months, and perhaps most controversially, would have lowered the minimum age a person can apply for a GRC from 18 to 16.

On Monday, the U.K. government’s Scottish Secretary Alister Jack announced he would invoke a clause in the legislation that handed the Scottish government devolved powers from Westminster to block the bill from becoming law.

“I have decided to make an order under section 35 of the Scotland Act 1998, preventing the Scottish Parliament’s Gender Recognition Reform (Scotland) Bill from proceeding to Royal Assent,” Jack wrote in a statement.

“After thorough and careful consideration of all the relevant advice and the policy implications, I am concerned that this legislation would have an adverse impact on the operation of Great Britain-wide equalities legislation.

“Transgender people who are going through the process to change their legal sex deserve our respect, support, and understanding. My decision today is about the legislation’s consequences for the operation of GB-wide equalities protections and other reserved matters.

“I have not taken this decision lightly. If the Scottish Government chooses to bring an amended bill back for reconsideration in the Scottish Parliament, I hope we can work together to find a constructive way forward that both respects devolution and the operation of UK Parliament legislation,” Jack added.

The decision has sparked outrage among the government in Scotland, run by Nicola Sturgeon’s Scottish Nationalist Party (SNP), which has long advocated Scottish independence from Westminster.

In response, Sturgeon called the move a “full-frontal attack on our democratically elected Scottish Parliament and its ability to make its own decisions on devolved matters.”

She vowed to “defend the legislation and stand up for Scotland’s parliament,” warning that if the U.K. government was successful in vetoing the bill, “it will be the first of many.”

Progressives in Holyrood passed the bill despite polling results published last month showing as many as two-thirds of Scots aged 16 and over oppose the plans. In particular, 66 percent opposed reducing the minimum age required to apply for a GRC from 18 to 16 years old.

Against a background of some recent ‘better than expected’ macro prnts that bolstered the ‘soft landing’ thesis spurring stocks higher and rate-hike-odds lower, the Empire Fed Manufacturing Survey just stole the jam out of the bulls’ donuts.

The NYFed’s general business conditions index crashed nearly 22 points to -32.9 this month (twice as bad as the weakest analyst estimate).

Aside from the trough of COVID lockdowns in May 2020, this is the weakest print since March 2009, and has been in contraction in five of the last six months.

New orders dropped nearly 28 points to minus 31.1, also the lowest since May 2020 and marking the third-straight month of contraction. 

Shipments plunged by a similar amount to the lowest since August.

Factory employment fell to its weakest level in more than two years, indicating that hiring has essentially stalled.

Moreover, an index of the employee workweek shrank to the lowest since August.

…but, but, but ‘soft landing’?

Via SchiffGold.com,

The CPI data for December buoyed markets and raised hopes that the Federal Reserve is winning its war against inflation. But in his podcast, Peter explained that the Fed isn’t winning the war. It is losing and will ultimately surrender to inflation.

Markets rallied after the CPI data appeared to show further cooling in price inflation. Most people assume that means the central bank can be less aggressive and ease up on rate hikes in the coming year. And if there is enough progress, many people think the Fed will reverse course and start cutting interest rates later in 2023.

Peter said he agrees that there is a good chance the Fed will cut rates this year. And he thinks there is an even better chance the central bank returns to quantitative easing, whether it cuts rates or not. But this pivot won’t be because of a victory in the war against inflation.

No. They’re going to surrender. Inflation is going to win that war. The Fed is going to run to fight another battle — at least it’s going to try to fight because it’s going to lose that battle too. That battle is going to be recession, maybe financial crisis, maybe a battle to try to prop up the US government whose insolvency is becoming a bigger problem with rising interest rates.”

The US government continues to run massive budget deficits even as its interest costs rise. Interest payments on the debt rose 41% in 2022. According to the Peterson Foundation, the jump in interest expense was larger than the biggest increase in interest costs in any single fiscal year, dating back to 1962.

If interest rates remain elevated or continue rising, interest expenses could climb rapidly into the top three federal expenses. (You can read a more in-depth analysis of the national debt HERE.)

Because servicing this debt is going to become so problematic in 2023, that’s another reason that the Federal Reserve is going to back off of its rate hikes, and, in fact, may have to go back to quantitative easing because they will need to buy Treasuries that private buyers don’t want at interest rates that the US government can’t afford.”

Along with the massive federal debt, there is also a growing level of consumer debt that will create problems for the Fed’s inflation fight for the same reason. The average credit card interest rate has ballooned to 19.6%. Meanwhile, credit card debt alone grew by 15% in 2022. It was the biggest year-over-year gain in 20 years.

The fact that credit card debt is skyrocketing as savings rates are plunging — this is very problematic for the economy. It shows that Americans are struggling to make ends meet.”

Rising consumer debt also indicates overall credit is expanding. That is, by definition, inflation. Keep in mind, inflation isn’t just rising prices. Properly defined, it is an expansion of the money supply and credit. People can use credit to buy things and bid up prices.

Consumers are dealing with rising prices not so much by cutting back and buying less, although in some circumstances they are. But they’re also taking advantage of credit so that they can just keep buying the same amount and just making up the difference by borrowing money. So, the Federal Reserve is still keeping interest rates too low and allowing credit to grow too plentifully so that additional credit is available to consumers to continue to bid up higher prices. And so they’re not being priced out of the markets because they’re staying in the market because of their access to credit. So, in other words, the inflation is continuing in the credit markets.”

The bottom line is that the increasing level of debt is not a sign of a strong economy. It’s a sign of economic weakness. And it is exacerbating the inflationary pressure. It’s indicative of the fact that the Fed is losing the inflation battle.

The Fed needs to discourage spending and encourage saving. But that’s not happening.

The Fed is raising interest rates but consumers don’t care. They’re just borrowing more money and spending more money. So, the credit supply is expanding and that is going to continue to put upward pressure on prices. The Fed is making no real headway in its battle against inflation.”

Authored by Michael Msika via Bloomberg,

European stocks are surging like never before in the new year, revved up by a surprise softening in inflation readings as well as resilient economies. While low positioning and bullish technicals point to more upside, there are roadblocks ahead.

The Stoxx Europe 600 index just had its best start of a year on record, advancing 6.5% over the first two weeks. The performance already exceeds strategists’ forecasts for the full year.

“Markets may have good reasons to see the glass half-full on inflation and dismiss hawkish central banks’ rhetoric,” says Barclays strategist Emmanuel Cau, while warning that some consolidation “would make sense and feel rather healthy.”

But overall, the strategist says positioning and sentiment are not as bullish as European price action suggests, and sees further gains possible, noting the rally seems more due to short covering than capital reallocation to the region.

Additionally, equity flows are still muted, exposure from CTAs and hedge funds is below normal, and investor sentiment indicators are still bearish, Cau says.

And technicals are rather bullish, according to DayByDay analyst Valerie Gastaldy, who says the Euro Stoxx 50 could well gain another 10% within a few weeks once it catches a second wind. She sees the first real resistance for the index at 4,415 — the high from 2021.

“In the short-term, the market may feel overheated, especially as there is no confirmation yet that yields will rise more slowly,” Gastaldy says, but technicals signal that the most probable scenario for the Euro Stoxx 50 is to rocket to a new high, with the current rally having at least the same size as the one in November.

No part of the market is oversold and there seems to be a lack of interest in buying downside protection, even with volatility under 20 — which was a key sell signal over the past year.

In fact, many strategists are scratching their heads and sticking to a view that a storm is coming and investors should hedge. BofA strategist Sebastian Raedler even sees 20% downside by the second quarter as economic growth momentum fades due to monetary tightening.

Separately, UBS strategists Gerry Fowler and Sutanya Chedda recommend buying risk reversals on European equities (sell calls/buy puts), seeing 8% downside ahead on declining earnings and margin expectations.

“The market significantly under-prices downside risks,” they say.

The upcoming earnings season could be a reality check for Europe, although even the salvo of profit warnings from the past few days — including Logitech, Ubisoft, Halfords, Signify, VAT and Gym Group — failed to dent investor optimism.

For now, bears are lacking arguments. The extension of the rally from 2022 losers, along with Europe’s largest company LVMH trading at an all-time high, makes finding shorts very difficult, according to Cowen’s EMEA head of trading Carl Dooley.

“So some kind of pullback looks fair,” he says. “It certainly feels like one is due. But aren’t we all thinking that?”

Russia and Belarus have kicked off joint aerial drills over Belarusian skies on Monday, in a worrying prospect for neighboring Ukraine given the exercises will last for a full two weeks, until Feb.1. 

Minsk, however, has called the drills “defensive in nature” amid accusations from Kiev that Belarusian armed forces are about to join the Russian invasion. Seeking to downplay that this signals escalation in Ukraine, Minsk also called the exercises mere “technical drills” which seek greater compatibility among the allies’ air forces.

An Al Jazeera correspondent in Moscow said that “We all know that last month President Vladimir Putin went to Minsk, where he met his counterpart [Alexander] Lukashenko, where they agreed that Russia will provide the Belarusian air force with training to be able to use what they described as aircraft that could carry unconventional weapons.”

But the correspondent noted: “there are many concerns with the role Belarus is playing with respect to the war, whether this is going to have [an] impact.”

As of last week, the Pentagon said it had yet to observe any Russian troop movements in Belarus that would indicate the two countries are staging a fresh attack on Ukraine together. Over the last weeks there have been widespread reports of Russian heavy equipment moving across the border by train into Belarus.

According to an AP description of the Monday joint air force drills, “The exercise will feature joint air patrols, action to support ground forces, airborne operations, air reconnaissance and transport flights, the ministry said. It didn’t mention the number of aircraft that will be involved in the drills.”

Ten days ago, Belarusian President Alexander Lukashenko paid a visit to a military base where Russian troops are stationed, in but the latest sign of Belarus’ growing support to Russian efforts in Ukraine.

“At this stage, units of the Armed Forces of the Russian Federation are ready to carry out tasks as intended,” a defense ministry official said at the time. Lukashenko himself had referred to the conflict in Ukraine as part of his country’s “common cause” with Russia.

The Ukrainian government, meanwhile, has continued to charge that Russia is using Belarusian territory to launch drones as it targets energy infrastructure.

Authored by Alexander Zhang via The Epoch Times,

A man has been arrested under terrorism laws after traces of uranium were found in a cargo package at Heathrow Airport, police said.

Uranium was detected in a package at the airport on Dec. 29, London’s Metropolitan Police confirmed on Jan. 11.

The man, who is in his 60s, was arrested after counter-terror officers searched an address in Cheshire on Saturday.

He was arrested on suspicion of an offence under Section 9 of the Terrorism Act 2006, which covers the making and possession of radioactive devices.

He has been released on bail until April, the Metropolitan Police said on Sunday, adding that there does not appear to be any direct threat to the public.

People queue to enter Terminal 2 at Heathrow Airport, London, on Jan. 18, 2021. (Henry Nicholls/Reuters)

According to the Sun newspaper, which first reported the incident, the package had originated from Pakistan and arrived in the UK on a flight from Oman. The uranium was found in a shipment of scrap metal, according to the BBC.

Uranium can be used for civilian power generation and scientific purposes and is a key ingredient in nuclear weapons. Certain isotopes emit radiation that can be harmful to humans, and the metal itself is toxic if ingested or inhaled.

‘Very Small Amount’

Police stressed that the amount of uranium detected was “very small.”

Commander Richard Smith, who leads the Met’s Counter Terrorism Command, said: “The discovery of what was a very small amount of uranium within a package at Heathrow Airport is clearly of concern, but it shows the effectiveness of the procedures and checks in place with our partners to detect this type of material.

“Our priority since launching our investigation has been to ensure that there is no linked direct threat to the public. To this end, we are following every possible line of inquiry available to us, which has led us to making this arrest over the weekend.

“I want to be clear that despite making this arrest, and based on what we currently know, this incident still does not appear to be linked to any direct threat to the public. However, detectives are continuing with their inquiries to ensure this is definitely the case.”

Undated photo showing the New Scotland Yard sign outside the Metropolitan Police headquarters in London. (Kirsty O’Connor/PA Media)

On Jan. 10, after the incident was reported in the press, Smith said, “I want to reassure the public that the amount of contaminated material was extremely small and has been assessed by experts as posing no threat to the public.”

“Although our investigation remains ongoing, from our inquiries so far, it does not appear to be linked to any direct threat. As the public would expect, however, we will continue to follow up on all available lines of inquiry to ensure this is definitely the case,” he added.

He added that the incident “does highlight the excellent capability” of UK police and other security agencies to monitor the country’s ports and borders “in order to keep the public safe from any potential threats to their safety and security that might be coming into the UK.”

Giving evidence at the Police and Crime Committee of the London Assembly on Jan. 11, Smith said that it was “understandable” that media reports on the incident would attract “considerable attention and potentially concern.”

He said: “The circumstances are that in the course of routine scanning at London Heathrow an element of cargo was identified that was emitting a radioactive signal. There are procedures in place to deal with these sorts of incidents and those procedures were enacted. As part of that, the counter-terrorism commands were contacted and have opened an investigation into the surrounding circumstances.”

Armed police officers patrol the new Terminal 5 at Heathrow Airport prior to its official opening, in London, on March 14, 2008. (Dan Kitwood /Getty Images)

Britons ‘Should Be Pretty Reassured’

Col. Hamish de Bretton-Gordon, a chemical and biological weapons expert, told the BBC Radio 4 “Today” programme on Jan. 11 that people should be reassured that the uranium was detected.

He said, “It’s very clear that the comprehensive surveillance network that we have in place in this country, run by the security services, the police, and others, has actually worked and picked up potentially a very dangerous containment that could provide a threat.”

De Bretton-Gordon, the former head of the UK’s nuclear defence regiment, added, “In this country I think people should be pretty reassured that we’re not going to see dirty bombs from this type of material.”

Asked what could have happened to the metal, he said: “If it is for nefarious reasons, for bad reasons, to create mayhem by Iranians or some sort of Russian proxy, then that is an area of concern. But I think the key thing is that there are people looking out for this, and this should not worry the public unduly.”