Matters of Highest Concern:North Korea,Russia and Afghanistan-SecDef Mattis

On his first visit to the UK as US Secretary of Defense,Jim Mattis gave a press conference alongside his British counterpart,Minister of Defence Sir Michael Fallon,on 31 March 2017 in London.Mr.Mattis responded to reporters' interest in North Korea,Russia and Afghanistan:
In the larger scheme of things,in the global situation,which is dynamic,you've highlighted-I think correctly-the North Korean threat.This is a growing threat.This is a threat of both rhetoric and capability.Right now,North Korea appears to be going in a very reckless manner in what its conduct is portraying for the future-and that has got to be stopped.*
Russia's violations of international law are now a matter of record.From what happened with Crimea to other aspects of their behaviour in mucking around in other people's elections and that sort of thing,so I think that the point I would like to make is that NATO stands united;the trans-Atlantic bond is united.We are going to maintain Article V-an attack on one is an attack on all-as absolute bedrock of the NATO Alliance,and we will,as you see with the European Reassurance Initiative,act accordingly if Russia chooses to be a strategic competitor.On the Intermediate Nuclear Forces issue-as to whether Russia has violated the INF treaty with the US-we are in consultation with our Allies and we are still formulating the way ahead.In fact,it'll be addressed,I think,very,very soon as a matter of highest level concern.
We have seen Russian activity in Afghanistan vis a vis the Taliban.I'm not willing to say at this point if that has been manifested into weapons and that sort of thing;but certainly what they're up to there,in light of their other activities,gives us concern.I would just say that we look forward to engaging with Russia on a political or diplomatic level;but right now,Russia is choosing to be a strategic competitor,and we're finding that we can only have very modest expectations at this point of areas that we can cooperate with Russia,contrary to how we were just ten years ago,five years ago.It's no longer a cooperative engagement with them.Right now,it's gotten to where we're diplomatically going to have to carve out some manoeuvring room here,assuming Russia can change its behaviour and act in accordance with international norms and international law.*
On the question about more forces for Afghanistan,the suggestions and recommendations coming into us from the NATO commander in the field,General John Nicholson,have been received and we are reviewing those right now.Our Chairman of the Joint Chiefs,General Joseph Dunford,is reviewing them.Obviously,in light of our close relations with the UK,we always engage with them on issues like this,simply because we consider them an equal partner.Their advice is always solicited.It doesn't come to the number of troops in the field,so we'll be working with our Allies on that issue.We have not made a recommendation yet.I've not yet put a recommendation forward to our President at this time.
With regard to Daesh being in Afghanistan,you're all aware that Daesh-aka ISIL-has every intention of striking externally from the region,and that immediate threat goes to Europe;and we're going to have to keep Daesh on their back foot,and that's where we're concentrating at this point,US Defense Secretary Jim Mattis told journalists in London following his talks with UK Defence Minister Sir Michael Fallon.

SecDef Sets Forth Strategy at EUCOM Change of Command Ceremony

General Curtis M. Scaparrotti,US Army,assumed command of US European Command on 3 May in Stuttgart,Germany and NATO forces as Supreme Allied Commander Europe (SACEUR) on 4 May in Mons,Belgium.He replaces General Philip Breedlove who is retiring after three years in the conjointly held posts.Described as being intelligent,deliberate and personable,General Scaparrotti has previously held commands in Iraq,Afghanistan,the Pentagon and the Republic of Korea.*
At the EUCOM change of command ceremony at Stuttgart's Patch Barracks,US Secretary of Defense Ashton Carter described the US view of the challenges faced by NATO and the steps being taken to address them.EUCOM covers 51 countries in Europe and Eurasia,including Israel,Afghanistan and the NATO allies.
Under General Breedlove's leadership,Mr.Carter said,NATO forces have been writing a new playbook.They've been innovating to counter new challenges like cyber and hybrid warfare;integrating conventional and nuclear deterrence;and adjusting our posture and presence so that we can be more agile in responding to new threats.The NATO force that General Breedlove leaves behind is stronger than the one he inherited.*
We haven't had to prioritise deterrence on NATO's Eastern Flank for the past 25 years;but while I wish it were otherwise,now we have to,despite the progress that we've made together since the end of the Cold War.We must demonstrate to potential foes that,if they start a war,we have the capabilities and capacity to ensure they regret it;because for a force to deter a conflict,it must show that it can dominate a conflict.*
Russia has appeared in recent years intent to erode the principled international order that has served us,our friends and allies,the international community,and Russia itself,so well for so long.Russia continues to violate the territorial integrity of Ukraine,Georgia and Moldova,and actively seeks to intimidate its Baltic neighbours.At sea and on land,in the air and space and cyberspace,Russian actors have engaged in challenging international norms-and,most disturbing,Moscow's nuclear sabre-rattling raises troubling questions about Russian commitment to strategic stability;their respect for norms against the use of nuclear weapons;and whether they respect the profound caution that nuclear age leaders showed with respect to the brandishing of nuclear weapons.*
In response,the US is taking a strong and balanced approach to counter Russia's aggression.We're strengthening our capabilities,our posture,our investments,our plans and our allies and partners,all without closing the door to working with Russia where our interests align,and we will continue to make clear that Russia's aggressive actions only serve to further its isolation and unite our alliance.Since Russia began its illegal attempt to annex Crimea a little over two years ago,the US has made valuable investments in reinforcing our NATO allies.For example,we're contributing to NATO's Very High Readiness Joint Task Force (VJTF),and stepping up our training and exercises under Operation Atlantic Resolve.
Our recent budget submission builds on that significantly.To further reinforce our NATO allies and build our deterrence posture in the face of Russia's aggression,this budget significantly increases funding for our European Reassurance Initiative,making a total investment of 3.4 billion dollars for this year,fiscal year 2017,which more than quadruples the amount we requested last year.This will allow us to increase the amount of warfighting equipment as well as the number of US forces,including reserve forces,rotating through Europe to engage with friends and allies.This increase supports head-to-toe rotations that maintain the persistent presence of an Armoured Brigade Combat Team,which will give us a total of three BCTs continuously present in Europe.It supports more training and exercises with our European allies and friends.It supports more warfighting gear,including forward-stationing equipment for an additional Armoured Brigade Combat Team by the end of 2017.It also supports the pre-positioning of equipment for a division headquarters and other enablers in Europe,such as this equipment,and along with assigned Army Airborne and Stryker Brigade Combat Teams,and Marine Corps heavy vehicles and equipment already in Europe.
All this will allow us to rapidly form a highly capable combined arms ground force of division-plus strength that can respond theatre-wide if necessary-and it helps strengthen our regional air superiority posture,among other things allowing us to keep an additional F-15C tactical fighter squadron based in Europe,and also improve airfield infrastructure to enhance operations for Air Force fighters and Navy Maritime Patrol Aircraft-all this to reinforce our enduring commitment to the security of our European partners.
Our budget also reflects how we're doing more in more ways with our NATO allies given increased Russian submarine activity in the North Atlantic.It includes building toward a continuous arc of highly capable Maritime Patrol Aircraft operating over the Greenland-Iceland-UK Gap and Norway's North Cape.It also includes delivering Europe's first stealthy F-35 Joint Strike Fighter aircraft to our British allies and,given Russia's use of hybrid warfare,as exemplified by the so-called "little green men" in Ukraine,we're investing in more rotational presence of US Special Operations Forces exercising and training here in Europe.And,as we look to address the threats of the future as well as today,we're making significant investments in new technology-and when coupled with revised operational concepts,these technologies will ensure that we can deter and if necessary win a high-end conventional fight in an Anti-Access Area Denial environment across all domains and warfighting areas:air,land,sea,space,cyberspace and the electromagnetic spectrum.
These include new unmanned systems;enhanced ground-based air and missile defences;new long-range anti-ship weapons;the Long Range Strike Bomber;and also innovations in technologies like the electromagnetic rail gun;lasers;and new systems for Electronic Warfare;space and cyberspace.Finally,our budget also invests in modernising our nuclear deterrent.With these commitments,we will continue to build our capacity to deter a potential adversary like Russia,Mr.Carter stated in Stuttgart,Germany.

Walgreens Boots Alliance Acquires Rite Aid To Form Drug Store Colossus

Walgreens Boots Alliance has purchased Rite Aid for 9.4 billion dollars.Walgreens,which has more than 13,200 stores in the US,Canada,UK and eight other countries,will absorb Rite-Aid's approximately 4600 stores in 31 states,for a total of some 17,800 drug stores.The merger is the latest chapter in a trend within the health care sector,spurred on by Obamacare,to cut costs by combining operations and gaining bargaining power with drug companies and insurers by increasing size.Rival CVS Caremark has more than 7800 stores.*
Walgreens does business in the US under the Walgreens and Duane Reede names,and under the Boots name outside the US.The company's CEO is Italian Stefano Pessina,who was the executive chairman at Alliance Boots GmbH before it merged with Walgreens.
Rite Aid stores will initially continue under the Rite Aid name.Anti-trust regulators in the US could possibly require the divestment of some Walgreens assets,as there will only be two competitors of any size post-merger.*
The merged company will have 41% of US market share versus 58% for CVS.*
Walgreens Boots Alliance Inc (WBA),Rite Aid Corp (RAD)

The Geneva Syria Talks:Change and Danger

Secretary of State John Kerry is headed for Geneva,Switzerland for two days of talks with Russian foreign minister Sergei Lavrov.Each side will bring technical experts to assess the proposed turnover of Syria's chemical weapons to international supervision and evaluate the way forward,according to White House spokesman Jay Carney.At the same time,there are discussions at the UN to frame a Security Council resolution on the matter.We are working with Great Britain and France on the resolution.
The process needs to be credible and verifiable.After 20 years,Syria suddenly acknowledges it has chemical weapons and says it will sign the convention against their use.This is significant.
The president never considered canceling his Tuesday night speech.It is still very important for the president to speak to the American people.We will continue to have this discussion in the days ahead.This is far too complex an issue to reduce to a single phrase or words.
Russia has made this proposal and is engaging with other members of the UN Security Council.Russia's prestige is on the line.
There's no question very significant changes have taken place from the recent past.We go into this with eyes wide open.The goal of the Geneva meeting is to test the seriousness of the Russian proposal,Mr.Carney indicated.
Congressman Peter King,R-New York,said I have multiple concerns about Russia.We have now made Russia a major player in the Middle East.They will have influence over the region,and we will be almost indebted to them.Iran is actually more of a threat than Syria.
We've pretty much given immmunity to Assad.We should be extremely sceptical,extremely wary and not make any more concessions.We have to take a tough line with Russia.Russian President Vladimir Putin strengthens Syria and Iran's position in the Middle East.Don't give the benefit of the doubt to Putin.He wants to reestablish Russia and assert himself in a powerful way,Congressman King warned.
Mr.Putin is being seen as a man who does business with Syria and Iran,obsessively cultivating a Cold War mentality of being the counterweight to the influence of the United States.The Russians are part of the problem in Syria;they are not credibly part of the solution,said Senator John Cornyn,R-Texas.

Syria:Voices and Visions

US and French forces seem almost certain to attack Syria for its alleged use of chemical weapons within a short period of time.The UK is waffling after expressing initial support,delaying a decision until the UN inspectors have issued a report on chemical weapons use in Syria and a Parliamentary debate next week.NATO Secretary General Anders Fogh Rasmussen expressed support for military action.The US is prepared to go it alone if necessary.*There would be cruise missiles launched from four or five US destroyers in the region,and perhaps from submarines;and possibly long range bombers would be utilised as well,along with fighter aircraft to suppress anti-aircraft systems and strike other targets with precision munitions.Air bases in Turkey and Italy could be used.The target sets would likely be Syrian command and control centres,as well as their naval and air forces in order to hinder a Syrian response.The operation would perhaps take a day or two.*CNBC's Jim Cramer said I'm at a loss.How do I game Syria?Collectively,the market doesn't know what it's doing.We're all searching for analogies;we don't really have analogs.We told Assad what the schedule is.I don't think anyone really knows much.*Art Cashin,Director of NYSE Floor Operations for UBS,said you're gonna see this as pretty broad-based;watch both gold and oil.We're playing a game of headline roulette.The difficulty is,once events begin to take place,they can accelerate.If they take it to the UN,there could be a sigh of relief rally.*General Anthony Zinni,US Marine Corps retired,former CENTCOM commander,said there has to be a long term strategy.Where do we go in the long term if he continues these unacceptable acts? This is not simply a matter of regime removal.We thought that in Iraq.This is a mess.There is a religious war underneath.If we attack now,we have to be prepared to follow up.A military commander,if he's prudent,plans against all possibilities.*This is a regional conflict.We have a lot of work to build international support.It's not there now,and that concerns me greatly,General Zinni confided.*President Barack Obama said the Assad regime will have received a pretty strong signal it better not do it again.You are not only breaking international norms and standards of decency,you are also having an affect on US national interests,and it needs to stop.

Publicis-Omnicom:the Meaning of the Merger

The merger of Publicis and Omnicom is a big,bold move,strategically counterculture and structurally a bit clunky,said Sir Martin Sorrell,CEO of advertising and public relations firm WPP Group.They have to jump regualtory hurdles.There will be impacts on clients and their people.We're already seeing a certain degree of disruption,which we will seek to capitalise on.*There will be two large companies-ourselves and Publicis Omnicom Group.It makes you a little more energetic.We've done five or six deals in Brazil,in the UK,and two in Asia.I wanted to signal to our people that we want to be a little more energetic.We have 165,000 people in 110 countries.Size for size's sake,I'm not sure there's anything in that.*Our clients probably lowered their earnings estimates.They're getting there by cost-cutting,small leaps-a focus on cost,finance and procurement that shows in the lack of top line growth.It can't continue forever.*Western Europe,the UK and Germany are stronger than people realise.July surprised us a little on the upside,Sir Martin Sorrel noted.

Prologis Industrial REIT Sees Good Signs

Prologis is the world's largest industrial real estate investment trust.CEO Hamid Moghadam cites FedEx,UPS,Amazon and Wal-Mart as being among the warehouse firm's largest customers.We think economic growth and the lack of construction is gonna give us pricing power,Mr.Moghadam said.Ecommerce is probably the biggest renter and housing the least,and those in the middle are also growing.
Housing affects our smaller buildings.Under 100,000 square feet,we have about 10% vacancy.That's finally happening this year.
Overseas,we're seeing really good demand on domestic consumption.Japan is doing well because it's changing from an export to a domestic import economy.Spain,Italy and the UK are going strong.France is the weakest.President Hollande's policies have frightened people,and there's a lot of flight capital.
If occupancies drop to the 90s or below as in 2009,I get worried.We're a conservative bunch and we'd like to see it higher,Mr.Moghadam admitted.
UBS is to increase its Asia corporate advisory head count by 10% on the region's growth forecast.
Germany's industrial output was up in February on economic recovery.
Alcoa's earnings topped estimates on growing demand for aircraft.
Prologis(PLD),UBS AG(UBS),Alcoa Inc(AA)

Voices and Trends in European Business

Northern Europe is gonna do just fine because the US will have strong growth,and they will do well off that,according to Joseph McAlinden,Chief Investment Officer at Catalpa Capital.People are gonna feel wealthier and spend,which is good for the world economy.The US economy,the stock market is the buy on the gold seam right now.
French consumer confidence fell in March on the stalled economy.
US durable goods orders were up more than forecast.US home values are at their highest level since 2007.
An EU report says the employment outlook is very bleak across Europe.
UK banks must raise 38 billion dollars to make up for a capital shortfall,the Bank of England says.
London remains the world's top financial centre,says the Global Financial Centres Index.
VTB has the most exposure to Cyprus of the Russian banks,according to Standard and Poor's.The EU says the Cypriot bank tax is not a template for future bailouts.
Credit Suisse is to buy Morgan Stanley's Europe wealth management business.Erricson is in talks to buy Microsoft's IPTV business.
The euro has traded below 1.28 for the first time since November.
German plant and machine orders were unchanged in February on weak Euro-zone demand.
Credit Suisse(CS),Microsoft(MSFT),Morgan Stanley(MS),Erricson(ERIC)

Chief Market Strategist:What To Look At Now

There really is a sense that something very profound is happening in Spain,said Stephen Wood,PhD,Chief Market Strategist at Russell Investments.There's a sense they're on the edge of something big.It's the fourth largest economy in Europe.We're facing one of the first global stimulus packages in four years.
The UK is just chugging along as it always has.I would have to say the US right now has much stronger fundamentals.They may be better than China right now.Corporations have strong balance sheets.
You need globally diversified,multi-asset portfolios.The Federal Reserve is forcing people up the risk spectrum.I would be looking at emerging markets and corporate debt,Dr.Wood advised.
Stephen Wood conducts research on the economy,capital markets,portfolio strategies and investor behaviour.He interfaces with Russell's institutional clients and retail partners to communicate the firm's perspectives on the global market,investment process and portfolio management.He is also a prominent media spokesman for the company's views.

A Morgan Stanley Analysis

Henry McVey,Chief Investment Strategist at Morgan Stanley,thinks Germany's in pretty good shape.The UK may be the next problem.There's tension between high leverage and sustaining growth in Europe.What's really a risk-free asset?The U.S. is gonna be somewhat of a safe haven.Treasuries haven't sold off,and the dollar has rallied.
Mr.McVey still thinks most of the emerging market currencies are a good bet.They've been owning some high yield growth stocks outside the U.S. such as Nestle.A lot of the most levered companies are pretty expensive right now.
I don't think the sovereign debt issue is going away,Mr.McVey said.It's a multi-year issue.It's tough medicine to bring down your leverage.It's the first time in the capital markets that Asian inflation exceeds that of the developed nations.There's more stress to come for the pound and the euro,Mr.McVey predicted.

Brown Calls For Unity

Gordon Brown,the British Prime Minister,said that the economic downturn can only be ended by international cooperation.Individual countries can do a great deal to help their own economies,but only global efforts can provide a long term solution,through better regulation and coordinated intervention.The International Monetary Fund and World Bank must play a larger role in crisis prevention and resolution.Only a truly international response of policy and governance can be effective,Mr.Brown stated.If we all coordinate our response,there will be a quicker global,and therefore British,recovery,he maintained.Mr.Brown plans to meet with CEOs of the largest international banks in April to discuss dealing with global financial problems.

Pondering Market Conditions

Two prominent analysts have been evaluating the current market conditions.Mark Tinker of AXA Framlington Gemini says it has been a trading band environment,characterized by options use.Unwinding causes volatility toward the end of the day.People don't want to face a wall of selling,so they take their 20% profit,Mr.Tinker noted.For his part,Jacob Schmidt of Schmidt Research Partners feels that it's just day trading now,in and out.Everyone has become a day trader-even pension funds.There's no stability here in the markets.The question for me is,who's gonna be around in 2-3 years' time? I think the Tesco supermarket chain will survive.We don't know what the U.K. consumers will do.Will immigrants continue to arrive in the U.K.,or will they leave because of unemployment? If there's a survivor,I think it will be a Tesco,Mr.Schmidt reiterated.

Osborn Decries Debt

George Osborn,the Conservative party's Shadow Chancellor of the Exchequer,its chief financial expert,has bitterly criticized British Prime Minister Gordon Brown's response to the financial crisis.Borrowing is out of control,,Mr.Osborn complained,mounting up massive national debt.Interest rates should be slashed.There's plenty of scope to stimulate demand with lower rates.We were already in pretty bad shape coming into this downturn,reducing our room for maneuver.We're in for a very difficult time and a recession.Government needs to be there to help.Monetary policy is the best tool,Mr.Osborn believes.The Bank of England and the European Central Bank will make interest rate decisions on Thursday.