InvestMacro

By Iain Boyd, University of Colorado Boulder 

Ukraine has received a broad array of military supplies from the U.S. and other allies. Recently, Ukrainian President Volodymyr Zelenskyy made an urgent plea specifically for additional air defense resources from the West in response to increased air attacks by Russia.

To understand Zelenskyy’s emphasis on air defense, it’s important to look at the types of air weapons that Ukraine faces and how air defenses work to counteract those threats. It’s also important to understand why this type of warfare is all about the number of assets each side has at its disposal.

Increased air attacks

On Oct. 10, 2022, Russia launched a large barrage of airborne weapons against a variety of targets in Ukraine. The types of weapons involved in the attack included short-range ballistic missiles and cruise missiles.

Ballistic missiles are accelerated by rockets from the ground or from aircraft, tend to follow a predictable path and are somewhat easier to track. Cruise missiles carry a propulsion system that allows them to maintain speed and fly more unpredictable flight paths, including trajectories that are close to the ground. They are much more difficult to detect, track and shoot down.

Then, on Oct. 17, Russia launched a barrage of explosive drones at Ukraine’s capital city, Kyiv. Explosive drones, known as loitering munitions, tend to be small weapons that are difficult to defend against. By circling overhead, they are able to surveil a region of interest, gathering information before identifying a specific target to attack. Russia has acquired explosive drones from Iran, according to U.S. officials.

Air defense systems

The defense against all such air threats involves an integrated system of several elements.

Early warning radars located at Ukraine’s borders first detect the approach of missiles. These weapons are further tracked along their flight trajectories by a dispersed network of additional radars. The primary defensive countermeasure against ballistic and cruise missiles involves surface-to-air missiles (SAMs): You destroy a missile using a missile. This is no easy feat because the SAM must track, home in on and hit a high-speed target that may be changing direction.

In the U.S., key strategic assets such as the White House are protected against aerial attack by the National Advanced Surface-to-Air Missile System (NASAMS). NASAMS was designed to counteract a variety of incoming threats, including cruise missiles, aircraft and drones. Each NASAMS contains 12 interceptor SAMs. No information is available publicly on its effectiveness. NASAMS is one of the options being considered by the U.S. to help support Ukraine.

Another notable example of an air defense system is the Israeli Iron Dome. The system is designed to defend against rockets and artillery shells launched from up to 155 miles (250 kilometers) away. Each Iron Dome missile battery consists of three to four missile launchers, each with up to 20 interceptor SAMs.

The system is reported to have a 90% kill rate for rockets launched against Israel. Veteran national security correspondent Mark Thompson described Iron Dome as possibly the most effective missile defense system the world has seen.

Both NASAMS and Iron Dome are reported to be effective against drones. However, SAMs are an expensive way to defend against such low-cost targets, and they could be overwhelmed by large numbers of drones. Directed energy weapons such as high energy lasers are being developed and deployed to provide a potentially more cost-effective approach to neutralizing low-cost drones.

A numbers game

The significance of the plea by Zelenskyy for additional air defense systems can be understood in the context of a numbers game. Different air defense systems have a range of effectiveness against different aerial threats. However, none of the defense systems is 100% effective.

Moreover, an adversary can significantly reduce the effectiveness of air defense by launching salvos of multiple weapons simultaneously. Therefore, an attacker can always overwhelm a defender if the attacker has more attack missiles than the defender has defensive missiles. Conversely, a sufficient number of defensive systems may cause an attacker to stop firing altogether. It becomes a war of attrition, with the winner being the side with the most missiles.

Ukraine likely has sufficient air defenses to protect strategic military targets such as command and control centers and ammunition dumps. They do not have coverage of many other key assets such as transportation hubs and power and water facilities, the types of targets Russian forces have been targeting in recent days.

Should the West agree to provide significant numbers of air defense systems to Ukraine, it could significantly change the course of the conflict. At some point, Russia will have to confront the finite depth of its missile stockpile. The number of remaining Russian high-precision missiles is already reported to be running low.

Without the ability to wear down and demoralize Ukraine through airstrikes, Russia would be faced with the much more daunting and drawn-out prospect of relying solely on ground forces to grind out its objectives.

About the Author:

Iain Boyd, Professor of Aerospace Engineering Sciences, University of Colorado Boulder

This article is republished from The Conversation under a Creative Commons license. Read the original article.

By JustMarkets

The US stock indices were trading yesterday without a single trend. By the close of trading, the Dow Jones Index (US30) gained 0.01%, while the S&P 500 Index (US500) decreased by 0.74%. The NASDAQ Technology Index (US100) fell by 2.04% on Wednesday.

The US economic data released by the US Commerce Department showed that home sales in September fell by 10.9% from the previous month, while August’s 685,000 unit figure was revised downward to 677,000, indicating that the Federal Reserve’s aggressive policies continue to hold back the real estate market.

Shares of Meta Platforms Inc (Facebook) fell more than 20% on the report after third-quarter earnings missed Wall Street estimates.

Visa, meanwhile, closed 5% higher after posting quarterly results that beat net income estimates, driven by continued consumer spending and a recovery in activity.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) gained 1.09%, France’s CAC 40 (FR40) added 0.41%, Spain’s IBEX 35 (ES35) increased by 0.97%, and the British FTSE 100 (UK100) closed by 0.61% on Wednesday.

The euro weakness may lead to a further rise in consumer prices at the expense of imports, said German Deputy Finance Minister Florian Toncar. Toncar’s remarks contrast with recent comments from other European leaders, who stressed the risk of recession and suggested that the cost of borrowing in the eurozone should not increase too sharply.

The European Central Bank will raise interest rates again today and likely provide a subsidy to commercial banks, taking another important step in tightening policy (QT) to combat a historic spike in inflation. The ECB will almost certainly raise its deposit rate by 75 basis points to 2% and make clear that the size of the next steps remains open for discussion. The central bank is also likely to take the first steps to reduce its balance sheet of €8.8 trillion. Signaling that future steps will be more difficult, ECB President Christine Lagarde is likely to give only vague guidance, arguing that additional increases are needed, but incoming data and new economic forecasts in December will be the key.

According to the World Bank, a sharp slowdown in global growth and restrictions imposed because of the coronavirus pandemic in China are key downside risks to oil consumption. But with OPEC+ countries limiting oil production starting in November, the medium-term outlook for oil remains upward.

Shell company on Thursday reported third-quarter earnings of $9.45 billion, down from the previous quarter. But the company announced plans to increase its dividend by 15% by the end of the year. Shell also expanded its stock buyback program, announcing plans to buy $4 billion worth of stock over the next three months.

Asian markets closed in positive territory yesterday. Japan’s Nikkei 225 (JP225) jumped by 0.67%, Hong Kong’s Hang Seng (HK50) ended the day up by 1.00%, and Australia’s S&P/ASX 200 (AU200) increased by 0.18%.

Solid wage growth is likely to be the trigger that will push the Bank of Japan away from ultra-low interest rates. With Japan’s economy still weak, the Bank of Japan is not expected to raise interest rates soon, even if it means increasing downward pressure on the yen, which has fallen to a 32-year low against the dollar. Analysts say that Governor Haruhiko Kuroda’s second five-year term ends in April, opening the prospect of a gradual withdrawal of his radical economic stimulus program.

S&P 500 (F) (US500) 3,830.60 −28.51 (−0.74%)

Dow Jones (US30) 31,839.11 +2.37 (+0.01%)

DAX (DE40) 13,195.81 +142.85 (+1.09%)

FTSE 100 (UK100)  7,056.07 −0.51 (+0.61%)

USD Index 109.71 −1.24 (−1.14%)

• – Eurozone Monetary Policy Statement at 15:15 (GMT+3);
• – Eurozone Interest Rate Decision at 15:15 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US GDP (q/q) at 15:30 (GMT+3);
• – US Durable Goods Orders (m/m) at 15:30 (GMT+3);
• – Eurozone ECB Press Conference at 15:45 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

By JustMarkets

At yesterday’s close of the stock market, the Dow Jones Index (US30) increased by 1.07%, and the S&P 500 Index (US500) added 1.63%. Technology Index NASDAQ (US100) gained 2.25% on Tuesday. Investor sentiment improved amid growing expectations that the high-interest rate damage to the US economy may prompt the Federal Reserve to soften its hawkish stance. Also, a positive for the market is the reporting season, but tech giants were disappointing yesterday.

Google Inc (GOOGL) failed to beat quarterly earnings estimates Tuesday as advertisers cut back in the face of the economic downturn. As a result, the company’s stock plummeted nearly 7% on the report release.

Microsoft (MSFT) shares also fell more than 6% in after-hours trading after the software giant disappointed in its revenue growth forecast for its Azure cloud computing business.

On Tuesday, Spotify Technology SA (SPOT) beat Wall Street estimates for third-quarter revenue and subscriber growth but said harsh economic conditions led to slower-than-forecast advertising growth.

The US consumer confidence fell more than expected in October to a three-month low as high inflation, and growing concerns about the economic outlook put pressure on Americans. The drop in confidence shows that the Federal Reserve’s aggressive interest rate hikes are taking a toll on consumers. And with the midterm elections just two weeks away, this is a worrying sign for President Joe Biden and the Democrats, who are trying to maintain their slim majority in Congress. In the future, inflationary pressures will continue to pose strong obstacles to consumer confidence and spending, leading to a difficult holiday season for retailers.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) gained 0.94%, France’s CAC 40 (FR40) added 1.94%, Spain’s IBEX 35 (ES35) increased by 1.49%, Britain’s FTSE 100 (UK100) closed down slightly by 0.01% on Tuesday.

Deutsche Bank reported a significant jump in earnings in the third quarter despite a downturn in deal-making. UniCredit raised its 2022 earnings target, with the second-largest Italian bank supported by higher interest rates and lower loan loss reserves.

Financial markets are convinced that tomorrow’s ECB meeting will include another significant increase in key interest rates. In line with the last move in September, the only uncertainty concerns the step of raising. The 75-basis-point hike that ECB officials have been talking about in recent weeks is still an unresolved issue since last month, and several Governing Council members demanded only a 50-basis-point increase on the grounds that a possible recession would itself reduce inflationary pressures. And more and more members are now talking about the likelihood of a limited recession in 2023. This week’s meeting will almost certainly also include a discussion of quantitative tightening (QT). But even without QT, financial markets are increasingly convinced that key interest rates are far from their peak. From the current level of 1.25%, analysts are predicting a rate hike to 2.25% by the end of the year.

New Prime Minister Rishi Sunak promises to lead the UK out of its economic crisis. Sunak reappointed Jeremy Hunt as his finance minister to appease markets that had abandoned his predecessor’s debt-driven economic plans. Sunak also warned that difficult decisions lie ahead as he hopes to cut government spending.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) jumped by 1.02%, Hong Kong’s Hang Seng (HK50) ended the day down by 0.10%, and Australia’s S&P/ASX 200 (AU200) was up by 0.28%. But since the market opened today, Hong Kong’s and China’s shares are showing the best dynamics of the day. Hong Kong’s Hang Seng Index (HK50) jumped by 2% from a 13-year low, while China’s Shanghai Shenzhen CSI 300 blue-chip index increased by 1.4%.

Inflation in Australia has jumped to a 32-year high. The reason for this is a sharp rise in home construction costs and rising gas prices. Data from the Australian Bureau of Statistics showed Wednesday that the consumer price index (CPI) jumped by 1.8% over the last quarter. On an annualized basis, the inflation rate rose from 6.1% to 7.3%. This is negative data that will push the Reserve Bank of Australia (RBA) to resume raising interest rates more aggressively. Initially, the RBA wanted to slow growth so that rising interest rates would not affect consumer spending too much, but that plan has not been successful.

S&P 500 (F) (US500) 3,859.11 +61.77 (+1.63%)

Dow Jones (US30) 31,836.74 +337.12 (+1.07%)

DAX (DE40) 13,052.96 +121.51 (+0.94%)

FTSE 100 (UK100) 7,013.48 −0.51 (−0.01%)

USD Index 110.88 −1.11 (−0.99%)

• – Australia Consumer Price Index (m/m) at 03:30 (GMT+3);
• – US New Home Sales (m/m) at 17:00 (GMT+3);
• – Canada BoC Monetary Policy Report at 17:00 (GMT+3);
• – Canada BoC Interest Rate Decision at 17:00 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
• – Canada BoC Press Conference at 18:00 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.