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Former ambassador warns expiration of key nuclear treaty with Russia would make the U.S. ‘worse off’

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The Biden administration has pushed to extend the New Strategic Arms Reduction Treaty, or New START, with Russia for five years, which is set to expire on Feb. 5. The nuclear agreement regulates and limits how many nuclear weapons each country can have. Russian officials on Friday said they welcome the news. 

Michael McFaul told CNBC’s “The News with Shepard Smith” that the expiration of New START with Russia would make the U.S. “worse off.” 

“We would lose our verification ability to look inside and look at Russia’s nuclear arsenal,” said McFaul, who served as U.S. Ambassador to Russia from 2012 to 2014. “Remember Ronald Reagan used to say, ‘Trust but verify?’ I say don’t trust, only verify, and the New START treaty allows us to do this. I think it is the right decision by the new Biden team to extend it.”

Joel Rubin is a former Deputy Assistant Secretary of State for Legislative Affairs, where he worked with members of Congress on multiple national security issues, including nuclear security. He agreed with McFaul and told “The News with Shepard Smith” that the accord stabilizes relations between the two nuclear powers. 

“The Trump Administration tried to use its delay of renewal of the treaty as leverage but failed to get anything in return, putting the entire treaty at risk,” said Rubin, who was also the Policy Director for Ploughshares Fund, the country’s leading nuclear security foundation. “We need stability between the U.S. and Russia, who combined hold more than 90% of the world’s nuclear weapons. Renewal of New START will do that.”

Relations between Moscow and the U.S. are fraught amid the massive cyberattack targeting federal agencies, interference in U.S. elections, and the recent arrest of the Russian opposition leader Alexie Navalny. President Joe Biden will ask his Director of National Intelligence Avril Haines to review Russia’s interference in the 2020 election, according to the Washington Post

McFaul told host Shepard Smith that he thinks the response against Russia will likely be sanctions, but that the Biden administration has choices when it comes to penalties against Russia.

“The easy thing to do is to sanction a bunch of no-name colonels, FSB, the successor group to the KGB, and check the box,” McFaul said. “The more bold move would be to sanction some of those that enable the Putin regime, including some of the economic oligarchs that support Putin.”

Rubin added that the U.S. should also work closely with European and Asian allies to pressure Russia to change and address its internal repression and its aggressive international behavior, “rather than push them away and reduce the diplomatic pressure on Russia, as the Trump Administration did.”

McFaul told Smith that he wasn’t sure if President Joe Biden wanted to expend the political capital to get tougher with Russia, because of domestic issues that the U.S. is facing, including Covid and an economic crisis. McFaul added, however, he believes it’s possible for Biden to do both. 

“I think you could walk and chew gum at the same time, I think you should be able to do both at the same time, but we’ll have to wait and see what they choose to do,” McFaul said.  

Rubin told “The News with Shepard Smith”  that he thinks it’s time for the U.S. to be “hard headed” when it comes to Russia and President Vladimir Putin. 

“We should neither be afraid of nor kowtow to Moscow any longer, nor should we expect that we can make US-Russia relations better through kid gloves diplomacy,” Rubin said.

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Biden signs executive order to address chip shortage through a supply chain review

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President Joe Biden signed an executive order Wednesday meant to address a global chip shortage impacting industries ranging from medical supplies to electric vehicles.

The order includes a 100-day review of key products including semiconductors and advanced batteries used in electric vehicles, followed by a broader, long-term review of six sectors of the economy. The long-term review will allow for policy recommendations to strengthen supply chains, with the goal of quickly implementing the suggestions, Biden said at a press event Wednesday before he signed the order.

The action follows calls from bipartisan members of Congress and industry leaders warning about the potential consequences of the shortage. Commonly known as chips, semiconductors are used to power electronics including phones, electric vehicles and even some medical supplies. Senate Majority Leader Chuck Schumer, D-N.Y., said that “semiconductor manufacturing is a dangerous weak spot in our economy and in our national security.”

Biden met with a bipartisan group of lawmakers Wednesday to discuss the shortage and said it was “very productive.” He praised the cooperative nature of the meeting, saying, “it’s like the old days, people actually were on the same page.”

The semiconductor supply chain had taken a hit early in the Covid pandemic since much of the world’s chips are manufactured in places like China and Taiwan. The health crisis has underscored issues with U.S. reliance on supply chains abroad in many areas, and the semiconductor industry is no different. According to the Semiconductor Industry Association, a coalition backed by several chipmakers, the U.S. only accounts for about 12.5% of semiconductor manufacturing.

The shortage has already impacted several companies. Ford said earlier this month that reduced estimates from suppliers could mean losing up to a 20% of its expected first-quarter production. General Motors said earlier this month that it would extend downtime at several production plants due to the shortage and would “reassess in mid-March.” On Wednesday, ahead of the executive order announcement, however, GM CFO Paul Jacobson said the worst of the chip shortage may actually be over already.

In a letter to Biden last week, several industry associations including SIA, the Advanced Medical Technology Association and the Motor & Equipment Manufacturers Association wrote that the U.S. should incentivize new semiconductor manufacturing plants to be established in the country to compete effectively with other nations that have invested in chip production.

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Dow soars to a record close overnight, Standard Chartered earnings ahead

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SINGAPORE — Stocks in Asia-Pacific rose in Thursday morning trade after the Dow Jones Industrial Average surged to a record closing high overnight.

In Japan, the Nikkei 225 jumped 1.53% in early trading as shares of conglomerate Softbank Group surged more than 3%. The Topix index also gained 1.21%.

South Korea’s Kospi rose 1.61% as shares of chipmaker SK Hynix soared more than 3%. The S&P/ASX 200 in Australia gained 0.94%.

MSCI’s broadest index of Asia-Pacific shares outside Japan traded 0.5% higher.

On the earnings front, Standard Chartered is expected to report its 2020 earnings around 12:15 p.m. HK/SIN on Thursday. On Tuesday, HSBC reported full-year earnings that beat expectations and announced a dividend payout for the first time since the Covid-19 pandemic.

Overnight stateside, the Dow jumped 424.51 points to a record closing high of 31,961.86. The S&P 500 gained 1.1% to finish its trading day at 3,925.40 while the Nasdaq Composite closed about 1% higher at 13,597.97.

The moves on Wall Street came as U.S. Federal Reserve Chair Jerome Powell continued to downplay the threat of inflation, saying it could take three years to reach the central bank’s target consistently.

In Wednesday’s testimony in front of the House Financial Services Committee, Powell said inflation could be volatile as the economy reopens and there’s increased demand. Still, the Fed chair does not expect inflation to run hot and said the central bank has tools to combat it if it should.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 90.176— still weaker than levels above 90.8 seen last week.

The Japanese yen traded at 105.92 per dollar, having weakened from levels below 105.6 yesterday. The Australian dollar changed hands at $0.7972, stronger then levels below $0.784 seen last week.

— CNBC’s Yun Li contributed to this report.

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Australia passes its news media bargaining code

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A search for ‘Australia News’ on the Google homepage, arranged on a desktop computer in Sydney, Australia, on Friday, Jan. 22, 2021.

David Gray | Bloomberg via Getty Images

Australia has passed a new law that will require digital platforms like Facebook and Google to pay local media outlets and publishers to link their content in news feeds or search results.

The move was widely expected and comes days after the government introduced some last-minute amendments to the proposed bill, which known officially as the News Media and Digital Platforms Mandatory Bargaining Code.

Facebook announced Monday it will restore news pages in Australia, reversing an earlier decision to block access to news content in Australia in retaliation against the then proposed bill.

“We believe the Code will support a diverse and sustainable public interest news sector in Australia,” Paul Fletcher, Australia’s communications minister, said on Twitter.

Treasurer Josh Frydenberg said the legislation will “help level the playing field” and ensure Australian news media businesses are paid for creating original content.

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