Get the latest market trends in your inbox

Stay on top of the latest market trends and economic insights with the Axios Markets newsletter. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa-St. Petersburg news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Indians celebrate after the Indian Air Force's airstrike on a Jaish-e-Mohammed terrorist camp in Pakistan, in Mumbai, on Feb. 26. Photo: Himanshu Bhatt/NurPhoto via Getty Images

In retaliation for the Feb. 14 terrorist attack in the Pulwama district of Kashmir, which killed 44 Indian security personnel, the Indian Air Force (IAF) conducted strikes on Tuesday against an alleged terrorist training facility and madrassa complex in the Pakistani town of Balakot.

Why it matters: The operation was the first cross-border sortie by the IAF since the 1971 India-Pakistan war. Escalating tensions have sparked fears of a standoff between the nuclear-armed rivals.

Details: Although the facts are in dispute, the airstrikes apparently targeted Jaish-e-Mohammed, a UN-sanctioned terrorist group that claimed responsibility for the Pulwama attack, among others in India. Both the Pulwama attack, the bloodiest such incident in the disputed territory of Kashmir in over three decades, and the strikes on Balakot, which lies outside the region, marked escalations from previous incidents.

What to watch: In a week when the U.S. is focused on the Trump-Kim summit, Venezuela, and Taliban negotiations in Qatar, other regional powers will likely take the lead in restraining the two sides:

Pakistan, after claiming that the strikes hit nothing but trees and soil, is likely to convene an emergency parliamentary session tomorrow to condemn India’s action. India hopes that Pakistan’s reaction will be all fury but no fire.

Yes, but: Electoral politics in the lead-up to India's May elections is likely to produce chest-thumping from Prime Minister Narendra Modi's government and the IAF that could provoke a more direct Pakistani reaction.

The bottom line: Indian observers hope that the enhanced military capabilities demonstrated in India's attack will deter future Pakistani terrorism. But that seems unlikely, as Pakistan relies on militant proxies and the world's fastest-growing nuclear arsenal to counterbalance India. The challenge for New Delhi will be mitigating terrorism without inciting reactions that could prove disastrous to India's prospects as an emerging power.

James Schwemlein is a nonresident scholar at the Carnegie Endowment for International Peace and a former U.S. State Department official.

Go deeper

42 mins ago - Health

Vaccine shipment companies targeted by cyberattacks, IBM says

Illustration: Sarah Grillo/Axios

A global phishing campaign has been trying to gain information from organizations working to ship coronavirus vaccines since September, IBM's cybersecurity arm said on Thursday.

Why it matters: Successfully distributing a COVID vaccine will already be challenging for the U.S. and other wealthy countries, especially to rural areas with less resources — while poorer countries are expected to have delayed access.

Fauci to meet with Biden transition for first time

Anthony Fauci. Photo: Win McNamee/Getty Images

The government's top infectious-disease expert Anthony Fauci will stay on at the National Institutes of Health and plans to meet virtually with President-elect Joe Biden's transition team for the first time Thursday to discuss the coronavirus response, he told CBS News.

Why it matters: Fauci, widely viewed as one of the country's most trusted voices on the coronavirus, said it will be the first "substantive" conversation between he and Biden's team. He said he has not yet spoken with Biden directly, but has connected several times with incoming White House Chief of Staff Ron Klain.

Dion Rabouin, author of Markets
Updated 3 hours ago - Economy & Business

Our make-believe economy is here to stay

Illustration: Eniola Odetunde/Axios

The Federal Reserve and global central banks are remaking the world's economy in an effort to save it, but have created something of a monster.

Why it matters: The Fed-driven economy relies on the creation of trillions of dollars — literally out of thin air — that are used to purchase bonds and push money into a pandemic-ravaged economy that has long been dependent on free cash and is only growing more addicted.