Member Briefing April 25, 2022

April 25, 2022

Posted By: Harold King in Daily Briefing,

Seventy-Five Basis Points is the New 50 Basis Points

A relentlessly hawkish Federal Reserve is ramping up market expectations for big interest rate hikes that would have been considered unthinkable (and market crippling) just two months ago. The shift in market expectations for even more tightening came after Fed Chairman Jerome Powell said at an IMF debate Thursday that a 50-basis-point hike in March was “on the table.” Perhaps even more pertinent to the markets, he said there was some merit in front-loading tightening with the current upside risks to inflation and a historically tight labor market. Stock markets sold off in reaction with the Dow shedding 1,000 points Friday.

Traders quickly priced in more aggressive hiking as Powell spoke, with CME FedWatch now pricing in an 85% chance the benchmark rate will rise to a range of 1.5%-1.75% after the June meeting. That would mean a 75-basis point hike in June if May gets the expected half-point boost.

Invasion of Ukraine Headlines

Russia’s War Against Ukraine Continues to Impact Global Supply Chains

As Russia’s war against Ukraine escalates and sanctions by the U.S. and other countries intensify, so does their impact on supply chains around the world. In fact, recent data shows that nearly 300,000 U.S. and European firms have suppliers that are based in Russia and/or Ukraine.

The publication goes on to say that supply chains are affecting people and industries in different ways. For example, food supply chains are snarled because Russia and Ukraine can’t deliver fertilizer, wheat and sunflower oil, while producers of aluminum, steel and platinum face similar challenges. “The largest broad effect comes from the rise in the price of oil,” Forbes adds, “which is more contributing to inflationary pressures than it is affecting the actual delivery of goods.”

Appellate Court: New York’s Congressional Maps Were Improperly Gerrymandered, Dems Appeal to State’s Highest Court

A mid-level appellate court ruled late Thursday that the congressional maps enacted by New York Democrats in early February were improperly gerrymandered and has given lawmakers a little over a week to come up with a new plan.

The case is expected to quickly be heard by the Court of Appeals, New York’s top court, where every judge was appointed by Democrats. Oral arguments could occur as soon as next week. “Under the 2012 congressional map there were 19 elected Democrats and 8 elected Republicans and under the 2022 congressional map there were 22 Democrat-majority and 4 Republican-majority districts.”

US COVID – Mortality Declines

The US CDC is currently reporting 80.6 million cumulative cases of COVID-19 and 987,034 deaths. The average 7-day daily incidence was 40,985 on April 19, an increase of nearly 40% since a recent low of 24,845 on March 29. Average daily mortality appears to have declined over the past week, with a 7-day average of 385 on April 19, down slightly from 459 on April 12, the date of our last report. The 7-day moving average number of new hospital admissions of people with confirmed COVID-19 continues to trend upwards, up 7.2% over the prior 7-day average, for the week ending April 18, reflecting the increasing trend in incidence.

Daily vaccinations have mostly leveled off over the past 2 weeks, with a slight increase from 455,258 on April 6 to 459,655 on April 14. A total of 256.9 million individuals have received at least 1 vaccine dose, which corresponds to 77.4% of the entire US population. A total of 219 million individuals are fully vaccinated, which corresponds to 66% of the total population. Only about 50% of those eligible for a first booster dose have received one.

NYS Vaccine and COVID Update –

Vaccine Stats as of April 22:

One Vaccine Dose

90.0% of all New Yorkers – 16,543,497
In the Hudson Valley 1,722,748

Fully Vaccinated

76.7% of all New Yorkers – 14,812,904
In the Hudson Valley – 1,512,753

Boosters Given

All New Yorkers – 7,898,238
In the Hudson Valley – 951,437

The Governor updated COVID data through April 22. There were 10 COVID related deaths for a total reported of 70,631

Hospitalizations:

Patients Currently in Hospital statewide: 1,488
Patients Currently in ICU Statewide: 186

7 Day Average Positivity Rate – Cases per 100K population

Statewide 6.37% – 32.61 positive cases per 100,00 population
Mid-Hudson: 5.97% – 28.11 positive cases per 100,00 population

Useful Websites:

Study: A Quarter of US COVID-19 Deaths Could Have Been Prevented by Vaccination

A new analysis finds that approximately 234,000 U.S. deaths from COVID-19 since June 2021 could have been prevented if people had been vaccinated. The analysis from the Peterson Center on Healthcare and the Kaiser Family Foundation underscores the importance of vaccination, and indicates a significant portion of the heavy toll from the virus could have been prevented.

The analysis made its calculations using the share of COVID-19 deaths that were among unvaccinated people, which ranged from 85 percent in June 2021 to 58 percent in January 2022. As of February 2022, 22 percent of the adult population was unvaccinated, but made up a much higher percentage of COVID-19 deaths, at 60 percent.

One-Way Masking Works

If you are vaccinated, boosted, and wearing a well-fitted N95 or similar indoors, “your risk is extremely low,” says Joseph Allen, a COVID and ventilation expert at Harvard. “I mean, there’s not much else in life that would have as low a risk as that. I would qualify your risk as de minimis.”

An N95 mask filters about 95 percent of airborne particles. But two surgical masks—one on me, one on you—filter only about 91 percent, Allen wrote recently for The Washington Post. Because most people’s masks aren’t perfectly sealed onto their faces, studies show that N95s reduce the wearer’s uptake of coronavirus particles by 57 to 86 percent. And that’s on top of the protection that vaccines and boosters already offer.

French Election: Macron Defeats Le Pen and Vows to Unite Divided France

Emmanuel Macron comfortably defeated far-right rival Marine Le Pen on Sunday, heading off a political earthquake for Europe but acknowledging dissatisfaction with his first term and saying he would seek to make amends. With 97% of votes counted, Macron was on course for a solid 57.4% of the vote, interior ministry figures showed.

In his victory speech he acknowledged that many had only voted for him only to keep Le Pen out and he promised to address the sense of many French that their living standards are slipping. “Many in this country voted for me not because they support my ideas but to keep out those of the far-right. I want to thank them and know I owe them a debt in the years to come,” he said. Leaders in Berlin, Brussels, London and beyond welcomed his defeat of the nationalist, eurosceptic Le Pen.

Jobless Claims – 184,000 People Filed New Claims Last Week

Weekly unemployment claims held near their lowest levels since the 1960s, with a strong labor market and improving levels of unemployment remaining a bright spot in the U.S. economy.

Initial jobless claims, week ended April 16: 184,000 and an upwardly revised 186,000 during prior week.
Continuing claims, week ended April 9: 1.417 million and an unrevised 1.475 million during prior week.

Companies in other industries have also highlighted these concerns. Bank of America CFO Alastair Borthwick said during the firm’s earnings calls earlier this week that the bank’s clients “are definitely seeing supply chain challenges” that have extended to the workforce. “We’ve also seen inflation, and we’re seeing labor and wage pressure,” Borthwick said. And rising labor costs as companies compete for talent could ultimately exert even further pressure on corporate profit margins.

Orrin Hatch, Former Longtime Utah Republican Senator, Dead at 88

ormer Utah Republican Senator Orrin Hatch has died at the age of 88. “The Hatch Foundation sadly announces the passing of Senator Orrin G. Hatch—the former President Pro Tempore of the United States Senate and the longest-serving Senator in Utah history (1977-2019),”

“Senator Orrin G. Hatch personified the American Dream,” said Matt Sandgren, Executive Director of the Hatch Foundation. “From tax and trade to religious liberty and healthcare, few legislators have had a greater impact on American life than Orrin Hatch. He was a profoundly positive influence in the lives of those he served, whether they were the constituents he helped over four decades of casework, the hundreds of interns he sponsored in both Utah and DC, or the robust network of Hatch staffers who carry on his legacy to this day. Senator Hatch touched the hearts of countless individuals, and I know I speak for all of them when I say he will be dearly missed.”

How CEOs Are Battling Employee Burnout

Quantifying ROI in the area of wellness spend can seem, on its face, a bit squishy. And the notion that companies should be responsible for employees’ mental health is relatively new; most CEOs today—the vast majority either Boomers or Gen X—grew up in a corporate culture rife with stigmas around depression, addiction and other mental health challenges, and one that encouraged people to leave their personal problems at home.

But as times and expectations have changed, more and more leaders are seeing a direct link from promoting mental health and wellness to profitability. “It’s crystal clear to me that if we’re not investing in our people and helping and supporting them, it’s going to hurt our overall bottom line,” says Dan Dye, CEO of flour milling and ingredient company Ardent Mills. “There’s just no question in my mind about that.

What’s the 329? New Mid Hudson Area Code Announced

Beginning as early as the third quarter of 2023, the Mid-Hudson Valley will have a second telephone area code. Persons with the current 845-prefix will retain it, but as those numbers run out, new ones will be issued with a 329-area code. The 845-code serves all or parts of the counties of Columbia, Delaware, Dutchess, Greene, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester.

The need for the new code stems from the increasing demand for residential and business phone numbers. What is a local call now, will continue to remain local, even between the two area codes and all calls will require dialing all 10 digits. The price of a call, coverage area, or other rates and services will not change due to the overlay.

New Low-Cost Airline to Fly to Eight Cities from Westchester County Airport

Breeze Airways began service only 10 months ago and has now announced it will fly to eight cities from Westchester County Airport. Charleston, South Carolina, Jacksonville, Florida and Norfolk, Virginia will all start at the end of June while service to Las Vegas, Los Angeles, New Orleans, San Francisco and Savannah, Georgia will start in the fall.

All of the flights will be non-stop with the exception of New Orleans, which will stop at Jacksonville to pick up additional passengers, said Director of Corporate Communications Gareth Edmondson-Jones. The leisure airline will fly daily to the west coast and Charleston while the other cities will operate on a four-days-per-week schedule, similar to Allegiant Airlines’ model, he said.

Bacteria in Urine May be a Sign of Aggressive Prostate Cancer

Scientists in the UK say they have discovered bacteria in urine linked to aggressive prostate cancer—although whether they are a trigger for the disease or a marker is not yet clear. Bacteria are known to cause some other cancers, including in the stomach, so a causal link may help oncologists treat the condition. Even if the bugs are a byproduct, they could prove a handy diagnostic tool.

The University of East Anglia team which found the link plan more work to see if clearing the infection might prevent bad tumors. Bacterial infection is known to play a part in the development of other cancers – a bug called H. pylori can trigger stomach cancer, for example, and a course of antibiotics can get rid of this risk.

Why the Federal Reserve Has Made a Historic Mistake on Inflation

America’s Federal Reserve has suffered a hair-raising loss of control. In March consumer prices were 8.5% higher than a year earlier, the fastest annual rise since 1981. In Washington inflation-watching is usually the preserve of wonks in shabby offices.

Uncle Sam has been on a unique path because of Mr Biden’s excessive $1.9trn fiscal stimulus, which passed in March 2021. It added extra oomph to an economy that was already recovering fast after multiple rounds of spending, and brought the total pandemic stimulus to 25% of gdp—the highest in the rich world. As the White House hit the accelerator, the Fed should have applied the brakes. It did not. Its hesitancy stemmed partly from the difficulty of forecasting the path of the economy during the pandemic, and also from the tendency of policymakers to fight the last war. For most of the decade after the global financial crisis of 2007-09 the economy was hung over and monetary policy was too tight.