Member Briefing March 9, 2022
Invasion of Ukraine Headlines
- Russian Shelling Halts Ukrainian Evacuation Effort – WSJ
- ‘We’ll Fight in Forests, Fields, Streets’: Zelensky Channels Churchill in UK Speech – Times of Israel
- At least 27 killed in Ukraine’s Eastern City of Kharkiv in Past Day – Reuters
- ‘Putin is Angry’: U.S. Intel Heads Warn Russia Could ‘Double Down’ in Ukraine – Politico
- Biden Announces Ban on Russian Energy Imports – The Hill
- Poll: 79% of Americans Back Ban on Russian Oil Even if Energy Prices Rise – WSJ
- UN Denies Banning Staff From Calling Russia’s Attack On Ukraine An ‘Invasion’ Or ‘War’ – Forbes
- Germany Vetoes Nuclear Power Extension, Aims for LNG Terminal in 2024 – Reuters
- Russia’s Denying that it’s About to Cut Itself Off from the Global Internet – Fortune
- Map – Tracking Russia’s Invasion of Ukraine – The Economist
US Trade Deficit Hits New Record in January as Exports Fall
The trade deficit in the world’s largest economy increased by 9.4% compared to December to a record $89.7 billion, the Commerce Department reported. Exports fell 1.7% to $224.4 billion while imports rose to $314.1 billion, the report said. Imports of autos, parts and engines jumped $1.6 billion, while purchases of crude oil and natural gas rose $1.5 billion, but key semiconductors, needed for everything from cars to cell phones, fell $600 million compared to December.
U.S. firms have been trying to replenish depleted inventories and bring in parts and materials that have proved hard to find due to the pandemic disruptions that have snarled global supply chains.
Congress to Spend $15B on COVID
Congress is planning to give the Biden administration $15.6 billion to continue the fight against Covid-19, less than half of what federal agencies originally said would be needed. Top Democratic and Republican lawmakers say the 2022 spending bill they aim to pass this week to avoid a government shutdown includes $10.6 billion for domestic efforts such as testing, therapeutics and vaccinations, and $5 billion for global pandemic efforts.
Just last week, the White House had argued that they needed at least $22.5 billion just for their immediate needs, already a reduced number from the more than $30 billion they originally requested. The Office of Management and Budget did not respond to a request for comment.
Labor Crunch, Inflation Drive NFIB Index of Small Business Sentiment Lower
The NFIB index of small business sentiment and activity fell to 95.7 from 97.21, below the consensus, 97.3. The dip in the headline index to a 13-month low is largely due to the dip in stock prices, even before the hit from the invasion of Ukraine. The NFIB index is extremely sensitive to the S&P 500, which exerts huge influence on the expectations components. The headline NFIB index therefore is very likely to drop again in March.
The details show that the labor market remains very tight, though it seems no longer to be tightening, and the proportion of NFIB members who say that finding labor is their biggest problem has dropped from a peak of 29% in November to 22% in February, the lowest reading since January 2021. The rising trend in labor participation is making recruitment easier, at the margin, and it appears to be capping the increase in wage growth too.
Will Inflation Fall? Any Pullback Depends on These Sectors
How does inflation swing from 7.5% to around half that in just 11 months? Normally, the main driver of inflation is the economy itself: the degree of economic slack, and the overall balance of supply and demand. There are always outliers because of temporary events, such as an interruption to oil supplies. But these usually resolve on their own and don’t tell you much about where inflation will be in a year. So economists seldom try to predict price movements for discrete goods and services.
“I’m a macroeconomist by training that believes, yeah, maybe for a month or two, you do disaggregated,” Alan Detmeister, economist at UBS said. “But right now is a special time—you have so many of these special stories hitting.” Standard models that predict inflation based on unemployment and economic slack would at best explain inflation of as much as 3.5%, he said. Those models missed the inflation surge and for the same reasons, are likely to miss the reversal, said Mr. Detmeister, who expects inflation to fall to 2.7% in December 2022.
US COVID – COVID-19 Can Cause Brain Shrinkage, Memory Loss
COVID-19 can cause the brain to shrink, reduce grey matter in the regions that control emotion and memory, and damage areas that control the sense of smell, an Oxford University study has found. The scientists said that the effects were even seen in people who had not been hospitalised with COVID, and whether the impact could be partially reversed or if they would persist in the long term needed further investigation.
Moderna Signals It May Enforce Covid-19 Vaccine Patents in Wealthy Nations
Moderna Inc. said it will never use its Covid-19 vaccine-related patents to stop others from manufacturing its vaccine in more than 90 low- and middle-income countries, but signaled it was prepared to begin enforcing patents in wealthier countries.
The drugmaker said Monday it now expects anyone in higher-income countries that want to use its patented technologies to respect the company’s intellectual property. It also said it is willing to license its patents to others in those countries on “commercially reasonable terms.”
Russia Threatens to Shut Off the Gas to Europe
The energy markets are roiling again after Russia on Monday threatened to halt the flow of gas to the European Union via the Nord Stream 1 pipeline. That’s no small threat—roughly 40% of the EU’s gas comes from Russia, and any disruption risks sending inflation higher throughout the euro zone. On cue, natural gas prices hit a record-high overnight. The silver lining: Europe says it’s determined to wean itself off Russian gas imports by 80% this year. Here are four steps Europe could take to begin that process.
Last week, the International Energy Agency (IEA) set out how the EU can do just that in 10-point plan for reducing Russian gas imports by half within a year. Here are four of the top recommendations:
State and Local Officials Urge Gas Tax Suspension
Area officials joined with State Assemblyman Colin Schmitt (R, New Windsor) on Monday to call on the government to ease the sales tax on gasoline as prices spiral out of control. “That bill, if signed into law today would immediately reduce these prices by at least 20- cents a gallon by suspending for the next two years the four percent state sales tax and up to four- to 4 ½ percent local sales tax that’s imposed on gasoline,” he said.
What can we expect in the coming months? The average gas price in the US, which was $2.76 a gallon one year ago, is now at $4.01, up 47 cents since before Russia invaded Ukraine 11 days ago and is already nearly $4.50 at many Orange County gas stations. Residents are bracing for the real possibility in the next month or two when filling their vehicles might cost $5.00/gallon.
Understanding Why People Keep Quitting Their Jobs
Manufacturing leaders consistently tell our team at IndustryWeek that attracting labor remains the biggest challenge in today’s market. So, I’ve been spending a lot of time looking at U.S. Bureau of Labor Statistics numbers, trying to make sense of the chaos.
One lesson from the pandemic: men like their kids, too. Work-life balance has long been stereotyped as a women’s issue. If that ever was true, it isn’t any more. Stevenson says men appreciated family time during lockdowns and don’t want to give that up to spend more time in the factory.
Supreme Court Denies Injunction in Challenge of New York City’s Public School COVID-19 Vaccination Mandate
The Supreme Court denied an injunction Monday in the challenge of New York City’s COVID-19 vaccination mandate for public school employees. The injunction would have restricted New York City from requiring public school employees to be vaccinated. The news comes on the same day masks are now optional for public school children in grades kindergarten and above in New York City.
A group of four public school teachers and staff first asked Justice Sonia Sotomayor, who assesses emergency appeals from the region that includes New York City, to consider their emergency request to block the mandate due to their religious objections in September. The Bronx-born federal trial court judge denied the request and did not refer the case to the full court. However, after their first attempt, the teachers sent a new request to conservative Justice Neil Gorsuch, who did refer it to the full court.
LME Suspends Nickel Trading, Cancels Trades, After Prices Double to Over $100,000
The London Metal Exchange (LME) in an unprecedented move halted nickel trading and cancelled all trades on Tuesday as a race to cover short positions saw prices double in just hours to record highs above $100,000 per tonne. The trading shutdown after Western sanctions threatened supply from major producer Russia is the biggest crisis to hit the 145-year-old exchange in decades. One reason the LME took action is because some position holders have been struggling to pay margin calls, traders said.
The move underscores the market panic created by Russia’s invasion of Ukraine with buyers scrambling for the metal crucial for making stainless steel and electric vehicle batteries. “The current events are unprecedented,” the LME said in a notice to members. “The suspension of the nickel market has created a number of issues for market participants which need to be addressed.”
3 Ways to Help Employees Affected by Global Events
How do we manage our teams when a global, geopolitical crisis weighs heavily on our minds? There are atrocities happening throughout the world nearly every day. Unless something has affected us or someone on our team personally, we don’t normally start our morning staff meeting with a moment of silence. But when a singular event captures our collective global attention, how do we as leaders and managers address it?
When you are in a position of authority, your words have special weight and you can use them to either foster anxiety or create a supportive culture. But it can be hard to know what to do or what to say. If you’re finding yourself at a loss, start with these three simple steps.
New Enrollment Data: Fewer Voters, Democratic Gains in Hudson Valley
The figures released Monday shows there were 11.9 million registered voters in New York as of Feb. 21. That’s down from 12.4 million a year ago, continuing a long-standing trend in which the voter rolls decrease due to attrition in the aftermath of a presidential-year surge. The data Monday showed there were 5.93 million Democrats, making up 49.8 percent of the rolls. There were 2.65 million Republicans (22.2 percent of total registered voters).
There were 16 counties in which the total number of Democrats has increased by more than 10 percent in the past four years. And the vast majority of them either bordered or were near the Hudson Valley, with the biggest gains in Columbia (26 percent), Greene (22.3 percent), Saratoga (21.8 percent) and Ulster (17.8 percent) counties.
Alphabet’s Google to Buy Mandiant in $5.4 Billion Deal
Google lined up its largest acquisition in more than a decade on Tuesday, striking a deal to pay $5.4 billion in cash for Mandiant, a cybersecurity company that specializes in tracking the activities of hackers and cyber spies. It might be best known for uncovering the SolarWinds hack in 2020.
The rise of cloud computing—accelerated by the shift to remote work during the pandemic—has transformed the way many companies think about protecting themselves, driving a surge of cybersecurity spending. More recently, the war in Ukraine has intensified concern about potentially imminent threats.