Member Briefing May 24, 2022
Davos 2022: Global Economy Faces ‘Its Biggest Test’ Since WWII
As the first World Economic Forum to be held in person since 2020 opened in Davos, Switzerland on Monday, the International Monetary Fund said the economy faces “perhaps its biggest test since the Second World War.” “We face a potential confluence of calamities,” IMF Managing Director Kristalina Georgieva said in a statement. She warned that Russia’s invasion of Ukraine has “compounded” the effects of the Covid-19 pandemic, weighing on the economic recovery and fanning inflation as the cost of food and fuel jumps.
“We cannot solve the problems if we focus on only one of the problems,” German economy minister Robert Habeck said. “If none of these problems are solved, I fear, we will see a global recession — with huge implications, not only for the climate, for climate protection, but for global stability.” To limit economic stress, the IMF is calling for government officials and business leaders meeting in Davos to discuss lowering trade barriers.
Invasion of Ukraine Headlines
- Ukraine and Russia: the Latest News – Reuters
- Ukraine’s Forces Sink Russian River Crossings, Inflicting Heavy Damage – WSJ
- Zelenskyy Urges ‘Maximum’ Sanctions on Russia in Davos Talk – Yahoo
- Ukraine Rules Out Any Ceasefire Deal that Would See Land Given to Russia – The Independent
- Russian Soldier Sentenced to Life in Prison in Ukraine War-Crimes Trial – WSJ
- Andrey Kortunov Offers Three Scenarios for the End of the War in Ukraine -The Economist
- Why Turkey is Blocking Bids by Sweden and Finland to Join NATO – The Economist
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Small Businesses Lose Confidence in U.S. Economy
Fifty-seven percent of small-business owners expect economic conditions in the U.S. to worsen in the next year, up from 42% in April and equal to the all-time low recorded in April 2020, according to a survey of more than 600 small businesses conducted in May for The Wall Street Journal by Vistage Worldwide Inc., a business-coaching and peer-advisory firm. The measure is one part of a broader confidence index that in May posted its largest year-over-year drop since the Covid-related shutdowns of April and May 2020.
Small businesses are often the first to feel the effects of an economic downturn. Reports of diminishing optimism are coming from a variety of sectors, from manufacturing to consumer products and services.
This Year’s Fortune 500 List Has Some Notable Additions
The 68th edition of the Fortune 500 list is out and what’s interesting is not so much who’s on it—the top five remain the same: Walmart, Amazon, Apple, CVS Health, and UnitedHealth Group—but rather what a bang-up year the 500 had in 2021. Profits were by far at an all-time high—$1.84 trillion, up from the previous high of $1.22 trillion in 2019. Profits per employee soared to $61,821, up from the previous record in 2019 of $41,884
There were some notable new additions to the list. Vaccine-maker Moderna, which didn’t even have a product prior to the pandemic, clocked in at 195 on this year’s list. And Cleveland Cliffs—soared from 501 to 171, thanks to a pair of acquisitions engineered by Goncalves that have transformed the 175-year-old mining company into the top provider of steel for the U.S. automobile industry. Some notable companies also fell off the list, including R.R. Donnelly, Electronic Arts, and Ralph Lauren. You can view the full list here.
US COVID – Americans Are ‘Checked Out’ on COVID-19
COVID-19 cases are on the rise, but many Americans are over thinking of the virus as a crisis. Even in blue cities, restaurants are packed with people, and many Americans don’t wear masks even on the subway or on airplanes. Amid this national attitude, it may be extremely difficult for local or national leaders to try to reimpose any COVID-19 restrictions.
An Axios-Ipsos poll last week found just 36 percent of Americans said there was significant risk in returning to their “normal pre-coronavirus life. Andy Slavitt, the Biden administration’s former senior adviser on COVID-19 response, acknowledged the difficulties in responding given current attitudes. He called for a “middle zone conversation” on masks, where people could be encouraged to wear them in certain instances even if they are not mandated.
Three Doses of Pfizer’s Covid-19 Vaccine 80% Effective in Young Children, Company Says
Three doses of the Pfizer Inc. and BioNTech SE Covid-19 vaccine were 80% effective at preventing symptomatic Covid-19 and generated a robust immune response in children ages 6 months to 5 years old, the companies said. The vaccine was also found to be safe and well-tolerated among the children in the study, the companies said Monday.
Many of the children had received at least some of their shots during the Omicron wave, suggesting that the three-dose series worked well against the highly contagious variant after the two doses produced mixed results. Though preliminary, the results could set the stage for the last remaining group of people to get access to shots. Pfizer and BioNTech said they plan to complete submissions this week with U.S. health regulators.
US Has Offered Vaccines to North Korea but Got No Response
President Biden said Saturday the United States has offered vaccines to North Korea and China to help fight COVID-19 outbreaks, but neither has responded. “The answer is yes we’ve offered vaccines, not only to North Korea but to China as well,” Biden said at a joint press conference in Seoul with the South Korean president. “And we’re prepared to do that immediately. We’ve gotten no response.”
North Korea has long been isolated from the rest of the world, and the secretive government did not report any coronavirus cases for much of the first two years of the pandemic. But in recent weeks, the country has seen an outbreak of hundreds of thousands of cases and dozens of deaths from the virus, according to state media, triggering concern from the international community given North Korea’s limited access to outside medicine and its fragile health care system.
Hudson Valley Added More than 20,000 Jobs Year on Year – Mfg Plus 1,400
Private sector jobs in the Hudson Valley rose by 20,200 or 2.7 percent, to 772,500 over the year in April 2022. Employment gains were largest in leisure and hospitality (+9,100), other services (+4,000), professional and business services (+3,300), trade, transportation and utilities (+2,400), manufacturing (+1,400) and information (+700). Job losses were greatest in educational and health services (-600).
While job growth in the region’s private employment sector continued trending upward, the pace of growth has slowed down. Through the first three months of 2022, the region’s private employment sector averaged a year-over-year growth rate of 3.9 percent, compared to the 2.7 percent recorded in April 2022. Nevertheless, job growth continued be broad-based with six of nine sectors posting year-over-year gains. Two sectors posted year-over-year job gains of at least 10.0 percent.
Beijing Extends Work-from-Home ‘Requirement’ for Millions as COVID Spreads
The Chinese capital extended its work-from-home requirement for many of its 22 million residents to stem a COVID-19 outbreak, while Shanghai deployed more testing and curbs to hold on to its hard-won “zero COVID” status after two months of lockdown. Six of the city’s 16 districts have told all residents to work from home and avoid gatherings, and said those who have to go to work should have a negative PCR test taken within 48 hours. A further three encouraged certain groups to follow such measures, with each district responsible for implementing its own guidelines.
Beijing said 99 new cases were detected on Sunday, up from 61 the previous day – the largest daily tally so far during a month-old outbreak that has consistently seen dozens of new infections every day. In Shanghai, fewer than 600 daily cases were reported for Sunday, with none outside quarantined areas, as has been the case for much of the past week.
Fifth Circuit Issues a New Blow to SEC Administrative Law
The Securities and Exchange Commission’s in-house judges violate the U.S. Constitution by denying fraud defendants their right to a jury trial and acting without necessary guidance from Congress, the 5th U.S. Circuit Court of Appeals ruled on Wednesday. The court ruled 2-1 in favor of hedge fund manager George Jarkesy Jr and investment advisor Patriot28 LLC, overturning an SEC administrative law judge’s determination that they committed securities fraud.
In the ruling Wednesday, the majority said that because seeking penalties is akin to debt collection, which is a private right, the defendants were entitled to a jury trial. The majority also found that SEC judges, known as administrative law judges, lack authority under the Constitution because Congress did not provide guidance on when the SEC should bring cases in-house instead of in a court.
These 14 States had Significant Miscounts in the 2020 Census – New York Overcounted by 3.44%
For the 2020 census, all states were not counted equally well for population numbers used to allocate political representation and federal funding over the next decade, according to a U.S. Census Bureau report released Thursday.
A follow-up survey the bureau conducted to measure the national tally’s accuracy found significant net undercount rates in six states: Arkansas (5.04%), Florida (3.48%), Illinois (1.97%), Mississippi (4.11%), Tennessee (4.78%) and Texas (1.92%). It also uncovered significant net overcount rates in eight states — Delaware (5.45%), Hawaii (6.79%), Massachusetts (2.24%), Minnesota (3.84%), New York (3.44%), Ohio (1.49%), Rhode Island (5.05%) and Utah (2.59%).
Should We Be Worried About Monkeypox? Top Professor Gives Reassuring Context
An expert on vaccines and tropical medicine has said that the current outbreak of monkeypox should be simpler to contain than COVID-19 and noted that the disease is more easily identifiable. Peter Hotez, a professor of Pediatrics and Molecular Virology and co-director of the Center for Vaccine Development at Texas Children’s Hospital, provided key context for the monkeypox outbreak during an appearance on CNN on Friday.
Hotez said that when it comes to COVID and monkeypox “you can’t really compare the two.” “This is in terms of orders of magnitude less. We are seeing now multifocal outbreaks in multiple countries, meaning that historically we’ve seen transmission in Nigeria and the Democratic Republic of Congo,” he said.
12 Asian Nations Join Negotiations on Biden’s Economic Initiative for the Region
The White House said Monday that it had reached an agreement with a dozen Indo-Pacific nations to participate in negotiations on President Joe Biden’s economic initiative in the region after scrambling to sell trading partners on the proposal. India, Vietnam, Indonesia, Thailand, Brunei and the Philippines have agreed to take part in the framework negotiations after expressing some hesitation. They will join Japan, South Korea, Australia, New Zealand, Singapore and Malaysia, which were among the first countries the Biden administration started engaging last year.
Biden formally launched the Indo-Pacific Economic Framework on Monday during his visit to Tokyo. The unconventional trade arrangement is a cornerstone of his strategy for deepening U.S. ties in Asia, a region that administration officials consider critical to countering China as an economic and national security rival.
Foreign Investors are Fleeing China
Mr Xi’s insistence on using prolonged lockdowns to rid China of the Omicron variant, as well as his backing for Russia’s war in Ukraine, are being seen as ideological pursuits that ignore economic and geopolitical realities. Add in the timing of his crackdown on tech groups such as Alibaba, an e-commerce company, and on the leverage of property giants such as Evergrande, and it helps explain why some of the world’s largest investment groups are questioning the quality of leadership in Beijing.
Many attribute this and other ideological campaigns to preparations for the Communist Party congress set to be held in the autumn, at which Mr Xi is expected to be granted another five years in office. The events of 2022 could shape how global investors view China for years to come.