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Daily Market Report | January 18, 2022

US FINANCIAL MARKET

Stocks Fall as Bond Yields Hit Two-Year High – Wall Street Journal, 1/18/2022

  • U.S. stock indexes fell Tuesday and bond yields hit two-year highs, as investors fretted over whether the Federal Reserve will hike interest rates more quickly and aggressively than expected.
  • Investors, coming off a holiday weekend that had closed markets on Monday, sold stocks across the board. All three indexes fell, with the S&P 500 sliding 1.6%, the Dow Jones Industrial Average shedding 1.6% and the Nasdaq Composite retreating 1.8%.
  • The Cboe Volatility Index—Wall Street’s so-called fear gauge, also known as the VIX—ticked up to 21.53, its highest level in a month.
  • Technology stocks and shares of other fast-growing companies have come under pressure in January as government-bond yields have risen. On Tuesday, the yield on the benchmark 10-year Treasury note ticked up to 1.827%—its highest level in two years—from 1.771% Friday, pushing bond prices lower.
  • The surge in Treasury yields pushed up bond yields globally.
  • The benchmark 10-year German bund yield traded as high as minus 0.005% on Tuesday, up from minus 0.061% Monday, on the verge of crossing positive territory for the first time since 2019, according to Tradeweb.
  • U.S.-listed shares of Alibaba fell 1.4% after Reuters reported that the Biden administration was reviewing the e-commerce giant’s cloud business to determine whether it poses a national security risk.
  • Meanwhile, shares of Activision Blizzard shot up nearly 30% after ​​ Microsoft agreed to buy the videogame heavyweight that has been roiled by claims of workplace misconduct. Microsoft shares were flat in recent trading.
  • Oil prices rose as geopolitical tensions in the Middle East added to worries about tight supply. Futures for West Texas Intermediate, the main grade of U.S. crude, rose 2% to $84.96 a barrel.
  • If the contracts settle above $84.65 a barrel, it will mark their highest closing level since October 2014.
  • Overseas, the pan-continental Stoxx Europe 600 fell 1%, with the biggest losses in the technology and travel and leisure sectors.
  • Major indexes in Asia broadly closed lower, although China’s Shanghai Composite bucked the trend, adding 0.8%. South Korea’s Kospi fell 0.9%, Japan’s Nikkei 225 edged down 0.3% and Hong Kong’s Hang Seng declined 0.4%.

Olympic Ticket Sales Halted; Hong Kong Arrests: Virus Update – Bloomberg, 1/18/2022

  • China halted ticket sales to the general public for the 2022 Winter Olympics and instead will invite groups of spectators to attend the games.
  • A study from Israel suggests a fourth dose of the Pfizer-BioNTech vaccine would not be significantly effective at preventing the omicron variant of the coronavirus.
  • Dr. Anthony Fauci, President Joe Biden’s chief medical adviser on the pandemic, said it’s too soon to know whether the rapid spread of the omicron variant will hasten the end of the health crisis. But Pfizer Chief Executive Officer Albert Bourla said he sees a return to normal life coming soon.
  • Two former Cathay Pacific Airways Ltd. flight attendants were arrested for violating pandemic rules, Hong Kong police said late Monday, after they were identified as the source of the city’s omicron outbreak.
  • France’s parliament adopted a new set of rules that will require proof of vaccination for people to eat in restaurants, attend the theater or get on an airplane.
  • The changes tighten the so-called health pass that France has had in place for months by removing the option that allowed for a recent negative test.
  • A  review of the so-called Plan B Covid curbs in place in England could come as soon as this week, Reuters reported, citing a senior figure in the U.K. government.
  • Current measures include mandatory Covid passes to gain access to venues and large events and, as well as requirements to wear masks on public transport and advice to work from home if possible. These are set to expire on Jan. 26.

Goldman Sachs Sees Profit Slip 13% – Wall Street Journal, 1/18/2022

  • Goldman Sachs’s profit fell in the fourth quarter, even as the deals market stayed strong.
  • The Wall Street giant said Tuesday that profit declined 13% to $3.94 billion, or $10.81 a share. That fell short of the consensus forecast of $11.77 a share among analysts polled by FactSet.
  • Revenue grew 8% to $12.64 billion. That beat the forecast of just over $12 billion.
  • Trading revenue was $3.99 billion, down 7%, as pandemic-induced volatility in capital markets subsided. Trading revenue fell 11% at JPMorgan and 17% at Citigroup.
  • Bond-trading revenue of $1.86 billion was essentially flat from a year earlier, while stock-trading revenue shrank 11%.
  • Total operating expenses were $7.27 billion, up 23% from the same period a year earlier. Compensation expenses at Goldman rose 31% to $3.25 billion.

Full Recovery in Global Labor Market Could Take Years – Wall Street Journal, 1/18/2022

  • It will take at least two years before global unemployment falls back to pre-pandemic levels, according to fresh projections, with joblessness in poor countries remaining high even as labor markets in rich countries become increasingly tight.
  • The U.S. labor market is nearing, or may already be, at full employment, but a United Nations agency said Monday that is far from true in many other parts of the world, with the Omicron variant of the Covid-19 virus likely stretching out the process of getting people back to work.
  • In new forecasts, the Geneva-based International Labor Organization said the number of hours worked globally would likely recover at half the pace it had previously projected for this year, with the number of unemployed workers falling to 207 million this year from 214 million last year, and to 203 million in 2023, still well above the 186 million recorded in 2019.
  • If the labor market remains on its current path, the number of unemployed workers would probably return to its pre-pandemic level in 2024, said ILO Director-General Guy Ryder.
  • The ILO said that while rich countries account for just one-fifth of the global workforce, they will likely account for half of the world-wide decline in unemployment between the end of 2020 and the end of 2022.
  • The ILO said that in addition to the persistence of high unemployment in many countries, large numbers of people have left and not returned to the workforce. It estimates that the number of people in work or looking for employment as a share of the working-age population will be 1.1 percentage points lower in 2022 than it was in 2019.

Microsoft to Buy Activision Blizzard in All-Cash Deal Valued at $68.7 Billion – Wall Street Journal, 1/18/2022

  • Microsoft agreed to buy Activision Blizzard in an all-cash deal valued at $68.7 billion, using its largest acquisition by far to grab a videogame heavyweight that has been roiled by claims of workplace misconduct.
  • The deal, if completed, would sharply expand Microsoft’s already sizable videogame operation, adding a stable of popular game franchises including Call of Duty, World of Warcraft and Candy Crush to Microsoft’s Xbox console business and its own games like Minecraft and Doom.
  • Microsoft said the transaction would make it the world’s third-largest gaming company by revenue, behind China’s Tencent Holdings and Japan’s Sony Group.

Citigroup Nears Sale of Taiwan Consumer-Banking Business – Wall Street Journal, 1/18/2022

  • Citigroup is nearing a sale of its retail banking franchise in Taiwan to DBS Group Holdings for around $2 billion, according to a person familiar with the matter, as the New York-based bank speeds up its strategic shift in Asia.
  • A deal with Singapore-based DBS could be announced before the end of this month, and it would include the transfer of all of Citigroup’s Taiwan consumer-banking staff, the person said. The U.S. bank’s Taiwan retail business includes 45 branches, mortgage lending and a large credit-card business.
  • Final details for the Taiwanese sale are under deliberation, and the transaction is likely to be valued at 50 billion to 60 billion New Taiwan dollars, or the equivalent of $1.8 billion to $2.2 billion, according to the person.
  • That amount includes the net asset value of Citigroup’s operations as well as a premium for them.

With Rate Increases Looming, Investors Dump Shares of Money-Losing Companies – Wall Street Journal, 1/18/2022

  • A Wall Street Journal data analysis shows that, as Fed officials’ signals and continued high-inflation readouts made it clearer that rate increases were looming, shares of unprofitable companies in the Nasdaq Composite Index have skidded while their profitable counterparts have generally still risen.
  • On average, loss-making companies in the analysis slid 25% from the market’s close on Sept. 30 through Friday. Profitable companies in the index, meanwhile, gained an average of 1.4% for the same time frame.
  • The performance of riskier growth stocks, which aim to deliver sharp profit growth in the future, also lagged behind broader indexes in the latter part of 2021.
  • The Nasdaq CTA Internet Index, for example, has fallen about 16% from Sept. 30 through Friday. The Nasdaq Composite gained about 3.1% for the same time frame, while the S&P 500 added 8.2%.
  • Unprofitable traditional IPOs also delivered lower first-day returns in 2021, according to an analysis by Jay Ritter, a finance professor at the University of Florida.
  • About three-quarters of the more than 300 operating companies tracked by Prof. Ritter that went public in the U.S. had earnings per share below zero, and they delivered an average first-day return of 30% in 2021, compared with 45.3% among a smaller pool of companies in 2020.

Traders Weigh Bigger Fed Rate Hike in March as U.S. Yields Soar – Bloomberg, 1/18/2022

  • Treasuries slid and yield-curve premiums shrank to the lowest in almost two years amid increased speculation the Federal Reserve will deliver more than a quarter-percentage point rate hike in March.
  • The yield on two-year notes climbed as much as nine basis points to 1.06% on Tuesday as cash trading restarted after a holiday.
  • Ten-year Treasury yields rose to 1.85% — the highest since January 2020 — and the gap between five- and 30-year yields fell below 50 basis points for the first time since March 2020, when the Covid pandemic began.
  • Investors are increasingly concerned that elevated U.S. inflation will force the Fed to tighten policy faster than expected, with swaps markets pricing in four 25 basis-point hikes within a year.
  • Fed Governor Christopher Waller said there may be even as many as five hikes this year, depending on inflation.
  • While the Fed has cut by increments of greater than a quarter point in recent cycles, it has tended to limit its individual tightening moves to 25 basis points for the past two decades.
  • The last time it was bigger was in May 2000, when it hiked rates by half a point, although back then the central bank was already well embarked on its tightening cycle.

Oil Prices Hit Seven-Year High on Rising Geopolitical Tensions – Wall Street Journal, 1/18/2022

  • Crude prices rose to their highest level since the 2014 shale-induced oil crash, a milestone in a rally that is gathering momentum as geopolitical tensions threaten to knock supply.
  • Futures for West Texas Intermediate, the main grade of U.S. crude, added 1.7% to $85.20 a barrel Tuesday morning. If the contracts settle above $84.65 a barrel, it will mark their highest closing level since October 2014, when oil prices were moving in the opposite direction as a gusher of U.S. crude flooded the market.
  • Among the factors driving the rally are concerns that tensions in the Middle East and Europe will spill into energy markets by denting supplies from major crude producers, particularly Russia and the United Arab Emirates. Any outages are likely to goose prices in a market where demand is rising and stockpiles have fallen below recent norms, traders and analysts say.

OPEC Sees Oil Market ‘Well-Supported’ by Robust Demand – Bloomberg, 1/18/2022

  • OPEC expects global oil markets to remain “well-supported” this year by robust demand, maintaining the confident outlook that has allowed the group to revive production.
  • The Organization of Petroleum Exporting Countries said in its monthly report that the market’s strength will persist, even as central banks tighten monetary policy. Stockpiles are considerably below their five-year average, the group’s data show.
  • OPEC repeated its prediction from last month that “the impact of the omicron variant is projected to be mild and short-lived” — a projection that has so far been vindicated.
  • In December, OPEC’s members added just 166,000 barrels a day, compared with a target of 250,000 a day, the report showed. Nigeria saw its output fall once again.

U.S. Airlines Say Further 5G Delay Needed to Avoid Flight Disruptions This Week – Wall Street Journal, 1/18/2022

  • The chief executives of major passenger and cargo airlines said there could be significant flight disruptions when new 5G service goes live in the U.S. this week, unless implementation of the wireless service within 2 miles of major airport runways is delayed.
  • The outlook had worsened for flight disruptions from the planned rollout of new high-speed wireless services, the airline executives said Monday in a letter to U.S. officials.
  • The executives asked that officials “take whatever action necessary to ensure that 5G is deployed except when towers are too close to airport runways until the FAA can determine how that can be safely accomplished without catastrophic disruption.”
  • AT&T and Verizon Communications had planned to roll out the faster wireless internet service in early December. The plan hit hurdles after aviation regulators said they would need to implement flight restrictions to protect air traffic from the “C-band” frequencies that will carry the fifth-generation service.

US ECONOMY & POLITICS

Omicron, Inflation Drive Down U.S. Growth Outlook – Wall Street Journal, 1/18/2022

  • The outlook for economic growth in the first quarter and 2022 is darkening amid the latest wave of Covid-19, as consumers grapple with high inflation and businesses juggle labor and production disruptions.
  • Forecasters surveyed by The Wall Street Journal this month slashed their expectation for growth in the first quarter by more than a percentage point, to a 3% annual rate from their forecast of 4.2% in the October survey.
  • The combination of higher inflation, supply-chain constraints and the fast-spreading Omicron variant caused economists to trim their forecast for growth to 3.3% for the current year as a whole, based on the change in inflation-adjusted gross domestic product in the fourth quarter of 2022 from a year earlier, from 3.6% in October. Last year, output rose 5.2%, economists estimate.
  • Economists expect average hourly earnings to be up 4.9% from a year earlier in June; they rose 4.7% in December.
  • By the end of 2022, wage inflation is expected to cool slightly to a 4.5% year-over-year increase in average hourly earnings. Still, economists expect workers to reap annual wage increases of roughly 4% for the best part of the next two years.
  • On average, survey respondents expect annual inflation to moderate to 5% in June, up substantially from the 3.4% they forecast in October, as measured by the consumer-price index.
  • They expect it to cool further to 3.1% at the end of this year, up from last quarter’s forecast of 2.6%.
  • Concerns about limited supply remain a cloud over the outlook, forecasters say. Bottlenecks are expected to continue in part due to China’s zero-tolerance strategy for combating the pandemic, which has led to disruptions at ports and factories.

New York Manufacturing Gauge Slumps, Hinting at Omicron Effect – Bloomberg, 1/18/2022

  • A gauge of New York state manufacturing slumped in January from a month earlier as measures of orders and shipments retreated sharply, suggesting the omicron variant of the coronavirus caused a pullback in activity.
  • The Federal Reserve Bank of New York’s general business conditions index plummeted to minus 0.7 from 31.9 a month earlier, a report showed Monday.
  • Figures below zero indicate contraction, and the reading was weaker than all estimates in a Bloomberg survey of economists.
  • The median projection called for a reading of 25. Responses were collected between Jan. 3 and Jan. 10, when infection rates were picking up.
  • The 32.6-point plunge in overall business conditions was the largest since April 2020 in the immediate aftermath of the pandemic. An index of new orders dropped 32.1 points in January to minus 5, while the shipments gauge slumped 26.1 points to 1.
  • A measure of delivery times eased only slightly, while the average workweek and employment also showed a slower rate of expansion.
  • The report also suggests inflation is poised to remain persistently high well into this year. While the survey’s current price metrics eased, expectations about prices paid and received six months from now climbed to record highs.

Texas, Arizona Have Recovered All the Jobs Lost When Covid-19 Hit – Wall Street Journal, 1/18/2022

  • Texas and Arizona have joined two other states in recovering all the jobs they lost at the start of the Covid-19 pandemic, leading a trend that is expected to include another dozen states by the middle of this year.
  • The states, which also include Utah and Idaho, have benefited from demographic shifts before and during the pandemic—experiencing outsize payroll growth in retail, warehousing, technology and transportation industries.
  • The states—all Republican controlled—also have had relatively relaxed Covid-19 restrictions during the pandemic, which economists say softened the blow on their economies.
  • As of November—the latest available state-level data—Texas had about 28,000 more jobs than in February. Arizona had nearly 5,000 more, Idaho had 14,500 more, and Utah leads with about 61,000 more.
  • According to recent Census Bureau estimates, Idaho, Utah, Montana and Arizona were the four states that saw the largest percentage growth in their populations from July 2020 to July 2021.
  • Texas, meanwhile, saw the biggest numeric growth in its population of all states during that same period—an increase of more than 310,000 people, according to census data.

Schumer Hits Trouble After Earlier Wins in 50-50 Senate – Wall Street Journal, 1/18/2022

  • Last month, the Democratic-controlled Senate failed to advance President Biden’s roughly $2 trillion economic plan. This week, the party’s push to overhaul election practices nationwide is set to fizzle out as well.
  • These twin setbacks have cast a harsher spotlight on the leadership of Senate Majority Leader Chuck Schumer (D., N.Y.), the lawmaker responsible for navigating President Biden’s agenda through the 50-50 Senate after he delivered a Covid-19 aid bill early last year and a bipartisan infrastructure bill in the summer.
  • With the signature issues for the Democratic Party stalled, neither Mr. Schumer nor other party leaders have outlined a path to legislative wins they might deliver in the short time left before campaign season begins for the midterms, with poll numbers suggesting their slender majorities are in significant jeopardy.

Some Lawmakers Push to Ban Stock Trading by Colleagues – Wall Street Journal, 1/18/2022

  • Federal judges and central bank officials have faced stepped-up scrutiny over stock trades, due to concerns about possible conflicts of interest or access to nonpublic information. Now, the spotlight is turning to Congress.
  • Last week, Democratic Sens. Mark Kelly of Arizona and Jon Ossoff of Georgia introduced legislation that would prohibit all members of Congress, their spouses and dependent children from trading individual stocks and would require them to place their stock portfolios into a blind trust.
  • Both of the freshman senators have put their holdings in such a vehicle, where control over their trades is given to a trustee.
  • Many members of Congress own individual stocks, and their trading activity has sometimes raised flags.
  • The Federal Bureau of Investigation began looking into reports in March 2020 that several lawmakers, their spouses or their investment advisers sold stock after lawmakers attended closed-door briefings about Covid-19. Some of those trades spared lawmakers losses when stocks initially sank.
  • The Senate bill, which would continue to allow lawmakers to directly control mutual-funds holdings and other diversified products, doesn’t have any Republican co-sponsors and isn’t expected to come up for a vote soon.
  • In the House, Rep. Abigail Spanberger (D., Va.) and Rep. Chip Roy (R., Texas) have a similar bill with 15 sponsors.

Trucker Vaccine Rule Is Making Freight and Fruit Pricier – Bloomberg, 1/18/2022

  • New rules requiring truckers to show proof of vaccination when crossing the Canada-U.S. border are cutting into shipping capacity and boosting the cost of hauling everything from broccoli to tomatoes.
  • The cost of transporting produce out of California and Arizona to Canada jumped 25% last week as fewer trucks are available to cross the border, according to George Pitsikoulis, president and chief executive officer of Montreal-based distributor Canadawide Fruits.
  • Canada implemented new rules on Jan. 15 that require border agents to turn away unvaccinated U.S. truckers, a move industry executives warned could slow down supply chains that are already under stress.
  • Canadian truckers who can’t show proof of vaccination will be required to quarantine when they re-enter the country from the U.S.
  • Shipping is expected to get disrupted in both directions, with the U.S. set to impose its own vaccine mandate on foreign travelers on Jan. 22. Only 50% to 60% of U.S. truckers are vaccinated, according to an estimate from the American Trucking Associations.
  • Bison Transport, one Canada’s largest trucking firms, is poised to lose 10% of its freight capacity as a result, prompting the company to boost wages for cross-border drivers and offer signing bonuses of C$2,500 (about $2,000). Those costs have to be passed on to customers, Chief Executive Officer Rob Penner said.
  • There are already concerns large companies will have be forced pay up to secure vaccinated drivers, pushing up freight costs, said Ron Lemaire, president of the Canadian Produce Marketing Association.

EUROPE & WORLD

Supply Chain Woes Could Worsen as China Imposes New Covid Lockdowns – New York Times, 1/18/2022

  • Companies are bracing for another round of potentially debilitating supply chain disruptions as China, home to about a third of global manufacturing, imposes sweeping lockdowns in an attempt to keep the Omicron variant at bay.
  • The measures have already confined tens of millions of people to their homes in several Chinese cities and contributed to a suspension of connecting flights through Hong Kong from much of the world for the next month.
  • At least 20 million people, or about 1.5 percent of China’s population, are in lockdown, mostly in the city of Xi’an in western China and in Henan Province in north-central China.
  • So far, the effects of the lockdowns on Chinese factory production and deliveries have been limited. Four of China’s largest port cities — Shanghai, Dalian, Tianjin and Shenzhen — have imposed narrowly targeted lockdowns to try to control small outbreaks of the Omicron variant.
  • As of this weekend, these cities had not locked down their docks. Still, Volkswagen and Toyota announced last week that they would temporarily suspend operations in Tianjin because of lockdowns.
  • Analysts warn that many industries could face disruptions in the flow of goods as China tries to stamp out any coronavirus infections ahead of the Winter Olympics, which will be held in Beijing next month.
  • On Saturday, Beijing officials reported the city’s first case of the Omicron variant, prompting the authorities to lock down the infected person’s residential compound and workplace.

China’s Zero-Covid Policies Cause a Traffic Jam in Vietnam as Farmers Suffer – Wall Street Journal, 1/18/2022

  • China’s zero-Covid policies are putting Chinese cities into lockdown and grounding air travel anew. They are also disrupting trade routes across its land borders that are lifelines for the region’s farmers and merchants.
  • In neighboring Vietnam, thousands of trucks laden with dragon fruit, jackfruit, watermelons and other produce have been backed up at the border awaiting passage for weeks. Their trips were disrupted after Chinese authorities toward the end of last year suspended operations at a number of gates or slowed traffic citing a need to contain Covid-19.
  • Chinese cities, provinces and sea ports test not just people but also fruit for the coronavirus. A city in the Guangxi area banned dragon-fruit imports last month after the pathogen was detected on three batches of the fruit and its packaging, authorities there said.
  • A county in Anhui province suspended all business related to imported fruit after two batches of Vietnamese dragon fruit were found similarly tainted, it said. Screening of Thailand’s shipments of longan—a fleshy lychee-like fruit—led to the quarantining of sellers, buyers and store visitors earlier this month.

China Seeks to Cushion Blow of Economic Pain as Momentum Slows – Wall Street Journal, 1/18/2022

  • Last year, Chinese policy makers shook up the world’s second-largest economy just as its rebound from the pandemic was starting to wear off, unleashing a flurry of measures to address longer-term economic imbalances—and delivering a short-term hit to business activity.
  • Now, China’s leaders are hoping that they can put a floor under the economy, which officials said Monday expanded by just 4% in the fourth quarter of last year, the slowest pace since the beginning of the Covid-19 recovery in the second quarter of 2020.
  • To do so, they are easing some of their earlier tightening policies, for example by increasing mortgage lending to home buyers. The country’s central bank on Monday cut two key interest rates that could pave the way for further cuts to the benchmark lending rate.
  • After staging a spectacular rebound from the pandemic based largely on its manufacturing sector, China’s economy quickly slowed in the second half of 2021 as a flurry of regulations roiled private businesses in the consumer internet, education and real-estate sectors.

China’s Population Stalls With Births in 2021 the Lowest in Modern History – Wall Street Journal, 1/18/2022

  • The number of newborns in China fell for a fifth straight year to the lowest in modern Chinese history, despite Beijing’s increasing emphasis on encouraging births.
  • Last year’s 10.62 million births, down from 12.02 million in 2020, barely outnumbered the 10.14 million deaths, the National Bureau of Statistics said Monday, suggesting the day may be near when China’s population starts to shrink.
  • At the end of 2021, China’s population was 1.413 billion, up only 0.034% from the year-earlier 1.412 billion at end 2020.
  • The birthrate—the number of births per thousand people—slipped to a fresh low of 7.52 in 2021 compared with 8.52 in 2020, underscoring Beijing’s challenge in brightening a dire demographic picture.
  • Nearly one in five Chinese is 60 or older. Monday’s data showed a further rise in that percentage, to 18.9% in 2021 from 18.7% in 2020.
  • Working-age Chinese—defined as those aged between 16 and 59—now account for 63% of the total population.
  • A gender imbalance also contributes to falling marriage rates, said He Yafu, an independent demographer based in Guangdong.
  • A traditional preference for boys combined with the now-scrapped one-child policy have skewed China’s sex ratio. Among Chinese ages 20 to 40, men outnumber women by 17.5 million, census data showed, although nationwide the gap has narrowed in recent years.
  • China’s fertility rate—the number of children a woman has over her lifetime—dropped below replacement levels in the early 1990s and in 2020 came in at 1.3, below even Japan’s 1.34.

Deepening Debt Crisis in Sri Lanka Stokes Controversy Over Chinese Lending – Wall Street Journal, 1/18/2022

  • A deepening debt crisis has left Sri Lanka struggling to pay for imports and stoked political controversy over Chinese lending to the South Asian nation as part of Beijing’s global Belt and Road infrastructure program.
  • The crisis has also opened a window for India, which provided financial relief to Sri Lanka last week shortly before a $500 million bond matured, to push back against Chinese influence in the Indian Ocean region.
  • Ajith Nivard Cabraal, Sri Lanka’s central bank governor, said on his official Twitter account that the country had repaid the bond, which matured on Tuesday. It was the first major tranche of $4.5 billion total sovereign debt repayments due in 2022.
  • But with around two thirds of government revenue already going toward interest payments, President Gotabaya Rajapaksa warned in a speech to parliament that the country would be unable to pay for imports without increasing its foreign currency reserves.

Toyota Expects to Miss Annual Output Goal on Chip Disruptions – Bloomberg, 1/18/2022

  • Toyota Motor said it is unlikely to reach its goal of manufacturing 9 million cars this fiscal year through March due to persistent chip shortages.
  • The world’s No. 1 automaker is paring back production to 700,000 units in February, around 150,000 units lower than its original goal for the month, according to a statement Tuesday, which cited a semiconductor crunch due to continued demand across industries. Toyota didn’t set a new annual target, saying only that final output is expected to be lower than previously forecast.
  • Toyota already slashed its annual production outlook in September as Covid lockdowns in Southeast Asia disrupted its ability to procure key parts from the region.
  • Even with the February cut, Toyota still aims to make about 5% more vehicles next month than a year earlier, when it produced 668,001. High levels of production have been planned for March and next fiscal year, Kumakura said.

Factmonster – TODAY in HISTORY

  • Captain James Cook became the first European to visit the Sandwich Islands (Hawaii). (1778)
  • The First Fleet, carrying convicts and sheep, arrived in Australia’s Botany Bay. (1788)
  • The Nazi siege of Leningrad was broken. (1943)
  • All 50 states joined in the observance of the Martin Luther King, Jr. holiday. (1993)

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