US ECONOMY & POLITICS

U.S. Producer-Price Inflation Stays Hot, Reinforcing Fed’s Plan to Start Raising Rates – Bloomberg, 2/15/2022

• Prices paid to U.S. producers jumped in January by more than forecast, pointing to persistent inflationary pressures as companies contend with supply-chain and labor constraints.
• The producer price index for final demand increased 9.7% from January of last year and 1% from the prior month, Labor Department data showed Tuesday. The gain from December was the largest in eight months.
• The median forecasts in a Bloomberg survey of economists called for a 9.1% year-over-year increase and a 0.5% monthly advance.
• Excluding the volatile food and energy components, the so-called core PPI increased 0.8% from a month earlier and was up by a 8.3% from a year ago.
• The cost of energy rebounded in January after falling a month earlier, rising 2.5%.
• Prices of goods accelerated in January from a month earlier, rising 1.3%, the most in three months.
• Similar to the CPI, prices for goods are still running just as hot as services.
• The cost of services advanced 0.7%, matching the prior month.
• The report captures changes in prices paid to producers as well as margins received by wholesalers and retailers.
• Producer prices excluding food, energy, and trade services — a measure often preferred by economists because it strips out the most volatile components — rose 0.9% from December, the most in a year.
• Compared with a year earlier, the gauge advanced 6.9%.

New York Factory Gauge Improves Slightly, Price Gauge at Record – Bloomberg, 2/15/2022

• Manufacturing activity in New York state barely improved in February from a month earlier, falling short of expectations for a more robust rebound, while a measure of selling prices surged to a record high.
• The Federal Reserve Bank of New York’s general business conditions index increased to 3.1 from minus 0.7 a month earlier, a report showed Tuesday. Figures below zero indicate contraction, and the median projection in a Bloomberg survey of economists called for a rebound to 12.
• The report showed sizable inflationary pressures remained. A gauge of prices received jumped 17 points to 54.1, the highest reading in data back to 2001. Meantime, an index of prices paid remained elevated and is still close to a record high.
• Some 34% of respondents reported conditions had improved over the month, while about 30% said they had worsened.
• Measures of new orders and shipments barely grew in February, while a measure of factory employment improved to a three-month high.

Russia Says Some Troops Pulling Back From Ukraine Border but Exercises Continue – Wall Street Journal, 2/15/2022

• Russia’s Defense Ministry said it was pulling back some troops from near Ukraine while noting that large-scale military maneuvers were continuing, and Western officials warned that combat units were moving into forward positions.
• The announced pullback would scale down a total force that is still estimated to number more than 120,000, and came amid a new round of shuttle diplomacy aimed at defusing the crisis.
• Moscow has warned of unspecified consequences if the U.S. and its allies reject its security demands.
• U.S. Ambassador to the North Atlantic Treaty Organization Julianne Smith said Tuesday that a pullback wasn’t yet evident. “What’s important is that we verify,” she said. “This is something that we’ll have to look at closely and verify in the days ahead,” she said.
• Meanwhile, German Chancellor Olaf Scholz arrived in Moscow for talks with Russian President Vladimir Putin over the situation, a day after Mr. Scholz visited Ukrainian President Volodymyr Zelensky in Kyiv.
• The Kremlin said the talks were expected to last for hours.

Senate Action on Russia Sanctions Bill Stalls Amid Partisan Disagreements – Wall Street Journal, 2/15/2022

• A disagreement over how to treat a Russian natural-gas pipeline has halted Democratic and Republican efforts to cut a deal on sanctions legislation targeting Russia, just days before many U.S. officials say an invasion of Ukraine is possible.
• Senators from both parties had hoped to agree on legislation that Sen. Bob Menendez (D., N.J.), chairman of the Senate Foreign Relations Committee, dubbed the “mother of all sanctions,” part of an effort to deter Russian President Vladimir Putin from invading Ukraine by ensuring that Moscow would face painful economic measures.
• At the center of the dispute are disagreements about the timing and certainty of sanctions aimed at stopping gas from flowing in the new Nord Stream 2 pipeline that connects Russia and Germany, bypassing Ukraine.
• The impasse raises the risk that the White House and Capitol Hill may not have a unified message if an invasion occurs, according to people following the talks.

U.S. Interest Rates Have Soared Everywhere But Savings Accounts – Bloomberg, 2/15/2022

• Most everywhere you look on Wall Street, interest rates are going up. For everyday savers: not so much.
• In mid-2019, Goldman Sachs Group’s popular consumer bank Marcus was also offering individuals a yield in excess of 2% to park their cash in a high-yield savings account.
• The rates are much lower today, even though U.S. yields are back at pre-pandemic levels.
• Marcus’s savings rate is 0.5%, which it notes on its website is higher than Bank of America’s 0.04% or JPMorgan Chase’s 0.02%.
• Banks simply aren’t as desperate as they once were for new deposits, said Kevin Caron, portfolio manager for Washington Crossing.
• Pandemic-era fiscal stimulus pumped so much cash into the financial system that, combined with post-2008 banking regulations, it strained the balance sheets of some of the largest U.S. lenders.
• Last year, JPMorgan Chief Executive Officer Jamie Dimon said there was a risk it would have to turn away deposits.

Renting a Home Is Even Harder Than Buying One in Unrelentingly Hot U.S. Market – Bloomberg, 2/15/2022

• Rental prices for single-family homes grew an average of 7.8% in 2021, an all-time high, according to the most recent data available from CoreLogic Inc. In December, U.S. home rents jumped 12% year over year for the month, with Miami leading the way with a 35.7% increase.
• Home values have been increasing in lockstep, with the median home price jumping 14% year over year in January to $354,750, according to Redfin Corp.
• Active listings fell 29% to an all-time low of 438,000 due to tight supply.
• Mortgage payments have continued to climb, reaching an all-time high of $1,877 due to higher borrowing costs and asking prices, the firm said.
• Institutional investors have added further pressure to home prices by snapping up existing single-family homes to rent out — so much so that they’re starting to build new ones.
• Landlords, builders and institutional backers have committed $85 billion to that effort, according to Alan Ratner, an analyst at housing research firm Zelman & Associates.

EUROPE & WORLD

Canada’s Trudeau Invokes Emergency Powers to Address Trucker Protests – Wall Street Journal, 2/15/2022

• In a highly unusual move, the Canadian government on Monday invoked a series of emergency powers that include limits on public gatherings in a bid to end disruptive demonstrations in the capital city and along the Canada-U.S. border.
• The measures, announced by Prime Minister Justin Trudeau, represent one of the most striking responses by a Western government against protests by those opposing Covid-19 vaccine mandates and social restrictions in response to the pandemic, and immediately drew fire from some Canadian leaders and civil-liberties groups.
• The government also said Monday the country was extending laws targeting money laundering to capture transactions, including cryptocurrencies, on crowdfunding platforms like GoFundMe.
• An earlier and much more restrictive version of the legislation, called the War Measures Act, was invoked three times in Canadian history.
• Its most controversial use was in 1970, when Mr. Trudeau’s father, Pierre Elliott Trudeau, used the act when he was prime minister to squelch a militant separatist group in Quebec, known as the FLQ.

Hong Kong Hospital Wards Overflow as Omicron Defies Zero-Covid Policies – Wall Street Journal, 2/15/2022

• As spiraling Omicron cases overwhelm Hong Kong’s health system, officials doubled down on their zero-Covid strategy on Tuesday by commandeering thousands of apartments and hotel rooms to isolate infected residents.
• Officials acknowledged that they were struggling to keep up with testing suspected cases across the city. There were more than 1,600 confirmed new infections reported on Tuesday. While this was lower than Monday’s record 2,071 tally, 5,400 more suspected cases awaited verification.
• While much of the world continues to open up despite the global spread of the coronavirus, Hong Kong Chief Executive Carrie Lam told residents to prepare for further tightening of what are already among the world’s most stringent anti-Covid-19 restrictions.
• The containment measures have so far failed to stop accelerating infections of the less deadly Omicron strain.

Japan’s Economy Recovered in Fourth Quarter – Wall Street Journal, 2/15/2022

• Japan’s economy returned to growth in the October-December quarter thanks to higher consumer spending, but a resurgence in Covid-19 infections is likely to hold back the recovery in the current quarter.
• In the final quarter of 2021, the world’s third-largest economy after the U.S. and China grew 1.3% from the previous quarter. That was equal to 5.4% on an annualized basis, showing what would happen if the quarter’s growth continued for a full year.
• The growth was due largely to private spending, which increased 2.7% from the previous quarter. Spending on services recovered solidly after a state of emergency in Tokyo and other cities was lifted on Sept. 30.
• In the fourth quarter, Japan’s gross domestic product still fell short of its pre-pandemic level. The economies of the U.S. and China, Japan’s top two trading partners, have recovered more quickly and are now bigger than they were before the pandemic.

Decade-High Food Prices Drive Poverty and Unrest in Africa – Wall Street Journal, 2/15/2022

• Parts of Africa are contending with a wave of inflation that is, by some measures, even worse than the supply shocks cascading around the rest of the world.
• Over the past two decades, more Africans have become heavily dependent on imported food, tripling the food import bill to $35 billion in 2020, according to the World Bank, leaving them vulnerable to the rising cost of shipping food globally.
• Food prices are at their highest levels in over a decade, according to the United Nations’ Food and Agriculture Organization, compounding the plight of some 40 million people thrown into poverty by the impact of the Covid-19 pandemic and its accompanying lockdowns.
• That is creating a food crisis that threatens to spill over into unrest. In some places, it is already driving people to emigrate.
• Over the past 12 months, some 100,000 Ugandans—including teachers, accountants and social workers—have migrated to the Gulf, according to government data.
• In Malawi, one of Africa’s more established democracies, the local currency has lost around a 10th of its value against the dollar in the past year, pushing inflation into double digits, reaching 11.5% in December. Authorities have arrested more than 1,000 people in recent weeks during protests at rising costs.

Italy Electricity Bills Set to More Than Double This Quarter, Regulator Warns – Bloomberg, 2/15/2022

• Italian energy regulators warned on Tuesday that electricity bills in the country will more than double in the first three months of 2022, as the government led by Mario Draghi hurries to roll out new measures to help families and companies deal with soaring prices.
• The increase is estimated at 131% for the quarter, while natural gas bills are expected to rise over 90%, officials from the regulator, known as ARERA, said at a parliamentary hearing in Rome.
• The energy crunch has already forced at least six Italian distributors to halt contracts with clients as price guarantees become impossible to honor.

Russia’s Yandex eyes $6.5 billion annual revenue in 2022, profits slip – Reuters, 2/15/2022

• Russian internet giant Yandex on Tuesday reported a 55% drop in adjusted net profit last year, but said it expects total group revenues to continue their upward trajectory this year to 490 billion-500 billion roubles ($6.50 billion-$6.63 billion).
• Total revenues were 54% higher in the fourth quarter and rose by the same amount over the full year to 356.2 billion roubles, above company guidance of 340 billion-350 billion roubles.
• Yandex’s core advertising business, which accounted for 47% of total revenue in the fourth quarter, took a hit during the early stages of the COVID-19 pandemic, but surging interest in online transactions allowed its other businesses to flourish.
• Revenues in the taxi segment rose 93% in the final quarter to 42.9 billion roubles.
• Search and portal revenues were up 31% in the same period, during which time the company’s search market share in Russia averaged 60.2%, Yandex said.
• Yandex’s adjusted net income stood at 8 billion roubles in 2021, down 55% on a like-for-like basis including its Yandex.
• The group expects its total e-commerce gross merchandise volume (GMV) to double in 2022, while GMV in its taxi segment, which includes ride-hailing and car-sharing, should reach 700 billion-720 billion roubles in 2022.

Factmonster – TODAY in HISTORY

• President Rutherford Hayes signed a bill allowing female attorneys to argue cases before the Supreme Court. (1879)
• USS Maine blew up in Havana harbor, touching off the Spanish-American War. (1898)
• The Maple Leaf Flag officially became the new national flag of Canada. (1965)
• More than 100,000 Soviet troops withdrew from Afghanistan almost 10 years after the USSR invaded the country. (1989)
• Millions of protesters around the world demonstrated against the threat of a U.S. war on Iraq. (2003)