Daily Market Report | May 3, 2022
US FINANCIAL MARKET
U.S. Stocks Turn Higher Ahead of Fed Meeting – Wall Street Journal, 5/3/2022
- U.S. stock indexes rose Tuesday morning as investors geared up for the Federal Reserve’s policy decision this week and evaluated a batch of earnings.
- The S&P 500 climbed 0.8%, sustaining the momentum from a late rally that lifted stocks on Monday, May’s first business day.
- The technology-focused Nasdaq Composite gained 0.3% while the Dow Jones Industrial Average was up 0.4%.
- Ten of the S&P’s 11 industry subsectors were in the green.
- Earnings season continues apace. Airbnb, Starbucks, Lyft and AIG are on the block after markets close.
- Earlier on Tuesday, the yield on 10-year Treasury notes topped 3% for a second straight day before slipping back to 2.917%, compared with 2.995% Monday.
- They have also dragged up government borrowing costs globally. The yield on 10-year German government bonds, the benchmark in Europe, surpassed 1% Tuesday for the first time since 2015, before slipping back to 0.935%.
- Rate-setting officials will gather Tuesday for a two-day policy meeting.
- At its conclusion Wednesday, the Fed is expected to raise interest rates by a half percentage point, the first such increase in 22 years and following on from a quarter-point rise in March.
- Overseas stock markets wavered. The Stoxx Europe 600 gained about 0.3%, led by shares of banks and oil-and-gas companies on a busy day for earnings in the region.
- BP shares rose 4.1% after the oil producer reported underlying profit of $6.2 billion, when stripping out a pretax accounting charge related to its decision to exit its Russia holdings.
- BNP Paribas posted a jump in earnings, sending shares of the French lender 4.8% higher.
- Mainland Chinese markets were closed for a public holiday. Hong Kong’s Hang Seng edged up 0.1%.
Pfizer Sales Soar on Covid-19 Vaccine Sales – Wall Street Journal, 5/3/2022
- Pfizer’s first-quarter sales soared 77%, helped by higher revenue from its Covid-19 vaccine and antiviral medication.
- The New York-based drug company logged $25.7 billion in sales in the first-quarter, driven by sales of its vaccine, Comirnaty, and Paxlovid, a pill aimed at reducing severe outcomes from the virus.
- Direct sales of Comirnaty grew to $13.2 billion while Paxlovid brought in another $1.5 billion, having launched in the U.S. last December and internationally in late 2021 and earlier this year.
- Excluding those two products, revenue increased by 2%. Sales of its pneumococcal vaccine Prevnar swelled 59% in the U.S. thanks to strong retail stocking and government purchases of the pediatric version.
- The company’s net income rose to $7.86 billion for the quarter, up from $4.88 billion last year, while earnings rose 59% to $1.37 a share. Stripping out one-time items, adjusted earnings climbed 72% to $1.62. Analysts polled by FactSet had been expecting $1.49 a share.
- The company said it is on track to deliver between $98 billion and $102 billion in revenue for the year, with $32 billion coming from Comirnaty and $22 billion from Paxlovid.
- Despite the strong results, Pfizer trimmed its earnings forecast, reflecting an accounting-policy change that starts including all acquired in-process research and development expenses. It now expects per-share earnings between $6.25 and $6.45 a share, down 10 cents on each end of the range in its prior forecast.
Paramount+ Adds 6.8 Million Subscribers in First Quarter – Wall Street Journal, 5/3/2022
- Paramount Global said its main streaming platform, Paramount+, added 6.8 million subscribers during the first quarter, as the service benefited from original content including “Halo” and a “Star Trek” series, as well as National Football League games.
- Revenue slipped 1.1% to $7.33 billion.
- The company, home of CBS, Nickelodeon and the Paramount movie studio, said Paramount+ had nearly 40 million subscribers as of March 31, an increase of more than 20% from the 32.8 million total customers it had as of Dec. 31.
- The company said its net profit fell roughly 52% to $433 million from $911 million last year due to higher operating costs.
- On an adjusted basis, the company said adjusted earnings fell nearly 44% to $913 million, as it ramped up investment in its streaming platform.
Expedia Results Are in Line as Omicron Weighs on Pent-Up Demand – Bloomberg, 5/3/2022
- Expedia Group reported revenue in the first quarter that jumped 80%, in line with analysts’ estimates, and signaled a strong summer travel season after two years of pent-up demand.
- Revenue was $2.25 billion in the first three months of the year, according to a statement from the Seattle-based company.
- Expedia, which hosts reservations for traditional lodging like hotels and short-term rentals on its Vrbo platform, and provides access to pricing for airlines, hotels and car rental companies, reported gross bookings of $24.4 billion, compared with analysts’ projections for $24.5 billion.
- Expedia reported a loss of 47 cents a share, excluding some costs, while analysts were predicting a loss of 43 cents.
- Expedia doesn’t break out Vrbo’s performance, but Chief Executive Officer Peter Kern said demand remains above 2019 levels. Supply in top locations is already selling out, he added.
Marathon Petroleum posts profit on robust refining margins – Reuters, 5/3/2022
- U.S. refiner Marathon Petroleum posted a first-quarter profit on Tuesday, compared with a loss last year, buoyed by strong refining margins as demand for fuel and refined products recovered to near pre-pandemic levels amid tight supplies.
- Crude capacity utilization was 91%, resulting in total throughput of 2.8 million bpd, compared with an 83% utilization and total throughput of 2.6 million bpd a year earlier.
- The company said its refining and marketing margins rose nearly 51% to $15.31 per barrel in the first quarter ended March 31.
- Refining and marketing segment’s profit from operations stood at $768 million, compared with a loss of $598 million last year.
- The Findlay, Ohio-based refiner said net profit was $845 million, or $1.49 per share, for the quarter, compared with a loss of $242 million, or 37 cents per share, a year earlier.
- For the current quarter, the refiner expects throughput of 2.9 million bpd.
DuPont shares down 4.5% premarket after earnings beat is offset by Q2 guidance that lags consensus – Marketwatch, 5/3/2022
- DuPont de Nemours shares slid 4.5% in premarket trade Tuesday, after the company beat earnings estimates for the first quarter but offered second-quarter guidance that lagged consensus.
- Sales rose 9% to $3.274 billion from $3.017 billion, also ahead of the $3.208 billion FactSet consensus.
- The specialty materials company posted net income of $488 million, or 42 cents a share, for the quarter, down from $5.394 billion, or 64 cents a share, in the year-earlier period.
- Adjusted per-share earnings came to 82 cents, ahead of the 67 cent FactSet consensus.
- DuPont is now expecting second-quarter adjusted EPS of 70 cents to 80 cents and sales of $3.200 billion to $3.300 billion. The FactSet consensus is for EPS of 84 cents and sales of $3.334 billion.
- It expects full-year adjusted EPS of $3.20 to $3.50 and sales of $13.300 billion to $13.700 billion, compared with a FactSet consensus of 3.40 and sales of $13.476 billion.
Estee Lauder cuts profit forecast on China COVID curbs, Ukraine crisis – Reuters, 5/3/2022
- Estee Lauder cut full-year profit forecast on Tuesday as fresh COVID-19 curbs in China and the suspension of operations in Russia following the invasion of Ukraine dent sales, sending the luxury cosmetics maker’s shares down 8%.
- Estee’s sales rose 10% to $4.25 billion in the third quarter, but fell short of expectations of $4.31 billion, according to Refinitiv data.
- Full-year net sales are projected to rise 7% to 9%, down from its prior forecast of an increase of 13% to 16%.
- Estee estimates adjusted annual profit of between $7.05 and $7.15 per share, compared with its prior outlook of between $7.43 and $7.58.
Burger King, Tim Hortons sales power earnings beat for parent Restaurant Brands – Reuters, 5/3/2022
- Restaurant Brands International beat estimates for quarterly results on Tuesday, boosted by higher prices and strong demand at its Burger King and Tim Hortons chains.
- The company’s total revenue rose to $1.45 billion in the first quarter ended March 31, from $1.26 billion a year earlier, topping analysts’ average estimate of $1.39 billion, according to Refinitiv IBES data.
- Comparable sales at Tim Hortons in Canada rose 10.1%, while Burger King global same-store sales jumped 10.3%, both beating analyst estimates.
- Net income attributable to common shareholders rose 2.2% to $183 million.
- Restaurant Brands, which usually caters to lower-income consumers, is also set to hike prices again this year after it stripped Burger King’s popular Whopper sandwich from discount menus earlier this year.
- The price hikes have helped Toronto, Ontario-based Restaurant Brands cushion a hit from a 3% decline in comparable sales at its Popeyes chain, popular for its fried chicken sandwich.
Hilton resumes capital return earlier than expected after profit beat – Reuters, 5/3/2022
- Hotel operator Hilton Worldwide Holdings said on Tuesday it had resumed returning capital to shareholders earlier than expected, after reporting a better-than-expected quarterly profit as travel demand rebounded.
- The Virginia-based company reported revenue of $1.72 billion for the first quarter, compared with average analysts’ expectations of $1.73 billion, according to Refinitiv data.
- Hilton, which own brands including the Waldorf Astoria Hotels & Resorts, said U.S. occupancy rate rose to 61.8% in the quarter ended March 31, up 14.1 percentage points from a year earlier.
- Hilton’s comparable RevPAR, or revenue per available room, rose 80.5% for the quarter as people spent more on travel, dining out at restaurants as well as hotel stays despite rising inflation.
- On an adjusted basis, the company earned 71 cents per share, better than average analysts’ expectations of 65 cents per share.
- The company said it expects 2022 adjusted profit per share between $3.77 and $4.02, lower than analysts’ estimate of $4.10 per share.
Fertilizer company Mosaic sees high ag-commodity prices continuing due to Russia-Ukraine conflict – Marketwatch, 5/3/2022
- Fertilizer and feed producer Mosaic late Monday said Russia’s invasion of Ukraine continues to push prices of some agricultural commodities higher, with the conflict also impacting fertilizer supplies amid low stocks globally.
- Revenue rose 71% to $3.9 billion as “stronger pricing more than offset lower volumes,” Mosaic said.
- The Tampa, Fla., company said it earned $1.18 billion, or $3.19 a share, in the first quarter, compared with $157 million, or 41 cents a share, in the year-ago period.
- Adjusted for one-time items, Mosaic earned $2.41 a share.
- Analysts polled by FactSet had expected the company to report adjusted earnings of $2.40 on revenue of $4.1 billion.
- Russia and Ukraine together supply more than a quarter of the world’s wheat and barley, 16% of corn, and more than three quarters of global sunflower oil, Mosaic said.
- That “supply uncertainty” continued to drive grain and oilseed prices higher, and prices were already higher before the February invasion amid a 20-year low in global stocks-to-use ratios, the company said.
Nutrien bolsters profit forecast on surging fertilizer prices – Reuters, 5/3/2022
- Nutrien on Monday raised its full-year earnings forecast well above estimates after posting a more than 10-fold jump in first-quarter profit, as the world’s largest fertilizer company benefits strongly from soaring prices of crop nutrients.
- Net earnings rose to $1.39 billion, or $2.49 per share, in the quarter ended March 31 from $133 million, or 22 cents per share, a year earlier.
- “Global agriculture and crop input markets are being impacted by a number of unprecedented supply disruptions that have contributed to higher commodity prices and escalated concerns for global food security,” interim Chief Executive Officer Ken Seitz said in a statement.
- The company forecast a cut in global potash shipments for the year, citing supply uncertainties from Russia and Belarus.
- Nutrien expects 2022 adjusted earnings of $16.20 to $18.70 per share, compared with its previous forecast of $10.20 to $11.80 per share. Analysts were expecting $15.20 per share, as per Refinitiv data.
CNH tops Q1 profit forecast despite Ukraine, supply headwinds – Reuters, 5/3/2022
- Agricultural and construction machine maker CNH Industrial said on Tuesday its operating profit rose 9% in the first quarter as demand remained healthy despite headwinds including war in Ukraine and higher energy costs.
- The company said its adjusted earnings before interest and tax (EBIT) for industrial activities stood at $429 million in the January-March period, in its first set of results after spinning off Iveco Group.
- That topped a $391 million forecast in an analyst poll compiled by Reuters.
- CNH added, however, it took a $71 million hit in the quarter due to the suspension of its Russian operations, including for asset writedowns.
- It also saw negative cash flow generation from industrial activities of $1.059 billion, as “critical supply chain disruptions” constrained its ability to ship finished goods.
- “Order books remain exceptionally strong, up almost 40% in agriculture and 80% in construction,” Chief Executive Scott Wine said in a statement, confirming full-year forecasts the group had previously released.
KKR’s first-quarter earnings jump 47% on strong asset sales, fees – Reuters, 5/3/2022
- Private equity firm KKR & Co said on Tuesday that its first-quarter distributable earnings rose 47% year-on-year, thanks to a surge in asset sales and a rise in revenue from fees it charges investors to manage their money.
- During the quarter, KKR generated $609.2 million in income from performance fees, up from $171.3 million a year ago, as it booked more profits from asset divestments.
- Its fee-related earnings, which reflect revenue from management and capital market transaction fees, rose to $624.9 million from $439.7 million a year earlier.
- The New York-based firm said its after-tax distributable earnings, which represent the cash used to pay dividends to shareholders, rose to $968.5 million, compared with $660.2 million a year earlier.
- That translated to after-tax distributable earnings per share of $1.10, exceeding the mean Wall Street analyst estimate of $0.98 per share, according to financial data provider Refinitiv.
- KKR’s assets under management rose to $479 billion at the end of the first quarter, up from $471 billion at the end of the fourth quarter, while unspent capital totaled $115 billion.
Cummins stock turns higher after profit declines, while revenue rises above forecasts – Marketwatch, 5/3/2022
- Shares of Cummins rose 1.1% in premarket trading Tuesday, reversing an earlier loss, after the diesel and natural gas engines and new power company reported first-quarter profit that fell, weighed by costs associated with the suspension of its Russia operations, but revenue that rose above forecasts and raised its full-year outlook.
- Sales grew 4.8% to $6.39 billion, beating the FactSet consensus of $6.02 billion.
- Among Cummins’ business segments, engine, distribution, components and power systems beat expectations while new power missed.
- Gross margin slipped to 24.0% from 24.4%.
- Net income declined to $418 million, or $2.92 a share, from $603 million, or $4.07 a share, in the year-ago period.
- The FactSet consensus for earnings per share was $3.55.
- The results include costs of $1.03 a share related to the suspension of Russia operations and 9 cents a share related to the separation of the filtration business.
- For 2022, the company raised its revenue growth guidance to 8% from 6%, while the FactSet sales consensus of $25.52 billion implies 6.2% growth.
Clorox Falls After Cutting Annual Profit View on Inflation – Bloomberg, 5/3/2022
- Clorox shares fell after the company lowered its outlook for full-year earnings amid stubbornly rising costs while reporting profit in its latest quarter that exceeded market expectations.
- Net revenue of $1.8 billion was slightly higher than Wall Street expectations.
- On Monday, the company said organic sales for the quarter rose 2%, surpassing analyst estimates of a 0.1% decline.
- Gross margins of were 35.9%, ahead of the 34.4% expectation.
- Adjusted earnings per share for the company’s fiscal third quarter, which ended March 31, were $1.31, compared to the 93-cent average analyst estimate in a Bloomberg survey.
- Higher costs will result in a steeper-than-expected hit to gross margins this fiscal year, the owner of natural skincare line Burt’s Bees and salad-dressing brand Hidden Valley said in a statement.
- The measure is now seen decreasing as much as 800 basis points, compared to a prior call for a drop of 750 basis points.
- The maker of Pine-Sol and Glad trash bags now sees earnings per share of $4.05 and $4.30, excluding some items, for its fiscal year ending in June. That compares to the prior expectation of $4.25 to $4.50.
- Organic sales, which exclude the impact of currency fluctuations and acquisitions, are still seen falling by 1% to 4%, unchanged from the previous forecast.
- The new outlook for $530 million of extra expenses, up from a previous prediction of $500 million, is due to the recent jump in oil prices — which also affects the cost of resins and transportation.
Biogen CEO Michel Vounatsos to Step Aside After Alzheimer’s Drug Struggles – Wall Street Journal, 5/3/2022
- Biogen Chief Executive Michel Vounatsos will resign from the company as it slims down its workforce, cuts spending by $1 billion annually and attempts to chart a new course after Medicare’s devastating refusal to cover its new Alzheimer’s drug Aduhelm.
- Sales fell 6% to $2.5 billion, down from $2.7 billion in the year-earlier quarter.
- Biogen said Aduhelm sales were $2.8 million in the first quarter, representing 0.1% of the company’s product sales.
- The company’s net income was $303.8 million, down 26% from a year earlier, in part due to a write-off of $275 million for Aduhelm inventory.
- Biogen said Tuesday that Mr. Vounatsos would continue to lead the company and remain on its board until a search for a new CEO is completed.
- Biogen also said it would substantially eliminate the sales infrastructure it built up to support Aduhelm’s launch, which will contribute to other cost-cutting measures intended to provide savings of $500 million annually.
Amazon Workers Reject Union in New York After Labor Victory at Separate Facility – Wall Street Journal, 5/3/2022
- Amazon.com workers voted against unionizing at a facility on Staten Island, N.Y., a win for the company after a loss at another warehouse in the borough last month.
- The National Labor Relations Board said 62% of workers who cast valid ballots from a location site named LDJ5 voted not to form a union. The count was 618 to 380 against unionization, the NLRB said.
- The results Monday dealt a blow to organizers who hoped to build on their success from an April election, where workers at a warehouse named JFK8, Amazon’s largest on Staten Island, voted to establish the first U.S. union inside the e-commerce giant.
Global Chip Shortage’s Latest Worry: Too Few Chips for Chip-Making – Wall Street Journal, 5/3/2022
- The drought in chip availability that has hit auto production, raised electronics prices and stoked supply-chain worries in capitals around the globe has a new pain point: a lack of chips needed for the machines that make chips, industry executives say.
- The wait time it takes to get machinery for chip-making—one of the world’s most complex and delicate kinds of manufacturing—has extended over recent months.
- Early in the pandemic it took months from placing an order to receiving the equipment. That time frame has stretched to two or three years in some cases, according to chip-making and equipment executives.
- Deliveries of previously placed orders are also coming in late, executives say.
- As a result, hopes of quickly overcoming the global chip shortage are dimming as it stretches into its third year.
- What began as a pandemic-era aberration of supercharged demand for laptops and other chip-hungry gadgets has spiraled into a structural problem for the industry. Now many chip executives say the problem will persist into 2023 and 2024, or even longer.
Natural Gas Hits 13-Year High in U.S. on Growing Supply Jitters as Demand Soars – Bloomberg, 5/3/2022
- Natural gas prices in the U.S. climbed above $8 per million British thermal units, hitting a fresh 13-year high, on growing concern that stockpiles of the power-plant fuel will fall short of demand this summer.
- The current rally is unusual in that past U.S. price spikes tended to be triggered by bone-chilling weather that boosted demand, or by Gulf of Mexico hurricanes that slashed supplies.
- Normally at this time of the year, North American weather is so benign that utilities, manufacturers and brokers have no trouble stowing ample volumes of gas in storage caverns for use later in the year.
NFT Sales Are Flatlining – Wall Street Journal, 5/3/2022
- The sale of nonfungible tokens, or NFTs, fell to a daily average of about 19,000 this week, a 92% decline from a peak of about 225,000 in September, according to the data website NonFungible.
- The number of active wallets in the NFT market fell 88% to about 14,000 last week from a high of 119,000 in November.
- NFTs are bitcoin-like digital tokens that act like a certificate of ownership that live on a blockchain.
- An NFT of the first tweet from Twitter co-founder Jack Dorsey sold in March 2021 for $2.9 million to Sina Estavi, the chief executive of Malaysia-based blockchain company Bridge Oracle.
- Earlier this year, Mr. Estavi put the NFT up for auction. He didn’t receive any bids above $14,000, which he didn’t accept.
Snarled-up ports point to worsening global supply chain woes – report – Reuters, 5/3/2022
- Global supply chain problems look to set to worsen, a new report published on Tuesday said, as China’s COVID-19 lockdowns, Russia’s invasion of Ukraine and other strains cause even longer delays at ports and drive up costs.
- The study by analysts at Royal Bank of Canada (RBC) found that one-fifth of the global container ship fleet was currently stuck in congestion at various major ports.
- In China, ships awaiting berth at the Port of Shanghai now tally 344, a 34% increase over the past month, while shipping something from a warehouse in China to one in the United States currently takes 74 days longer than usual.
- In Europe too, ships from China are showing up an average of four days late, causing a number of knock-on effects, including a shortage of empty containers to take European-made goods to the U.S. east coast.
- Though vessel delays have improved fractionally over the last couple of months, the average global delay of a ship’s arrival was still 7.26 days in March, a figure that rarely tops 4.5 days in normal times, RBC noted.
- A queue of 19 vessels in Los Angeles and port level inefficiencies have seen Time of Turnaround (ToT) jump to 6.9 days from 5 days a month ago, although it is still down from the peak of 8.7 days during last year’s pre-Christmas rush.
US ECONOMY & POLITICS
U.S. Job Openings Rose Unexpectedly to Record 11.5 Million – Bloomberg, 5/3/2022
- U.S. employers saw record levels of job openings and workers quitting in March, pointing to intensifying labor-market tightness that will keep pushing wages higher at a rapid clip.
- The number of available positions increased to 11.5 million in the month from 11.3 million in February, the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, showed Tuesday.
- The median forecast in a Bloomberg survey of economists called for 11.2 million openings.
- Meantime, a series high of 4.5 million Americans quit their jobs in March, in data back to 2000.
- The quits rate, a measure of voluntary job leavers as a share of total employment, rose slightly to 3%.
- There were 1.9 jobs for every unemployed worker in March, up from February.
- Vacancies decreased in transportation, warehousing, and utilities; state and local government education; and accommodation and food services.
- Hires were little changed at 6.7 million in March. By industry, leisure and hospitality rose.
Rise in U.S. factory orders beats expectations in March – Reuters, 5/3/2022
- New orders for U.S.-made goods increased more than expected in March and shipments rose solidly, but supply constraints following new COVID-19 lockdowns in China could slow manufacturing activity in the months ahead.
- The Commerce Department said on Tuesday that factory orders rose 2.2% in March after edging up 0.1% in February. Economists polled by Reuters had forecast factory orders would rise 1.1%.
- The increase in factory orders in March was across the board. Orders for motor vehicles and parts rebounded 3.0%, suggesting an improvement in the global supply of semiconductors.
- Shipments of manufactured goods increased 2.3% after rising 1.1% in February.
- Inventories at factories gained 1.3%.
- Unfilled orders rose 0.4% after climbing 0.5% in the prior month.
- The Commerce Department also reported that orders for non-defense capital goods, excluding aircraft, which are seen as a measure of business spending plans on equipment, rebounded 1.3% instead of 1.0% as previously reported last month.
- Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, rose 0.4% in March instead of the previously reported 0.2%.
Home Buyers Rushed In as Mortgage Rates Rose, Boosting Housing Prices Across U.S. – Wall Street Journal, 5/3/2022
- Home prices continued to surge in virtually every corner of the U.S. during the first quarter as mortgage rates rose rapidly, according to a Tuesday report from the National Association of Realtors.
- Many buyers rushed to lock in purchases in the first quarter before rates climbed even higher, according to real-estate agents.
- The median sales price for single-family existing homes was higher in the first quarter compared with a year ago in 181 of the 185 metro areas tracked by the NAR, the association said Tuesday.
- Nationwide, the median single-family existing-home sales price rose 15.7% in the first quarter from a year ago to $368,200, the NAR said.
- In the first quarter, the typical monthly mortgage payment for a single-family home rose to $1,383, from $1,064 a year earlier, the NAR said.
Immigrants to Get Extension for Expiring or Expired U.S. Work Permits – Wall Street Journal, 5/3/2022
- Most immigrants with recently expired or soon-to-expire work permits will be able to continue working on those documents for up to a year and a half after they expire under a new policy announced by U.S. Citizenship and Immigration Services on Tuesday.
- The policy, which will take effect beginning Wednesday, is meant to address the unprecedented backlog of 1.5 million work-permit applications at the nation’s legal-immigration agency, leaving tens of thousands unable to work legally and exacerbating labor shortages.
- The change will immediately help about 87,000 immigrants whose work authorization has lapsed or is set to in the next 30 days.
- Overall, the government estimates that as many as 420,000 immigrants renewing work permits will be protected from losing their ability to work for the duration of the policy.
U.S. trade chief Tai says all tools on table to beat inflation, tariffs not top of list – Reuters, 5/3/2022
- All tools are on the table to address rising inflation, including reductions of tariffs on Chinese imports, U.S. Trade Representative Katherine Tai said on Monday, but she stressed that any policy shift needed to keep medium-term goals in mind.
- Such goals include building a more resilient, durable, global economy that served workers as well as consumers, she noted.
- Monetary, tax and policy have a role in addressing surging food and energy prices, Tai told a conference hosted by the Milken Institute in Los Angeles.
- “Sure we can look at those tariffs, but I’m giving you the … strategic lens through which we need to be looking at. The question is what do we do with them.”
- Recent comments by deputy national security adviser Daleep Singh and Treasury Secretary Janet Yellen about the deflationary impact of tariff reductions sparked a flurry of speculation that the administration was thinking about changing course.
- But Tai appeared to downplay the prospects of a larger-scale move to reduce tariffs, and challenged a recent paper by the Peterson Institute for International Economics that called for elimination of a wide swath of tariffs to combat inflation.
EUROPE & WORLD
BP Takes $25.5 Billion Hit From Russia Exit – Wall Street Journal, 5/3/2022
- BP took a $25.5 billion pretax accounting charge related to its decision to exit its Russia holdings, including its stake in government-controlled oil producer Rosneft, by far the biggest financial hit tallied by companies pulling back from the country after its invasion of Ukraine.
- The London-based company said Tuesday that the charge dragged it into a $20.4 billion headline loss for the first quarter despite soaring commodity prices that poured cash into major oil companies’ coffers.
- The loss included a $13.5 billion write-down of BP’s nearly 20% stake in Rosneft that reflected its carrying value as of Feb. 27.
- BP said that without the one-time charges, its first-quarter underlying replacement-cost profit, a metric similar to net income that U.S. oil companies report, was $6.2 billion. That compared with a $4.5 billion average projection of 26 analysts compiled by BP.
- The company said it would continue to reduce debt and maintain its full-year capital-spending plans at $14 billion to $15 billion, including $2.9 billion in capital expenditures in the first quarter.
- The company said it would buy back another $2.5 billion of its shares, in addition to $1.6 billion in buybacks it made during the first quarter, and that the Russia-related losses don’t change the company’s strategy or cut into its plans to distribute cash to investors.
Libya Oil Exports Hit an 18-Month Low on Port and Field Closures – Bloomberg, 5/3/2022
- Armed clashes, damaged storage tanks and political protests at key ports have hobbled Libya’s ability to export oil, cutting shipments to the lowest level since October 2020.
- The North African country loaded 819,000 barrels a day last month, down from 979,000 barrels a day in March, according to tanker-tracking data monitored by Bloomberg.
- Fewer cargoes headed to the country’s biggest customers in Italy, Spain and China.
- Nationwide oil production fell to about 800,000 barrels a day from 1.3 million barrels a day within the space of just a few days in mid April, according to an oil official who asked not to be identified because the information is private.
Australia Raises Interest Rates for First Time in More Than a Decade – Wall Street Journal, 5/3/2022
- The Reserve Bank of Australia raised its benchmark interest rate for the first time in more than a decade, acting to tame elevated inflation that is threatening the country’s economic recovery from the Covid-19 pandemic.
- The RBA lifted the cash rate to 0.35%, from 0.10%, and signaled further increases are likely as it seeks to bring long-term inflation back toward its 2%-3% target.
- It represents a significant gear shift by the RBA, which as recently as March had been signaling patience even as other global central banks laid the groundwork for aggressive moves to tighten monetary policy.
France’s BNP Paribas beats earnings forecasts on bumper trading revenue – Reuters, 5/3/2022
- French bank BNP Paribas posted a better than expected 19% rise in net income in the first quarter as trading boomed and reaffirmed its medium-term profitability targets, sending its shares higher.
- France’s biggest listed lender said on Tuesday that net profit reached 2.11 billion euros ($2.22 billion) as trading revenues surged and it slashed charges for bad debt, though costs were higher than market forecasts.
- BNP’s revenue in fixed-income, currency and commodities trading rose by 47.9% in the first quarter, while equity trading revenue soared 60.9%.
- The bank also reaffirmed plans to return 60% of net income to investors through 2025 compared to 50% previously.
- It has targeted a return on tangible equity — a key measure of profitability — of more than 11% by 2025, up from 10% last year.
- It stuck to the target despite booking a 159 million euro impairment on its 60% stake in Ukrainian lender Ukrsibbank, which has 5,000 staff and 230 branches across the country.
Danske Bank keeps guidance despite profit miss, higher costs – Reuters, 5/3/2022
- Danske Bank reported lower-than-expected first-quarter profits, citing higher costs and turbulent financial markets, sending its shares lower on Friday even as it maintained its full-year profit outlook.
- Danske shares were down 3.65% at 0940 GMT after it reported first quarter net profit of 2.8 billion Danish crowns ($396.28 million), below an average of 3.2 billion forecast by analysts in a poll compiled by the company.
- Net interest income and net fee income for the first quarter both came in slightly above analyst estimates, while trading income dropped to 565 million crowns, below an average of 855 expected by analysts.
- Danske firm maintained its full-year net profit guidance of 13-15 billion crowns and costs around 25 billion, but in a poll it compiled earlier this month, analysts expected Danske to miss both targets.
Factmonster – TODAY in HISTORY
- The Shelley v. Kraemer Supreme Court decision stated that it is unconstitutional for a court to enforce a restrictive covenant which prevents people of a certain race from owning or occupying property. (1948)
- Margaret Thatcher became the first woman elected prime minister of the UK.(1979)
- Kansas and Oklahoma were hit by an outbreak of more than 55 tornadoes, including one measured at F5 on the Fujita scale. (1999)
- The United States, a member of the UN Human Rights Commission since its inception, lost its seat. It would be restored the following year. (2001)
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