S&P 500 futures were down 0.4%, while futures on the Dow Jones Industrial Average dropped 0.38%. Nasdaq 100 futures fell 0.29%.
These overnight moves were influenced by the release of March’s highly-anticipated consumer price index on Tuesday. It is expected that the data will reveal an 8.4% annual increase in prices, according to economists polled by Dow Jones. This is the highest level since December 1981, with rising housing, energy, and food costs thought to be the major factor behind the record-high figure.
Speaking to CNBC on Monday, Ed Yardeni, president of Yardeni Research said, “I think by the summer we’ll probably see the CPI inflation rate peaking and then the consumption deflator is going to peak somewhere between 6 and 7% and then come down to maybe 3 to 4% by the second half of the year going into next year.”
“There’s definitely a lot of financial anxiety,” commented Celeste Revelli, a director of financial planning at eMoney Advisor. “It’s difficult to know how long this inflationary moment will last.”
The analysis comes from the Office of Management and Budget (OMB), responsible for administering the federal budget. It also warned that the US government may need to spend an additional $25 billion to $128 billion per year in areas including flood insurance, coastal disaster relief, and crop insurance.
“The fiscal risk of climate change is immense,” Candace Vahlsing, the OMB’s associate director for climate and chief economist Danny Yagan, wrote in a White House blog post.
“The need for urgent action is why the President called on Congress in the State of the Union and through the Budget to advance legislation that decreases energy prices, combats climate change, and grows the clean economy.”
The White House’s warning was published on the same day as the United Nations’ climate report which warns that the fight against climate change must come “now or never”. It stated that limiting climate change to 1.5 degrees Celsius above pre-industrial levels will require greenhouse gas emissions to peak before 2025 and be reduced by 43% by 2030.
Member countries of the International Energy Agency (IEA) will meet on Friday to decide on a collective oil release, a spokesperson for New Zealand’s energy minister told Reuters via a Thursday email: "The amount of the potential collective release has not been decided [...] That meeting will set a total volume, and per country allocations will follow.”
It remains unclear as to whether the US’ potential draw would come as part of a wider global coordinated release. If Biden does choose to draw from the SPR, it would be the largest draw in the SPR’s almost 50-year history.
US President Biden is expected to deliver an update on his administration’s actions on Thursday, the White House has said.
Following the news, global oil prices plummeted more than $5 per barrel, having surged since Russia’s unprovoked invasion of Ukraine on 24 February.
Financial banks are on the brink of collapse, the stock market is in the first inning of what would be a freefall, and the forecast for the foreseeable future is blood in the streets. So with the global economy teetering on the edge of a swan dive into the abyss, the Federal Reserve stepped in with an innovative policy response that would arguably become the most well-known financial acronym in economic history, quantitative easing, or QE for short.
Glossing over a ton of details, with express apologies paid to the professional economists out there in the audience, QE had one, singular goal - to prevent the worldwide monetary system from freezing up. To accomplish this, the Fed simply oiled up the ol’ printing press, created new money out of nothing, and then injected copious amounts of liquidity (i.e. cash) with those newly created funds by buying debt instruments in the open market.
Not too dissimilar from snaking out your shower drain when it gets clogged, this meant that any jams in the system could quickly be cleared, and the banks and institutions on the other side of these transactions would receive a strong boost of capital that allowed them to continue their operations and strengthen their balance sheets. With this safety net in place, the thinking was these same banks would continue to have the capital to lend out in the form of mortgages, auto loans, business ventures, etc. - all the while the huge demand for debt by the Fed itself would act to keep a lid on interest rates (as bond prices and interest rates move inversely) thus keeping the demand for all this new money continually stoked.
Months and quarters went by, as the stock market roared back to life, and the economy healed itself. But quantitative easing didn’t stop, as QE1 became QE2 became QE3 became QE-infinity, and before you knew it, the market began to expect more accommodative policy from the Fed at every meeting and would sell off sharply at the mere hint of anything otherwise.
Good times were rolling again, but all that extra cash must have a downside, right? It must lead to the classic “too many dollars chasing too few goods” scenario sooner or later, which would only lead to a weaker USD, and a higher cost of goods in the US (i.e. inflation), right? Right?
Well, not exactly, as the low cost of money across the board actually led to an incredible surge of growth, productivity, and innovation, all of which allowed producers to keep production costs low, which in turn kept consumer costs low. So, much to the chagrin of many prognosticators making the same prognostication that inflation would explode before the ink was even dry on the Fed’s first bond purchase in the fall of 2008, this didn’t happen - at all. In fact, 2009, 2010, 2011…’12…’13…’14…’15…’16…’17…’18…’19…and most of ‘20 saw inflationary figures hover barely above zero.
Fast forward back to the present - what has recently changed in the worldwide economy such that inflation is now something that nearly every American has to worry about?
The breakdown of the supply chain.
The economy was clearly able to absorb years and years of QE, even long after it might have “needed it”, with little more than a hiccup higher in inflation or a modest blip lower in the value of the USD. But the global disruption that was, and very much still is, a worldwide pandemic appears to have been the straw that finally broke the camel’s back.
With large-scale production centres slowed down significantly, and cargo ships stalled out at sea in an effort to quell the spread of the virus, producers were unable to quickly, easily, and efficiently access the raw materials needed to produce their goods. And as a result, they were shut off from tapping into all the competitive advantages and high-leverage efficiencies they had developed over the previous years through technological advancements and overlapping synergies because there were now links missing from the supply chain. Gaps in the production cycle presented companies with huge obstacles to navigate.
Not to mention, with the supply chain breaking itself and a lower supply of the necessary goods, basic economics reminds us that a limited supply will always lead to a higher price, ceteris paribus, and thus producer prices begin to rise, paving the way for consumer prices to also rise. Specifically, the most recent reading of the Producer Price Index (PPI) and Consumer Price Index (CPI) have shown increases of 10% and 8%yoy, respectively - a multi-decade high for both.
A difficult market for both producers and consumers, without question, but that’s how we have arrived at the spot we are in.
Unfortunately, until there is some resolution to the Russia-Ukraine war and global trade is restored to some degree, inflationary pressures will likely persist for some time. Case in point, fertiliser, a critical component of the farming process that obviously has a direct link to food and crops, has seen a 30% cost increase in just the last few months. According to the UN Food and Agriculture Organization, in 2021, Russia was one of the world’s leading exporters of nitrogen and phosphorus fertilisers - an ominous situation given the economic sanctions that have been placed on Russia as a result of its unprovoked invasion of Ukraine. So one would think it’s only a matter of time before these added costs get passed down to the consumer at the local grocery store, and inflation accelerates even faster.
But just as the slam dunk that was higher inflation from QE missed the mark for well over a decade, we can all hope that maybe the economy has other plans, and our forecasts are dead wrong - again.
About the author: Dr Jim Schultz, Phd is a Market Expert and On-Air Personality at tastytrade, the beloved live financial network that provides financial information, investment strategies and entertainment related to trading and the stock market.
Preparations for the IPO follow on from the collapse of Nvidia Corp’s deal to buy Arm from SoftBank for $40 billion after widespread objections from US and European antitrust regulators. SoftBank has announced it will likely list Arm on Nasdaq by March of next year.
Over the past few weeks, SoftBank has interviewed investment banks for Arm’s IPO, asking them to commit to providing a credit line as part of their commitments to the deal.
Last month, SoftBank founder Masayoshi Son promised investors that the company “will aim for the biggest IPO ever in semiconductor history,” when discussing Arm’s listing.
While it is likely that SoftBank will list Arm in the United States, the venue of the flotation is reportedly yet to be finalised.
In 2021, the average payout for New York securities workers was $257,500 as deal-making and trading activity by big banks hit record levels amid surging global stock markets.
New York State Comptroller Thomas DiNapoli called the higher than expected figures “welcome news.”
In 2021, Wall Street contributed approximately 18% of all the taxes collected in New York. This is expected to help New York City trump its projections for income tax revenue.
"We have an April 1 budget deadline for the state, and this is welcome news,” DiNapoli said. “It gives them a little bit more breathing room.”
Several factors are expected to impact Wall Street bonuses this year, including record-high inflation, ongoing post-pandemic recovery, and the economic fallout from Russia’s attack on Ukraine. Presently, New York City and state are estimating that incentive compensation packages for securities industry workers in 2022 will drop by an average of 16%.
The survey, which polled 9,658 US employees between December 2021 and January 2022, found that 44% of workers are “job seekers”. Of this figure, 33% are active job seekers who looked for new roles in the fourth quarter of 2021. Meanwhile, 11% of this figure planned to seek out new roles in the first quarter of 2022.
The Great Resignation has proven a significant issue for US employers since spring 2021 when the economy began to recover as the worst of the coronavirus pandemic passed and demand for workers grew. In January 2022, 4.3 million Americans quit or changed their jobs, while employers reported 11.3 million job openings for the month.
“It is, by many measures, the tightest labour market ever,” said Julia Pollak, chief economist at ZipRecruiter. “Employers are having to play tug-of-war to get half an employee.”
“Flexibility and remote work are becoming more important [...] We’re already seeing that when asked to come back to the office, people are bolting to the exits in search of fully remote opportunities.”
Amid spiralling inflation, over half of the workers surveyed cited pay as a top reason for seeking out a new job. The survey revealed that 41% of employees would leave their current position for a 5% pay increase.
Powell’s vow comes less than a week after the Federal Reserve upped interest rates for the first time since 2018 in a bid to tackle inflation that is at its highest level in four decades.
On Monday, Powell reiterated the position the Federal Open Market Committee made in its post-meeting statement, stating that interest rate hikes would continue until inflation is once again under control. Powell said that, if necessary, increases could be even higher than the quarter-percentage point move approved in the meeting.
“We will take the necessary steps to ensure a return to price stability,” Powell said. “In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so. And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.”
When asked whether there would be a European ban on oil imports from Russia, Johnson replied, "There are different dependencies in different countries, and we have to be mindful of that, and you can't simply close down the use of oil and gas overnight even from Russia.”
"We can go fast in the UK...what we need to do is to make sure we are all moving the same direction... and that we accelerate that move and I think that's what you are going to see."
The UK prime minister also said that the government must ensure a substitute supply, though warned that impacts to the UK population can be expected.
Johnson’s announcement follows on from previous remarks from Europe minister James Cleverly who said that the UK will consider banning Russian oil imports as the US moves to do so.
Soon after Russian President Vladimir Putin announced he had authorised a “special military operation”, explosions were heard in the Ukrainian capital of Kyiv and the Ukrainian government accused Russia of launching a full-scale invasion.
In response to Moscow’s actions, the United States and its allies are set to impose “severe sanctions.”
In a statement, US President Joe Biden said: “I’m going to begin to impose sanctions in response, far beyond the steps we and our Allies and partners implemented in 2014. And if Russia goes further with this invasion, we stand prepared to go further as — with sanction.”
“Who in the Lord’s name does Putin think gives him the right to declare new so-called countries on territory that belonged to his neighbors? This is a flagrant violation of international law, and it demands a firm response from the international community.”
Following Russia’s invasion, the Euro Stoxx futures and German DAX futures were down over 3.5% in early deals, while FTSE futures were 2% lower. Meanwhile, S&P 500 e-minis dropped 2.3% and Nasdaq futures fell 2.8%.
On Thursday, the Moscow Exchange said it was suspending all trading.
The figure is by far the highest tally since the census bureau began to survey employee sicknesses in April 2020. The most recent survey, conducted between December 29 and January 10, includes employees who called in sick after testing positive for Covid-19 as well as those who have had to take time off to care for others infected with the virus.
The previous record high was recorded in January 2021, when 6.6 million Americans called in sick from coronavirus before vaccines were made widely available.
Omicron’s impact on the US labour market comes at a time when employers are struggling to find staff across all sectors. On top of this, “The Great Resignation” has continued to maintain a steady pace with an increasing number of employees feeling dissatisfied with their current roles. In November 2021, 4.5 million people quit their jobs in the US — the highest number on record.
In recent weeks, labour shortages have severely impacted a number of industries including trucking, air travel, food sales, and essential services such as policing and waste collection.
When choosing a US-registered forex broker, you should take into account several factors. It is important to remember that a US brokerage must have a minimum of $20 million in capital. Moreover, the leverage they can offer must be limited to one currency pair. Furthermore, they cannot use hedging strategies and can only have the leverage of 1:1000. They must also be registered with the National Futures Association or the CFTC. Moreover, you should look for an approved US Forex brokerage. The best US Forex brokers are regulated by the NFA and the CTFC. You should always look for the US-registered forex brokerage with the best commission rates. They will help you to make a wise decision. You can even opt for a Canadian-registered broker.
If you are a beginner, you should check out a few US-registered brokers before making a decision. They should be regulated by the NFA. If they are, they will also be listed on the American regulatory agency's website. You should look into the terms of the license, which is required to join this particular broker. You should not worry about the future of the currency. There is no reason not to try a US-registered forex brokerage.
There are many benefits of choosing a US-registered broker. You can choose from an exchange-traded fund or a future option. If you want to invest in a forex exchange, you can find brokers who accept US clients. There are a few major advantages to using a US-registered broker: First, it's possible to make money with a US-registered broker. The US regulators will certify your account with a recognised financial institution.
The US-registered forex broker is subject to stringent rules regarding the use of leverage. Because they don't have to meet strict regulatory requirements, US-registered brokers don't have to invest their money in a particular currency. Instead, they don't have to worry about being registered with a foreign exchange company. If you're an American citizen, you can trade in a US-registered Forex broker.
US-based Forex brokers have better customer service than foreign-registered forex brokers. The NFA has strict regulations that foreign forex brokers have to adhere to. A US-registered broker must accept payments in the US dollar. The NFA is not required to do this, but it does not charge you a fee. There's no requirement to be registered with a US-based broker to trade in the country. If you're moving to the US, you can use a USA-based broker.
The US has strict regulations of Forex brokers. A US-registered broker must meet strict rules regarding their operations. If you're not registered in a US-registered broker, you're not allowed to invest in their account. Aside from that, US-registered brokers must have RFED registration to conduct business in the United States. In addition, a US-registered forex brokerage should have a US-registered entity.
CFTC - The CFTC regulates forex brokers in the US. In the past, there was no CFTC-registered broker. Now, the CFTC has regulated the industry. Currently, more than 40 retail FX brokers in the US serve their international clients. Its jurisdiction is broadened due to the Dodd-Frank Wall Street Reform Act. Although the CFTC is a nonprofit organisation, the commission has the power to penalise a broker if it has committed fraud.
CFTC is not regulated in the US, but it is regulated in the EU. Unlike foreign brokers, a US-registered forex brokerage must be registered in a country that complies with the regulations. Its licensing requirements may be higher than in the EU, but these requirements are lower than in other countries. The Dodd-Frank Act is designed to protect consumers by regulating the industry. A regulated US-registered forex broker will also be a transparent and well-regulated one.
