Aurelia Butler

WASHINGTON (Reuters) – U.S. President Joe Biden was due to visit Colorado on Friday to view the devastation left by a rare, winter wildfire that ravaged two Denver-area towns last week, displacing thousands of residents.Two people were missing and feared dead after the wind-driven Marshall Fire, the most destructive in the state’s history, incinerated more than 1,000 homes on Dec. 30-31. Human remains believed to belong to one of the missing were recovered on Wednesday.The prairie grass fire in Boulder County, on the northern outskirts of the Denver metropolitan area, scorched over 6,000 acres in about two hours, officials said, with flames at times devouring football field-size stretches of drought-parched landscape in seconds.Biden’s trip to Boulder County, where he will tour a Louisville neighborhood and meet with families displaced by the blaze, marks his second as president to Colorado and his second focused on wildfires.Biden has declared the scene of the latest blaze on the eastern fringe of the Rocky Mountains a national disaster, freeing up federal funds to assist residents and businesses in recovery efforts.The normal wildfire season in Colorado does not typically extend into the winter thanks to snow cover and bracing cold. But climate change and rising global temperatures are leaving vegetation in parts of the western United States drier and more incendiary.Insured losses from the fire, which laid waste to parts of the towns of Superior and Louisville, are expected to run about $1 billion, according to catastrophe modeling firm Karen Clark & Company.The president’s primary legislative initiative, the Build Back Better Act, would funnel billions of dollars to increased forest management, firefighting and efforts to reduce carbon emissions.The bill, opposed by Republicans, passed the Democratic-controlled House of Representatives in November. It must still pass the Senate, where it has yet to secure the needed support of all of Biden’s fellow Democrats. More

The writer is a senior fellow at Harvard Kennedy SchoolAs 2021 ended, Team Transitory was in retreat in the US. The rapidly accelerating inflation predicted by economists including former Treasury secretary Lawrence Summers and former IMF chief economist Olivier Blanchard had appeared. Consumer prices rose 6.8 per cent in the year to December, the fastest increase since 1982. By their December 15 meeting, even the Federal Reserve policymakers who had counselled patience were worried. Minutes of the meeting, released last week, reveal discussions about raising interest rates and shrinking their balance sheet faster than markets had anticipated.I would caution them not to abandon their position so easily. After trillions of dollars spent on fiscal support, too much money may have been chasing too few goods by the end of last year. But this year I think the situation will reverse, with growth and inflation slowing. According to the Brookings Institution’s Fiscal Impact Measure, local, state and federal tax and spending policy added over 7.5 percentage points to US gross domestic product growth in the first quarter of 2021. But the fiscal impulse turned negative thereafter — and it is expected to be a drag on the economy through at least the third quarter of 2023. These forecasts include the new infrastructure spending plan. And even if parts of the stalled $1.75tn Build Back Better stimulus are passed this year, actual government spending in 2022 would remain small, and partially offset by ramped up tax collection. According to the Office of Management and Budget, the swing in the budget balance in 2022 from a year ago will be nearly nine percentage points, the second largest retrenchment since records began in 1930. Some argue this fiscal cliff is simply the government handing the baton for generating demand to consumers. Stimulus checks, beefed up unemployment insurance and expanded child tax credits boosted personal savings by over $2tn, so the higher consumption that affords can offset the fiscal drag. While the overall stock of savings is astounding, it is dwindling, and it was not distributed evenly in the first place. The personal savings rate has reverted to pre-pandemic levels of around 7 per cent. According to the JPMorgan Chase Institute, low-income families saw the highest percentage gains in savings from fiscal measures, but exhausted their savings faster. For low earners, the proportion of any income increase that is spent on consumption is typically higher than among the wealthy. The government can’t hand a baton to people who have burned through their savings. According to Moody’s Analytics, excess savings among working- and middle-class households could be exhausted early this year. And high-income consumers who don’t spend all their savings are little help. The upshot is likely weaker inflation. Unemployed respondents to a survey by Indeed.com said their financial cushion was one of the top three reasons for not urgently seeking a job. As those savings run down, many who dropped out of the labour force will try to return, boosting labour supply and easing upward pressure on wages, and therefore prices.What about business investment? Even limited Fed rate hikes will increase borrowing costs in 2022. Ten-year US Treasury yields are rising, and it’s hard to argue the investment environment will improve in 2022. The dollar will strengthen, pushing down inflation and exports. Foreign demand may also be weak. Chinese growth slowed precipitously in the second half of 2021, partly in pursuit of financial stability. While Beijing has signalled it will do more to support growth in 2022, long-term issues persist. Cascading property sector defaults are a key risk, as is China’s zero-Covid policy, which is prompting new factory closures and lockdowns.These may exacerbate existing global supply-chain disruptions in early 2022. But there are other indications that supply pressures are easing. Order backlogs and supply delivery times have improved in recent months. According to the New York Fed’s new Global Supply Chains Pressure Index, supply-chain issues “have peaked and might start to moderate somewhat going forward”. That, too, will lead to US inflation abating later this year.The Fed may move faster and farther than anticipated early in 2022 to retain credibility as an inflation fighter. But fiscal drag, shrinking savings and weak foreign demand are likely to ease an overheated economy. This, and improving supply chains, will reduce inflation pressures. Summers and others were right in 2021, but I see the balance tipping within six months. I’m signing up for another year as a member of Team Transitory. More

(Reuters) – U.S. stock index futures edged higher on Friday ahead of a closely watched jobs report, with an index of economy-linked value shares on track for its third straight weekly gain.The Labor Department’s report, due at 08:30 a.m. ET, is expected to show U.S. employment growth likely picked up last month, culminating in record job creation in 2021. The unemployment rate is also seen falling to a 22-month low of 4.1% from 4.2% in November.Economists surveyed by Reuters expect nonfarm payrolls to increase by 400,000 jobs in December after rising 210,000 in November.The data comes after minutes from the Federal Reserve’s December meeting signaled the central bank may have to raise interest rates sooner than expected amid a “very tight” job market and unabated inflation.The hawkish tone spurred a rally in U.S. Treasury yields while prompting investors to swap technology-heavy growth shares with more cyclical parts of the market such as energy, financials and industrials that tend to do better in a high interest-rate environment. [US/]”A stronger-than-expected (jobs) number might add to the impression given by the recently released minutes of the Fed’s latest meeting that rates are set to rise further and faster in the short term and provide another jolt to markets,” Russ Mould, investment director at AJ Bell, wrote in a client note.Fed funds futures imply an 80% chance of a 25-basis point tightening at the March Fed meeting, and at least three rate hikes by the end of the year.Shares of Occidental Petroleum (NYSE:OXY) and Citigroup (NYSE:C) rose 1.5% and 0.8%, respectively, in premarket trading, leading gains among major oil and banking companies.The S&P 500 energy sector, which has gained 9% so far this week, was set for its best weekly rise in ten months. The broader value index added 0.8% this week, outperforming its growth counterpart, which is eyeing its worst week since late February 2021.At 6:43 a.m. ET, Dow e-minis were up 36 points, or 0.1%, S&P 500 e-minis were up 10.5 points, or 0.22%, and Nasdaq 100 e-minis were up 54.75 points, or 0.35%.All the three major Wall Street indexes are set for a weekly fall.Mega-cap tech titans Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA) Inc were up between 0.6% and 1.5%, nursing some steep losses suffered this week. GameStop Corp (NYSE:GME) jumped 16.9% after the video game retailer and “meme stock” said it is launching a division to develop a marketplace for nonfungible tokens (NFTs) and establish cryptocurrency partnerships. Starbucks Corp (NASDAQ:SBUX) fell 1.7% after RBC downgraded the specialty coffee retailer’s stock to “sector perform” from “outperform”. More

Qualified brokerages can apply to act as market-makers on STAR, in a pilot scheme that will be steadily expanded, the China Securities Regulatory Commission (CSRC) said in a statement.CSRC also published corresponding draft rules on market-making, in which brokerages actively quotes in a security, providing liquidity and depth to markets, while profiting from the difference in the bid-ask spread. CSRC is introducing market-making now because “the STAR Market has been operating smoothly, and various reform measures have been effective,” the regulator said. STAR, set up in 2019 to fund China’s technical innovation,, currently hosts 379 listed companies worth a total of 5.3 trillion yuan ($831.57 billion) in market value. According to the draft rules, market makers can trade using its own shares, as well as borrowed shares. Regulators will closely monitor risks in brokerages’ market making business, as such activities can both curb, and boost market volatility, CSRC said. ($1 = 6.3735 Chinese yuan renminbi) More

FRANKFURT (Reuters) -Euro zone economic sentiment dropped more than expected last month while inflation hit another record high, indicating the economy is under renewed stress as surging coronavirus infections force governments to tighten restrictions.With infections breaking records almost daily as the Omicron variant sweeps across Europe, growth is likely to take a hit around the turn of the year even though governments have largely avoided the debilitating measures that brought their economies to a standstill a year ago.Foreshadowing the pain, the European Commission’s Economic Sentiment Indicator, a key gauge of the bloc’s economic health, fell more sharply than forecast in December to a level last seen in May. The outlook for services worsened significantly and employment expectations also fell.In Germany, the euro zone’s biggest economy, the slowdown is already evident in hard data.Supply chain bottlenecks have held back Germany’s vast factory sector for most of the last quarter and industry, thought to be on the rebound, unexpectedly stumbled in November.Output fell 0.2% on the month, despite expectations for a 1% rise, reinforcing views that Europe’s biggest economy came to a halt in the fourth quarter of 2021, with no relief in sight for months.”Unfortunately, this is where the rebound of German industry stops for the time being. The fourth wave of the pandemic and Omicron should send industrial activity back into hibernation,” ING economist Carsten Brzeski said.”It will take until spring before German industry is back on a fully sustainable recovery path.”In a rare bright spot for the bloc, retail trade unexpectedly rose in November, indicating that at least consumers remained optimistic going into the Christmas shopping season.The problem is that heavy spending by households, who were forced to save up cash for the past year amid restrictions, is pushing consumer prices to new records.Inflation unexpectedly hit 5% last month, a record high for the 19-country currency bloc and uncomfortable reading at the European Central Bank, which has consistently underestimated price pressures.When the economy rebounded from its initial pandemic shock last year price growth took off, primarily as oil and gas prices jumped.Adding to the upward pressure, supply-chain bottlenecks curtailed the availability of consumer products, while households, digging into the cash they had piled up, started spending on everything from new cars to restaurant meals.While most of these inflation drivers are temporary, many, including some influential policymakers, doubt the ECB’s benign narrative that price growth will be back under its 2% target by the end of the year.Part of their concern is that rises in underlying prices – or inflation excluding volatile food and fuel prices – are also above target, suggesting that sectors prone to weak inflation over the past decade are now adjusting.Still, with stimulus extended only a few weeks ago, the ECB is unlikely to revisit its policy stance until March, especially as Omicron clouds the outlook. There was a glimmer of good news for the central bank in the Commission’s sentiment survey with euro zone entrepreneurs paring back their expectations for price rises for the first time in more than a year last month. More