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    Fed Chair Powell Says He Expects Slower Interest Rate Increases to Continue

    After rapid interest rate increases, Federal Reserve officials could move to a steadily slower pace — though they are not ready to commit.Jerome H. Powell, the Federal Reserve chair, said on Thursday that he would expect to continue with a slower pace of interest rate increases after central bankers skipped raising interest rates in June for the first time in 11 policy meetings — but he did not rule out that officials could return to back-to-back rate moves.“It may be that we don’t move for a meeting, and then move at a meeting,” Mr. Powell said.Speaking at a conference in Madrid, he reiterated an assertion he made a day earlier that he would not take future rate increases at consecutive meetings “off the table.” But he added that he would expect a more patient approach to persist.“We did take one meeting where we didn’t move, so that’s in a way a moderation of the pace,” he explained. “So I would expect something like that to continue, assuming the economy evolves about as expected.”Mr. Powell noted, however, that the economy “has a tendency to do something different” than policymakers anticipate.Fed officials raised interest rates rapidly in 2022, making a string of three-quarter-point increases. They slowed to a half-point move late last year, and have been progressively moving toward smaller, and now more intermittent, adjustments.Raising interest rates is like hitting the brakes on economic growth: It slows consumer and business demand in order to bring down inflation. Lifting rates more gradually is akin to tapping the brake pedal less firmly. Fed officials are still slowing the economy, but they are trying to avoid an unnecessarily jarring halt. For now, central bankers expect to raise their policy rate two more times in 2023, from just above 5 percent to just above 5.5 percent. If those moves happen at an every-other-meeting pace, that could mean rate increases at the central bank’s meetings in July and November.But significant uncertainty clouds that forecast. Investors put a low — though rising — probability on two more rate increases by the end of the year. They are betting that it is more likely that the Fed will make only one more rate increase in 2023, as the economy slows and inflation cools.Mr. Powell noted that the Fed has repeatedly been wrong in the other direction, overestimating how quickly price increases moderate.“We’ve all seen inflation be — over and over again — shown to be more persistent and stronger than we expected,” he said.“It wouldn’t have been thinkable to have a 5 percent interest rate before the pandemic,” he later added. “And now the question is — is that tight enough policy?” More

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    Biden Administration Weighs Further Curbs on Sales of A.I. Chips to China

    Reports that the White House may clamp down on sales of semiconductors that power artificial intelligence capabilities sent tech stocks diving.The Biden administration is weighing additional curbs on China’s ability to access critical technology, including restricting the sale of high-end chips used to power artificial intelligence, according to five people familiar with the deliberations.The curbs would clamp down on the sales to China of advanced chips made by companies like Nvidia and Advanced Micro Devices and Intel, which are needed for the data centers that power artificial intelligence.Biden officials have said that China’s artificial intelligence capabilities could pose a national security threat to the United States by enhancing Beijing’s military and security apparatus. Among the concerns is the use of A.I. in guiding weapons, carrying out cyber warfare and powering facial recognition systems used to track dissidents and minorities.But such curbs would be a blow to semiconductor manufacturers, including those in the United States, who still generate much of their revenue in China.The deliberations were earlier reported by The Wall Street Journal. Nvidia’s shares closed down 1.8 percent on Wednesday after reports of the potential export crackdown. The company has been one of the primary beneficiaries of the enthusiasm over artificial intelligence, with its share price surging by roughly 180 percent this year.Such additional restrictions, if adopted, would not have an immediate impact on Nvidia’s financial results, Colette Kress, the chief financial officer of Nvidia, said Wednesday at an event hosted by an investment firm. But over the long term, they “will result in a permanent loss of opportunities for the U.S. industry to compete and lead in one of the world’s largest markets,” she said. She added that China typically generates 20 percent to 25 percent of the company’s data center revenue, which includes other products in addition to chips that enable A.I.The stock prices of chip companies Qualcomm and Intel fell less than 2 percent on Wednesday while AMD nudged 0.2 percent lower.Intel declined to comment, as did the Commerce Department, which oversees export controls. AMD did not respond to a request for comment.Curbing the sale of high-end chips would be the latest step in the Biden administration’s campaign to starve China of advanced technology that is needed to power everything from self-driving cars to robotics.Last October, the administration issued sweeping restrictions on the types of advanced semiconductors and chip making machinery that could be sent to China. The rules were applied across the industry, but they had particularly strong consequences for Nvidia. The company, an industry leader, was barred from selling China its top-line A100 and H100 chips — which are adept at running the many processes required to build artificial intelligence — unless it first obtained a special license.In response to those restrictions, Nvidia began offering the downgraded A800 and H800 chips in China last year.The additional restrictions under consideration, which would come as part of the process of finalizing those earlier rules, would also bar sales of Nvidia’s A800 and H800 chips, and similar advanced chips from competitors like AMD and Intel, unless those companies obtained a license from the Commerce Department to continue shipping to the country.The deliberations have touched off an intense lobbying battle, with Intel and Nvidia working to prevent further curbs on their business.Chip companies say cutting them off from a major market like China will substantially eat into their revenues and reduce their ability to spend on research and innovation of new chips. In an interview with The Financial Times last month, Nvidia’s chief executive, Jensen Huang, warned that the U.S. tech industry was at risk of “enormous damage” if it were to be cut off from trading with China.The Biden administration has also been internally debating where to draw the line on chip sales to China. Their goal is to limit technological capacity that could aid the Chinese military in guiding weapons, developing autonomous drones, carrying out cyber warfare and powering surveillance systems, while minimizing the impact such rules would have on private companies.The measure, which would come as the United States is also considering expanded curbs on U.S. investment in Chinese technology firms, is also likely to ruffle the Chinese government. Biden officials have been working in recent weeks to improve bilateral relations after a fallout with Beijing this year, after a Chinese surveillance balloon flew over the United States.Antony J. Blinken, the secretary of state, traveled to Beijing this month to meet with his counterparts, and Treasury Secretary Janet L. Yellen is also expected to travel to China soon.During a Wednesday appearance at the Council on Foreign Relations in New York, Mr. Blinken said that China’s concern that the U.S. sought to slow its economic growth was “a lengthy part of the conversation that we just had in Beijing.”Chinese officials, he said, believe the U.S. seeks “to hold them back, globally, and economically.” But he disputed that notion.“How is it in our interest to allow them to get technology that they may turn around and use against us?” he asked, citing China’s expanding nuclear weapons program, its development of hypersonic missiles and its use of artificial intelligence “potentially for repressive purposes.”“If they were in our shoes, they would do exactly the same thing,” he said, adding that the U.S. was imposing “very targeted, very narrowly defined controls.”Nvidia’s valuation had soared in light of the recent boom in generative artificial intelligence services, which can produce complex written answers to questions and images based on a single prompt. Microsoft has teamed up with OpenAI, which makes the chatbot ChatGPT, to generate results in its Bing search engine while Google has built a competing chatbot called Bard.As companies race to incorporate the technology into their products, it has increased demand for chips like Nvidia’s that can handle that the complex computing tasks. That momentum has helped to push Nvidia’s market capitalization past $1 trillion, making the company the world’s sixth largest by value.Nvidia said in an August filing that $400 million in revenue from “potential sales to China” could be subject to U.S. export restrictions, including sales of the A100, if “customers do not want to purchase the company’s alternative product offerings” or the government failed to grant licenses to allow the company to continue to sell the chip inside China.Since the restrictions were imposed, Chinese chip makers have been trying to overhaul their supply chains and develop domestic sources of advanced chips, but China’s capabilities to produce the most advanced chips remains many years behind that of the United States.Dan Wang, a visiting scholar at Yale Law School, said that the impact of advanced chip restrictions on Chinese tech companies was uncertain.“Most of their business needs are driven by less advanced chips, as fewer of them are playing on the fringes of the most advanced A.I.,” he said.Joe Rennison More

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    Overstock Buys Intellectual Property to Rename as Bed Bath & Beyond

    The online retailer is renaming its website and its mobile app after buying the intellectual property of the bankrupt home-goods store.Soon, Overstock.com will become Bed Bath & Beyond — at least in digital form.Overstock, which last week paid $21.5 million to acquire the bankrupt retailer’s intellectual property, said on Wednesday that it would start operating its website under the Bed Bath & Beyond name.The change will roll out in Canada in early July. Starting in August, about a month after the final Bed Bath & Beyond stores in the United States close, customers in the country who visit overstock.com will be redirected to bedbathandbeyond.com.Overstock’s mobile app and its rewards program will also be rebranded. Company executives plan to eventually bring back Bed Bath & Beyond’s popular wedding registry.As Overstock folds the bankrupt retailers’ assets into its own operations, it is considering renaming its business entirely, said Jonathan Johnson, the company’s chief executive. It might settle on Bed Bath & Beyond, he added, but other names are being considered, too.“I can’t tell you how many times I’ve been asked over the years when we’re going to change the name of Overstock,” said Mr. Johnson, who has been at the helm since 2019.For years, Overstock.com has been trying to find a way to update its image as a liquidator, which was how it started in 1999. The company has since moved away from selling only furniture at basement bargain prices, but ultimately, Mr. Johnson said, its name was holding it back in the eyes of consumers.It’s betting Bed Bath & Beyond’s name can help change that.“We will probably have both logos for a little bit, but the goal is to transition as quickly as possible to Bed Bath & Beyond,” Mr. Johnson said.When the home-goods retailer filed for Chapter 11 bankruptcy in April, Mr. Johnson saw an opportunity for his own company. In 2018, when Patrick Byrne, then Overstock’s chief executive, wanted to sell the retail business to focus on cryptocurrency technology, Bed Bath & Beyond was a potential buyer, Mr. Johnson said. That deal never happened.The tables turned when the pandemic hit and Overstock’s sales surged. Bankers approached the company, suggesting that it should purchase Bed Bath & Beyond.On the other hand, Bed Bath & Beyond was financially battered by the pandemic. Like many retailers, it had to temporarily close its stores, and its supply chain buckled as the company sought to keep up with the demand in online shopping. Sales fell drastically as company executives made several merchandising and marketing missteps.“We’ve been watching and watching, and last year when Bed Bath & Beyond fell on some troubles we started thinking, ‘Gee, if it goes bankrupt, we might have the opportunity to purchase what we like without purchasing what gave us pause before,’” Mr. Johnson said. (Overstock did not purchase Bed Bath & Beyond’s store locations or inventory.)As Overstock folds the bankrupt retailers’ assets into its own operations, it is considering renaming its business entirely, said Jonathan Johnson, Overstock’s chief executive.Alex Wong/Getty ImagesIn the week after its bid for Bed Bath & Beyond’s assets became public, Overstock added more than 100,000 bedding and bath items to its site as vendors raced to do business with the company. This was after months of Overstock’s courting them and making concessions like agreeing to hold inventory in warehouses, a rare move for the online retailer. Now, Mr. Johnson said, he does not think his company will have to do that to win vendors over.The acquisition also gives Overstock a trove of customer data. It has information on what Bed Bath & Beyond shoppers bought online and how frequently they visited the website — a helpful tool as Overstock contends with its own falling sales. On Wednesday, the company said it expected its second-quarter revenue to decline in the low 20 percent range from the year before.Overstock’s sales peaked in 2021, when more people bought furniture during the height of the pandemic. Its active customers have also been declining, and it said in April that it had 4.8 million users. Bed Bath & Beyond’s active customer list for its online shoppers is twice as large.Overstock expects that its customer count will increase in the coming months, while the average amount that shoppers spend may shrink because the small appliances and home goods that Bed Bath & Beyond was known for are less expensive than the couches and patio tables Overstock normally sells. The online retailer will also spend more on marketing to make consumers aware of its branding changes.This deal comes as U.S. consumers are spending less on furniture and more on eating out and traveling. Sales at furniture and home furnishing stores in the first five months of the year fell nearly 3 percent from a year earlier, according to Commerce Department data, which is not adjusted for inflation. “Opportunities like this come up once in a while, and they come up sometimes when times are tough,” Mr. Johnson said. “Will the category still be tough in the short to medium term? I think so, but I think getting all these new customers and rebranding helps us cut through some of that headwind.”During the integration process, Overstock plans to hire workers with marketing, merchandising and technology expertise. The company has been trying to recruit former Bed Bath & Beyond employees.As for the fate of Bed Bath & Beyond’s famed 20 percent coupon?“We’ll always be a couponer; we’ll always do the site sales,” Mr. Johnson said. “Whether we run at 20 percent as frequently as Bed Bath did — probably not. But it’ll be there for the beginning.” More

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    Facial Recognition Spreads as Tool to Fight Shoplifting

    Simon Mackenzie, a security officer at the discount retailer QD Stores outside London, was short of breath. He had just chased after three shoplifters who had taken off with several packages of laundry soap. Before the police arrived, he sat at a back-room desk to do something important: Capture the culprits’ faces.On an aging desktop computer, he pulled up security camera footage, pausing to zoom in and save a photo of each thief. He then logged in to a facial recognition program, Facewatch, which his store uses to identify shoplifters. The next time those people enter any shop within a few miles that uses Facewatch, store staff will receive an alert.“It’s like having somebody with you saying, ‘That person you bagged last week just came back in,’” Mr. Mackenzie said.Use of facial recognition technology by the police has been heavily scrutinized in recent years, but its application by private businesses has received less attention. Now, as the technology improves and its cost falls, the systems are reaching further into people’s lives. No longer just the purview of government agencies, facial recognition is increasingly being deployed to identify shoplifters, problematic customers and legal adversaries.Facewatch, a British company, is used by retailers across the country frustrated by petty crime. For as little as 250 pounds a month, or roughly $320, Facewatch offers access to a customized watchlist that stores near one another share. When Facewatch spots a flagged face, an alert is sent to a smartphone at the shop, where employees decide whether to keep a close eye on the person or ask the person to leave.Mr. Mackenzie adds one or two new faces every week, he said, mainly people who steal diapers, groceries, pet supplies and other low-cost goods. He said their economic hardship made him sympathetic, but that the number of thefts had gotten so out of hand that facial recognition was needed. Usually at least once a day, Facewatch alerts him that somebody on the watchlist has entered the store.Mr. Mackenzie adds one or two new faces a week to the Facewatch watch list that stores in the area share.Suzie Howell for The New York TimesA sign at a supermarket that uses Facewatch in Bristol, England. Suzie Howell for The New York TimesFacial recognition technology is proliferating as Western countries grapple with advances brought on by artificial intelligence. The European Union is drafting rules that would ban many of facial recognition’s uses, while Eric Adams, the mayor of New York City, has encouraged retailers to try the technology to fight crime. MSG Entertainment, the owner of Madison Square Garden and Radio City Music Hall, has used automated facial recognition to refuse entry to lawyers whose firms have sued the company.Among democratic nations, Britain is at the forefront of using live facial recognition, with courts and regulators signing off on its use. The police in London and Cardiff are experimenting with the technology to identify wanted criminals as they walk down the street. In May, it was used to scan the crowds at the coronation of King Charles III.But the use by retailers has drawn criticism as a disproportionate solution for minor crimes. Individuals have little way of knowing they are on the watchlist or how to appeal. In a legal complaint last year, Big Brother Watch, a civil society group, called it “Orwellian in the extreme.”Fraser Sampson, Britain’s biometrics and surveillance camera commissioner, who advises the government on policy, said there was “a nervousness and a hesitancy” around facial recognition technology because of privacy concerns and poorly performing algorithms in the past.“But I think in terms of speed, scale, accuracy and cost, facial recognition technology can in some areas, you know, literally be a game changer,” he said. “That means its arrival and deployment is probably inevitable. It’s just a case of when.”‘You can’t expect the police to come’Simon Gordon, the owner of Gordon’s Wine Bar in London, founded Facewatch in 2010. As a business owner, “you’ve got to help yourself,” he said. Suzie Howell for The New York TimesFacewatch was founded in 2010 by Simon Gordon, the owner of a popular 19th-century wine bar in central London known for its cellarlike interior and popularity among pickpockets.At the time, Mr. Gordon hired software developers to create an online tool to share security camera footage with the authorities, hoping it would save the police time filing incident reports and result in more arrests.There was limited interest, but Mr. Gordon’s fascination with security technology was piqued. He followed facial recognition developments and had the idea for a watchlist that retailers could share and contribute to. It was like the photos of shoplifters that stores keep next to the register, but supercharged into a collective database to identify bad guys in real time.By 2018, Mr. Gordon felt the technology was ready for commercial use.“You’ve got to help yourself,” he said in an interview. “You can’t expect the police to come.”Facewatch, which licenses facial recognition software made by Real Networks and Amazon, is now inside nearly 400 stores across Britain. Trained on millions of pictures and videos, the systems read the biometric information of a face as the person walks into a shop and check it against a database of flagged people.Facewatch’s watchlist is constantly growing as stores upload photos of shoplifters and problematic customers. Once added, a person remains there for a year before being deleted.‘Mistakes are rare but do happen’Every time Facewatch’s system identifies a shoplifter, a notification goes to a person who passed a test to be a “super recognizer” — someone with a special talent for remembering faces. Within seconds, the super recognizer must confirm the match against the Facewatch database before an alert is sent.Facewatch is used in about 400 British stores.Suzie Howell for The New York TimesBut while the company has created policies to prevent misidentification and other errors, mistakes happen.In October, a woman buying milk in a supermarket in Bristol, England, was confronted by an employee and ordered to leave. She was told that Facewatch had flagged her as a barred shoplifter.The woman, who asked that her name be withheld because of privacy concerns and whose story was corroborated by materials provided by her lawyer and Facewatch, said there must have been a mistake. When she contacted Facewatch a few days later, the company apologized, saying it was a case of mistaken identity.After the woman threatened legal action, Facewatch dug into its records. It found that the woman had been added to the watchlist because of an incident 10 months earlier involving £20 of merchandise, about $25. The system “worked perfectly,” Facewatch said.But while the technology had correctly identified the woman, it did not leave much room for human discretion. Neither Facewatch nor the store where the incident occurred contacted her to let her know that she was on the watchlist and to ask what had happened.The woman said she did not recall the incident and had never shoplifted. She said she may have walked out after not realizing that her debit card payment failed to go through at a self-checkout kiosk.Madeleine Stone, the legal and policy officer for Big Brother Watch, said Facewatch was “normalizing airport-style security checks for everyday activities like buying a pint of milk.”Mr. Gordon declined to comment on the incident in Bristol.In general, he said, “mistakes are rare but do happen.” He added, “If this occurs, we acknowledge our mistake, apologize, delete any relevant data to prevent reoccurrence and offer proportionate compensation.”Approved by the privacy officeA woman said Facewatch had misidentified her at the Bristol market. Facewatch said the system had ”worked perfectly.”Suzie Howell for The New York TimesCivil liberties groups have raised concerns about Facewatch and suggested that its deployment to prevent petty crime might be illegal under British privacy law, which requires that biometric technologies have a “substantial public interest.”The U.K. Information Commissioner’s Office, the privacy regulator, conducted a yearlong investigation into Facewatch. The office concluded in March that Facewatch’s system was permissible under the law, but only after the company made changes to how it operated.Stephen Bonner, the office’s deputy commissioner for regulatory supervision, said in an interview that an investigation had led Facewatch to change its policies: It would put more signage in stores, share among stores only information about serious and violent offenders and send out alerts only about repeat offenders. That means people will not be put on the watchlist after a single minor offense, as happened to the woman in Bristol.“That reduces the amount of personal data that’s held, reduces the chances of individuals being unfairly added to this kind of list and makes it more likely to be accurate,” Mr. Bonner said. The technology, he said, is “not dissimilar to having just very good security guards.”Liam Ardern, the operations manager for Lawrence Hunt, which owns 23 Spar convenience stores that use Facewatch, estimates the technology has saved the company more than £50,000 since 2020.He called the privacy risks of facial recognition overblown. The only example of misidentification that he recalled was when a man was confused for his identical twin, who had shoplifted. Critics overlook that stores like his operate on thin profit margins, he said.“It’s easy for them to say, ‘No, it’s against human rights,’” Mr. Ardern said. If shoplifting isn’t reduced, he said, his shops will have to raise prices or cut staff. More

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    Markets are pricing in rate cuts too soon, IMF’s Gopinath says

    Gita Gopinath, first deputy managing director of the International Monetary Fund, told CNBC that central bankers “should continue tightening and importantly [interest rates] should stay at a high level for a while.”
    Both the U.S. Federal Reserve and European Central Bank have raised rates significantly over many months.
    “It is taking too long for inflation to come back to target that means that central banks will have to remain committed to fighting inflation, even if that means risking weaker growth or much more cooling in the labor market,” Gopinath added.

    Major central banks will have to keep interest rates high for much longer than some investors expect, Gita Gopinath, first deputy managing director of the International Monetary Fund, told CNBC Tuesday.
    “We also have to recognize that central banks have done quite a bit … But that said, we do think they should continue tightening and importantly they should stay at a high level for a while,” Gopinath told CNBC’s Annette Weisbach at the European Central Bank Forum in Sintra, Portugal.

    “Now this is unlike, for instance, what several markets expect, which is that things are going to come down very quickly in terms of rates. I think they have to be on hold for much longer,” she said.
    The ECB began raising rates in July 2022 and has increased its main rate from -0.5% to 3.5% since then. The U.S. Federal Reserve, meanwhile, embarked on a hiking cycle in March 2022 but opted to pause this month, diverging from Europe. Nonetheless, Fed Chairman Jerome Powell has suggested there could be at least two more rate hikes this year.
    A survey of U.S. economists in late May showed they had pushed back their expectations for the Fed to cut rates from the final quarter of this year to the first quarter of 2024. In a note to clients on Friday, Nomura said it expects both the ECB and the Bank of England to announce rate cuts in about a year’s time.
    However, for the IMF it is clear that reducing inflation needs to be the absolute priority.

    Gita Gopinath, first deputy managing director of International Monetary Fund (IMF), spoke to CNBC at the ECB Forum in Portugal.
    Bloomberg | Bloomberg | Getty Images

    “It is taking too long for inflation to come back to target that means that central banks will have to remain committed to fighting Inflation even if that means risking weaker growth or much more cooling in the labor market,” Gopinath said.

    In the case of the ECB, the central bank raised its expectations for inflation in the euro zone at its last meeting in June. It now expects headline inflation at 5.4% this year, at 3% in 2024 and at 2.2% in 2025.
    Gopinath described the current macroeconomic picture as “very uncertain.”
    Goldman analysts said in a note on Friday they expect the Fed to make the first rate cuts in the second quarter of next year and the ECB in the final quarter of 2024.
    Speaking to CNBC’s “Street Signs Europe” Tuesday, Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, said it simply comes down to the fact that we don’t know “when enough will be enough” when it comes to rate increases.
    Meanwhile, ECB Governing Council member Mārtiņš Kazāks also told CNBC he believed markets were pricing in cuts too early.
    “Currently I think the markets are making the mistake of thinking the rates will come down much, much quicker, which in my view is inconsistent with the baseline we currently have,” Kazāks said at the Sintra Forum.
    “First off, next year is way too early. I would see personally for rates to start coming down, for rate cuts to be necessary, is only when we see that inflation does significantly and persistently fall below our target of 2%.” More

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    In Poorer Countries, Obesity Can Signal Financial Security

    A study found that loan officers in Uganda, where information is scarce, were more likely to offer credit to heavier-looking people.In the world’s wealthiest countries, the richer people are, the thinner they tend to be.But in Uganda, one of the poorest nations, where nearly half the people eat fewer calories than they need each day, excess fat is often a sign of wealth and can help get a bank loan, according to a forthcoming article in The American Economic Review.It’s not surprising that in places where food is scarce, obesity serves as a significant marker of wealth. But what the new study points out is that in poor countries, information is also scarce. And in those situations, loan officers use whatever bits of evidence they can find to help make critical economic decisions.“Given the scarcity of readily available hard information in poor countries, wealth signals, including obesity, play a crucial role in economic interactions where individuals seek to evaluate someone’s wealth,” said Elisa Macchi, an assistant professor of economics at Brown University.As part of her research, Ms. Macchi conducted tests with 238 loan officers at 146 financial institutions in the capital city, Kampala. She asked them to review applications from fictionalized potential borrowers whose accompanying photographs were manipulated so they appeared thin or fat.It is not uncommon in Uganda for people to include a photo of themselves when submitting a loan application, and it can be one nugget of information that a loan officer uses to decide whether to even grant an applicant a first interview, Ms. Macchi said.She discovered that loan officers were more likely to rate the applicants as more creditworthy and more financially sound when the obese version of the photograph was attached.“The obesity premium is large, equivalent to the effect of a 60 percent increase in borrower self-reported income in the experiment,” or an additional asset like ownership of a car, the study concluded.Historically, corpulence was prized in some parts of sub-Saharan Africa. Mauritania was once notorious for the custom of brutally force-feeding young girls to make them more marriageable — a practice referred to as gavage, taken from the French term for force-feeding geese to produce foie gras. Fat was a considered both a sign of family wealth and a cultural ideal.Lately, obesity has become an increasingly worrisome health risk on the continent, a development that follows the trend in the richest nations, where obesity is often correlated with poverty. The easy availability of cheap, highly processed foods that have little nutritional value allows people to satisfy hunger pangs without promoting overall health.In developing countries, changes in diets, a lack of physical activity and the use of varying modes of transportation particularly in cities are helping to drive the weight gain.“Africa is facing a growing problem of obesity and overweight, and the trends are rising,” Matshidiso Moeti, the World Health Organization’s regional director for Africa, said last year in a statement. “If unchecked, millions of people, including children, risk living shorter lives under the burden of poor health.”Research has found that obesity has been associated with severe disease, and hospitalization of Covid-19 patients.The World Health Organization and other international organizations have started to work with Kenya, Tanzania and Uganda to develop programs and standards to promote healthy diets and physical activity.Cultural associations and stereotypes, though, often persist despite science-based recommendations, such as the perception that fat signals an abundance of money.But at least in the case of loan officers in Uganda, facts ultimately trumped perception. When more solid information was provided — like the loan applicant’s income, collateral and occupation — lenders used it, and the so-called obesity premium fell.“The good thing is that it’s not that entrenched,” Ms. Macchi said about preconceived notions about wealth and weight. “The moment when we give them the information, then they respond to it.” More

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    What Is Happening in the Housing Market?

    Home construction surged in May and prices have ticked up, even with interest rates at a 15-year high. The resilience has surprised some economists.Gianni Martinez, 31, thought that it would be fairly easy to buy an apartment.Mortgage rates are now hovering around 7 percent — the highest they’ve been since 2007 — thanks to the Federal Reserve’s efforts to tame inflation. Central bankers have lifted their official policy rate to about 5 percent over the past 15 months, which has translated into higher borrowing costs across the economy.Mr. Martinez, a tech worker, expected that to cool down Miami real estate. But instead, he is finding himself in stiff competition for one- to two-bedroom apartments near the ocean. He has made seven or eight offers and is willing to put 25 percent down, but he keeps losing, often to people paying cash instead of taking out a pricey mortgage.“Because of interest rates at 7 percent, I didn’t think it would be this competitive — but that doesn’t matter to cash buyers,” Mr. Martinez said, noting that he’s competing with foreign bidders and other young people who show up to open houses with their parents in tow, suggesting Mom or Dad may be helping to foot the bill.“When there is a correctly priced listing, it’s a madhouse,” he said.The Fed’s rate increases are aimed at slowing America’s economy — in part by restraining the housing market — to try to bring inflation under control. Those moves worked quickly at first to weaken interest-sensitive parts of the economy: Housing markets across the United States pulled back notably last year. But that cool-down seems to be cracking.Home prices fell nationally in late 2022, but they have begun to rebound in recent months, a resurgence that has come as the market has proved especially strong in Southern cities including Miami, Tampa and Charlotte. Fresh data set for release on Tuesday will show whether that trend has continued. Figures out last week showed that national housing starts unexpectedly surged in May, jumping by the most since 2016, as applications to build homes also increased.Housing seems to be finding a burst of renewed momentum. Climbing home prices will not prop up official inflation figures — those are based on rental rather than purchased housing costs. But the revival is a sign of how difficult it is proving for the Fed to curb momentum in the economy at a time when the labor market remains strong and consumer balance sheets are generally healthier than before the pandemic.“It’s another data point: Things are not cooling off as much as they thought,” said Kathy Bostjancic, chief economist for Nationwide Mutual. In fact, new housing construction “tells us something about where the economy is headed, so this suggests that things are potentially picking up.”

    Note: Data is seasonally adjusted.Source: S&P CoreLogic Case-Shiller IndexBy The New York TimesThat could matter for policy: Fed officials think that the economy needs to spend some time growing at a speed that is below its full potential for inflation to fully cool off. In a weak economy, consumers don’t want to buy as much, so companies struggle to charge as much.The question is whether the economy can slow sufficiently when real estate is stabilizing or even heating back up, leaving homebuilders feeling more optimistic, construction companies hiring workers and homeowners feeling the mental boost that comes with climbing home equity.So far, the Fed’s leader, at least, has sounded unworried.“The housing sector nationally has flattened out, and maybe ticked up a little bit, but at a much lower level from where it was,” Jerome H. Powell, the Fed chair, told lawmakers last week, adding a day later that “you’ve actually kind of seen it hit a bottom now.”Higher rates have helped to markedly cool down sales of existing homes, to his point, though demand for new houses is being bolstered by two sweeping long-run trends.Millennials — America’s largest generation — are in their late 20s and early 30s, peak years for moving out on their own and attempting to purchase a house.And a shift to remote work during the pandemic seems to have spurred people who might otherwise have stayed with roommates or parents to live on their own, based on recent research co-written by Adam Ozimek, chief economist at the Economic Innovation Group.“Remote work means working from home for a lot of people,” Mr. Ozimek said. “That really increases the value of space.”Available housing supply, meantime, has been tight. That’s also partly because of the Fed. Many people refinanced their mortgages when interest rates were at rock bottom in 2020 and 2021, and they are now reluctant to sell and lose those cheap mortgages.“The most surprising thing about this housing market is how the increase in interest rates has affected supply and demand pretty equally,” said Daryl Fairweather, chief economist at Redfin. The pullback in demand was probably a bit more intense, she said, but builders are benefiting from a “dire lack of supply.”As young people continue to bid on houses and inventory comes up short, prices and construction are staging their surprise comeback.“Demand has hung in there better than we would have expected for that first-time buyer,” said Michael Fratantoni, chief economist at the Mortgage Bankers Association. Ms. Bostjancic said that the recent housing data will probably nudge the Fed toward higher rates. Officials paused their rate moves in June after 10 straight increases, but have suggested that they could lift them twice more in 2023, including at their meeting next month.If there’s a silver lining for the Fed, it is that home prices will not directly feed into inflation. America’s price measures use rents to calculate housing costs because they try to capture the cost of consumption. Buying a home is, in part, a financial investment.Rent growth has been stalling for months now — which is slowly feeding into official inflation data as people renew leases.“Rent growth is taking a nice, deep breath in,” said Igor Popov, chief economist at Apartment List. “Right now, it does not feel like there’s a lot of new heat.”Still, at least one Fed official has fretted that the pickup in housing could limit the scope of that slowdown. As home prices rise, some investors and landlords could decide to either charge more or to shift from renting out houses and to buying and selling them — curbing rental supply.“A rebound in the housing market is raising questions about how sustained those lower rent increases will be,” Christopher Waller, a Fed governor, said in a speech last month.He said that the upturn “even with significantly higher mortgage rates” raised questions “about whether the benefit from the slowing in rent increases will last as long as we have been expecting.” More

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    Harry Markowitz, Nobel-Winning Pioneer of Modern Portfolio Theory, Dies at 95

    He overturned the traditional approach to buying stocks by examining the relationship between risk and reward.Harry M. Markowitz, an economist who launched a revolution in finance, upending traditional thinking about buying stocks and earning the Nobel in economic science in 1990 for his breakthrough, died on Thursday in San Diego. He was 95.The death, at a hospital, was caused by pneumonia and sepsis, Mary McDonald, a longtime assistant to Dr. Markowitz, said.Until Dr. Markowitz came along, the investment world assumed that the best stock-market strategy was simply to choose the shares of a group of companies that were thought to have the best prospects.But in 1952, he published his dissertation, “Portfolio Selection,” which overturned this common sense approach with what became known as modern portfolio theory, widely referred to as M.P.T.The heart of his research was grounded in the basic relationship between risk and reward. He showed that the risk in any portfolio is less dependent on the riskiness of its component stocks and other assets than how they relate to one another. It was the first time that the benefits of diversification had been codified and quantified, using advanced mathematics to calculate correlations and variations from the mean.This breakthrough insight and its corollaries have now permeated all aspects of money management, with few professionals unfamiliar with his work.“Modern portfolio theory has gone from the halls of academia to investment management mainstream, or from gown to town,” Robert Arnott, chief executive of Research Associates, a large investment manager in Newport Beach, Calif., said in a videotaped interview with Dr. Markowitz.When Dr. Markowitz heard one of his peers describe how his work had brought “a process” to what had been, until the 1950s, the “haphazard” creation of institutional portfolios, he knew he deserved his reputation as the father of modern portfolio theory, he said.“That moment was one of these things where you feel a chill run up your spine,” he said. “I understood what I had started.”In 1999, the financial newspaper Pensions & Investments named him “man of the century.”Related work on investments led Dr. Markowitz to be regarded as a pioneer of behavioral finance, the study of how people make choices in practical situations, as in buying insurance or lottery tickets.Recognizing that the pain of loss typically exceeds the joy of comparable gain, he found it crucial to know how a gamble is framed in terms of possible outcomes and the size of the stakes.Dr. Markowitz won renown in two other fields. He developed “sparse matrix” techniques for solving very large mathematical optimization problems — techniques that are now standard in production software for optimization programs. And he designed and supervised the development of Simscript, which is used for programming computer simulations of systems like factories, transportation and communications networks.In 1989 Dr. Markowitz received the John von Neumann Theory Prize from the Operations Research Society of America for his work in portfolio theory, sparse matrix techniques and Simscript.His focus was always on applying mathematics and computers to practical problems, particularly involving business in uncertain conditions.“I’m not a one-shot Nobel laureate — only doing one thing,” Dr. Markowitz said in an interview for this obituary in 2014. Although he was 87 at the time, he was embarked on a monumental analysis of securities risk and return. The seminal 1952 paper, in The Journal of Finance, was expanded into his best-known work, “Portfolio Selection: Efficient Diversification of Investments,” in 1959.Harry Max Markowitz was born on Aug. 24, 1927, in Chicago, the only child of Morris and Mildred Markowitz, who owned a small grocery store. In high school he began to read the original works of Darwin and such classical philosophers as René Descartes and David Hume. In financial terms, Hume’s work lay behind the maxim that past performance is not a guide to the future.He continued on this track in a two-year bachelor’s program at the University of Chicago, where, inspired in part by Hume’s focus on the uncertainty of knowledge, he decided to pursue economics.It was in graduate school, where he studied under Milton Friedman and other eminent economists, that a chance conversation on possible dissertation topics led to his work applying mathematical methods to the stock market.The basic concepts of portfolio theory came to Dr. Markowitz one afternoon in the library while reading an investment book by the economist John Burr Williams.Dr. Markowitz was awarded the Nobel in economic science in 1990, sharing it with Merton H. Miller and William F. Sharpe.Sandy Huffaker for The New York Times“Williams proposed that the value of a stock should equal the present value of its future dividends,” Dr. Markowitz wrote in a brief autobiography for the Nobel committee. “Since future dividends are uncertain, I interpreted Williams’s proposal to be to value a stock by its expected future dividends.”But if investors were interested only in the expected values of securities, he figured, then that implied that the best, or maximized, portfolio would consist of the single most appealing stock.“This, I knew, was not the way investors did or should act,” he concluded. “Investors diversify because they are concerned with risk as well as return.”He set out to measure the relationships among a diverse assortment of stocks to construct the most efficient portfolio, and to chart what he called a “frontier,” where no additional return can be obtained without also increasing risk.At the RAND Corporation, during stints in the 1950s and ’60s, Dr. Markowitz worked on practical problems in American industry that required the development of simulation methods; he created the Simscript language to reduce their programming time.He went on to work for IBM and General Electric, where he built models of manufacturing plants. In 1962 he co-founded the California Analysis Center Incorporated, a computer-software company that would become CACI International.Dr. Markowitz’s first two marriages, to Luella Johnson and Gloria Hardt, ended in divorce. In 1970 he married Barbara Gay. She died in 2021.Mr. Markowitz is survived by two children from his first marriage, Susan Ulvestad and David Markowitz; two from his second, Laurie Raskin and Steven Markowitz; his wife’s son from a previous marriage, James Marks; 13 grandchildren; and more than a dozen great-grandchildren. He lived in San Diego.Dr. Markowitz in his office in 2012. “I’m not a one-shot Nobel laureate — only doing one thing,” he said in an interview in 2014.Sandy Huffaker for The New York TimesIn 1968 Dr. Markowitz began to manage a successful hedge fund, Arbitrage Management Company, based on M.P.T., that is believed to have been the first to engage in computerized arbitrage trading.Dr. Markowitz was a professor at Baruch College of the City University of New York when he was awarded the Nobel in economic science, sharing it with Merton H. Miller and William F. Sharpe. He also served on the faculties of Rutgers University, the University of Pennsylvania’s Wharton School, the University of California at Los Angeles and finally at the Rady School of Management at the University of California, San Diego.After submitting his landmark dissertation, Dr. Markowitz took a job at RAND and was fully confident that “I know this stuff cold” when he returned to Chicago in 1955 to defend it.Within a few minutes, however, Professor Friedman told him that while he could find no mistakes, the topic was extremely novel. “We cannot award you a Ph.D. in economics for a dissertation that is not economics,” he said.At this point, Dr. Markowitz recounted, “my palms began to sweat” and he was sent into a hallway, where he waited for about five minutes.Finally, a panel member emerged and said, “Congratulations, Dr. Markowitz.”Dr. Markowitz insisted that he had not suspected the joke.Alex Traub More