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    FirstFT: Big Tech shares slip on Apple, Amazon and Google results

    Good morning. We start today with a round-up of results from tech titans Apple, Amazon and Google parent Alphabet.The fourth-quarter earnings highlight the challenges technology companies face as the world emerges from the pandemic which has left its mark on supply chains, labour markets and consumer demand.Apple blamed sickness at an assembly plant in China for delaying iPhone deliveries after it posted a decline in quarterly revenues for the first time in three and a half years.Tim Cook, chief executive of Apple, said that the China supply chain challenges had been resolved. “We’re now at the point where production is what we need it to be,” he said. “And so the problem is behind us.”Google parent Alphabet reported a contraction in quarterly ad spending for only the second time in the company’s history as economic growth weakened and the pandemic-fuelled boom in digital services receded.The company, which announced 12,000 job cuts last month, said it expected to incur costs of $1.9bn-$2.3bn as a result of the headcount reductions and a further $500mn from office space shrinkage, most of it in the first quarter of this year. Like Mark Zuckerberg a day earlier, Alphabet chief executive Sundar Pichai highlighted the potential of artificial intelligence for the future of his company. Meanwhile, Amazon said growth at its AWS cloud computing division, its largest profits driver, had slowed as clients cut back on spending. “Everyone’s trying to cut their budgets,” said Amazon’s chief financial officer, Brian Olsavsky.Stronger than expected sales from Amazon’s ecommerce platform in the 2022 holiday shopping season, however, helped offset some of the disappointing results from the cloud computing division.Shares of all three companies dipped in after-hours trading, with Alphabet and Amazon down 4 per cent and Apple falling 3 per cent.How well did you keep up with the news this week? Take our quiz.Five more stories in the news1. US accuses China of flying spy balloon over sensitive military sites The spy balloon has been spotted flying over Billings, Montana, close to several sensitive locations housing nuclear weapons, according to the Pentagon. A Chinese foreign ministry official said earlier today that the government had “noted” the reports and was “working to understand and verify the situation”. More on US-China relations: The fresh tension between the US and China comes as US secretary of state Antony Blinken prepares to travel to China this weekend, where he will Xi Jinping.2. Carlyle courts ex-Goldman veteran for top job The private equity group has spoken to former Goldman Sachs executive Harvey Schwartz about taking the vacant chief executive position, said two sources familiar with the matter. Schwartz held top roles at Goldman, including chief financial officer and chief operating officer, before he left in 2018.3. EY considers handing retired US partners cut of spin-off proceeds The Big Four accounting firm has told retired US partners it is considering giving them a cut of the proceeds from a spin-off of its consulting arm, in an email sent yesterday and seen by the Financial Times. EY’s 13,000 current partners are due to be given details of their own individual financial packages in the coming weeks and a vote on the deal is expected to start in April.4. US set to give Ukraine longer-range smart bombs The US is expected to send ground-launched small-diameter bombs that would double Ukraine’s current strike range as part of an aid package to be announced today and worth more than $2bn. However, US officials continue to rebuff Ukrainian requests for the even longer-range Army Tactical Missile System. 5. TotalEnergies says exposure to Adani stands at $3.1bn as turmoil mounts The French energy group said it carried out due diligence “consistent with best practices” when investing $3.1bn in the Indian group targeted by fraud allegations that have triggered a $100bn in stock market losses. India’s opposition Congress party has demanded a probe into the share rout and called for nationwide protests against Adani on Monday. S&P Dow Jones Indices last night removed the conglomerate’s flagship Adani Enterprises from its sustainability index.The days ahead Economic data The Bureau of Labor Statistics releases its non-farm payrolls report today and is expected to confirm the labour market lost further momentum in the first month of the year. The Institute for Supply Management releases its services purchasing managers’ index, which economists expect to show the sector swinging back to growth with a reading of 50.4.Politics President Joe Biden and vice-president Kamala Harris are scheduled to travel to Philadelphia today to discuss the economic agenda. Later, Biden and Harris will participate in a reception for the Democratic National Committee and speak at the DNC Winter Meeting.EU-Ukraine summit Ukrainian president Volodymyr Zelenskyy hosts his EU counterparts Ursula von der Leyen and Charles Michel today in Kyiv. The two sides will discuss Ukraine’s hopes for rapid entry into the bloc, as member states have raised concerns about Kyiv’s timeline. Brussels will implement another round of sanctions against Russia on Sunday, banning all seaborne imports of Russian refined oil and petroleum products.What else we’re reading What chimpanzees tell us about how we see data Project Rosling, a Swiss Confederation initiative, launched a “beat the chimpanzees” metric last week in Geneva. The idea is that while chimps make completely random choices, there is a pattern to humanity’s collective ignorance — people routinely show a more pessimistic view of the world than the one described by our statistics.

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    Billionaire Disney insider becomes pivotal figure in Nelson Peltz’s proxy fight A key question hanging over Disney as it battles a challenge from activist investor Nelson Peltz concerns how many of its shares are held by one of the company’s own employees: Isaac Perlmutter. The reclusive Marvel chair became the entertainment company’s second-largest individual shareholder in 2009 when he sold Marvel to Disney and was the main backer of Peltz’s push to gain a seat on the board. Madison Square Garden owner battles outcry over ‘dystopian’ blacklisting For nearly a quarter of a century James Dolan has ruled as a capricious king over the home to his New York Knicks basketball team. But even those New Yorkers who have become hardened to his antics were shocked by recent news that he plans to use facial-recognition technology to stop lawyers working on litigation against his company from entering the arena. Sarah Germano has the story.Fed and ECB diverge While US Federal Reserve chair Jay Powell struck an optimistic note this week, European Central Bank chief Christine Lagarde was far gloomier. Speaking after the ECB increased interest rates to 2.5 per cent in the eurozone, Lagarde said price pressures remained “alive and kicking”. ‘No one remembers us’ During the pandemic, China mobilised millions of workers to enforce lockdowns, quarantines and mass testing. Once praised by President Xi Jinping for having “braved hardships and courageously persevered”, these workers have now been left jobless, disillusioned and angry by the abrupt end of China’s zero-Covid policy. Take a break from the newsRetiring at 62? The French have it absolutely right, writes Simon Kuper.

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    ECB terminal rate could be above current market pricing: Wunsch

    The ECB raised rates by a half a percentage point on Thursday and promised a similar move for March but markets still pared rate hike expectations, taking its lack of guidance for subsequent steps as a wavering in its commitment. Wunsch said markets got the wrong end of the stick because Thursday was a “hawkish decision” and the ECB is likely to keep going, hiking in May and possibly thereafter, depending on how inflation develops. “I don’t think we’re going to move from 50 basis points (in March) to zero,” Wunsch told Reuters. “It might be another 50 basis points or we might be moving to 25. I will certainly not exclude another 50 basis points but that’s going to be dependent on the data.”The key determining factor in how high the 2.5% deposit rate will go is the stickiness in core inflation, which has held above 5% in recent months, well above the ECB’s 2% target.”If core remains persistent, if we keep seeing core momentum being close to 5%, for me a terminal rate of 3.5% would be a minimum,” Wunsch said. “But I don’t want to give any number that is not conditional on incoming data.”Markets currently price the terminal rate at 3.35% by July.But even 3.5% may not be enough and the euro zone should look at rate moves by the United States and the UK if the ECB fails to break the momentum in underlying inflation. “Rates are clearly above 4% in the UK and the U.S.; that would also be a reference for me,” Wunsch said. “Why would we stay at 3% if we have more or less similar core numbers? The Bank of England raised rates to 4% on Thursday while the Federal Reserve lifted its own benchmark to a range of 4.5% to 4.75%”I’m not saying we need to go to 4%… but if incoming data continue to show very persistent core, we will have to look at what the U.S. and UK seem to consider as a restrictive enough interest rates to bring inflation back to 2%.”The problem is that labour markets are very tight and real wages have fallen sharply, so plenty of wage catch up is still likely and that is bound to keep core inflation under pressure, Wunsch added. More

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    Happy China Article IV day everyone

    One of the central jobs of the IMF is to regularly check up on all its members. They’re called “Article IV consultations” for reasons the link will explain. Today, the Fund published its take on China’s economy. As usual, it is a tortuously-constructed document — designed not to piss off one of the Fund’s biggest and most sensitive shareholders, while still providing some valuable insight into one of the most important pillars of the global economy.(Underscoring the sensitivity, the process for China’s Article IV actually started back in early Novembe. The projections weren’t finalised until mid-December, weren’t presented to the IMF’s executive board until mid-January, and although the forecasts were incorporated into its January World Economic Outlook update, the full report wasn’t released until this morning). The headline is that the IMF now forecasts that growth will rebound from just 2.6 per cent last year to 4.2 per cent this year thanks to the post-Covid reopening. Here’s the Fund’s summary:Following an impressive recovery from the initial impact of the pandemic, China’s growth has slowed significantly in 2022. It remains under pressure as more transmissible variants have led to recurring outbreaks that have dampened mobility, the real estate crisis remains unresolved, and global demand has slowed. Macroeconomic policies have been eased appropriately, but their effectiveness has been diminished by a focus on enterprises and increasingly less effective traditional infrastructure investment rather than support to households. The pandemic and its impacts have also been a setback to economic rebalancing toward private consumption and to reducing greenhouse gas emissions. A slowdown in growth-enhancing reforms against the backdrop of increasing geoeconomic fragmentation pressures stand in the way of a much-needed lift to productivity growth, weighing on China’s medium-term growth potential.As ever though, the interesting bits are elsewhere, such as the details of the forecasts. For example, the growth of overall “social financing” — a broad measure of debt in the Chinese financial system — is slowing, but will climb to 305 per cent in 2023. Elsewhere, the IMF notes that capital outflows have increased (though remain smaller than what was seen back in 2015-16) and the renminbi is under pressure. But the IMF’s main worry still seems to China’s messy real estate market. It flagged the slowness of restructuring the vast tangled web of property developers — bond prices indicate that 38 per cent of them have or will default — and seems unconvinced by Beijing’s insistence that everything is now fine. Here is what China told the IMF:The authorities were of the view that the problems in the real estate sector remained broadly contained and they were taking strong action. They noted that excessive leverage and weak governance of several large real estate firms had strong spillover effects on the broader property market since the second half of 2021, which were exacerbated by other factors such as the impact of COVID. They expected successive rounds of policy support led by local governments, which have a key role in China’s system of regionally differentiated real estate regulation, to have a gradual but cumulative effect on the market, with signs of stabilization already emerging in the third quarter of 2022. The authorities assessed the banking sector to be generally healthy. They emphasized that banking sector exposures to property developers were limited and that mortgage risk was low due to high prudential requirements and the lack of financial leverage. The overall capital level of the banking system is relatively high. They noted that they continuously monitor and pay close attention to the potential impact of pressure on the profitability of real estate enterprises. On leverage, the authorities emphasized that the private sector debt-to-GDP ratio had been on a downtrend in recent quarters, despite temporary increases due to slower growth.And here is what the IMF itself wrote:Despite the broadening policy response, the crisis has continued and the need for large-scale restructuring remains. Demand-side easing measures have had limited traction in boosting sales amid widening financial turmoil among private developers. The new housing completion funding mechanism will partially address the backlog of unfinished housing, but its scope appears small relative to the potential scale of construction needs should demand remain weak (see Box 1), and formalized forbearance policies are likely to limit creditor incentives to pursue restructuring. Adding to local government difficulties, while the scheme is funded by the central government, local governments must still backstop housing completion loans, and several highly-indebted regions also have large stocks of unfinished housing. The real estate crisis and the growth slowdown reinforce vulnerabilities from high debt in the non-financial sector and add to financial sector strains. Balance sheet pressures are rising at financial institutions, particularly at smaller banks and some non-bank lenders as asset quality has deteriorated. Moratoria on inclusive and pandemic-related loans continue to grow and banks are allowed easing in NPL classification rules for loans to sectors affected by the real estate crisis and the pandemic. Developer bond price declines and some households’ efforts to suspend mortgage repayments imply worsening credit quality in many smaller banks and some non-bank financial institutions from their real estate-related exposures, raising financial stability risks given their limited capital buffers and interconnectedness to the broader banking sector. Funding conditions for some smaller banks have tightened notably, despite ample aggregate liquidity in the system, reflecting in part governance concerns, lower profitability, and slow progress in their recapitalization efforts, although profitability pressures and resulting declines in capital adequacy ratios have also emerged in the banking system more broadly.The IMF wants China to set up “more robust mechanisms” to restructure distressed real estate developers, curtail off-balance-sheet borrowing by local governments and state-owned enterprises, and strengthen the banking system to contain the financial stability risks. The tl;dr is that China reopening will naturally boost growth, but there are a lot of gremlins still lurking in the system that could cause problems in 2023. More

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    This Is What It Looks Like to Try to Count America’s Homeless Population

    To fix a problem, you need to know its scope. To do that, you need sheriffs, social workers, volunteers, flashlights and 10 days in January.They go into the streets in search of data. Peeking behind dumpsters, shining flashlights under bridges, rustling a frosted tent to see if anyone was inside. This is what it takes to count the people in America who don’t have a place to live. To get a number, however flawed, that describes the scope of a deeply entrenched problem and the country’s progress toward fixing it.Last year, the Biden administration laid out a goal to reduce homelessness by 25 percent by 2025. The problem increasingly animates local politics, with ambitious programs to build affordable housing getting opposition from homeowners who say they want encampments gone but for the solution to be far from their communities. Across the country, homelessness is a subject in which declarations of urgency outweigh measurable progress.Officially called the Point-in-Time Count, the annual tally of those who live outside or in homeless shelters takes place in every corner of the country through the last 10 days of January, and over the past dozen years has found 550,000 to 650,000 people experiencing homelessness. The endeavor is far from perfect, advocates note, since it captures no more than a few days and is almost certainly a significant undercount. But it’s a snapshot from which resources flow, and creates a shared understanding of a common problem.This year, reporters and photographers from The New York Times shadowed the count, using a sampling of four very different communities — warm and cold, big and small, rural and urban — to examine the same problem in vastly different places.Volunteers and employees of the Downtown Women’s Center prepare to count people who are unhoused, in the Skid Row neighborhood of Los Angeles.Mark Abramson for The New York TimesOn any given evening, the forces that drive someone to sleep outside or in a shelter are myriad and complex. A long-run erosion in wages. A fraying social safety net. The fact that hard drugs are cheap and mental health care is not. Year after year, the count finds people experiencing homelessness to be disproportionately Black, disproportionately old and disproportionately sick. Members of the L.G.B.T.Q. community are overrepresented as well.There is one factor — the high cost of housing and difficulty of finding anything affordable — that rises above the rest. The numbers bear this out, explaining why expensive West Coast cities like Los Angeles have long had the nation’s worst homeless problems, why growing cities like Phoenix are now seeing a troubling rise, and why it is seemingly easier to solve homelessness in places like Rockford, Ill., a once-thriving factory town that has lost a lot jobs but where housing remains cheap.“Housing has become a competition for a scarce resource, and when you have that the people who are most vulnerable are going to lose,” Gregg Colburn, a professor at the University of Washington and a co-author of “Homelessness Is a Housing Problem,” said in an interview.The 2023 count will provide a crucial understanding of the legacy of the Covid-19 pandemic and the success of government efforts in blunting its effects. Last year’s count showed homelessness was essentially flat from two years ago, a fact that Jeff Olivet, executive director of the U.S. Interagency Council on Homelessness, attributed to widespread eviction moratoriums, billions in rental assistance and an expansion of federal housing vouchers that fortified the safety net. The question for this year, Mr. Olivet said, is “whether we were able to flatten the curve and even start pointing downwards.”Behind each number are tens of thousands of volunteers, outreach workers and public safety officers who spend the wee hours looking for the most destitute members of their community.Sometimes, people gladly answer questions and thank volunteers for what they are doing, with a hope that accurate figures will bring more funding for housing and services. Other times, they feel violated and gawked at.“What are you doing?” a man on a bicycle in Los Angeles asked a team of volunteers in day glow vests as they walked past a downtown sidewalk covered in tents.“Counting.”“Counting what?”“Counting people.”— Conor DoughertyLos Angeles, Jan. 25-26‘Once you enter this whole cycle, you are always on the edge’On the last night of the count, volunteers, along with those working for the Downtown Women’s Center, walk around the Skid Row neighborhood of downtown Los Angeles to count people who are unhoused.In the capital of the capital of homelessness, the people who live outside are used to seeing outsiders. This is especially true in Skid Row, a 50-block neighborhood in downtown where some 3,000 people live in the tents, shanties and recreational vehicles that so thoroughly clog the sidewalks that much of the pedestrian traffic is in the streets. So when dozens of volunteers in reflective vests left the Downtown Women’s Center to count on a recent evening, the people they were counting rarely so much as looked up.“They constantly have visitors, whether it’s proselytizers, outreach teams, people offering them something to eat, people offering them drugs — people doing a homeless count,” said Suzette Shaw, a volunteer who helped with the tally this year. “This community never sleeps.”Ms. Shaw is a 58-year-old student who lives in the neighborhood and was once homeless herself. She lived in various forms of transitional housing — hotels, shelters — until she found a permanent subsidized unit in 2016, whose rent is partially covered with a Section 8 housing voucher. Joining the count is one way she tries to make sense of a neighborhood whose scenes of ragged fabric and open fires are some of the bleakest pictures America has to offer.Volunteers counting people who are unhoused near Skid Row in Los Angeles.Members of the Los Angeles Homeless Services Authority counted people who are unhoused at an encampment near the Los Angeles River.Given that it has nation’s worst homeless problem, Los Angeles’s count requires assembling a small army that spends three days and several thousand hours amassing their figures. This ranges from volunteers like Ms. Shaw who comb sidewalks for a few hours, to officers like Lt. William Kitchin, of the Los Angeles County Sheriff’s Department, who along with a team of deputies and outreach workers spent a recent Wednesday driving a stretch of the Los Angeles River to tally the residents who live under overpasses and along the banks.More on CaliforniaIn the Wake of Tragedy: California is reeling after back-to-back mass shootings in Monterey Park and Half Moon Bay.Fast-Food Industry: A law creating a council with the authority to set wages and improve the conditions of fast-food workers was halted after business groups submitted enough signatures to place the issue before voters next year.Medical Misinformation: A federal judge has temporarily blocked enforcement of a new law allowing regulators to punish doctors for spreading false or misleading information about Covid-19.Oil From the Amazon: If you live in California, you may have a closer connection to oil drilling in the Amazon rainforest than you think.Unlike smaller cities, which often pair the Point-in-Time Count with interviews and outreach, for sensitivity and safety reasons organizers in Los Angeles discourage volunteers from interacting with the people on the streets.Some walk, some drive, but for the most part it happens briskly and the numbers they come back with are large. According to last year’s count, about 20 percent of the entire nation’s unsheltered population — about 50,000 people — lived in Los Angeles County.This has left voters despondent: Surveys consistently show housing and homelessness are the biggest concern of California voters, while a recent poll by the Los Angeles Business Council Institute found residents are furious at the city’s inability to make so much as a dent, with many voters saying they feel unsafe and have considered moving because of the homeless problem.Deputies from the Los Angeles Sheriff’s Department talk with Reyna Paula, who has built a temporary home, in which she has been living for five years, under a bridge along Coyote Creek.Mark Abramson for The New York TimesSeveral deputies accompanied workers from the Los Angeles Homeless Services Authority as they counted people who are unhoused staying along the riverbed and under bridges in Los Angeles.After a campaign last year that focused almost entirely on homelessness, Karen Bass, the city’s new mayor, declared a state of emergency on her first day in office. This gives her office expanded powers to speed the construction of affordable housing by lifting rules that impede it. “Tonight we’re counting the people on the street, but we also know that it is most important that we prevent new people from falling into homelessness,” the mayor said to a crowd at a kickoff event in the San Fernando Valley. She joined the count shortly after, along with the actor Danny Trejo.Ms. Bass summed up the central problem for Los Angeles and other high-cost U.S. cities: Even as they spend billions on new housing and expanded services, more people continue to fall into homelessness faster than these programs can help people already on the streets. Nationally, some 901,000 people exited homelessness each year between 2017 and 2020 on average. That figure would be a huge accomplishment, but for one detail: About 909,000 people entered homelessness each year over the same period.“Once you enter this whole cycle, you are always on the edge,” Ms. Shaw said.Phoenix, Jan. 25‘I stayed there till they kicked me out’​​Advocates say Phoenix’s streets are increasingly filled with people who simply could not afford an increasingly pricey Arizona.Daniel Greene never thought he would end up homeless in Phoenix, a city that enticed him from Idaho a decade ago with balmy winters and cheap housing. But when his lease was up for renewal in December, Mr. Greene said his landlord raised the monthly rent on his one-bedroom apartment to $1,400 from $700. Arizona has few restrictions on rent increases. Now, Mr. Greene is sleeping in a park while he tries to scrape together a deposit.“I would need $4,000,” he said on Tuesday morning, as a volunteer counted Mr. Greene as part of the city’s portion of the annual Point-in-Time Count.Mr. Greene, 54, is one of thousands of newly homeless people who have been coughed out of the tailpipe of Arizona’s economic engine, casualties of growth that has drawn new factories and hundreds of thousands of new residents, while sending housing costs spiraling.Advocates say Phoenix’s streets are increasingly filled with people who simply could not afford an increasingly pricey Arizona: Average rent in the Phoenix area has risen by about 70 percent over the past five years, and the number of people in shelters or living on the street has gone up by 60 percent.“The cost of housing is the biggest thing we see,” said Kenn Weise, the mayor of the suburban city Avondale, Ariz., and chairman of the Maricopa Association of Governments, which runs the Point-in-Time Count.The path that brought Mr. Greene to a park in downtown Phoenix, repairing a beater bicycle, began, he said, when he fell from a scaffold at his carpentry job a few years ago. Work was impossible after he crushed his leg, but he said he survived on monthly disability checks.The rent on his apartment near the palms of Encanto Park crept up from $525 to $700 before doubling in December, part of the disappearance of modestly priced rentals around Phoenix. A decade ago, almost 90 percent of apartments around Phoenix rented for $1,000 or less. Now, just 10 percent do.“I stayed there till they kicked me out,” Mr. Greene said.Gustavo Martinez, who is unhoused in Phoenix. He lost his job during the pandemic, he said, and feels safer sleeping outside than in a shelter.The Point-in-Time Count is part census, part deeply intimate personal history. Volunteers here ask for people’s name, age and ethnicity, but also whether prison time, drug use or mental illness is a factor in their homelessness. He shoved his furniture and most of his clothes into a $100 monthly storage unit and decided to live outside to try to rebuild his finances. A weekly motel might have been safer, but he figured the open air was free. He is camping out with three other men and spends a lot of time scouring roommate websites.“I’m doing this on my own,” he said.As the first of nearly 1,000 volunteers crisscrossed downtown Phoenix starting before sunrise on Tuesday morning, they met people sleeping in makeshift tents beside new art spaces and camping out in the shadow of construction cranes.One volunteer, Katie Gentry, regional homelessness program manager for the Maricopa Association of Governments, walked up to a gas station downtown where people had come to ask for quarters to buy coffee and escape from the chill; she approached them to ask a litany of deeply personal questions with a matter-of-fact cheerfulness.Daniel Pawlak and Rochelle Putnam have been living in an encampment known as “The Zone.”Alisha Coleman bikes away after being questioned during a Point-in-Time Count.The Point-in-Time Count is part census, part deeply intimate personal history. Volunteers here ask for people’s name, age and ethnicity, but also whether prison time, drug use or mental illness is a factor in their homelessness. One question asks whether people had ever traded sex for shelter.Gustavo Martinez, 56, said he lost his job as a concessionaire for spring-training baseball games during the early days of the pandemic, and he lost his subleased apartment a few months later. He has been bouncing from friends’ couches to shelter beds to living on the streets ever since. He said that he earned a little money cleaning up after the downtown Phoenix farmers market, and that he often spent his time marveling at how anyone could afford to live downtown in the new high-rises sprouting up around him.“Everything is just going up and up and up.”Cleveland, Mississippi, Jan. 25-27‘They were born there, raised there, and they have become homeless there’Kerria Whitley, an intern at the Bolivar Community Action Agency, takes photographs of a vacant home that has been occupied by unhoused folks for documentation.One of Florida McKay’s colleagues had passed on a tip: There was a woman living in a trailer without heat, light or water in Shelby, Miss., a little hamlet surrounded by the soybean and cotton fields north of town. On a cold and gray morning, Ms. McKay and Robert Lukes, who was helping to administer the Point-in-Time Count in the Mississippi Delta, drove past acres of mud-bogged farmland to find her.“The Delta’s a little different from other areas in terms of homelessness,” said Ms. McKay, the director of homeless services for the Bolivar County Community Action Agency, a nonprofit organization. There are plenty of people in need here — the median household income in Bolivar County is less than half of the nation’s and the poverty rate is roughly triple — but they are scattered across the region, making the Point-in-Time Count a sprawling exercise in detective work.On a street corner in Shelby, they parked near a blue and white trailer sagging into the grass. A woman opened the tattered door, hugging herself in the cold, and welcomed Ms. McKay and Mr. Lukes inside. Blankets were stapled over the windows and a rusty propane tank squatted at the end of a bed.Mr. Lukes began the questionnaire: name, age, how long had she been homeless. Vickey Wells, she said, born on Christmas Day, 1971. She had been living in this dark, cold room for most of a year. Asked how long she had been in the community, Ms. Wells seemed puzzled. She grew up down the street. “This is my home,” she said.“The Delta’s a little different from other areas in terms of homelessness,” said Florida McKay, the director of homeless services for the Bolivar County Community Action Agency, a nonprofit organization.Robert Lukes, center, and Ms. McKay with Vickey Wells inside a trailer she has been living for a year without gas, electricity and water.Rural areas are different in terms of homelessness and the Delta is perhaps more different still. In this vast expanse of rural Mississippi, one of the poorest regions of the country, there are very few shelters, very few multifamily housing developments and, relative to the rest of the country, fewer places for rent.It is a landscape of cropland and modest stand-alone homes, where families have lived — or did live — for generations. Some homes have been empty for years, left behind by a Great Migration of Black people out of the Delta that began early last century and has never really stopped. In contrast to big cities, where those who are homeless are often people who have moved there in search of opportunities, many of the people without a place to stay in the Delta are those who have never left. In some cases they seek shelter in the homes left by those who went elsewhere.“People in the Delta that are homeless are from the Delta,” said Hannah Maharrey, the director of the Mississippi Balance of State Continuum of Care, a federally funded program to address homelessness. It’s also the organization that Mr. Lukes works for. “They are literally homeless in their hometown. They lived there, they’re from there, their roots are there, they were born there, raised there, and they have become homeless there.”Some have been kicked out by family or marooned after the death of a parent; some are escaping abuse; some have fallen prey to addiction in a place where the margin for error is virtually nonexistent. Some never left their homes at all, staying as the structures around them decayed and utilities were cut off, becoming homeless without ever moving. The Point-in-Time Count relies on these local ranks and their network of sources — court clerks, gas station attendants, motel owners, police officers, longtime contacts within the homeless community itself. Kimberly Martin, 33, of Eudora, Ark., in a vehicle that she and her partner, Jason Matlock, have been living in for six months, in Greenville, Miss.Jobs in the Delta are scarce, government services are limited and the nonprofit infrastructure is thin, Ms. Maharrey said. The burden of helping the desperate falls largely to churches, neighbors and community groups.The Point-in-Time Count relies on these local ranks and their network of sources — court clerks, gas station attendants, motel owners, police officers, longtime contacts within the homeless community itself. On cold nights, those seeking shelter find sanctuary anywhere they can, in cars, abandoned homes and vacant strip malls. The only way to really know who is staying where is to live in these communities and know the people firsthand.The fact that the rural homeless population is harder to see is what makes the yearly census so important, Ms. Maharrey said. “When I talk to other communities, they find it difficult to believe that there’s homelessness in rural Mississippi, or that there’s homelessness in rural America,” she said. “The Point-in-Time Count gives us a reference point.”In Greenwood, Miss., population around 14,000, the team drove into a wooded lot where Donjua Parris, 43, had been living with her partner since the summer. Four years ago, her partner lost his maintenance job at the apartment building where they lived, she said, and when they were evicted, her family wouldn’t take them in. Ms. Lukes ran through the census questions with Ms. Parris, who shivered in the cold, then he asked her where they should go to find others.“There is a place,” she said, gesturing toward an area on the riverside of a nearby levee, where she said a pregnant woman was living. “She needs help.”A few minutes later, Mr. Lukes had climbed down the levee and found a campsite abandoned. If the woman had been there, she was gone now.Rockford, Illinois.‘Right now, I don’t got to worry anymore’Kathleen Combs speaks to a person seeking shelter for the night at a warming center at Second First Church in Rockford, Ill.Jamie Kelter Davis for The New York TimesEmpty bridges, empty alleys, an empty shanty behind a strip mall parking lot. Angie Walker ticked off a list of where people have been known to sleep. Outside, it was in the mid-20s with a light layer of snow upholstered on fences and grass.“Our hope is that nobody is outside,” said Ms. Walker, who oversees the homeless program for Rockford’s Health and Human Services Department. “We don’t usually get that lucky.”They did not, but they were close. After a three-hour search in a Chevy Suburban that at times went off-road and on bike paths, Ms. Walker and her team, which included a retired police officer and a member of the Fire Department, found only one person — a shivering man in a tent who clasped his hands as she ran through a list of survey questions — on the night of Rockford’s count.As Ms. Walker had predicted earlier in the evening, most of the night’s numbers consisted of the three-dozen people who laid on rectangles of padding parceled across a gym floor at Second First Church. On winter nights, the church becomes a warming center, providing a captive audience for Ms. Walker and the dozen others who spent an hour counting bodies and performing surveys after the drive.Not having to worry anymore: That is the goal of the tens of billions that city, state and federal governments spend each year in their so far futile effort to end homelessness.“Right now, I don’t got to worry anymore,” said Shirley Gill, 63, who was in for the evening.Douglas Webb, 54, a Marine Corps veteran, was unhoused and used to sleep in the warming center at Second First. Now he works at the center in the winter.Rockford is one of the country’s biggest success stories, having effectively ended the condition for veterans and chronically homeless individuals, or those who have experienced homelessness for at least a year, who have severe addiction problems or live with a disability of some kind.The road to those accomplishments was a program called “Built for Zero,” a coalition of 105 local governments nationwide whose members commit to reorganizing their social services and gathering monthly data with a goal of drastically reducing their homeless population. (In 2021, Community Solutions, the New York nonprofit that created “Built for Zero,” was awarded a $100 million grant from the MacArthur Foundation to expand the program.)Central to the work is a concept called “functional zero,” or the point at which the number of people going into and out of homelessness is equal each month, and anyone who experiences it isn’t homeless for more than a few weeks. This does not mean no one will ever be seen sleeping on the streets: Community Solutions instead likens its strategy to a hospital that can take care of everyone who shows up, even if the medical staff can’t prevent them from getting sick.“Before we get to a place where no one ever has to experience homelessness, we need some milestone that shows we have a system that can be responsive,” said Beth Sandor, chief program officer at Community Solutions.Rockford is one of the country’s biggest success stories, having effectively ended the condition for veterans and chronically homeless individuals.Shannon Kopp and Angie Gibbons talking to a man sleeping in a tent behind a shopping mall in Rockford. He has refused to sleep in a warming center but agreed to accept some supplies and food.Back at the warming center on the night of the count, Douglas Webb, a 54-year-old Marine Corps veteran, provided an example of good news. The first time Mr. Webb visited the warming center at Second First, he said, was after an outreach worker found him under a mass of blankets in a parking garage. Now he works at the warming center in the winter.“I was able to pull myself out of it,” he said.Mr. Webb is part of what is perhaps the most encouraging story in homelessness. Measured by the Point-in-Time Count, homelessness among veterans nationwide has plunged 55 percent since 2010, as the federal government has poured money into housing and support programs for them.Mr. Webb noted that he paid $620 for a one-bedroom apartment, low by national standards. (Rockford’s rents are about half the national level, according to a rental index compiled by Zillow.) This is a reflection of the city’s economic malaise. In the hours before the count, Ms. Walker gave a brief tour of Rockford, with sights that included an abandoned factory that used to provide good paying jobs, the anchor storefront that used to be a Kmart, the boarded-up school where people sometimes live.An abandoned shelter, often used by people without homes, near a highway in a wooded area in Rockford.The city of 147,000 is a picture of Rust Belt decline, with problems that are a magnification of the country’s stratifying economy: Over the past several decades, its base of middle-class manufacturing jobs has withered and been replaced by low-wage retail work, creating a cycle of poverty, despair and crime.As Ms. Walker surveyed a deserted encampment made with tarps and PVC piping, she noted that some of the city’s success in fighting homelessness could be attributed to its decline. In other words, because there’s been so much disinvestment, Rockford’s housing is cheaper and more plentiful than elsewhere. And such is the irony of homelessness: Economically speaking, it’s easier to solve it in places where things are going poorly than where things are going well. More

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    China’s recovery might be a bit less than meets the eye

    The writer is head of emerging markets economics at CitiAre all Chinese economic recoveries, like Tolstoy’s happy families, alike? Many observers these days seem to think so. The recent boom in metals prices, for example, reflects a confidence in the market that this year’s acceleration in China’s growth rate will cast the same benign shadow over the global economy as earlier big recoveries have done. But that may not be the case.The big Chinese economic recoveries of the past decade or so have been characterised by two features above all: they have been stimulus-driven and investment-led. Large amounts of support via credit markets and local government off-balance sheet financing vehicles were all typically focused on supporting activity in infrastructure and real estate. Fiscal and monetary stimulus delivered a surge in investment spending.This kind of pattern was most obviously apparent in the recovery that followed the financial crisis and the one that followed China’s slump of 2015. During those years, other big economies were not doing much in the way of investment themselves because of the post-crisis austerity policies after 2008 and the effects of the eurozone crisis thereafter. And so China’s investment spending played a huge role in shaping global trade and commodities demand. China’s economic performance in 2023 will be different in the sense that this year’s acceleration in growth will overwhelmingly be just the result of the country ending its lockdown approach to managing the spread of Covid. So, the economy will enjoy what is probably best described as a spontaneous recovery (not stimulus-driven) which will see the biggest effects on services and consumption (and not investment).Why will monetary and fiscal policy be playing a more or less neutral role? As far as fiscal policy goes, a big increase in China’s budget deficits is unlikely because one of the reasons for the reopening in the first place is that Beijing has become a bit more anxious about the stock of debt on the public sector balance sheet. It is almost as if the government wants the recovery to fix its balance sheet problem, rather than use its balance sheet to fix the economy’s problem.Equally, further significant monetary stimulus is unlikely, since Chinese interest rates are already considerably lower than those in the US, raising the risk of further capital outflows if monetary policy is loosened much more.Although there will not be as much of a pivot towards looser macroeconomic policy as in the past, there is a different kind of pivot taking place these days: one from ideology towards pragmatism. Beijing is clearly less focused — for the time being — on “common prosperity” or the “disorderly expansion of capital”. Chinese policymakers’ body language towards the private sector is warm these days, although the authorities’ attitude towards the property sector is still characterised by the slogan “houses are for living in, not for speculating on”.So, hopes for a stimulus-driven, investment-led recovery are likely to be disappointed. More Chinese households going to restaurants and theme parks will have a lot less impact on other countries than more Chinese high-speed trains or apartment buildings would.To put it more technically, the “marginal propensity to import” — the amount of each renminbi of spending that boosts other countries’ exports — is likely to be lower for Chinese services and consumer spending than it is for investment spending. That is especially true from other emerging economies.One other feature of China’s reopening this year bears thinking about, namely its consequences for the balance of payments. While the opening of China’s borders obviously benefits the traditional recipients of the country’s tourism largesse, its current account surplus might disappear fast: tourists spent a net $220bn abroad in 2019, and the pent-up demand for foreign travel is likely to be high.Equally high, though, will be the pent-up demand to park capital abroad. The opportunities that Chinese have had to diversify their wealth internationally have been pretty limited during the past three years. In that time, not only has the country’s property market lost its appeal as a reliable store of wealth, but the China-US interest rate differential has also turned sharply negative. All in all, the incentive to get money out will probably be strong, which is likely to inject some volatility into the performance of the renminbi.For sure the world is a lot better off with a Chinese recovery than without one. But it is best not to assume that this one will be just like those that have gone before. More

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    US jobs growth expected to have slowed further in January

    The US labour market is expected to have lost further momentum in the first month of the year, as higher borrowing costs from the Federal Reserve damped demand for new hires.Employers in the world’s largest economy are set to have added 190,000 jobs in January, according to a consensus forecast compiled by Bloomberg, a step down from a 223,000 increase in December. While still a solid pace, a figure in line with estimates would mark the sixth-straight month of slower growth. The unemployment rate is forecast to have steadied just above its pre-pandemic low, at 3.6 per cent. Average hourly earnings are expected to have edged up another 0.3 per cent since December, which would translate to a 4.3 per cent annual pace.The data, due to be released by the Bureau of Labor Statistics at 8.30am Eastern Time on Friday, comes as the Federal Reserve debates how much more it needs to tighten monetary policy in order to bring inflation back down to its longstanding 2 per cent target.The US central bank this week switched back to a more orthodox pace of interest rate increases after a string of big moves last year, lifting the federal funds rate by a quarter of a percentage point to a new target range of 4.50 per cent to 4.75 per cent.Speaking on Wednesday, Fed chair Jay Powell struck a more optimistic tone about the economic outlook and the central bank’s handle on what has been one of the worst inflation shocks in decades. That ignited speculation the Fed is closer to ending its rate-rising campaign earlier than previously signalled.Despite acknowledging that the “disinflationary process” had begun, Powell cautioned it was still in the “early stages” and that price pressures remained too intense, especially those linked to what he described as an “extremely tight” labour market. Underscoring the strength of the labour market, job openings in December jumped again, bringing the total number of vacancies to 11mn. Unemployment claims also fell last week to their lowest level in nine months. Wage growth has ebbed, however, and companies have begun to cut back on labour costs, both by slashing hours and cutting temporary workers from their payrolls.Powell on Wednesday reiterated that there was still a “path” to bringing inflation under control without a painful economic downturn and excessive job losses, although he did note that a “softening” of the labour market would be necessary. Most economists polled by Bloomberg expect the US to tip into a recession this year and for the unemployment rate to rise to almost 5 per cent. More

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    Fed and ECB diverge as Lagarde tackles ‘alive and kicking’ inflation

    Jay Powell struck a note of optimism this week when he explained why he felt able, at last, to slow the pace of rate rises. The removal of high inflation might only be in the “early stages”, the Federal Reserve chair said, but it was “gratifying” that price pressures in the US were noticeably starting to ease. Christine Lagarde on Thursday was far gloomier, as the European Central Bank president set out the reasoning behind her rate-setters’ latest half percentage point increase. Even though headline inflation had begun to fall in the eurozone too, it was still “far too high”, and underlying price pressures remained “alive and kicking”. While both Powell and Andrew Bailey, his counterpart at the Bank of England, signalled US and UK rates were close to their peak, Lagarde raised the near-certain prospect of another half-point rise in March — and hinted strongly that eurozone borrowing costs would need to rise further beyond that. “The ECB statement confirms that the European Central Bank is the most hawkish of the majors at present,” said Krishna Guha, of Evercore ISI, a research firm. The gap between rate-setters, after months of central banks on both sides of the Atlantic imposing bumper rate rises, is partly explained by the ECB’s decision to wait longer before beginning to tighten. Even if March’s rise does go ahead, the ECB’s deposit rate, at 3 per cent — up from the current level of 2.5 per cent, would remain lower than its equivalents in the US and the UK. The BoE’s tenth consecutive rate increase on Thursday took benchmark borrowing costs to 4 per cent, but the central bank dropped its previous guidance that it would continue to act “forcefully” to contain inflation, simply saying it would act again if there was evidence of more persistent price pressures. After Wednesday’s quarter-point increase, the US federal funds rate now hovers between a target range of 4.50 per cent to 4.75 per cent. Powell said in the post-meeting press conference that, while he would be “cautious about declaring victory”, he saw a path to bringing inflation back to target without a “really significant economic decline”. Fed officials’ latest December projections show the policy rate would need to surpass 5 per cent and remain there throughout 2023 to bring inflation down to 2 per cent. When asked if those projections could be upgraded in March, Powell said the central bank would make “data-dependent decisions”. Some took that as a sign officials are no longer so sure rates will need to remain that high for that long.Despite the dour message from Lagarde, market participants took the ECB’s pledge to “evaluate” the path of interest rates in May as a sign that it was preparing for a pause. “In all cases, central bank chiefs are starting to publicly entertain the notion that rates are reaching a peak,” said James Athey, investment director at Abrdn, an asset manager. But, when asked if the ECB meant to send a signal that the rate rise planned for March would be its last for a while, Lagarde was adamant that was not the intended message. “No, no, no, no,” she said, adding that the central bank would adopt “whatever rates are needed . . . to deliver on our 2 per cent inflation target in a timely manner”. It would also keep them in restrictive territory for as long as needed — a clear signal that markets’ expectations of cuts later this year are not shared by rate-setters. Traders were unconvinced by Christine Lagarde’s warnings, interpreting the ECB’s message as a shift to a less hawkish stance © Alex Kraus/BloombergLagarde pointed to several reasons why inflation could prove harder to tame in the eurozone than in the US, even if the risks had become more balanced than previously. One was ongoing fiscal support for consumers and businesses, which in some cases, will not be removed automatically as energy prices fall. “It is now important to start rolling back these measures promptly,” Lagarde said, warning “a stronger monetary response” would otherwise be required. Wage growth, although still a concern for all central banks, is slowing in the US. It is still accelerating in the eurozone as multiyear deals struck with unions are only just coming up for renegotiation. Those new deals could set pay at significantly higher levels, reflecting the sharp rise in food and energy prices workers have had to absorb over the past year. “It is easier said than done, but it is important in those negotiations that there is a forward-looking approach to what inflation will be, and that we will return it to 2 per cent,” Lagarde said. The ECB president also flagged the impact China’s reopening was having on global commodity prices. Unlike in the US, European goods prices continue to rise, with the effects of the pandemic on supply chains still feeding through. “The ECB will not have a strong reason to cut rates significantly in the foreseeable future,” said Holger Schmieding, economist at Berenberg Bank. “European inflation has lagged the dynamics for the US,” said Tiffany Wilding, an economist at Pimco, an asset manager. In the US, in contrast, she added: “The balance of risk to inflation is more balanced. Inflation is moderating and the Fed, in that environment, just doesn’t need to be as restrictive.”Traders were unconvinced by Lagarde’s warnings, interpreting the ECB’s message as a shift to a less hawkish stance. Sandra Horsfield, economist at wealth manager Investec, said many had focused on the ECB’ describing the risks to both growth and inflation as “more balanced”. After a year of supersized rate rises to tackle record-high inflation, the merest hints that price pressures were coming under control in 2023 proved enough to send bonds and stocks soaring. Giles Gale, a strategist at bank NatWest Markets, said: “In this global environment not hawkish is dovish.” More

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    Ukraine’s allies push IMF to approve $14bn-$16bn loan

    Ukraine’s allies are pushing the IMF to finalise plans for a multibillion-dollar lending programme as they seek to strengthen the war-torn country’s finances. The fund’s representatives are planning to meet Ukrainian officials in Warsaw in mid-February to advance discussions over a loan that could range from $14bn-$16bn, said officials familiar with the talks. The goal is to finalise it by the spring. Ukraine has said it is facing a $38bn deficit this year, while the World Bank has estimated that more than half of its energy infrastructure has been destroyed by Russian attacks, compounding the pressure on its economy.To cover the financing gap, the EU has put forward €18bn in a package agreed between its member states in December. But the bloc and other major partners of Kyiv want international lenders to accelerate their efforts to provide further support.“The expectation is that other international donors including other G7 and international financial institutions would cover the rest of the financing need,” said Valdis Dombrovskis, European Commission executive vice-president, during meetings in Kyiv.He told the FT that an IMF programme for Ukraine would carry “a certain signalling effect” that “can trigger also further donor support”. The sooner the loan arrived the better, he added. “These are not circumstances in which the IMF would normally lend, so it is a positive step that they are actually working on a proper disbursing programme.” The US has also been pushing the IMF to deliver new financial aid quickly to Ukraine. “Treasury is encouraging the IMF and Ukraine to work together expeditiously toward agreeing on a programme,” the US Treasury said on Thursday. Securing approval for a multiyear aid package has been a prolonged process, given vast uncertainty about the financial situation in a war-torn country like Ukraine as well as its capacity to pay back what the IMF would lend out.Kyiv has been pushing for funding from the IMF since September but talks have been held up by the conditions the fund would require to lend, as its rules do not allow financing to war zones. The fund is considering a three to four-year package of aid worth $14bn-$16bn, said people familiar with the discussions.The fund previously granted $2.7bn of emergency funding and in December approved a four-month programme for Ukraine aimed at both shoring up the economy and preparing it for a significant IMF loan.“We have been supporting Ukraine since the onset of the war and are committed to keep it going,” an IMF spokesperson told the FT. “We’re engaging closely with the Ukrainian authorities and hopefully move towards a fully-fledged programme as soon as feasible.” Ukraine’s finance ministry declined to comment. Advancing official loans to Ukraine is a complex process given the difficulties the country will have paying them back. The European Investment Bank on Thursday said it can only continue financing “risky” projects there if EU countries provide further guarantees.Werner Hoyer, president of the EU’s lending arm, said: “If you want us to do more we need support because what we are doing in Ukraine is bloody risky.”Since March last year, the EIB has distributed €1.7bn in funding to projects to help rebuild roads, trams and schools in Ukraine, with another €535mn due to be disbursed in 2023. Talks on guarantees to underpin loans have resumed in recent weeks and Hoyer said he was “very confident” that member states would provide support. The discussions come as the EU prepares to start tense negotiations over its long-term budget later this year. The European Bank for Reconstruction and Development has committed to a total of €3bn worth of loans and guarantees for Ukraine in 2022 through 2023, while the World Bank said it has disbursed $16bn in aid to date. More