Economy

LOS ANGELES (Reuters) – The busiest U.S. seaport expects its robust flow of imports to continue in the near term, but is closely monitoring COVID-19 shutdowns in major cities in China, its executive director said on Wednesday.”In the weeks ahead, we expect to see an increase in vessels headed our way as retailers to get a big push to replenish shelves,” Port of Los Angeles Executive Director Gene Seroka said on a media call. “We’re also watching very closely the events in China with yet another wave of COVID-19 spreading through major cities and businesses,” Seroka said.The Port of Los Angeles and the adjacent Port of Long Beach handle more imports from China than any other U.S. ocean gateways. They set a new record for imports in February, handling a combined 814,408 20-foot equivalent units (TEU) – 3.5% more than the year earlier.Forty-four ships are already sailing cargo to the Southern California port complex, versus the 30 that are typically seen at this time of the year, Seroka said.Meanwhile, China has put millions of people under lockdown in a bid to stop the spread of a highly contagious Omicron variant. That action is already impacting factories that make everything from electric scooters to Apple (NASDAQ:AAPL) iPhones.China has imposed some of the toughest measures in the key manufacturing hubs of Shenzhen, Dongguan and Changchun, as well as the financial center of Shanghai – home to the world’s busiest container port.Many small, high-value electronics from Shenzen enter the United States by plane. Inexpensive or bulky items move by ship, including Mattel (NASDAQ:MAT) toys, furniture and other home goods sold by QVC owner Qurate Retail Group (NASDAQ:QRTEA), and dishwashers from Samsung Electronics (OTC:SSNLF), said Eric Oak, a supply chain analyst at S&P Global (NYSE:SPGI) Market Intelligence’s trade data firm Panjiva. Mattel, Qurate and Samsung (KS:005930) did not immediately respond to requests for comment.While major air and sea ports in Shenzhen and Shanghai continue to operate, locals are reporting that trucks are delayed by road and testing restrictions and that some Shenzen warehouses are no longer accepting deliveries.The supply chain depends on all of the links working together, said Phil Levy, chief economist for freight forwarder Flexport. “If you don’t have truckers and you don’t have warehouses, (you can move) things already in process, but you’ll have a problem with new stuff,” Levy said. More

The Biden administration pulled back the aid from states and counties with unspent funds and diverted it to four states pressing for more: California, New York, New Jersey and Illinois.WASHINGTON — The Biden administration has clawed back $377 million in federal emergency housing aid from states and counties, most of them controlled by Republicans, and redirected the cash to states that have been clamoring for more help, including New York, California and New Jersey.The $46 billion Emergency Rental Assistance Program, first enacted by Congress in 2020, succeeded in preventing a wave of evictions stemming from the downturn caused by the pandemic. But Treasury Department officials, increasingly concerned that evictions might rise after the program winds down, have tried to ensure that none of the remaining funding goes unspent while pushing states to find other funding sources to assist poor tenants.In recent months, White House officials have pressured governors in states with unspent funds to turn over the money to local governments within their states. Now they are going one step further, pulling back cash from states with relatively few tenants — like Montana, Nebraska, South Dakota and Wyoming — or localities that failed to efficiently distribute the aid, including Alabama, Arkansas and several counties in Texas.The money, in turn, is being diverted to four states that burned through their allotted amounts — with $136 million in additional aid headed to California, $119 million to New York, $47 million to New Jersey and $15 million to Illinois, according to a spreadsheet provided by a senior administration official. North Carolina, Washington and other localities will be receiving smaller amounts.New York officials were happy with their windfall but said it fell far short of the $1.6 billion in additional aid requested by the state.“This is better,” said Representative Ritchie Torres, a Democrat whose district includes the South Bronx, which has some of the highest eviction and poverty rates in the country. “But it’s a pitiful drop in the bucket compared to what we need.”The four states, home to roughly a third of the nation’s low-income renters, have already spent billions in emergency aid paying back rent for tenants at risk of eviction, and they have requested more funding, citing affordable housing shortages and rising rents. In January, their governors — Gavin Newsom of California, Kathy Hochul of New York, Philip D. Murphy of New Jersey and J.B. Pritzker of Illinois, all Democrats — called on Treasury Secretary Janet L. Yellen to shift cash from low-spending states into their accounts, saying that tenants were “facing an immediate need now.”Treasury officials responded with the reallocation — but made it clear the well was running dry, and states would soon have to make hard choices by using their own revenues, or other federal pandemic relief funding, to bankroll anti-eviction initiatives that might have been buoyed by President Biden’s stalled social spending bill.“The emergency rental program has helped keep millions of families in their homes, reducing the economic costs of the pandemic, and built a nationwide system for eviction prevention that didn’t exist before,” the deputy Treasury secretary, Wally Adeyemo, who has overseen the implementation of the program, said in an interview.“As these funds run out, Treasury is encouraging state and local governments to invest in long-term strategies to prevent evictions and build affordable housing, using other resources,” he added.The program, initiated under the Trump administration and ramped up by Mr. Biden’s team, got off to a sluggish start, as state governments struggled to create new systems to process applications, determine eligibility and distribute the cash.But by late 2021, most local systems were up and running, thanks in part to White House guidelines relaxing verification requirements.The enormous infusion of cash, coupled with federal and local eviction bans, helped prevent or delay about 1.35 million evictions in 2021, according to an analysis published last week by Princeton’s Eviction Lab. Evictions have risen in recent months in some cities but remain below the levels predicted when the pandemic first struck.Most of the aid that the Treasury Department is clawing back comes from states in the West, Midwest and New England with relatively high per capita incomes and low percentages of renters per capita. But part of the money is being pulled out of some of the country’s poorest states, where local officials were unable, for various political and logistical reasons, to disburse the funds.Alabama, for instance, is losing $42 million from a total allocation of about $263 million. A spokesman for the state’s housing agency provided a memo from state housing officials claiming that the Treasury Department “did not consider that Alabama has a lower proportion of renters to homeowners” in making its aid decisions, and that an overall lack of need put “downward pressure” on applications.But applicants and housing groups have complained that the state has made accessing the money difficult, and that a company hired to run the program rejected a large percentage of low-income tenants.West Virginia, which has been slow to distribute a range of federal food, housing and anti-poverty aid during the pandemic, was forced to return $39 million despite recent efforts by state officials to encourage more renters to apply. A spokesman for Gov. Jim Justice of West Virginia, a Republican, said the state was “simply not a renter state,” adding that the program “was clearly designed with Manhattan in mind — not rural America.”And Arkansas, which took months to organize its effort, is giving back $9 million, according to the tally provided by the senior administration official.The Biden administration had hoped to avoid shifting funding across state lines, opting instead to negotiate with governors to send unspent aid to counties and cities in their own states. Late last year, the White House persuaded Arizona, Georgia, Louisiana, Wisconsin and other states to voluntarily shift about $875 million to the cities and counties in their states that needed the money most.Yet administration officials are less concerned about offending state officials that have lost funding than tamping down the expectations of Democratic governors who want them to claw back even more.Gene Sperling, who oversees the Biden administration’s pandemic relief programs, said that the program was on track to help around five million renters, and that the largest complaint now was that “the funds are moving out so swiftly that there is very little left to be reallocated.” More

China’s top economic official intervened on Wednesday to reassure investors, saying Beijing would take measures to support the economy and financial markets after a sharp sell-off that has accelerated in the wake of Russia’s invasion of Ukraine.Liu He, a vice-premier and President Xi Jinping’s closest economic adviser, said the government would take measures to “boost the economy in the first quarter”, as well as introduce “policies that are favourable to the market”. He did not elaborate on what specific measures would be taken. Liu made the comments after convening a special meeting of the State Council’s Financial Stability and Development Committee, which he chairs, according to a summary of the meeting published by Xinhua, China’s official news agency. The FSDC oversees the country’s main financial regulators, including the central bank and securities watchdog, and meets regularly but such a wide-ranging statement to boost confidence is rare. Investors in Shanghai, Shenzhen and Hong Kong — as well as in US-listed Chinese companies — have been spooked by slowing economic growth, the inflationary aftershocks of the Ukraine war and a long-running crackdown by Xi’s administration on previously fast-growing companies in the technology, education and property sectors.Hong Kong’s Hang Seng index yesterday had its best day since the financial crisis, gaining 9.1 per cent as markets across the region rallied in response to the new measures from Beijing.The latest from the Ukraine war: Peace plan: Ukraine and Russia have made significant progress on a tentative peace plan, according to five people briefed on the talks.Financial fallout: Russia said it had sent interest payments due on its dollar bonds for processing, but it could not guarantee investors would receive the cash, leaving the country on the brink of its first debt default since 1998.Energy: Pakistan plans to finalise a Russian-built gas pipeline despite international pressure to isolate Moscow economically.US response: Joe Biden approved the delivery of new weapons systems to Ukraine, following Volodymyr Zelensky’s impassioned plea to Congress. Biden went on to label Vladimir Putin a “war criminal” for the first time.Explainer: FT’s Henry Foy and Ian Bott provide a look at how Ukraine using western weapons to exploit Russian weaknesses.Opinion: China must make Moscow see sense, writes Ukraine’s ambassador to Japan. Follow our live blog and updated maps for the latest on the conflict. Send your feedback on this newsletter to [email protected]. Now for the rest of today’s news — EmilyFive more stories in the news1. Powerful earthquake hits Japan’s northeastern coast A 7.3 magnitude earthquake shook Japan’s northeastern coast last night, rattling areas devastated by the 2011 quake and plunging more than 2mn households in Tokyo and the surrounding prefectures into a power blackout.

A woman shops in a store in a residential area during a power outage in Koto district in Tokyo © AFP via Getty Images

2. Dissidents targeted on behalf of China’s secret police, US prosecutors allege Five individuals have been charged with spying, harassing and stalking dissident members of the Chinese diaspora on behalf of China’s secret police, including what US authorities believed to be the first case brought by Washington for electoral interference involving Beijing.3. Fed announces first rate rise since 2018 amid surging inflation The Federal Reserve lifted its benchmark interest rate by a quarter of a percentage point in the start of what US central bank officials signalled would be a series of hikes this year with further rises expected at all of the six remaining policy meetings. The US stock market rallied strongly in response. 4. China plans audit concession in face of US delisting threat In an effort to resolve an impasse threatening more than $2tn of shares in US-listed Chinese companies, Beijing is preparing to allow some Chinese companies to provide certain audit information to US accounting regulators, according to three people familiar with the matter. 5. Dangerous missile launch failure in North Korea Kim Jong Un’s regime has suffered a dangerous missile launch failure with debris crashing into Pyongyang, days after the Biden administration warned North Korea against exploiting the Ukraine war to challenge the US.Coronavirus digest China’s latest attempt to suppress an outbreak of Covid-19 with lockdowns in several cities has disrupted global supply chains, which is likely to lead to lower growth and profitability across the technology industry.Japan’s government is planning to lift its remaining quasi-emergency Covid-19 measures when they expire on Monday. (Japan Times) Jacinda Ardern has accelerated the full reopening of New Zealand’s borders only days after a poll revealed that her Labour party had fallen behind its main rival for the first time in five years.The day aheadCentral bank news Expect a busy day for central banks in Asia today. The Bank of Japan begins its two-day monetary policy committee meeting, Taiwan will make its monetary policy decision as will the Bank Indonesia Board of Governors. The Reserve Bank of Australia will issue its quarterly bulletin. Elsewhere, the Bank of England is poised to raise interest rates to their pre-Covid level. What else we’re reading, watching and listening toVolkswagen and China The German automaker’s decision to suspend production and sales in Russia was not excessively painful. But what if there was pressure to withdraw from China, which accounts for half of its profits and has signalled support for Moscow’s invasion of Ukraine?

Will older investors ever embrace crypto? Wealthy millennials favour cryptocurrencies, while few of their older peers hold any at all. This is beginning to change as established institutions offer more access to digital currencies. But they are having to overcome concerns about security and money laundering.The China rout China’s Covid-19 outbreak is by far its worst since the first wave two years ago. Serious lockdowns are in the offing. But in our Unhedged newsletter, Rob Armstrong argues that given what we have learned about the resilience of the country’s economy and the virus itself, a Covid wave is not be a sufficient explanation. How influential are influencers at work? A new generation of young professionals are becoming online stars in their own right through their social media channels. But what happens when personal brands meet the old-fashioned big corporate workplace?HealthDiabetes support is moving into the workplace as employers begin to offer coaching to staff in an effort to manage Type 2 diabetes. “Our mission is to inspire healthier lifestyles including wellbeing in the workplace,” said TLC operations manager, Helen Gowers. More

WASHINGTON (Reuters) -The Federal Reserve on Wednesday raised interest rates for the first time since 2018 and laid out an aggressive plan to push borrowing costs to restrictive levels next year in a pivot from battling the coronavirus pandemic to countering the economic risks posed by excessive inflation and the war in Ukraine.The U.S. central bank’s Federal Open Market Committee kicked off the move to tighten monetary policy with a quarter-percentage-point increase in the target federal funds rate, lifting that key benchmark from the current near-zero level in a step that will ripple through a variety of other rates charged to consumers and businesses.But more notably, new Fed projections showed policymakers ready to shift their inflation fight into high gear, with one policymaker, St. Louis Fed President James Bullard, dissenting in favor of an even more aggressive approach.Most policymakers now see the federal funds rate rising to a range between 1.75% and 2% by the end of 2022, the equivalent of a quarter-percentage-point rate increase at each of the Fed’s six remaining policy meetings this year. They project it will climb to 2.8% next year – above the 2.4% level that officials now feel would work to slow the economy. Fed Chair Jerome Powell, speaking after the end of the latest two-day policy meeting, said the economy is strong enough to weather the rate hikes and maintain its current strong hiring and wage growth, and that the Fed needed to now focus on limiting the impact of price increases on American families.Even with Wednesday’s actions, inflation is expected to remain above the Fed’s 2% target through 2024, and Powell said officials would not shy from raising rates more aggressively if they don’t see improvement. “The way we’re thinking about this is that every meeting is a live meeting” for a rate hike, Powell said in a news conference, emphasizing that the Fed could add the equivalent of more rate increases by also paring its massive bond holdings. “We’re going to be looking at evolving conditions, and if we do conclude that it would be appropriate to move more quickly to remove accommodation, then we’ll do so.” Rate increases work to slow inflation by curbing demand for big-ticket items like houses, automobiles or home improvement projects that become more expensive to finance, which can also slow economic growth and potentially increase unemployment.The economy may already be slowing for other reasons. Fed policymakers marked down their gross domestic product growth estimate for 2022 to 2.8%, from the 4% projected in December, as they began to analyze the new risks facing the global economy.”That is just an early assessment of the effects of spillovers from the war in Eastern Europe, which will hit our economy through a number of channels,” Powell said. “You are looking at higher oil prices, higher commodity prices. That will weigh on GDP to some extent.”Over time, Fed policy itself would begin curbing economic activity, Powell said.”The Fed is playing catch-up and clearly recognizes the need to get back in front of the inflation situation,” said Seema Shah, chief strategist with Principal Global Investors.”It won’t be easy – rarely has the Fed safely landed the U.S. economy from such inflation heights without triggering an economic crash. Furthermore, the conflict … has the potential to disrupt the Fed’s path. But for now, the Fed’s priority has to be price stability.”The Fed’s preferred measure of inflation is currently increasing at a 6% annual rate. STUBBORN INFLATIONThe policy statement, which dropped a longstanding reference to the coronavirus as the most direct economic risk facing the country, marked the end of the Fed’s full-on battle against the pandemic. After two years focused largely on ensuring families and firms had access to credit, the Fed now pledges “ongoing increases” in borrowing costs to curb the highest inflation rates in 40 years.The interest rate path shown in new quarterly projections by policymakers is tougher than expected, reflecting Fed concern about inflation that has moved faster and threatened to become more persistent than expected, and put at risk the central bank’s hope for an easy shift out of the emergency policies used to fight the fallout from the pandemic.Major U.S. stock indexes briefly pared gains after the release of the statement and projections before recovering to close sharply higher, with the S&P 500 index up 2.2% on the day.Two-year Treasury note yields rose to 2.002% while benchmark 10-year Treasury yields reached 2.246%, both the highest levels since May 2019, before falling back to 1.948% and 2.188%, respectively. The dollar traded lower against a basket of currencies.Even with the tougher rate increases now projected, the Fed expects inflation to remain at 4.3% this year, dropping to 2.7% in 2023 and to 2.3% in 2024. The unemployment rate is seen dropping to 3.5% this year and remaining at that level next year, but is projected to rise slightly to 3.6% in 2024. The new statement said the Fed expects to begin reducing its nearly $9 trillion balance sheet “at a coming meeting.” Powell told reporters that policymakers had made “excellent progress on that front and could finalize details at their next policy meeting in May. The central bank’s holdings of Treasury bonds and mortgage-backed securities ballooned after the start of the pandemic in 2020 when it began making massive monthly asset purchases to bolster the economy. More

Bombs rained down on Ukrainian cities despite talk of compromise from both Moscow and Kyiv in peace negotiations, three weeks after the start of the Russian invasion.Market participants, meanwhile, focused on whether Russia would pay coupons on sovereign debt due Wednesday, or start the clock on a 30-day grace period, after which it could default on its foreign sovereign debt for the first time in over a century.At the close of trading in Moscow, the rouble gained 1.9% on the day to close at 108 per dollar and gained 0.7% versus the euro to close just below 117.7.On foreign exchanges, the rouble was bid recently at 91 per dollar and traded at 97, up more than 13% on the day. It is down 23% so far this year. “There hasn’t been any liquidity in rouble so very small moves, very small amounts of volume and demand for the currency can cause very big moves up, rather than anything in particular,” said Rachel Ziemba, founder of Ziemba Insights.”Because of the restrictions of the Central Bank of Russia the rouble is still relatively non convertible, there’s a lot of question marks about what foreigners can do with it. I wouldn’t trust any rally in the rouble to be persistent.”Russia has $117 million in payments due on Wednesday on two dollar-denominated Eurobonds. Fitch Ratings said on Tuesday that if the payments were done in roubles, it would constitute a sovereign default if not corrected after a 30-day grace period.Sources said there was no evidence yet of payment as of the end-of-business day in London.Events in Ukraine and the sanctions against Moscow that followed have triggered the worst economic crisis in Russia since the fall of the Soviet Union in 1991.The Moscow stock market stayed largely closed by order of the central bank, and will remain so for the rest of the week. Stocks last traded in Moscow on Feb. 25, after which the central bank imposed restrictions.The European Union on Tuesday launched a new barrage of sanctions, including bans on Russian energy sector investments, luxury goods exports to Moscow and imports of steel products from Russia. More

NEW YORK (Reuters) – Federal Reserve policymakers have made “excellent progress” on their plan for reducing the central bank’s nearly $9 trillion balance sheet, and could finalize details at their next policy meeting in May, Fed Chair Jerome Powell said on Wednesday. Overall, he said, the plan will look “familiar” to when the Fed last reduced bond holdings between 2017 and 2019, “but it will be faster than the last time, and of course it’s much sooner in the cycle than last time.” The Fed will provide more details on the plan’s parameters when it releases minutes of Wednesday’s policy meeting in three weeks’ time, he said. The U.S. central bank’s balance sheet more than doubled during the pandemic as it scooped up trillions of dollars in Treasuries and mortgage-backed securities, first to calm markets and then to support the economy. It ended those bond purchases this month. Shrinking the portfolio will help tighten monetary policy and financial conditions, complementing the Fed’s move to higher interest rates to bring inflation back under control, Powell said.Earlier this year the Fed said balance sheet reductions would generally happen not through outright sales of bonds but by allowing securities to roll off as they mature. Investors expect the Fed to set monthly caps to control the reduction and make it predictable. “We’ll be mindful of the broader financial context when we make the decision on timing” of reductions, Powell said. “We always want to use our tools to support macroeconomic and financial stability, and we want to avoid adding uncertainty in a highly uncertain situation already.” More

“It’s an important role and he will nominate someone to fill the position,” White House Press Secretary Jen Psaki said at a Wednesday press briefing. Psaki did not provide a timeline for announcing a new nominee.©2022 Bloomberg L.P. More