Economy

WASHINGTON (Reuters) -The International Monetary Fund and World Bank on Tuesday said they were racing to provide billions of dollars of additional funding to Ukraine in coming weeks and months, adding the war there is creating “significant spillovers” to other countries.IMF chief Kristalina Georgieva and World Bank President David Malpass said the war was driving commodity prices higher, which risked further fueling inflation, and disruptions in financial markets would continue to worsen should the conflict persist. Sanctions imposed by the United States, Europe and other allies would also have a significant economic impact.The leaders said they were deeply shocked and saddened by the war, but did not explicitly mention Russia, which is a shareholder in both institutions. Russia began a full-scale invasion of Ukraine on Feb. 24 and its armed forces are bombarding Ukrainian urban areas. “People are being killed, injured, and forced to flee, and massive damage is caused to the country’s physical infrastructure,” Georgieva and Malpass said in a joint statement. “We stand with the Ukrainian people through these horrifying developments. The war is also creating significant spillovers to other countries.”The IMF and the World Bank were urgently increasing financing and policy support for Ukraine, and had been in daily contact with the authorities on crisis measures, they said.The IMF board could consider Ukraine’s request for emergency financing through the Rapid Financing Instrument as early as next week, they said. An additional $2.2 billion was available before the end of June under its stand-by arrangement.The World Bank is also preparing a $3 billion package of support in the coming months, they said. That funding would start with a fast-disbursing budget injection of at least $350 million that the bank’s board will consider this week, followed by $200 million for health and education programs.Reuters first reported the $350 million loan earlier on Tuesday.The two institutions said they were also assessing the economic and financial impact of the war and refugees on other countries in the region and the world. They said they stood ready to provide enhanced policy, technical, and financial support to Ukraine’s neighbors as needed. More than 660,000 people have fled Ukraine to countries such as Poland, Romania and Hungary since the invasion began, the U.N. refugee agency said.”Coordinated international action will be crucial to mitigate risks and navigate the treacherous period ahead,” the institutions said. More

(Reuters) – Apollo Global Management (NYSE:APO) Inc Chief Executive Marc Rowan said on Tuesday that Russia’s invasion of Ukraine could temper interest rate rises by central banks and that he expected inflation to slow down in the long term.The conflict in Ukraine has roiled global financial markets and fueled a surge in energy prices. While this could exacerbate inflation that was already raging because of supply chain shortages, any ensuing economic slowdown could drag inflation down, which would in turn alleviate the need for higher interest rates, Rowan said in a Reuters Newsmaker interview.”The path right now should be for higher rates to tamp down inflation. But with Ukraine, the uncertainty is going to modulate that,” Rowan said.Apollo, one of the world’s biggest investors in alternative assets such as corporate credit and private equity, does not have investment portfolio exposure to Russia or Ukraine, Rowan said. He added that the crisis was having a series of implications across the market and Apollo stood ready to capitalize on investment opportunities by providing liquidity to companies. The New York-based firm is experiencing higher labor, shipping and energy costs in the companies it owns, and expects these to remain elevated in the first half of the year, Rowan said. Inflation should abate longer-term as the effect fades of the economic stimulus that governments around the world launched two years ago in the wake of the COVID-19 pandemic, Rowan said.”The underlying factors that historically have given rise to increasing rates just don’t exist,” Rowan said.Rowan said he expects Apollo, which has about $500 billion in assets under management, to step up sustainable investments through a platform it unveiled last week. He said Apollo financed fossil fuel companies if they were in the process of transitioning into clean forms of energy.Rowan succeeded Leon Black last year, who stepped down as Apollo’s CEO after an independent review found that he had paid $158 million to late financier and convicted sex offender Jeffrey Epstein for advice on tax and estate planning and related services between 2012 and 2017. The review cleared Black of any wrongdoing.Black, who remains Apollo’s largest shareholder, and Apollo co-founder Josh Harris, who sits on the firm’s board, are now “completely out of the business,” Rowan said, adding that he did not need their advice at this stage.”This is a business I know well. I joke with people internally, it’s not a hard job, it’s just a lot of work,” Rowan said. More

MEXICO CITY (Reuters) – An overwhelming vote by workers at a northern Mexican factory to elect an independent union, defeating an entrenched labor group, could presage more such showdowns amid growing U.S. pressure to strengthen worker rights.Independent union SNITIS won nearly 87% of the vote at the Tridonex auto parts plant in the border city of Matamoros late on Monday, clobbering powerful union CTM, which also recently lost an election at General Motors Co (NYSE:GM) in the central city of Silao.Tridonex came under U.S. scrutiny last year after U.S. unions pushed for a labor complaint under the United States-Mexico-Canada Agreement (USMCA) trade deal, saying workers had been blocked from choosing their union.CTM’s latest defeat could encourage workers at other plants in industrial Matamoros to seek new representation, say workers and experts, in line with a recent Mexican labor reform meant to give workers a stronger voice, a tenet of the USMCA.Many workers at Tridonex, owned by Philadelphia-based Cardone, had accused CTM, one of Mexico’s biggest labor groups, of failing to demand higher wages.”Tridonex is going to push forward the entire Matamoros working class,” said Rosario Moreno, SNITIS secretary general.Cardone thanked workers for participating at Tridonex, which refits second-hand car parts for sale in the United States and Canada, and said it would work with the winning union once officials certify the vote.Tridonex’s longstanding union, a CTM affiliate called SITPME, declined to comment, but previously said it generates jobs and provides perks to members.Top Biden administration officials said the vote signaled the strength of USMCA labor provisions.For Tridonex worker Hector Manuel, the vote marked “justice” for colleagues who began a push to change unions two years ago. Some were fired for what they described as retaliation for their activism, beginning with wildcat strikes in 2019 at numerous Matamoros factories.”It’s a big step … for my colleagues to be able to lose their fear and think about their futures,” said Manuel, adding he barely gets by on a daily paycheck of 260 pesos ($12.62).Co-worker Alejandro Rodriguez said CTM’s ouster will encourage workers beyond Tridonex.”This will motivate people to make the effort to organize,” he said.Labor scholar Cirila Quintero said fledging SNITIS has hard work ahead to negotiate its first contract, but its victory sends a strong message after long-simmering resentment toward CTM.”This is a lesson to listen to workers and not belittle their claims,” she said.($1 = 20.5941 Mexican pesos) More

The currency had found some support after Russian authorities ordered exporting companies, among which are some of the world’s biggest energy producers from Gazprom (MCX:GAZP) to Rosneft, to sell 80% of their forex revenues on the market, as the central bank’s own ability to intervene on currency markets was curbed.Later in the day, Russian President Vladimir Putin issued a decree banning the export of cash in foreign currency exceeding $10,000 in value with effect from March 2, according to a Kremlin statement.But even the session-strong dip under 90 per greenback had left the rouble well shy of the 75 to the dollar it traded at before Russia recognised two breakaway regions in eastern Ukraine and sent troops into its neighbouring country last week.The rouble ended down 6.5% to 101.23 against the dollar in Moscow trading, and lost 5.8% to 112.49 versus the euro.After the Moscow close, the rouble weakened to as much as 117 per dollar and was trading near 105 in late trading in New York.”By nature, it’s a sign of disconnect between what’s going on in Russia and what’s going on abroad,” said Rachel Ziemba, founder of Ziemba Insights in New York.”Ultimately, a lot of foreign actors aren’t really able to participate in purchasing Russian assets right now.”Major Russian banks have been shut out of the SWIFT international payments system.The rouble has tumbled since the start of Russia’s invasion of Ukraine, at one point losing a third of its value in Moscow trading, prompting the central bank to more than double interest rates to 20% and adopt a range of other urgent measures.Moscow calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.STOCKS ABROAD TUMBLEShare trading on the Moscow Exchange was suspended for a second day after sharp sell-offs hammered the market since mid-February.Russia said on Tuesday it was placing temporary restrictions on foreigners seeking to exit Russian assets, and it ordered the spending of up to $10 billion from its rainy-day fund on buying shares in Russian companies.But an ETF of Russian stocks traded in the United States fell 24% Tuesday for a combined 47% drop in two days and set a record closing low, while the London-listed iShares MSCI Russia ETF lost a third of its value on Tuesday and is down 83% since mid February.”Price is the great arbiter and the price falling the way it is tells you that at least right now, the market’s a bit skeptical about that demand,” said Sameer Samana, senior global market strategist at Wells Fargo (NYSE:WFC) Investment Institute.”If that type of statement or show of force was credible, clearly it wouldn’t be falling as quickly.”Dominant state lender Sberbank’s depositary receipts in London tumbled 80% on Tuesday.LIVING STANDARDS DAMAGEDThe weak rouble is set to reduce living standards in Russia and fan already high inflation, while Western sanctions are expected to create shortages of essential goods that people in Russia have become used to, such as cars.The Institute of International Finance (IIF), a trade group representing large banks, warned that Russia was extremely likely to default on its external debts as well, and that its economy would suffer a double-digit contraction this year.The Russian central bank and finance ministry did not reply to a Reuters request for comment on the possibility of defaults.Inflation will spike in the short term but over the longer term could slow as people in Russia switch to a money-saving mode, said Dmitry Polevoy, head of investment at Locko-Invest. More

Some European buyers, shippers, banks and insurers have grown leery of doing business with the country in recent days.HOUSTON — The United States and the European Union have been unwilling to put sanctions on Russian energy exports in response to the country’s invasion of Ukraine. But some oil traders appear to have concluded that buying oil from Russia is just not worth the trouble.One of the three top oil producers in the world, after the United States and Saudi Arabia, Russia provides roughly 10 percent of the global supply. But in recent days traders and European refineries have greatly reduced their purchases of Russian oil. Some have stopped altogether.Buyers are pulling back because they or the shipping companies, banks and insurance companies they use are worried about running afoul of Western sanctions in place now or those that might come later, energy experts said. Others are worried that shipments could be hit by missiles, and some just don’t want to risk being seen as bankrolling the government of President Vladimir V. Putin.Russian exporters have been offering the country’s highest-quality oil at a discount of up to $20 a barrel in recent days but have found few buyers, analysts said. Buyers, in Europe in particular, have been switching to Middle Eastern oil, a decision that has helped drive the global oil price above $100 a barrel for the first time since 2014.“The enablers of oil exports — the banks, insurance companies, tanker companies and even multinational oil companies — have enacted what amounts to a de facto ban,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. Mr. Kloza said it could take weeks before it was clear how significantly Russia’s oil exports had fallen and whether the drop would be sustained, but “clearly the Russian contribution to world oil supply has been constricted.”On Tuesday, the International Energy Agency said its members, which include the United States and more than a dozen European nations, had agreed to release 60 million barrels of oil from their strategic reserves. The announcement had little impact on global oil prices, probably because the amount was modest, amounting to roughly three days of consumption by the United States. The White House and Energy Department signaled that more oil could be released later by describing the I.E.A. agreement as an “initial release.”Much of Russia’s oil is shipped out of Black Sea ports for use in Europe. Some shipping companies carrying oil and commercial goods are afraid that their vessels will be fired on. Congestion in sea lanes is interrupting the shipping of not only oil but also food. On Friday, an unidentified missile hit a Moldovan-flagged tanker carrying oil and diesel.“Russia’s flagship Urals blend was one of the first to break through the $100-per-barrel mark this year,” said Louise Dickson, senior oil market analyst at Rystad Energy, a research and consulting firm. “But the country’s incursion into Ukraine has now made it one of the most toxic barrels on the market.”As European refiners buy more oil from places like Saudi Arabia, Russian companies are increasingly trying to sell their crude to refineries in China and other Asian countries by offering them discounts.Most of Russia’s roughly five million barrels of daily oil exports go to Europe. About 700,000 barrels a day are consumed in the United States, roughly 4 percent of the U.S. market.Several Scandinavian refiners, including Neste Oyj of Finland and Preem of Sweden, have said they halted purchases of Russian oil.“Due to the current situation and uncertainty in the market, Neste has mostly replaced Russian crude oil with other crudes, such as North Sea oil,” said Theodore Rolfvondenbaumen, a Neste spokesman. As the company watches future sanctions and “potential countersanctions,” he said, it is preparing “for various options in procurement, production and logistics.”Energy experts say the international oil trade could be rejiggered in ways that are similar to what happened in 1956 when Britain, France and Israel attacked Egypt and closed the Suez Canal. For a time, oil tankers were rerouted around Africa. Similarly, over the next few months Russian oil once shipped to Europe could go to China.Russia’s Attack on Ukraine and the Global EconomyCard 1 of 6A rising concern. More

President Biden is poised to talk up the striking progress the labor market has made during the first year of his presidency — and it is true that the snapback has been rapid, exceeding most economists expectations.But the breakneck pace of hiring needs to be understood in context, because it happened as the labor market was clambering back from pandemic lockdowns that caused millions of jobs to disappear practically overnight.Overall employment might be the easiest way to understand what has gone on in the labor market since the pandemic began to bite in March 2020. About 152.5 million people had jobs in February 2020; by May 2020, that had dropped to 133 million. Between then and mid-January 2021, the final months of Donald J. Trump’s administration, the job market added back about half of the jobs it lost and employment rose to 143 million.Since Mr. Biden took office on Jan. 20, 2021, the economy has added back about 6.6 million jobs — a number Mr. Biden will emphasize, his administration said ahead of the Tuesday night speech, noting that the progress made for “one of the strongest labor market recoveries in American history.”Employment ReboundJob gains bounced back rapidly following abrupt layoffs at the start of the pandemic.

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Total nonfarm employment, seasonally adjusted
Source: Bureau of Labor StatisticsBy The New York TimesThe unemployment rate has fallen swiftly and now stands at 4 percent — down from a 14.7 percent peak in May 2020. Economists in a Bloomberg survey expect the February rate, which will be released on Friday, to be down to 3.9 percent. That progress has come much more quickly than many economists, including officials at the Federal Reserve, had anticipated. Meanwhile, job openings have surged and companies are paying up to attract workers.The question is how much of the progress owes to the administration’s policies. Some of it probably can be attributed to them: By pumping money into the economy and stoking consumer demand, the $1.9 trillion aid package Democrats passed last year has created more need for employees and has probably goosed hiring.But strong demand has been a double-edged sword: It has also collided with constrained supply chains to push prices higher, and inflation is eroding wage gains, even as average hourly earnings pick up at the fastest pace in decades across a range of measures, especially for rank-and-file workers and those with less education.In fact, price gains have been so quick that pay has often failed to keep up with them in recent months, on average.Still, the reality that jobs are plentiful and that employers continue to hire voraciously is a positive talking point for the Biden administration as it approaches midterm elections.The president will emphasize the role his policies “played in positioning employers to hire and workers to rejoin the labor force and find higher quality jobs,” according to a White House fact sheet released ahead of Mr. Biden’s remarks. More

Tai said the U.S. would monitor Mexico’s certification of Monday’s vote, which came after a settlement reached with Tridonex following a U.S. complaint filed under a labor enforcement mechanism in the U.S.-Mexico-Canada trade agreement.“Workplace democracy is a cornerstone of the USMCA’s labor provisions. People on both sides of the border win when workers can choose their union representation in a free and fair manner – and without delay,” Tai said. More

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen on Tuesday told European Commission Executive Vice President Valdis Dombrovskis that cooperation was needed on “further strong measures” in response to Russia’s invasion of Ukraine after unprecedented sanctions, the U.S. Treasury said.”Secretary Yellen affirmed the United States’ support for Ukraine’s sovereignty, working together with our partners to hold Russia accountable,” the Treasury said in a statement after a call between the U.S. and EU officials. More