Finance

The watchdog group’s “gray list” is not as severe as its “black list,” which currently includes North Korea and Iran.
The UAE is the financial hub of the Middle East, home to numerous international companies’ headquarters.

Dubai, United Arab Emirates, on July 5, 2021.
Christopher Pike | Bloomberg | Getty Images

An intergovernmental organization dedicated to combating money laundering and illicit cash flows on Friday placed the United Arab Emirates on its “gray list” over concerns that the Gulf country isn’t sufficiently stemming illegal financial activities.
The UAE was one of several countries listed by The Financial Action Task Force as being under increased monitoring due to “strategic deficiencies” in their efforts to counter money-laundering.

“Jurisdictions under increased monitoring are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing,” the organization said.
“When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies,” it continued.
The state-run Emirates News Agency, in a statement published late Friday, said the FATF “has recognised that the United Arab Emirates has made positive progress in its anti-money laundering (AML), countering the financing of terrorism (CFT), and counter proliferation financing (CPF) efforts.”
The watchdog group’s “gray list” is not as severe as its “black list,” which includes North Korea and Iran.
Other countries on the gray list include Pakistan, Turkey, Jordan and Yemen.

The UAE is the financial hub of the Middle East, home to numerous international companies’ headquarters, one of the world’s busiest airports, and a roughly 90% expat population.
“The UAE takes its role in protecting the integrity of the global financial system extremely seriously and will work closely with the FATF to quickly remedy the areas of improvement identified,” said the UAE’s agency in charge of combating money laundering, according to Emirates News Agency.

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Defense spending is set to rise by 7.1% to 1.45 trillion yuan ($230.16 billion) this year, China’s Ministry of Finance said in a plan released Saturday.
That’s the fastest pace since 2019, when defense spending grew by 7.5%.
Total central government expenditures for the general public budget are expected to rise by 14.3% to 13.40 trillion yuan this year, the finance ministry said.

Chinese President Xi Jinping inspects troops during a parade on October 1, 2019, to celebrate the 70th Anniversary of the founding of the People’s Republic of China at Tiananmen Square in 1949, in Beijing, China.
Kevin Frayer | Getty Images

BEIJING — China’s defense spending this year is set to grow at its fastest pace since 2019, according to the Ministry of Finance plan released Saturday.
Defense spending will rise by 7.1% to 1.45 trillion yuan ($230.16 billion) this year, faster than the 6.8% increase in 2021 and 6.6% climb in 2020, according to official data.

China’s defense spending rose by 7.5% in 2019 to 1.19 trillion yuan.
Total central government expenditures for the general public budget are expected to rise by 14.3% to 13.40 trillion yuan this year, the finance ministry said.
“We will move faster to modernize the military’s logistics and asset management systems, and build a modern weaponry and equipment management system,” Chinese Premier Li Keqiang said in a separate annual government work report released Saturday, according to an official English-language version.
Li’s other statements about military development and foreign policy remained in line with those of 2021. He said that “China will continue to pursue an independent foreign policy of peace.”
Li did not mention other major countries in the government work report.
The total U.S. defense budget for 2022 comes in just under $770 billion, up 2% from last year.

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China is set Saturday to release its gross domestic product growth target for 2022 as an annual parliamentary meeting gets underway.
Analysts widely expect the GDP target will be set at about 5% or slightly higher.
They are also looking for details from policymakers about stimulus plans for an economy that has slowed significantly.

Workers weld at a workshop of an automobile manufacturer in Qingzhou, East China’s Shandong Province, on March 1, 2022.
Future Publishing | Future Publishing | Getty Images

BEIJING — China is slated on Saturday to release its gross domestic product growth target for 2022, as an annual parliamentary meeting gets underway.
Analysts widely expect the GDP target to be set at about 5% or slightly higher. They are also looking for details about stimulus plans for an economy that has slowed significantly.

The figure is set to be released Saturday morning local time, or Friday evening ET.
China’s economic growth softened in the fourth quarter to a 4% year-on-year increase, despite full-year growth of 8.1%.
The country was the only major economy to grow in 2020, while the rest of the world struggled with the coronavirus pandemic.
But sluggish consumer spending has yet to fully recover from the pandemic, and fallout from Beijing’s regulatory crackdown on tech and real estate have dragged on growth. China’s stringent “zero-Covid” policy, with abrupt lockdowns and travel restrictions, has also weighed on the economy.
In the last two weeks, the heads of government ministries have spoken of plans for more economic support, especially for small businesses and consumers.

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The “Two Sessions” is an annual meeting of the Chinese People’s Political Consultative Conference, an advisory body, and the National People’s Congress legislature in Beijing.
While largely symbolic, the meetings draw delegates from around the country to approve and announce national economic policies for the year ahead. Those include targets for GDP growth, employment, inflation, deficit and government spending.
This year, the Two Sessions will last about a week, with proceedings set to wrap up on March 11.

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Gas prices are surging, adding to inflationary concerns across the U.S. economy.
The national average price for a gallon of gas was at $3.83 on Friday, the highest since Sept. 21, 2012, according to data from AAA.
The spike comes after U.S. crude oil hit the highest level since 2008.

Fuel prices are displayed on a sign at a gas station on March 03, 2022 in Hampshire, Illinois. Increasing demand and dwindling supplies coupled with global supply uncertainty driven by the war in Ukraine have driven gas prices over $4-per-gallon in many parts of the country.
Scott Olson | Getty Images

Gas prices are surging, with the national average now at the highest in nearly a decade. The rapid ascent is pinching consumers’ pockets, and experts say there may be little end in sight.
The national average for a gallon of regular gas stood at $3.83 on Friday, the highest since Sept. 21, 2012, according to data from AAA. Prices are rising at a fast clip, with Friday’s average nearly 11 cents a gallon above Thursday’s. Americans are paying about 27 cents more than last week, and 41 cents more than a month ago.

In some places consumers are paying a lot more. In California, the state average is now $5.07 per gallon.
The surge in prices has become a headache for President Joe Biden whose administration has vowed for months that it’s working to combat high prices at the pump.
Rising oil prices are behind the spike. West Texas Intermediate crude, the U.S. oil benchmark, topped $116 per barrel Thursday, the highest level since 2008. Russia’s invasion of Ukraine and the subsequent sanctions levied against the nation’s financial sector are prompting fears of supply shortages in what was already a tight market.
More than 50% of the cost of gasoline is based on the price of oil, according to the U.S. Energy Information Administration. Costs associated with refining, distribution, marketing, and taxes make up the rest of the price of gasoline.
As the adage goes “the cure for high prices is high prices” and experts say that demand destruction — in the form of high prices — might be the only thing to quell the surge in crude prices.

Wells Fargo pegs that number at $130 per barrel of oil or $4.60 per gallon of gasoline
Patrick De Haan, head of petroleum analysis at GasBuddy, predicted the national average could top $4 later this month.
“The fallout from Russia’s oil production or lack thereof is likely to continue impacting us as we head to the peak of summer driving season,” he said Thursday on CNBC’s “The Exchange.”
Gasoline futures settled about 8% higher on Friday, after jumping to the highest level since July 2008 during the session.

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An employee looks at a stock price index graph showing plunging stock prices on an electronic information screen at the headquarters of the Micex-RTS Moscow Exchange.
Andrey Rudakov | Bloomberg | Getty Images

Index giant S&P Dow Jones Indices said Friday it is removing all stocks listed and/or domiciled in Russia from its benchmarks in light of the country’s invasion of Ukraine, further isolating the nation from the global economy.
The removal, effective before the open next Wednesday, also affects Russian American depositary receipts (ADRs), S&P Dow Jones Indices said.

The firm, which is the keeper of the Dow Jones Industrial Average and the S&P 500, also said it will declassify Russia as an emerging market and categorize it as a standalone group.
The move came as Russian forces attacked Europe’s largest nuclear power plant in Ukraine early Friday morning, causing a fire to break out at an adjacent training facility. The U.S. Embassy in Kyiv called the attack a war crime.
Earlier Friday, the NYSE halted trading in three Russian ETFs — Franklin FTSE Russia ETF (FLRU), iShares MSCI Russia ETF (ERUS) and Direxion Daily Russia Bull 2X Shares (RUSL). The exchange cited “regulatory concerns” for these halts.
Exchange-traded funds tracking Russian stocks have been in a tailspin since the geopolitical tensions escalated. The iShares MSCI Russia ETF tumbled 33.4% for its worst day Tuesday since the fund’s inception in 2010, and after losing 27.9% on Monday.
Meanwhile, shares of the VanEck Russia ETF ended February down 54.9%, closing out its worst month ever.

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Shoppers wearing face masks leave a Costco wholesale store in Washington, D.C.
Ting Shen | Xinhua News Agency | Getty Images

Check out the companies making headlines in midday trading.
Costco — The stock dipped 1.4% despite a better-than-expected quarterly report. The retailer reported earnings of $2.92 per share on revenue of $51.9 billion. Analysts had expected earnings of $2.74 on revenue of $51.47 billion, according to Refinitiv.

Broadcom — Shares of the chipmaker jumped 3% after the company reported record revenue in the fiscal first quarter that exceeded analysts’ expectations. Broadcom reported adjusted earnings of $8.39 per share, higher than the $8.23 per share analysts were looking for per FactSet estimates. Meanwhile, its revenue jumped 16% year over year to $7.7 billion, also topping estimates.
Signature Bank — Shares of crypto-friendly Signature Bank fell 7.1% despite Goldman Sachs saying Friday it’s keeping its buy rating on the stock and is bullish on the company’s growth outlook after a recent meeting with management.
Kroger — The grocery chain added 6.9% after it provided a business update Friday including its digital push to drive 2022 sales and a commitment to shareholder returns of 8% to 11% over time. The increase follows a boost in shares Thursday after it reported strong earnings.
Splunk — The cloud company’s shares rose 5.9% after Daiwa upgraded the stock to outperform from neutral, saying it sees an “uptick” in security demand as a result of concerns about Russia.
Best Buy — Shares fell 3.6% after Raymond James downgraded Best Buy to market perform from outperform. “We are placing our stock recommendation in ‘sleep mode’ for now,” analysts said. The call comes after Best Buy on Thursday reported underwhelming quarterly results that just matched Wall Street expectations.

Rivian Automotive — The electric truck maker’s shares lost 6.9% after Baird lowered its price target on the stock to $100 per share from $150. Baird did, however, reiterate Rivian as an outperform and said it’s still bullish long-term, despite several recent missteps by company management.
Roblox — Shares of the gaming platform fell 6.5% after Bank of America said investors should expect the stock to remain volatile for the foreseeable future. It also said that a positive surprise on February bookings growth could lead to a short rally but warned that launches “must be successful before the bear thesis is disproven.”
Sweetgreen — Sweetgreen shares soared 25.4% after the salad chain reported strong sales growth in its first quarterly report since going public in November. The company also issued a positive sales outlook for 2022, although it doesn’t expect to turn a profit yet.
Gap — The apparel retailer saw its shares fall about 2% before turning slightly positive, after it reported a narrower-than-expected loss for the fourth quarter and issued strong earnings guidance. Gap posted a loss of 2 cents per share, versus the 14 cents forecast by Refinitiv analysts.
 — CNBC’s Samantha Subin, Yun Li, Hannah Miao and Michael Bloom contributed reporting

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Workers saw average pay grow by 5.1% in the past year, to $31.58 an hour, according to the February jobs report issued Friday by the U.S. Department of Labor. Rank-and-file workers saw a 6.7% bump.
However, hourly earnings grew by just $0.01 from January, much less than the big increases in recent months.
The slowdown suggests employers are having an easier time hiring and don’t need to raise wages as much to compete.

A ‘help wanted’ sign is posted in front of restaurant on Feb. 4, 2022 in Los Angeles.
Frederic J. Brown | AFP | Getty Images

The big raises that many Americans got over the past year are starting to get smaller.
Workers in the private sector saw average wages grow by 5.1% in the past year, to $31.58 an hour, according to the February jobs report issued Friday by the U.S. Department of Labor. Rank-and-file workers saw a higher bump, of 6.7%, to $26.94 an hour in February.

Employers have paid bigger paychecks to compete for workers in a competitive hiring market.

While February’s annual wage growth is high by historical standards, there are signs that it’s tempering. Hourly earnings for all workers rose by just 1 cent (or, by 0.03%) last month relative to January, a weak gain relative to prior months.
“What we’re seeing is the sign that, in aggregate, wage growth is slowing down a little bit,” said Nick Bunker, economic research director for North America at the Indeed Hiring Lab.

For context, workers had gotten roughly 3.5% annual raises prepandemic, which at the time was considered robust, Bunker said.
“Even if wages don’t continue to accelerate, but they’re 4% or 5%, that’s still quite strong,” he said. But it wouldn’t be the same “gangbusters” growth from early 2021, he said.

Demand for workers

Workers enjoyed greater bargaining power as the U.S. economy started emerging from its pandemic hibernation.
Employers’ demand for workers rose at the same time that Covid-related factors (like health fears, child care duties, early retirements and a bigger cash buffer) were limiting their supply.

Job openings surged to record levels. Businesses raised pay to attract scarce talent. Workers started quitting their jobs at record levels, many enticed by higher pay elsewhere, part of a trend dubbed the “Great Resignation.”
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However, workers are reentering the labor force, increasing their availability and making it easier for employers to hire. Wages, in turn, may come down, and workers may lose some of their bargaining power.
The labor force grew by 304,000 people in February, according to the Labor Department. (It remains 592,000 people shy of its February 2020 level.) The U.S. economy added 678,000 new jobs in February, the most since July and a continuation of recent strong growth.

Better pay is attracting workers off the sidelines, Bunker said. Jobs, especially in-person ones, may also be more palatable as risks posed by the Covid omicron virus variant recede.

Inflation

Despite higher pay, average wages haven’t kept pace with inflation. Consumer prices rose by 7.5% in January relative to a year earlier, a 40-year high. Annual inflation outstripped February’s 5.1% average pay increase.
When a household’s wages rise at a slower pace than inflation, it means they have less purchasing power. Their paychecks don’t go as far at the grocery store and at the gas pump, for example.

“Will inflation similarly slow down, and will it slow at the same pace or more?” Bunker asked of consumer prices relative to average wage growth.
The Federal Reserve is expected to start raising interest rates this month to cool down the economy and reduce inflation.
Workers’ raises have been much stronger than average in certain sectors of the economy, especially lower-paying, in-person jobs.

In some cases, they’ve far surpassed the rate of inflation. For example, rank-and-file workers in leisure and hospitality jobs (such as bars, restaurants and hotels) have seen pay increase over 14% in the past year, to $17.22 an hour. (That equates to about $36,000 a year before tax.)
Their pay growth is slowing down, too, when looking over shorter periods of time. Low-wage workers saw earnings increase by an average 7.6% in the three months through January, relative to 11.4% in the three months through August 2021, according to an Indeed analysis of federal data. (Low-wage industries include department stores, food services and drinking places, and child day care services.)
Lower-income households have also felt inflation more acutely than higher-income ones, because more of their household budgets are earmarked for energy and transportation, which are among the categories that have seen prices rise fastest.

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Chicago Fed President Charles Evans warned Friday that small businesses could take a particularly hard hit from surging inflation.
He repeated his position that current Fed policy on interest rates is “wrong-footed” and will need to adapt.

Small businesses will be facing growing challenges from inflation and higher wages, Chicago Federal Reserve President Charles Evans said Friday.
Even with average earnings flattening out in February, Evans told CNBC, he hears from smaller companies in his district about the challenges from cost increases.

“I think there are a lot of business models, especially for small businesses, that are going to be challenged for the future,” the central bank official told CNBC’s Steve Liesman during a “Squawk Box” interview. “They’re going to be asked to pay higher wages, and you know if inflation is going up, it’s the real wage that’s going to equate demand and supply.”
Evans spoke just after the Labor Department’s Bureau of Labor Statistics reported that the economy added 678,000 nonfarm jobs in February, which is considerably higher than expected. The count also indicated that wages rose little over the month and were up 5.1% from a year ago, though that was less than the Wall Street estimate.
Still, even that yearly level is well ahead of anything the economy experienced prior to the Covid pandemic, and Evans said it will exert pressure. The Fed’s preferred inflation gauge shows that inflation, even excluding food and energy prices, is running at its fastest pace since the early 1980s.
“Wages are going to go up. If rents are going up, gas is going up, food costs are going up, and there are a lot of businesses where margins are very thin,” he said. “Can they really survive that?”
Though Evans generally favors less-restrictive Fed policy, he said inflation has rendered the current stance, in which benchmark short-term rates are being held near zero, as “wrong-footed.”

As such, he likely will be among the majority of members this month to vote to raise rates a quarter-percentage point and continue to do so.
“Obviously, we need to be moving toward a more neutral monetary policy certainly by the end of the year, so that we’re within striking distance of taking a position that would deal more forcefully with inflation,” Evans said. “I have said ‘wrong-footed’ [on policy], and I think that’s the right term. It happened very quickly.”
Markets currently expect six 25-basis-point rate hikes this year. Evans said he’s not sure the Fed needs to be that aggressive and the central bank will have a better idea of where it needs to be by the end of the year.

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