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  • China President Xi to visit Moscow in apparant show of support for Putin

    China President Xi to visit Moscow in apparant show of support for Putin

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    BEIJING (AP) — Chinese President Xi Jinping will visit Russia from Monday to Wednesday, in an apparent show of support for Russian President Vladimir Putin amid sharpening East-West tensions over the conflict in Ukraine.

    Russia’s ongoing invasion of Ukraine is expected to dominate discussions. China has sought to project itself as neutral in the conflict even while in 2022 Beijing declared it had a “no-limits” friendship with Russia and has refused to condemn Moscow’s invasion.

    The meeting between the leaders was announced by both countries on Friday.

    China has said the sovereignty and territorial integrity of all countries should be respected, while condemning Western sanctions and accusing NATO and the United States of provoking Russia into military action.

    On Thursday, Chinese Foreign Minister Qin Gang told his Ukrainian counterpart Dmytro Kuleba that Beijing is concerned about the year-old conflict spinning out of control and urged talks on a political solution with Moscow.

    China has “always upheld an objective and fair stance on the Ukraine issue, has committed itself to promoting peace and advancing negotiations and calls on the international community to create conditions for peace talks,” Qin said.

    Kuleba later tweeted that he and Qin “discussed the significance of the principle of territorial integrity.”

    “I underscored the importance of (Ukrainian President Volodymyr Zelenskyy’s)’s Peace Formula for ending the aggression and restoring just peace in Ukraine,” wrote Kuleba, who spoke the same day with U.S. Secretary of State Antony Blinken.

    Wang Wenbin, spokesperson of the Ministry of Foreign Affairs, said in a daily briefing on Friday that Xi “will have an in-depth exchange of views with President Putin on bilateral relations and major international and regional issues of common concern, promote strategic cooperation and practical cooperation between the two countries, and inject new impetus into the development of bilateral relations.”

    “Currently, the world is entering a new period of turbulences and reform with the accelerated evolution of changes of the century. As permanent members of the UN Security Council and important major countries, the significance and impact of the China-Russia relations go far beyond the bilateral sphere,” he added.

    The trip comes after the destruction of a U.S. drone over the Black Sea following an encounter with Russian fighter jets, which brought the two countries closest to direct conflict since Moscow’s invasion of Ukraine a year ago.

    The Kremlin on Friday also announced Xi’s visit, saying it will take place “at the invitation of Vladimir Putin.”

    Xi and Putin will discuss “issues of further development of comprehensive partnership and strategic interaction between Russia and China,” as well as exchange views “in the context of deepening Russian-Chinese cooperation in the international arena,” the Kremlin said in a statement.

    The two leaders will also sign “important bilateral documents,” the statement read.

    Putin invited Xi to visit Russia during a video conference call the two held in late December. The visit, Putin said, could “demonstrate to the whole world the strength of the Russian-Chinese ties” and “become the main political event of the year in bilateral relations.”

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  • Dow suffers worst week since June as U.S. stocks end sharply lower after employment report, banking sector fears

    Dow suffers worst week since June as U.S. stocks end sharply lower after employment report, banking sector fears

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    U.S. stocks ended sharply lower Friday as investors parsed mixed signals from the February jobs report amid ongoing concerns about contagion in the banking sector from the troubles at Silicon Valley Bank.

    How stocks traded
    • The Dow Jones Industrial Average
      DJIA,
      -1.07%
      dropped 345.22 points, or 1.1%, to close at 31,909.64, its fourth straight day of declines for its longest losing streak since December.

    • The S&P 500
      SPX,
      -1.45%
      fell 56.73 points, or 1.4%, to finish at 3,861.59.

    • Nasdaq Composite
      COMP,
      -1.76%
      sank 199.47 points, or 1.8%, to end at 11,138.89.

    For the week, the Dow sank 4.4%, S&P 500 dropped 4.5% and the Nasdaq shed 4.7%, according to Dow Jones Market Data. The Dow booked its worst week since June, the S&P 500 saw its biggest weekly percentage decline since September, and the Nasdaq had its biggest percentage slide since November.

    What drove markets

    U.S. stocks slumped amid investor concerns about the banking sector after the closure of Silicon Valley Bank by the Federal Deposit Insurance Corp and in the wake of the monthly employment report released Friday.

    In a sign of investor anxiety, the CBOE Volatility Index
    VIX,
    +9.69%
    was up Friday afternoon at almost 25, after jumping Thursday, according to FactSet data, last check.

    “Bears came out of hibernation this week after waking up to a warning shot from the banking space,” said Adam Turnquist, chief technical strategist for LPL Financial, in emailed comments Friday, pointing to the collapse of Silicon Valley Bank.

    Silicon Valley Bank was closed Friday by the California Department of Financial Protection and Innovation. The Federal Deposit Insurance Corp. was appointed receiver, with the bank becoming the first FDIC-backed institution to fail this year.

    Read: Bank ETFs fall amid concerns over SVB and ‘crack’ in financial system after rate hikes

    The SPDR S&P Regional Banking ETF
    KRE,
    -4.39%
    was down more than 4% Friday afternoon, FactSet data show, while shares of Bank of America Corp.
    BAC,
    -0.88%
    closed 0.9% lower, Citigroup Inc.
    C,
    -0.53%
    slid 0.5% and JPMorgan Chase & Co.
    JPM,
    +2.54%
    rose 2.5%.

    Worries over the banking sector are “probably overshadowing” the positive aspects of the employment report, said Karim El Nokali, investment strategist at Schroders, in a phone interview Friday.

    The U.S. employment report for February showed the labor market continued to grow at a robust pace last month, with the U.S. economy adding 311,000 jobs, more than the 225,000 that economists polled by the Wall Street Journal had expected.

    But “if you dig a little deeper” into the report, average hourly earnings came in “a little lighter than expected” while labor-force participation ticked up, which are positive developments from an inflation standpoint, said El Nokali.

    Average hourly wages grew by 0.2%, a slower rate than the 0.3% rate economists had expected. It was also less than the 0.3% increase in January. The unemployment rate ticked higher to 3.6%, helped by an increase in the labor-force participation rate.

    “On the margin,” said El Nokali, the employment report was “positive for the equity market.” He said it would “probably argue more” for the Federal Reserve to raise its benchmark rate by 25 basis points at its policy meeting later this month, as opposed to a 50-basis-point hike that investors had been fearing leading up to the employment data.

    See: Jobs report shows strong 311,000 gain in February, puts pressure on Fed for bigger rate hike

    Fed Chair Jerome Powell said earlier this week that the “totality” of jobs and inflation data would determine whether the central bank would go back to raising its policy interest rate by another 50 basis points at its meeting later in March.

    After climbing earlier in the week, odds of a 50-basis-point rate hike by the Fed have moderated over the past 24 hours. Traders now see a 62% chance of the central bank raising its benchmark rate by 25 basis points, according to the CME FedWatch Tool.

    Meanwhile, Treasury yields sank Friday.

    The yield on the 2-year Treasury note
    TMUBMUSD02Y,
    4.594%
    dropped 31.4 basis points to 4.586%, while the 10-year Treasury yields fell 22.8 basis points to 3.694%, according to Dow Jones Market Data. The Treasury yield curve remains massively inverted, which has contributed to banks’ woes.

    Companies in focus

    —Steve Goldstein contributed to this report.

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  • Jobs report shows strong 311,000 gain in February, puts pressure on Fed for bigger rate hike

    Jobs report shows strong 311,000 gain in February, puts pressure on Fed for bigger rate hike

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    The numbers: The U.S. created a robust 311,000 new jobs in February, raising the odds of another sharp hike in interest rates by the Federal Reserve later this month.

    Economists polled by The Wall Street Journal had forecast 225,000 new jobs.

    The increase in employment last month followed a revised 504,000 gain (initially 517,000) in January, the government said Friday.

    The large back-to-back increases could force the Fed to raise interest rates higher than it had planned to slow the economy and loosen up the tightest labor market in decades. The central bank meets March 21-22 to plot its next move.

    A sign advertises job openings outside a business in Illinois. Lots of companies are still hiring, but the economy has slowed and job creation is likely to as well.


    Scott Olson/Getty Images

    Yet there were a few glimmers of hope for the Fed.

    The unemployment rate rose a few ticks to 3.6%. Hourly wages rose just 0.2% to mark the smallest increase in a year. And the share of able-bodied people in the labor force climbed to a three-year high.

    All of these are pressure valves on the labor market and the broader economy from high inflation.

    Investors appeared to put more weight on those factors than another big increase in employment. Stocks rose and bond yields fell.

    Big picture: An expanding U.S. economy has shown lots of resilience in the face of rising interest rates, but analysts doubt the good times can last. Higher borrowing costs typically slow the economy by depressing consumer spending and business investment.

    Just look at the housing market, where soaring mortgage rates have crushed sales and new construction. The same could happen to the rest of the economy if the Fed has to jack up rates more than Wall Street expects.

    Already, a robust U.S. labor market is showing signs of fraying. Job postings have declined, lots of large companies have announced layoffs and workers who lose a job are taking longer to find a new one.

    It just might not be enough for the Fed.

    Market reaction:  The Dow Jones Industrial Average
    DJIA,
    -1.66%
    and S&P 500
    SPX,
    -1.85%
    trimmed premarket losses in Friday trades. The yield on the 10-year Treasury fell to 3.78%.

    Investors hope some signs of cooling in the labor market will encourage the Fed to keep raising interest rates in smaller increments.

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  • UPDATE

    UPDATE

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    A few days ago I posted this photo. Some brave souls ascended a peak above town in the middle of the night and cut in a thousand foot dong visible for miles.

    UPDATE. A few days ago I posted this photo. Some brave souls ascended a peak above town in the middle of the night and cut in a thousand foot dong visible for m

    Welp, the decided risk a heli drop ski patrol to wipe it out. But after several hours at max altitude they only managed to give it hairy balls and a dick vein before admitting defeat.

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  • Dow tumbles over 400 points in final hour of trade as investors await monthly employment report

    Dow tumbles over 400 points in final hour of trade as investors await monthly employment report

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    U.S. stocks extended losses in the final hour of trade on Thursday, while awaiting Friday’s February employment data that could help decide how large an interest rate hike the Federal Reserve will impose at its next meeting in two weeks.

    Financial sector stocks were particularly hard hit along with cryptocurrencies after Silvergate Capital Corp., collapsed overnight amid growing scrutiny in Washington. Other financial stocks fell, dragged down by SVB Financial Group, which fell by a record amount.

    How are stocks trading
    • The S&P 500
      SPX,
      -1.85%
      dropped 56 points, or 1.4%, to 3,936

    • Dow Jones Industrial Average
      DJIA,
      -1.66%
      was off 412 points, or 1.3%, to 32,387

    • Nasdaq Composite
      COMP,
      -2.05%
      declined by 174 points, or 1.5%, to 11,399

    Both the S&P 500 and Nasdaq finished higher on Wednesday, with only the Dow finishing in the red, while all three indexes remained on track for weekly losses. A weekly drop for the S&P 500 would mark its fourth such pullback in five weeks.

    What’s driving markets

    U.S. stocks trimmed earlier gains and extended losses on Thursday afternoon after trading modestly higher after the open when the latest weekly jobless claims data showed an unexpectedly large uptick in the number of Americans filing for unemployment benefits.

    The number of Americans who applied for unemployment benefits in early March jumped to a 10-week high of 211,000, the highest level since Christmas. That’s higher than the 195,000 new applicants that economists polled by the Wall Street Journal had anticipated.

    Economists said the data suggest that the labor market might be starting to slow, which is seen as a necessary prerequisite for driving inflation back to the Fed’s 2% target.

    “The labor market might just be on the cusp of an inflection point,” said Peter Boockvar, chief investment officer of Bleakley Financial Group, in emailed commentary.

    Investors are now looking ahead to Friday’s closely watched February jobs report from the Department of Labor. Economists polled by the Wall Street Journal expect 225,000 jobs were created last month after 517,000 new jobs were created in January, a number that was much higher than economists had anticipated.

    “If we do get the expected 200,000, or really anything between say 180,000 and 240,000, this would be a return to the prior trend and would signal that last month was indeed a one-off,” said Brad McMillan, chief investment officer of Commonwealth Financial Network, in emailed comments.

    “That would be perceived as a positive by the Fed and markets, suggesting that inflation may start moderating again but is still high enough to allow for continued economic growth.”

    See: Wall Street sees smaller 225,000 increase in U.S. jobs in February. A much larger gain might spur stiffer Fed rate hike.

    The Russell 2000
    RUT,
    -2.75%    ,
    the small-cap index, is on pace to close below its 50-day moving average for the first time since January 9, 2023, according to Dow Jones Market Data.

    Regional bank stocks underperformed on Thursday. Shares of Silicon Valley Bank parent company SVB Financial Group
    SIVB,
    -60.41%
    plummeted more than 61% after the company disclosed large losses from securities sales and a stock offering meant to provide a boost to its balance sheet. SVB is on pace to book the biggest one-day selloff since the dotcom boom, while its trading was halted for volatility multiple times, according to Dow Jones Market Data.

    Signature Bank 
    SBNY,
    -12.18%
     shares dropped 11.2%undefined

    The KBW Bank Index
    BKX,
    -7.70%
    of 24 leading banks slumped 7.1%, on pace for its worst day since June 26, 2020, according to Dow Jones Market Data. SPDR S&P Bank ETF
    KBE,
    -7.30%
    was down 6.5%.

    See: SVB Financial’s stock suffers biggest drop in 25 years after large losses on securities sales, equity offering

    Treasury yields fell with the yield on the 2-year note BX:TMUBMUSD02Yslipped to 4.885% from 5.064% on Wednesday. 

    Stocks suffered earlier in the week after Powell said during testimony on Capitol Hill that rates would likely need to rise even further than market participants had expected. However, the main indexes saw some relief after the Fed chief clarified that policymakers hadn’t yet decided on the size of the next rate hike.

    Investors have already digested several reports on the labor market this week, including a report on the number of job openings, which showed that the number of Americans quitting their jobs had fallen below 4 million in January for the first time in 19 months.

    “The big picture is that the labor market is easing, but it’s still tighter than it was before the pandemic,” said Sonu Varghese, a global macro strategist at Carson Group.

    See: Bad economic data won’t be good for stocks, but good data will be even worse, this JPMorgan technical strategist says

    Companies in focus

    — Jamie Chisholm contributed to this article

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  • Jobless claims jump to 211,000, the highest since Christmas. Blame New York.

    Jobless claims jump to 211,000, the highest since Christmas. Blame New York.

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    The numbers: The number of Americans who applied for unemployment benefits in early March jumped to a 10-week high of 211,000. Yet most of the increase was concentrated in New York and might not signal a broader cooling-off trend in the U.S. labor market.

    New U.S. applications for benefits rose 21,000 from 190,000 in the prior week, the government said Thursday. The numbers are seasonally adjusted.

    It’s the first time in eight weeks claims have topped the 200,000 mark.

    An unusually big increase took place in New York. Raw or actual unemployment applications in the state jumped to 30,241 from 13,878 in the prior week.

    Chief economist Stephen Stanley of Santander U.S. Capital Markets said school workers in New York City are allowed by contract to apply for benefits during winter and spring breaks.

    Asked about the upsurge, a government spokesperson said by email that “the New York State Department of Labor cannot speculate on the increase.”

    California also posted a sizable pickup, perhaps a sign that the recent spate of major corporate layoffs are starting to bite. A number of large tech firms have announced job cuts since last fall.

    The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse. New unemployment applications remain near historically low levels, however.

    Economists polled by The Wall Street Journal had forecast new claims to total 195,000 in the seven days ending March 3.

    Key details: Thirty-seven of the 53 U.S. states and territories that report jobless claims showed an increase last week. Seventeen posted a decline.

    Most states aside from New York and California reported little change.

    The number of people collecting unemployment benefits across the country, meanwhile, rose by 69,000 to a two-month high of 1.72 million in the week ending Feb. 25. That number is reported with a one-week lag.

    These continuing claims are still low, but a gradual increase since last spring suggests it’s taking longer for people who lose their jobs to find new ones.

    Big picture: Jobless claims are one of the first indicators to emit danger signals when the U.S. is headed toward recession.

    So far, jobless claims remain remarkably low and the economy is still adding plenty of jobs. Economists estimate that the U.S. gained 225,000 new jobs in February.

    Economists expect hiring to slow and layoffs to increase later in the year, however, as rising interest rates restrain the economy and reduce demand for workers. A number of large companies, especially in tech, media and finance, have already announced job cuts.

    Looking ahead: “Absent [New York], the count would likely have been below 200,000 yet again,” Stanley of Santander said.

    “Broadly, initial jobless claims have remained remarkably low despite the flurry of layoff announcements in recent months, underscoring that the labor market retains considerable momentum.”

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    -1.66%
    and S&P 500
    SPX,
    -1.85%
    rose in Thursday trades.

    Wall Street is hoping for signs of cooling in the labor market, which would discourage the Federal Reserve from raising interest rates more aggressively. The Fed is raising rates to snuff out inflation and reduce upward pressure on wages.

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  • Senate Republican leader McConnell hospitalized after fall

    Senate Republican leader McConnell hospitalized after fall

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    WASHINGTON (AP) — Senate Republican leader Mitch McConnell has been hospitalized after tripping at a local hotel on Wednesday evening, a spokesman for the senator said.

    The Kentucky senator, 81, was attending a private dinner in Washington when he tripped. He was admitted to a hospital for treatment, spokesman Doug Andres said.

    McConnell’s office did not provide additional detail on his condition or how long he may be absent from the Senate.

    In 2019, the GOP leader tripped and fell at his home in Kentucky, suffering a shoulder fracture. At the time, he underwent surgery to repair the fracture in his shoulder. The Senate had just started a summer recess and he worked from home for some weeks as he recovered.

    First elected in 1984, McConnell in January became the longest-serving Senate leader when the new Congress convened, breaking the previous record of 16 years.

    The taciturn McConnell is often reluctant to discuss his private life. But at the start of the COVID-19 crisis he opened up about his early childhood experience fighting polio. He described how his mother insisted that he stay off his feet as a toddler and worked with him through a determined physical therapy regime. He has acknowledged some difficulty in adulthood climbing stairs.

    The Senate, where the average age is 65, has been without several members recently due to illness.

    Sen. John Fetterman, D-Pa., 53, who suffered a stroke during his campaign last year, was expected to remain out for some weeks as he received care for clinical depression. And Sen. Dianne Feinstein, D-Calif., 90, said last week that she had been hospitalized to be treated for shingles.

    The Democratic absences have proven a challenge for Senate Majority Leader Chuck Schumer, D-N.Y., who is already navigating a very narrow 51-49 majority.

    The Republicans, as the minority party, have had an easier time with intermittent absences. It is unclear if McConnell will be out on Thursday and if that would have an effect on scheduled votes. South Dakota Sen. John Thune is the Senate’s No. 2 Republican.

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  • Pace Analytical Services Acquires Alpha Analytical Laboratories

    Pace Analytical Services Acquires Alpha Analytical Laboratories

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    Company continues growth in the Northeast U.S. adding 11 environmental laboratories and service centers.


    MINNEAPOLIS, March 7, 2023 (Newswire.com)
    –
    Pace® Analytical Services, the preferred provider of regulatory testing and analytical laboratory services and a division of Pace®, a science and technology company, today announced the acquisition of Alpha Analytical, LLC, a full-service environmental laboratory services company based in Westborough, MA.

    “Harmful contaminants are all around us, in our air, water, soil, and more. With Alpha Analytical choosing to join the Pace® nationwide laboratory network, we are able to further expand and bring critical services closer to the businesses and communities we serve in the Northeast United States,” notes Pace® CEO, Eric Roman. In the past year, Pace® has added several labs and service centers in the region, giving customers the convenience of over 40 locations. “Customers want great service and convenience. Pace®, together with Alpha Analytical, further amplifies our ability to honor customer commitments and exceed expectations.”

    Like Pace®, Alpha Analytical has been providing environmental and analytical laboratory testing services for decades. “We have had a friendly relationship with Pace® for over ten years,” said Mark Woelfel, President of Alpha Analytical. “Because of our mutual respect, shared values, and focus on sustainability, Pace® was the only company we considered for this transaction.”

    Alpha Analytical provides a full range of environmental laboratory services complementing those offered by Pace® Analytical Services including air, water, soil, and testing for emerging contaminants such as PFAS which is highly regulated in the Northeast. “We are particularly excited about the breadth and depth of capabilities Alpha Analytical offers, including their sediment and tissue analysis and hydrocarbon forensics services, commented Greg Whitman, President of Pace® Analytical Services. “With the talented team of Alpha Analytical now part of Pace® Analytical Services, we will work together to advance science through innovation, ensuring all who need it have access to a trusted lab services partner.”

    Through the acquisition, Pace® adds full-service laboratories in Westborough, MA, and Mansfield, MA, and service centers in Brewer, ME, Portsmouth, NH, Mahwah, NJ, Albany, NY, Buffalo, NY, Rochester, NY, Syracuse, NY, Holmes, PA, and Mentor, OH.

    Pace® is a portfolio company of Leonard Green & Partners and Los Angeles-based Aurora Capital Partners.

    About Alpha Analytical

    Since 1987, Alpha Analytical, LLC. has provided full-service environmental laboratory solutions for the most demanding industrial and commercial applications in the U.S. and abroad. Alpha Analytical is 6th largest environmental laboratory in the country and the largest environmental laboratory in the Northeast. Our core services include air, water, and soil analysis, with particular expertise in the highly-specialized fields of emerging contaminants, sediment and tissue analysis, and petroleum forensics. More at alphalab.com.

    About Pace®

    Pace® makes the world a safer, healthier place. For decades, Pace® people have been committed to advancing the science of the pharmaceutical and biotechnology industries in our Life Sciences laboratories and supporting businesses, industries, consulting firms, government agencies, and more through our Analytical Services laboratories. Pace® offers local-level service backed by a national laboratory network. For customers with in-house labs, Pace® provides a range of professional services to keep their operations moving forward. Pace® people work in partnership with customers by providing the service, science, and the data they need to make critical decisions that benefit us all. More at pacelabs.com.

    ###

    Source: Pace Analytical Services

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  • Asian shares follow Wall Street lower after stronger-than-expected data

    Asian shares follow Wall Street lower after stronger-than-expected data

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    BANGKOK (AP) — Shares fell Monday in Asia after Wall Street benchmarks closed out their worst week since early December. U.S. futures edged higher while oil prices fell.

    Reports on inflation, the jobs market and retail spending have come in hotter than expected, leading analysts to raise forecasts for how high the Federal Reserve will have to take interest rates to slow the U.S. economy and cool inflation.

    Higher rates pressure business activity and investment prices. So far, they do not seem to be slowing growth as much as anticipated. The S&P 500 fell 1.1% Friday to cap its third straight loss.

    “It is becoming increasingly apparent that inflation, and associated inflation expectations and wage pressures, will not decline in a predictable linear manner,” Mizuho Bank said in a commentary. “Early trading on Monday suggests that risk aversion has been brought forward to Asian markets.”

    Tokyo’s Nikkei 225 index
    NIK,
    -0.11%
    edged 0.1% lower to 27,423 and the Kospi
    180721,
    -0.87%
    in Seoul gave up 0.8% to 2,402.

    In Hong Kong, the Hang Seng
    HSI,
    -0.26%
    lost 0.5% to 19,907 while the Shanghai Composite index
    SHCOMP,
    -0.28%
    was down 0.2% at 3,259. Australia’s S&P/ASX 200
    XJO,
    -1.12%
    shed 1.1% to 7,224.80.

    Bangkok was 0.3% lower while the Sensex in Mumbai dropped 0.7%.

    On Friday, the S&P 500
    SPX,
    -1.05%
    closed 1% lower at 3,970.04. The Dow Jones Industrial Average
    DJIA,
    -1.02%
    dropped 1% to 32,816.92, while the Nasdaq Composite
    COMP,
    -1.69%
    lost 1.7% to 11,394.94.

    Higher rates can drive down inflation, but they raise the risk of a recession.

    The measure of inflation preferred by the Fed, reported Friday, said prices were 4.7% higher in January than a year earlier, after ignoring costs for food and energy because they can swing more quickly than others. That was an acceleration from December’s inflation rate and was higher than economists’ expectations for 4.3%.

    It echoed other reports earlier in the month that showed inflation at both the consumer and wholesale levels was higher than expected in January.

    Other data Friday showed that consumer spending, the biggest piece of the economy, returned to growth in January, rising 1.8% from December. A separate reading on sentiment among consumers came in slightly stronger than earlier thought, while sales of new homes improved a bit more than expected.

    Such strength paired with the remarkably resilient job market raises the likelihood the economy might avoid a recession in the near term.

    Tech and high-growth stocks once again took the brunt of the pressure.

    Investments seen as the most expensive, riskiest or making their investors wait the longest for big growth are among the most vulnerable to higher rates.

    Traders are increasing bets on the Fed raising its benchmark rate to at least 5.25% and keeping it that high through the end of the year. It’s currently in a range of 4.50% to 4.75%, and it was at virtually zero a year ago.

    Expectations for a firmer Fed have caused yields in the Treasury market to shoot higher this month, and they climbed further Friday.

    The yield on the 10-year Treasury
    TMUBMUSD10Y,
    3.928%
    was steady at 3.94%, up from 3.89% late Thursday. It helps set rates for mortgages and other important loans. The two-year yield
    TMUBMUSD02Y,
    4.815%    ,
    which moves more on expectations for the Fed, rose to 4.79% from 4.71% and is near its highest level since 2007.

    In other trading Monday, U.S. benchmark crude oil
    CL.1,
    +0.20%
    lost 56 cents to $75.75 per barrel in electronic trading on the New York Mercantile Exchange. It gained 93 cents to $76.32 per barrel. Brent crude oil
    BRN00,
    +0.10%    ,
    the pricing basis for international trading, shed 65 cents to $82.51 per barrel.

    The dollar
    DXY,
    -0.12%
    rose to 136.41 Japanese yen
    USDJPY,
    -0.30%
    from 136.45 yen. The euro
    EURUSD,
    +0.12%
    slipped to $1.0533 from $1.0549.

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  • Why is the stock market falling? Blame a ‘perfect storm’ as yields rise, dollar rallies

    Why is the stock market falling? Blame a ‘perfect storm’ as yields rise, dollar rallies

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    Rising Treasury yields appeared Tuesday to finally catch up with a previously resilient stock market, putting major indexes on track for their worst day so far of 2023.

    “Yields are popping across the curve, with the 2-year back to its November highs. This time it seems, market rates are playing catch up with fed funds,” said veteran technical analyst Mark Arbeter, president of Arbeter Investments, in a note.

    Since the beginning of the month, traders in fed-funds futures have priced in a more aggressive Federal Reserve after initially doubting the central bank would hit its forecast for a peak fed-funds rate above 5%. A few traders are even pricing in the outside possibility of a peak rate near 6%.

    Arbeter noted that markets generally lead fed-funds higher, not the other way around. Meanwhile, the U.S. dollar has also rallied, with the ICE U.S. Dollar Index adding 0.2% to a February bounce.

    Arbeter also noted that breadth indicators, a measure of how many stocks are participating in a rally, had previously deteriorated, with some measures reaching oversold levels.

    “Just another perfect storm against the equity markets in the short term,” he wrote.

    Rising yields can be a negative for stocks, increasing borrowing costs. More important, higher Treasury yields mean that the present value of future profits and cash flow are discounted more heavily. That can weigh heavily on tech and other so-called growth stocks whose valuations are based on earnings far into the future. Those stocks were pummeled heavily last year but have led gains in an early 2023 rally, remaining resilient through last week even as yields extended a bounce.

    Yields have been on the rise after a run of hotter-than-expected economic data, which have boosted expectations for Fed rate hikes. Weak guidance Tuesday from Home Depot Inc.
    HD,
    -7.09%
    and Walmart Inc.
    WMT,
    +0.59%
    also contributed to the tone.

    Home Depot sank 6.5%, and was the biggest lower on the Dow Jones Industrial Average
    DJIA,
    -2.06%    ,
    after the home-improvement retailer reported a surprise decline in fiscal fourth-quarter same-store sales, guided for a surprise drop in fiscal 2023 profit and earmarked an additional $1 billion to pay its associates more.

    “While Wall Street expects resilient consumers following last week’s robust retail sales report, Home Depot and Walmart are much more cautious,” said Jose Torres, senior economist at Interactive Brokers, in a note.

    “This morning’s data offers more mixed signals concerning consumer demand, but during a traditionally weak seasonal trading period, investors are shifting toward a glass half-empty view against the backdrop of a year that’s featured the exact opposite so far, a glass half-full perspective,” he wrote.

    The Dow remained down nearly 650 points, or 1.9%, while the S&P 500
    SPX,
    -2.00%
    slumped 1.9% to trade at 4,001 after earlier dipping below the 4,000 level for the first time since Jan. 25. The S&P 500 was on track for its biggest daily drop since December. The Nasdaq Composite
    COMP,
    -2.50%
    was down 2.4%.

    The losses left the Dow clinging to a 0.1% year-to-date gain, while the S&P 500 remains up more than 4% and the Nasdaq Composite has rallied over almost 10% so far this year.

    Arbeter identified a “very interesting cluster” of support just below the Tuesday low for the S&P 500, with the convergence of a pair of trend lines along with the index’s 50- and 200-day moving averages all near 3,970 (see chart below).


    Arbeter Investments LLC

    “If that zone does not represent the pullback lows, we have more trouble ahead,” he wrote.

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  • Soccer star Christian Atsu ‘under the rubble’ following Turkey earthquake, report says. ‘We remain hopeful for positive news’ says Ghana Football Association

    Soccer star Christian Atsu ‘under the rubble’ following Turkey earthquake, report says. ‘We remain hopeful for positive news’ says Ghana Football Association

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    Ghanaian soccer star Christian Atsu is “under the rubble” following the deadly that earthquake hit Turkey, according to a report.

    The former Chelsea, Newcastle and Everton star plays for Turkish Super Lig club Hatayspor in the city of Antakya in southern Turkey.

    Istanbul-based sports journalist Yagiz Sabuncuoglu tweeted Monday that Atsu and Hatayspor Sporting Director Taner Savut were “left under the rubble,” adding that “search and rescue teams are looking for two names.”

    “We pray for Ghana International Christian Atsu and victims of the earthquake in Turkey and Syria,” tweeted the Ghana Football Association. “We continue with our efforts to establish contact with officials of Hataspor and the Turkish Football Federation, considering the difficult situation.”

    “Our thoughts and prayers are with Christian Atsu and our brothers and sisters in Turkey and Syria. We remain hopeful for positive news,” the Ghana Football Association wrote.

    Related: Turkey quake assistance ‘already underway,’ says U.S.’s Blinken

    “Praying for some positive news, @ChristianAtsu20,” tweeted his former club Newcastle United.

    Soccer star Yannick Bolasie tweeted praying hands in response to Yagiz Sabuncuoglu’s tweet.

    On Sunday Atsu tweeted out images from Hatayspor’s victory over Kasimpasa earlier that day, in which he scored the winning goal.

    The powerful 7.8 magnitude quake rocked wide swaths of Turkey and Syria early Monday, toppling hundreds of buildings and killing more than 1,900 people.

    Turkey’s Daily Sabah reports that the runway of Hatay Airport. which serves Antakya, was split in two by the earthquake

    Additional reporting by Robert Schroeder.

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  • The stock-market rally survived a confusing week. Here’s what comes next.

    The stock-market rally survived a confusing week. Here’s what comes next.

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    Despite a Friday stumble, stocks ended a turbulent week with another round of solid gains, keeping 2023’s young but robust stock-market rally very much alive.

    But a cloud of confusion also sets over the market, and it will eventually need to be resolved, strategists said.

    Stocks rose early in the week as traders continued to bet that the Federal Reserve won’t follow through on its forecast to push the federal funds rate to a peak above 5% and hold it there, instead looking for cuts by year-end. Fed chief Jerome Powell pushed back against that expectation again on Wednesday, but a nuanced answer to a question about loosening financial conditions and an acknowledgment that the “disinflationary process” had begun convinced traders they remained right about the rate path.

    On Friday, however, a blowout January jobs report, with the U.S. economy adding 517,000 jobs and the unemployment rate dropping to 3.4%, its lowest level since 1969, appeared to affirm Powell’s position.

    Stocks took a hit, even if they finished off session lows, with the Nasdaq Composite
    COMP,
    -1.59%
    booking a fifth straight weekly gain and the S&P 500
    SPX,
    -1.04%
    achieving back-to-back weekly wins. The Dow Jones Industrial Average
    DJIA,
    -0.38%
    suffered a 0.2% weekly fall.

    “It kind of leaves you shaking your head right now, doesn’t it?” asked Jim Baird, chief investment officer at Plante Moran Financial Advisors, in a phone interview.

    See: Jobs report tells markets what Fed chairman Powell tried to tell them

    Commentary: The blowout jobs report is actually three times stronger than it appears

    At some point in the coming months there will need to be “a reconciliation between what the markets think the Fed will do and what Powell says the Fed will do,” Baird said.

    The rally could continue for now, Baird said, but he argued it would be wise in the long run to take the Fed at face value. “I think the overall tone of risk taking in the market right now is a little bit too optimistic.”

    Money-market traders did react to Friday’s data. Fed funds futures on Friday afternoon reflected a 99.6% probability that the Fed would raise the target rate by 25 basis points to a range of 4.75% to 5% at the conclusion of its next policy meeting, on March 22, up from an 82.7% probability on Thursday, according to the CME FedWatch tool.

    For the Fed’s May meeting, the market reflected a 61.3% chance of another quarter-point rise to 5% to 5.25%, the level the Fed has signaled is its expected high-water-mark rate. On Thursday, it saw just a 30% chance of a quarter-point rise in May. But markets still look for a cut by year-end.

    Of course, one month’s data do not represent the end of the argument. But unless January’s labor-market strength turns out to be a blip, the hawks on the Fed are likely to dig in and keep rates higher for longer, said Yung-Yu Ma, chief investment strategist at BMO Wealth Management, in a phone interview.

    For markets, the lack of a resolution to the long-simmering disconnect with the Fed could lead to a period of consolidation after an admittedly impressive start to 2023, he said.

    Indeed, the momentum behind the market’s rally could be set to continue. It’s been led by tech and other growth stocks that were hammered in last year’s market rout. Market watchers detect a sense of “FOMO,” or fear of missing out, is driving what some have termed a tech-stock “meltup.”

    See: Tech stock ‘meltup’ puts Nasdaq-100 on verge of exiting bear market

    “The impressive equity rally to start the year has caught cautious institutional investors, hedge funds, and strategists off guard. While overbought conditions are obvious, the near-universal level of skepticism among institutions provides a contrarian degree of support for continued strength,” said Mark Hackett, chief of investment research at Nationwide, in a Friday note.

    And then there’s earnings season, which has so far seen results from around half of the S&P 500.

    Companies through Friday had reported lower earnings for the fourth quarter relative to the end of the previous week and relative to the end of the quarter.

    The blended earnings decline (a combination of actual results for companies that have reported and estimated results for companies that have yet to report) for the fourth quarter was 5.3% through Friday, compared with an earnings decline of 5.1% last week and an earnings decline of 3.3% at the end of the fourth quarter, according to FactSet. If earnings come out negative for the quarter, it would be the first year-over-year decline since the third quarter of 2020.

    When it comes to earnings, “there’s definitely been a mood of forgiveness in the market,” said BMO’s Ma.

    “I think the market just didn’t want to see a disastrous earnings season,” he said, noting expectations remain for weak earnings in the current quarter and next, with bulls looking into the second half of this year and even into 2024 to get on a better footing.

    For the market, the main driver will remain data on inflation and wage growth, Ma said.

    Mark Hulbert: Are we in a new bull market for stocks?

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  • Pentagon says it is tracking suspected Chinese spy balloon over U.S.

    Pentagon says it is tracking suspected Chinese spy balloon over U.S.

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    WASHINGTON — The U.S. is tracking a suspected Chinese surveillance balloon that has been spotted over U.S. airspace for a couple days, but the Pentagon decided not to shoot it down due to risks of harm for people on the ground, officials said Thursday. The discovery of the balloon puts a further strain on U.S.-China relations at a time of heightened tensions.

    A senior defense official told Pentagon reporters that the U.S. has “very high confidence” it is a Chinese high-altitude balloon and it was flying over sensitive sites to collect information. One of the places the balloon was spotted was Montana, which is home to one of the nation’s three nuclear missile silo fields at Malmstrom Air Force Base. The official spoke on condition of anonymity to discuss sensitive information.

    Brig. Gen. Patrick Ryder, Pentagon press secretary, provided a brief statement on the issue, saying the government continues to track the balloon. He said it is “currently traveling at an altitude well above commercial air traffic and does not present a military or physical threat to people on the ground.”

    He said similar balloon activity has been seen in the past several years. He added that the U.S. took steps to ensure it did not collect sensitive information.

    The defense official said the U.S. has “engaged” Chinese officials through multiple channels and communicated the seriousness of the matter.

    The incident comes as Secretary of State Antony Blinken was supposed to make his first trip to Beijing, expected this weekend, to try to find some common ground. Although the trip has not been formally announced, both Beijing and Washington have been talking about his imminent arrival.

    It was not immediately clear if the discovery of the balloon would impact Blinken’s travel plans.

    The senior defense official said the U.S. did get fighter jets, including F-22s, ready to shoot down the balloon if ordered to by the White House. The Pentagon ultimately recommended against it, noting that even as the balloon was over a sparsely populated area of Montana, its size would create a debris field large enough that it could have put people at risk.

    It was not clear what the military was doing to prevent it from collecting sensitive information or what will happen with the balloon if it isn’t shot down.

    The defense official said the spy balloon was trying to fly over the Montana missile fields, but the U.S. has assessed that the balloon has “limited” value in terms of providing China intelligence it couldn’t already collect by other means, such through spy satellites.

    The official would not specify the size of the balloon, but said it was large enough that despite its high altitude, commercial pilots could see it. All air traffic was halted at Montana’s Billings Logan International Airport from 1:30 p.m. to 3:30 p.m. Wednesday, as the military provided options to the White House.

    A photograph of a large white balloon lingering over the area was captured by The Billings Gazette, but the Pentagon would not confirm if that was the surveillance balloon. The balloon could be seen drifting in and out of clouds and had what appeared to be a solar array hanging from the bottom, said Gazette photographer Larry Mayer.

    The defense official said what concerned them about this launch was the altitude the balloon was flying at and the length of time it lingered over a location, without providing specifics.

    Montana Gov. Greg Gianforte said he was briefed Wednesday about the situation after the Montana National Guard was notified of an ongoing military operation taking place in Montana airspace, according to a statement from the Republican governor and spokesperson Brooke Stroyke.

    “From the spy balloon to the Chinese Communist Party spying on Americans through TikTok to CCP-linked companies buying American farmland, I’m deeply troubled by the constant stream of alarming developments for our national security,” Gianforte said in a statement.

    Tensions with China are particularly high on numerous issues, ranging from Taiwan and the South China Sea to human rights in China’s western Xinjiang region and the clampdown on democracy activists in Hong Kong. Not least on that list of irritants are China’s tacit support for Russia’s invasion of Ukraine, its refusal to rein in North Korea’s expanding ballistic missile program and ongoing disputes over trade and technology.

    On Tuesday, Taiwan scrambled fighter jets, put its navy on alert and activated missile systems in response to nearby operations by 34 Chinese military aircraft and nine warships that are part Beijing’s strategy to unsettle and intimidate the self-governing island democracy.

    Twenty of those aircraft crossed the central line in the Taiwan Strait that has long been an unofficial buffer zone between the two sides, which separated during a civil war in 1949.

    Beijing has also increased preparations for a potential blockade or military action against Taiwan, which has stirred increasing concern among military leaders, diplomats and elected officials in the U.S., Taiwan’s key ally.

    The surveillance balloon was first reported by NBC News.

    Some Montana residents reported seeing an unusual object in the sky around the time of the airport shutdown Wednesday, but it’s not clear that what they were seeing was the balloon.

    From an office window in Billings, Chase Doak said he saw a “big white circle in the sky” that he said was too small to be the moon.

    He took some photos, then ran home to get a camera with a stronger lens and took more photos and video. He could see it for about 45 minutes and it appeared stationary, but Doak said the video suggested it was slowly moving.

    “I thought maybe it was a legitimate UFO,” he said. “So I wanted to make sure I documented it and took as many photos as I could.”

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  • U.S. employment costs slow again, but they’re still rising too fast to comfort Fed as inflation battle rages

    U.S. employment costs slow again, but they’re still rising too fast to comfort Fed as inflation battle rages

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    The numbers: The employment cost index slowed at the end of 2022 for the third quarter in a row, but worker compensation still rose a sharp 1% and didn’t offer much comfort to the Federal Reserve as it fights to tame inflation.

    Economists polled by The Wall Street Journal had forecast a 1.1% increase in the ECI in the fourth quarter.

    Although trending in the right direction, labor costs are still rising far faster than the Fed would like.

    Compensation climbed at a 5.1% clip in the 12 months ended in December — up from 5% in the prior quarter — to leave the increase in worker pay near the highest level in 40 years.

    By contrast, wages and benefits rose an average of 2.7% a year from 2017 to 2019.

    Read: Workers love big raises. The Fed, not so much. Why pay has a big role in the inflation fight.

    Key details: Wages advanced 1% in the fourth quarter, but in a good sign, they slowed from 1.3% in the prior period.

    The increase in wages in the 12 months ended in December was flat at 5.1%, however.

    Benefits rose at a 0.8% pace in the last three months of 2022. The 12-month increase in benefits was unchanged at 4.9%.

    The ECI reflects how much companies, governments and nonprofit institutions pay employees in wages and benefits.  Wages make up about 70% of employment costs and benefits the rest.

    The big picture: Senior Fed officials want to see a tight labor market loosen up and wage growth decelerate further to help ensure inflation returns to pre-pandemic levels of 2% or so.

    The central bank on Wednesday is expected to raise a key interest again. It’s likely to keep raising rates — or keep them high for longer — until it sees more signs in the ECI or other wage trackers that labor costs are coming down.

    The increase in consumer prices slowed to 6.5% at the end of 2022 from a 40-year high of 9.1% last summer, but it’s still more than triple the Fed’s inflation goal.

    Looking ahead: “This result is a decent outcome for the Fed, as labor costs appear to be decelerating, but it would be premature to declare victory,” said chief economist Stephen Stanley of Amherst Pierpont Securities. “With the unemployment rate at a 50-year-plus low of 3.5%, it would be exceedingly optimistic to conclude that wage pressures have rolled over.”

    “Wage growth is slowing gradually,” said senior U.S. economist Andrew Hunter of Capital Economics said in a note to clients. “The Fed is still likely to keep raising interest rates at the next couple of meetings, but we expect a further slowdown in wage growth over the coming months to convince officials to pause the tightening cycle after the March meeting.”

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    -0.77%
    and S&P 500
    SPX,
    -1.30%
    were set to open higher in Tuesday trades. Stocks fell on Monday.

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  • S&P 500 nears first ‘golden cross’ in 2.5 years, but this doesn’t guarantee more gains ahead

    S&P 500 nears first ‘golden cross’ in 2.5 years, but this doesn’t guarantee more gains ahead

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    The S&P 500 is on the verge of achieving its first “golden cross” in two-and-a-half years, but that doesn’t mean stocks are destined for more gains over the coming year.

    The golden-cross indicator is used by technical analysts as a sign that a particular upward trend in markets or currencies is gaining momentum. Barring a massive selloff in stocks, the S&P 500’s 50-day moving average should cross its 200-day moving average in a matter of days.

    If it happens, it would mark the first such event since July, 2020, according to FactSet data. Data show it often does precede further gains for stocks over the following six months, or a year, but not always.

    The S&P 500 has seen 52 golden crosses since 1930, according to Dow Jones Market Data, which used back-tested data to account for the index’s performance prior to its creation in 1957. In that time, stocks were trading higher one year later 71% of the time.

    But there have been some notable exceptions during periods of heightened volatility.

    The S&P 500
    SPX,
    +0.25%
    declined during the 12 months that followed the golden cross that occurred on April 1, 2019, according to Dow Jones Market Data. This happened again in 1999 as the dot-com bubble burst, and also following a golden cross that occurred in1986, preceding the “Black Monday” crash.

    The Dow Jones Industrial Average
    DJIA,
    +0.08%
    achieved its most recent golden cross back in December and stocks have since moved higher.

    Technical analysts who spoke with MarketWatch said that while the golden cross can be a helpful sign that a given trend probably has more room to run, it helps to look for other signs as well.

    “The way we think about it is all big rallies start with a golden cross, but not all golden crosses lead to a big rally. It’s just one piece of the puzzle,” said Ari Wald, head of technical analysis at Oppenheimer.

    See: U.S. stocks flash rare bull-market signal for first time in nearly 3 years, but some have their doubts

    There have been some other encouraging signs that U.S. stocks could be headed for a lasting turnaround. One example Wald cited was the so-called advance-decline line, which recently reached a new cycle high.

    According to technical analysts, that’s a measure of market breadth which shows whether the major equity index’s gains are being powered by a broad range of stocks, or a handful.

    The advance-decline line hit 2.2 on Thursday, its highest level in nearly a year.

    The fact that cyclical sectors like technology and consumer discretionary are among the best performers since the start of the year is another encouraging sign, according to Wald.

    FactSet data show that communication services, consumer discretionary and information technology are the three best-performing sectors of the S&P 500 so far this year, with communications services up more than 15% since Jan. 1.

    However, with so much uncertainty about monetary policy and the macroeconomic outlook, some analysts doubt that the stock-market will simply return to business as usual so quickly, even as inflation has moderated over the past six months, taking some of the pressure off the Federal Reserve to continue to raise interest rates.

    One analysts warned that traders who are hungry for confirmation that the market sell-off of 2022 is indeed over should approach indicators like the golden cross with trepidation, despite its historical record.

    “In the past 20 years there have been more secular trends, and the golden crosses have worked,” said Will Tamplin, senior analyst at Fairlead Strategies. “But in an environment that’s a little more choppy, you can get the whipsaws. “

    The S&P 500 and SPDR S&P 500 exchange-traded fund
    SPY,
    +0.23%
    touched new intraday highs for the year on Friday, while the Nasdaq Composite
    COMP,
    +0.95%
    briefly traded at its highest level since September. The Dow Jones Industrial Average is on track for a weekly gain of more than 2.3%, what would be its best such performance since November.

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  • Biden taps Zients as White House chief of staff

    Biden taps Zients as White House chief of staff

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    President Joe Biden announced Jeff Zients on Friday as his next White House chief of staff, tapping an experienced technocrat who headed his administration’s response to the COVID-19 pandemic as Biden prepares for a reelection bid while facing an onslaught of investigations from a newly empowered House Republican majority.

    Zients succeeds Ron Klain, a longtime fixture in Biden’s political orbit who led the White House through its highs — passage of consequential legislation like the massive infrastructure bill and the Democrats’ climate, health care and tax law, as well as dozens of judges confirmed in the first two years — as well as its lows, such as the rocky withdrawal of U.S. troops from Afghanistan.

    The transition is the first major personnel change for an administration that has had minimal turnover at its highest ranks and throughout the Cabinet.

    “I’m confident that Jeff will continue Ron’s example of smart, steady leadership, as we continue to work hard every day for the people we were sent here to serve,” Biden said in a statement.

    Zients, 56, will be tasked with shepherding White House operations at Biden’s pivotal two-year mark, when the Democratic administration shifts from ambitious legislating to implementing those policies and fending off Republican efforts to defang the achievements.

    Zients is also charged with steering the White House at a time when it is struggling to contain the fallout from discoveries of classified documents at Biden’s home in Wilmington, Delaware, and at his former institute in Washington, which has triggered a special counsel investigation.

    Klain, in his resignation letter to Biden, said it was the “right time” for a transition.
    “The halfway point of your first term – with two successful years behind us, and key decisions on the next two years ahead — is the right time for this team to have fresh leadership,” he wrote.

    “I have served longer than eight of the last nine Chiefs of Staff, and have given this job my all; now it is time for someone else to take it on.”

    Zients, not known to be a political operative, is expected to focus on the task of governing as a separate circle of advisers take the lead on politics, such as senior adviser Anita Dunn and Jen O’Malley Dillon, a deputy chief of staff who managed Biden’s 2020 presidential campaign.

    Presidential counselor Steve Ricchetti, senior adviser Mike Donilon and deputy chief of staff Bruce Reed will continue in Biden’s inner circle, while Klain, a longtime Democratic operative, will continue to advise and be involved from the outside.

    Through both the Obama and Biden administrations, Zients has been the go-to person for significant operational challenges — such as a nationwide coronavirus vaccination campaign — or to repair bureaucratic messes such as the glitches and crashes that marked the launch of HealthCare.gov in fall 2013.

    Then-President Barack Obama also tapped Zients in 2009 to eliminate the backlog in applicants for the Cash for Clunkers program, which offered rebates to drivers who swapped old cars for fuel-efficient vehicles. Zients later took on a similar challenge to smooth sign-ups for an updated version of the GI Bill.

    Zients was vice chairman of Biden’s transition after he won in November 2020 and served as director of the National Economic Council during the Obama administration and acting director of the Office of Management and Budget.

    As COVID-19 coordinator, Zients led the effort that administered more than 220 million vaccinations in Biden’s first 100 days, while shoring up the nation’s supply of therapeutics and tests and distributing them.

    Zients gradually shifted the administration from a so-called “wartime” effort that grappled with COVID-19 at its most severe levels, to a strategy that would allow people to resume some normalcy with a virus that is likely to be endemic.

    Although Zients left the administration in April 2022, he quietly returned in recent months to ensure the remaining two years of Biden’s term would be adequately staffed, a prelude to his taking on the much broader managerial role.

    Senate Majority Leader Chuck Schumer, D-N.Y., said Biden’s first two years “would not have been nearly as successful without Ron Klain by the President’s side” and noted that he spoke with the outgoing chief of staff multiple times every day, knowing that his counsel and questions would be directly communicated to Biden.

    “I’ve known Jeff for many years and cannot think of a better person to help smoothly implement the transformational legislation Congress passed,” Schumer said.

    “Jeff is the epitome of what an outstanding chief of staff should be. He’s organized, focused and deliberate, exactly the right person to lead the Biden administration and ensure the American people see and feel the benefits of these new laws.”

    In the private sector, Zients served as top executive at the Advisory Board Co., a Washington consulting firm, and he maintains close relations with the business community. He’s worth between about $90 million and $400 million, according to the financial disclosure he filed when he entered the White House in 2021.

    “I respect him enormously,” Sen. Mitt Romney, R-Utah, who spoke regularly with Zients during his stint as COVID-19 response coordinator, said this week. “He’s a very bright guy. I expect to be able to communicate with him.”

    Yet those business ties have already spurred criticism of the Zients selection from some on the left, who have blasted the incoming chief of staff for his private-sector background.

    Progressives are anticipating a shift from Klain, who regularly tended to that ideological wing of the party and retained close ties with liberal lawmakers.

    Zients was also an initial investor in Call Your Mother, a local bagel shop, although he divested his shares before joining the administration in 2021. He has also served as chairman of the Children’s National Hospital in Washington.

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  • Inflation rate slows again to 15-month low, PCE shows, as U.S. economy weakens

    Inflation rate slows again to 15-month low, PCE shows, as U.S. economy weakens

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    The numbers: The cost of U.S. goods and services rose a scant 0.1% in December in yet another sign inflation is cooling off, opening the door for the Federal Reserve to stop raising interest rates soon.

    The rate of inflation, using the Fed’s preferred PCE index, has tapered off rapidly since last summer. Falling oil prices have played a big role, but inflation more broadly is easing.

    The annual increase in prices slowed to 5% in December from 5.5% in the prior month and a 40-year high of 7% last summer, according to fresh government data.

    That’s the smallest increase in 15 months, though still well above pre-pandemic levels of less than 2% annual inflation.

    Key details: The more closely followed core index rose a modest 0.3% last month, matching Wall Street’s forecast.

    The increase in the core rate of inflation in the past 12 months decelerated to 4.4% from 4.7%. That’s also the lowest level in 14 months.

    The PCE index is viewed by the Fed as the best predictor of future inflation trends, especially the core gauge that strips out volatile food and energy costs.

    Unlike it’s better-known cousin, the consumer price index, the PCE gauge takes into account how consumers change their buying habits due to rising prices.

    They might substitute cheaper goods such as chicken thighs for more expensive ones like boneless breasts to keep costs down, or buy generic medicines instead of brand names.

    The CPI showed inflation rising at a 6.5% yearly rate in December, but it’s also slowed sharply since the summer.

    Big picture: The Fed is trying to restore inflation to pre-pandemic levels of 2% or so, and it will keep raising interest rates until it is convinced the genie is back in the bottle. Higher rates reduce inflation by slowing the economy.

    Yet with inflation subsiding, Wall Street is raising questions about whether the Fed’s work is almost done. If rates go too high, the economy could sink into recession.

    Indeed, many economists think a downturn is likely this year. The central bank has jacked up a key U.S. interest rate to a 15-year high of 4.5% from near zero less than a year ago — and the effects of higher borrowing costs are just starting to bite.

    Looking ahead: “With higher interest rates evidently weighing heavily on demand now, we expect core inflation to continue moderating,” said chief North American economist Paul Ashworth of Capital Economics in a note to clients. That “will eventually persuade the Fed to begin cutting interest rates late this year.”

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    +0.08%
    and S&P 500
    SPX,
    +0.25%
    were set to open slightly lower in Friday trades.

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  • U.S. economy gets off to weak start in 2023, S&P finds

    U.S. economy gets off to weak start in 2023, S&P finds

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    The numbers: The U.S. economy got off to a weak start in 2023. Business conditions contracted again in January as demand for goods and services fell for the fourth month in a row, S&P surveys showed.

    The S&P Global “flash” U.S. services sector index rose to a three-month high of 46.6 from 44.7 in December. The service side of the economy employs most Americans.

    The S&P Global U.S. manufacturing sector index, meanwhile, edged up to 46.7 from a 31-month low of 46.2 at the end of last year.

    Any number below 50 suggests a contracting economy, however.

    The S&P surveys are among the first indicators in each month to assess the health of the economy.

    Key details: New orders, a sign of future sales, have tailed off since October.

    The decline in demand has helped to ease inflation since the fall, S&P found, but the cost of labor and supplies both rose in January. Companies tried to limit price increases of their own, however, to retain market share.

    Employment levels were basically unchanged. Manufacturers created more jobs, but service-oriented firms cut staff for the first time in two and a half years.

    In a bit of surprise, executives expressed more confidence about how the economy would perform over the next year.

    Big picture: The economy was stung in 2022 by the highest inflation in 40 years. Now it’s getting slammed by rising interest rates as the Federal Reserve aims to bring inflation back down to pre-pandemic levels.

    Many economists believe the U.S could sink into recession this year.

    Looking ahead: “The U.S. economy has started 2023 on a disappointingly soft note,” said Chris Williamson, chief business economist at S&P Global. “Companies cite concerns over the ongoing impact of high prices and rising interest rates, as well as lingering worries over supply and labor shortages.”

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    +0.02%
    and S&P 500
    SPX,
    -0.11%
    fell in Tuesday trades.

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  • Italy arrests Mafia boss after 30 years on the run

    Italy arrests Mafia boss after 30 years on the run

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    ROME (AP) — Italy’s No. 1 fugitive, convicted Mafia boss Matteo Messina Denaro, was arrested on Monday at a private clinic in Palermo, Sicily, after 30 years on the run, Italian paramilitary police said.

    Messina Denaro was captured at the clinic where he was receiving treatment for an undisclosed medical condition, said Carabinieri Gen. Pasquale Angelosanto, who heads the police force’s special operations squad.

    Messina Denaro was taken to a secret location by police immediately after the arrest, Italian state television reported.

    A young man when he went into hiding, he is now 60. Messina Denaro, who had a power base in the port city of Trapani, in western Sicily, was considered Sicily’s Cosa Nostra top boss even while a fugitive.

    He was the last of three longtime fugitive top-level Mafia bosses who had for decades eluded capture.

    Messina Denaro, who tried in absentia and convicted of dozens of murders, faces multiple life sentences.

    He is set to be imprisoned for are two bombings in Sicily in 1992 that murdered top anti-Mafia prosecutors, Giovanni Falcone and Paolo Borsellino. Among other grisly crimes he was convicted of is the murder of a Mafia turncoat’s young son, who was strangled and his body dissolved in a vat of acid.

    The arrest Monday came 30 years and a day after the capture of convicted “boss of bosses” Salvatore “Toto” Riina, in a Palermo apartment after 23 years on the run.

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