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Tag: Recessions and depressions

  • China’s Sinopec signs agreement to enter retail fuel market in crisis-hit Sri Lanka

    China’s Sinopec signs agreement to enter retail fuel market in crisis-hit Sri Lanka

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    COLOMBO, Sri Lanka — Chinese petroleum giant Sinopec signed an agreement with Sri Lanka on Monday to enter the South Asian island country’s retail fuel market as it struggles to resolve a worsening energy crisis amid an unprecedented economic upheaval.

    The contract agreement would enable Sinopec to import, store, distribute and sell petroleum products in Sri Lanka, which has had a fuel shortage for more than a year.

    The move comes as Beijing looks to consolidate investments in Sri Lanka’s ports and energy sector amid growing security concerns raised by the island nation’s immediate neighbor, India, which considers Sri Lanka to be its strategic backyard.

    Sri Lanka, which is facing a foreign exchange crisis, hopes the deal will help to resolve its energy crisis.

    The agreement signed Monday in the Sri Lankan capital, Colombo, was made to “ensure uninterrupted fuel suppliers to consumers,” the president’s office said in a news release.

    Under the pact, Sinopec will be granted a 20-year license to operate 150 fuel stations currently operated by Sri Lanka’s state-run Ceylon Petroleum Corporation, and to invest in 50 new fuel stations and in the country’s energy sector, the nation’s Power and Energy Ministry said in a statement.

    Sinopec can start operations within 45 days of license issuance and “this development brings hope for a more stable and reliable fuel supply, boosting the country’s energy sector and providing assurance to consumers,” the president’s office said.

    When the economic crisis hit Sri Lanka last year, the government couldn’t find foreign currency to import fuel, triggering a severe shortage that lasted for more than two months and forcing people to endure long lines at fuel stations. Sri Lankans are still allotted limited amounts of fuel that is distributed according to a QR code system.

    In an effort to resolve the crisis, Sri Lanka opened its retail fuel market to foreign petroleum companies, asking them to use their own funds to purchase fuel, without depending on Sri Lankan banks for foreign exchange. The government has given approval to two other foreign companies — Australia’s United Petroleum and U.S. company RM Parks in collaboration with Shell — to enter its fuel market.

    An Indian oil company already operates in Sri Lanka. But, India is concerned over the growing influence of China in Sri Lanka, which sits along one of the world’s busiest shipping routes.

    Sri Lanka borrowed heavily from China over the past decade for infrastructure projects including a seaport, airport and a city being built on reclaimed land. The projects failed to earn enough revenue to pay for the loans, a factor in Sri Lanka’s economic woes. In 2017, Sri Lanka leased the seaport in Hambantota to China because it could not pay back the loan.

    China accounts for about 10% of Sri Lanka’s loans, trailing only Japan and the Asian Development Bank.

    Sri Lanka’s economic crisis resulted in severe shortages of essentials such as medicines, fuel, cooking gas and food, leading to angry protests that forced then-President Gotabaya Rajapaksa to flee Sri Lanka and resign last summer.

    Sri Lanka defaulted payment of foreign debts and sought the support of international partners and organizations to resolve the crisis.

    The IMF approved a nearly $3 billion rescue program for in March which will run for four years. Sri Lanka authorities are now discussing debt restructuring with foreign creditors.

    ___

    This story was updated to correct that the quote that begins, “This development brings hope…,” is from the president’s office, not the Power and Energy Ministry.

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  • What it would mean for the global economy if the US defaults on its debt

    What it would mean for the global economy if the US defaults on its debt

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    WASHINGTON — If the debt crisis roiling Washington were eventually to send the United States crashing into recession, America’s economy would hardly sink alone.

    The repercussions of a first-ever default on the federal debt would quickly reverberate around the world. Orders for Chinese factories that sell electronics to the United States could dry up. Swiss investors who own U.S. Treasurys would suffer losses. Sri Lankan companies could no longer deploy dollars as an alternative to their own dodgy currency.

    “No corner of the global economy will be spared’’ if the U.S. government defaulted and the crisis weren’t resolved quickly, said Mark Zandi, chief economist at Moody’s Analytics.

    Zandi and two colleagues at Moody’s have concluded that even if the debt limit were breached for no more than week, the U.S. economy would weaken so much, so fast, as to wipe out roughly1.5 million jobs.

    And if a government default were to last much longer — well into the summer — the consequences would be far more dire, Zandi and his colleagues found in their analysis: U.S. economic growth would sink, 7.8 million American jobs would vanish, borrowing rates would jump, the unemployment rate would soar from the current 3.4% to 8% and a stock-market plunge would erase $10 trillion in household wealth.

    Of course, it might not come to that. The White House and House Republicans, seeking a breakthrough, concluded a round of debt-limit negotiations Sunday, with plans to resume talks Monday. The Republicans have threatened to let the government default on its debts by refusing to raise the statutory limit on what it can borrow unless President Joe Biden and the Democrats accept sharp spending cuts and other concessions.

    US DEBT, LONG VIEWED AS ULTRA-SAFE

    Feeding the anxiety is the fact that so much financial activity hinges on confidence that America will always pay its financial obligations. Its debt, long viewed as an ultra-safe asset, is a foundation of global commerce, built on decades of trust in the United States. A default could shatter the $24 trillion market for Treasury debt, cause financial markets to freeze up and ignite an international crisis.

    “A debt default would be a cataclysmic event, with an unpredictable but probably dramatic fallout on U.S. and global financial markets,’’ said Eswar Prasad, professor of trade policy at Cornell University and senior fellow at the Brookings Institution.

    The threat has emerged just as the world economy is contending with a panoply of threats — from surging inflation and interest rates to the ongoing repercussions of Russia’s invasion of Ukraine to the tightening grip of authoritarian regimes. On top of all that, many countries have grown skeptical of America’s outsize role in global finance.

    In the past, American political leaders generally managed to step away from the brink and raise the debt limit before it was too late. Congress has raised, revised or extended the borrowing cap 78 times since 1960, most recently in 2021.

    Yet the problem has worsened. Partisan divisions in Congress have widened while the debt has grown after years of rising spending and deep tax cuts. Treasury Secretary Janet Yellen has warned that the government could default as soon as June 1 if lawmakers don’t raise or suspend the ceiling.

    ‘SHOCKWAVES THROUGH THE SYSTEM’

    “If the trustworthiness of (Treasurys) would become impaired for any reason, it would send shockwaves through the system … and have immense consequences for global growth,’’ said Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics and former chief economist at the International Monetary Fund.

    Treasurys are widely used as collateral for loans, as a buffer against bank losses, as a haven in times of high uncertainty and as a place for central banks to park foreign exchange reserves.

    Given their perceived safety, the U.S. government’s debts — Treasury bills, bonds and notes — carry a risk weighting of zero in international bank regulations. Foreign governments and private investors hold nearly $7.6 trillion of the debt — roughly 31% of the Treasurys in financial markets.

    Because the dollar’s dominance has made it the de facto global currency since World War II, it’s relatively easy for the United States to borrow and finance an ever-growing pile of government debt.

    But high demand for dollars also tends to make them more valuable than other currencies, and that imposes a cost: A strong dollar makes American goods pricier relative to their foreign rivals, leaving U.S. exporters at a competitive disadvantage. That’s one reason why the United States has run trade deficits every year since 1975.

    CENTRAL BANKS’ STOCKPILES OF DOLLARS

    Of all the foreign exchange reserves held by the world’s central banks, U.S. dollars account for 58%. No. 2 is the euro: 20%. China’s yuan makes up under 3%, according to the IMF.

    Researchers at the Federal Reserve have calculated that from 1999 to 2019, 96% of trade in the Americas was invoiced in U.S. dollars. So was 74% of trade in Asia. Elsewhere outside of Europe, where the euro dominates, dollars accounted for 79% of trade.

    So reliable is America’s currency that merchants in some unstable economies demand payment in dollars, instead of their own country’s currency. Consider Sri Lanka, battered by inflation and a dizzying drop in the local currency. Earlier this year, shippers refused to release 1,000 containers of urgently needed food unless they were paid in dollars. The shipments piled up at the docks in Colombo because the importers weren’t able to obtain dollars to pay the suppliers.

    “Without (dollars), we can’t do any transaction,” said Nihal Seneviratne, a spokesman for Essential Food Importers and Traders Association. “When we import, we have to use hard currency — mostly the U.S. dollars.’’

    Likewise, many shops and restaurants in Lebanon, where inflation has raged and the currency has plunged, are demanding payment in dollars. In 2000, Ecuador responded to an economic crisis by replacing its own currency, the sucre, with dollars — a process called “dollarization’’ — and has stuck with it.

    THE GO-TO HAVEN FOR INVESTORS

    Even when a crisis originates in the United States, the dollar is invariably the go-to haven for investors. That’s what happened in late 2008, when the collapse of the U.S. real estate market toppled hundreds of banks and financial firms, including once-mighty Lehman Brothers: The dollar’s value shot up.

    “Even though we were the problem — we, the United States — there was still a flight to quality,’’ said Clay Lowery, who oversees research at the Institute of International Finance, a banking trade group. “The dollar is king.’’

    If the United States were to pierce the debt limit without resolving the dispute and the Treasury defaulted on its payments, Zandi suggests that the dollar would once again rise, at least initially, “because of the uncertainty and the fear. Global investors just wouldn’t know where to go except to where they always go when there’s a crisis and that’s to the United States.’’

    But the Treasury market would likely be paralyzed. Investors might shift money instead into U.S. money market funds or the bonds of top-flight U.S. corporations. Eventually, Zandi says, growing doubts would shrink the dollar’s value and keep it down.

    GOVERNMENT’S STRATEGY IF DEBT CAP IS BREACHED

    In a debt-ceiling crisis, Lowery, who was an assistant Treasury secretary during the 2008 crisis, imagines that the United States would continue to make interest payments to bondholders. And it would try to pay its other obligations — to contractors and retirees, for example — in the order that those bills became due and as money became available.

    For bills that were due on June 3, for example, the government might pay on June 5. A bit of relief would come around June 15. That’s when government revenue would pour in in as many taxpayers make estimated tax payments for the second quarter.

    The government would likely be sued by those who weren’t getting paid — “anybody who lives off veterans’ benefits or Social Security,’’ Lowery said. And ratings agencies would likely downgrade U.S. debt, even if the Treasury continued to pay interest to bondholders.

    The dollar, though it remains dominant globally, has lost some ground in recent years as more banks, businesses and investors have turned to the euro and, to a lesser extent, China’s yuan. Other countries tend to resent how swings in the dollar’s value can hurt their own currencies and economies.

    A rising dollar can trigger crises abroad by drawing investment out of other countries and raising their cost of repaying dollar-denominated loans. The United States’ eagerness to use the dollar’s clout to impose financial sanctions against rivals and adversaries is also viewed uneasily by some other countries.

    So far, though, no clear alternatives have emerged. The euro lags far behind the dollar. Even more so does China’s yuan; it’s hamstrung by Beijing’s refusal to let its currency trade freely in global markets.

    But the debt ceiling drama is sure to heighten questions about the enormous financial power of the United States and the dollar.

    “The global economy is in a pretty fragile place right now,’’ Obstfeld said. “So throwing into that mix a crisis over the creditworthiness of U.S. obligations is incredibly irresponsible.’’

    ______

    AP Writer Bharatha Mallawarachi in Colombo, Sri Lanka, contributed to this report.

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  • What it would mean for the global economy if the US defaults on its debt

    What it would mean for the global economy if the US defaults on its debt

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    WASHINGTON — If the debt crisis roiling Washington were eventually to send the United States crashing into recession, America’s economy would hardly sink alone.

    The repercussions of a first-ever default on the federal debt would quickly reverberate around the world. Orders for Chinese factories that sell electronics to the United States could dry up. Swiss investors who own U.S. Treasurys would suffer losses. Sri Lankan companies could no longer deploy dollars as an alternative to their own dodgy currency.

    “No corner of the global economy will be spared’’ if the U.S. government defaulted and the crisis weren’t resolved quickly, said Mark Zandi, chief economist at Moody’s Analytics.

    Zandi and two colleagues at Moody’s have concluded that even if the debt limit were breached for no more than week, the U.S. economy would weaken so much, so fast, as to wipe out roughly1.5 million jobs.

    And if a government default were to last much longer — well into the summer — the consequences would be far more dire, Zandi and his colleagues found in their analysis: U.S. economic growth would sink, 7.8 million American jobs would vanish, borrowing rates would jump, the unemployment rate would soar from the current 3.4% to 8% and a stock-market plunge would erase $10 trillion in household wealth.

    Of course, it might not come to that. The White House and House Republicans, seeking a breakthrough, concluded a round of debt-limit negotiations Sunday, with plans to resume talks Monday. The Republicans have threatened to let the government default on its debts by refusing to raise the statutory limit on what it can borrow unless President Joe Biden and the Democrats accept sharp spending cuts and other concessions.

    US DEBT, LONG VIEWED AS ULTRA-SAFE

    Feeding the anxiety is the fact that so much financial activity hinges on confidence that America will always pay its financial obligations. Its debt, long viewed as an ultra-safe asset, is a foundation of global commerce, built on decades of trust in the United States. A default could shatter the $24 trillion market for Treasury debt, cause financial markets to freeze up and ignite an international crisis.

    “A debt default would be a cataclysmic event, with an unpredictable but probably dramatic fallout on U.S. and global financial markets,’’ said Eswar Prasad, professor of trade policy at Cornell University and senior fellow at the Brookings Institution.

    The threat has emerged just as the world economy is contending with a panoply of threats — from surging inflation and interest rates to the ongoing repercussions of Russia’s invasion of Ukraine to the tightening grip of authoritarian regimes. On top of all that, many countries have grown skeptical of America’s outsize role in global finance.

    In the past, American political leaders generally managed to step away from the brink and raise the debt limit before it was too late. Congress has raised, revised or extended the borrowing cap 78 times since 1960, most recently in 2021.

    Yet the problem has worsened. Partisan divisions in Congress have widened while the debt has grown after years of rising spending and deep tax cuts. Treasury Secretary Janet Yellen has warned that the government could default as soon as June 1 if lawmakers don’t raise or suspend the ceiling.

    ‘SHOCKWAVES THROUGH THE SYSTEM’

    “If the trustworthiness of (Treasurys) would become impaired for any reason, it would send shockwaves through the system … and have immense consequences for global growth,’’ said Maurice Obstfeld, senior fellow at the Peterson Institute for International Economics and former chief economist at the International Monetary Fund.

    Treasurys are widely used as collateral for loans, as a buffer against bank losses, as a haven in times of high uncertainty and as a place for central banks to park foreign exchange reserves.

    Given their perceived safety, the U.S. government’s debts — Treasury bills, bonds and notes — carry a risk weighting of zero in international bank regulations. Foreign governments and private investors hold nearly $7.6 trillion of the debt — roughly 31% of the Treasurys in financial markets.

    Because the dollar’s dominance has made it the de facto global currency since World War II, it’s relatively easy for the United States to borrow and finance an ever-growing pile of government debt.

    But high demand for dollars also tends to make them more valuable than other currencies, and that imposes a cost: A strong dollar makes American goods pricier relative to their foreign rivals, leaving U.S. exporters at a competitive disadvantage. That’s one reason why the United States has run trade deficits every year since 1975.

    CENTRAL BANKS’ STOCKPILES OF DOLLARS

    Of all the foreign exchange reserves held by the world’s central banks, U.S. dollars account for 58%. No. 2 is the euro: 20%. China’s yuan makes up under 3%, according to the IMF.

    Researchers at the Federal Reserve have calculated that from 1999 to 2019, 96% of trade in the Americas was invoiced in U.S. dollars. So was 74% of trade in Asia. Elsewhere outside of Europe, where the euro dominates, dollars accounted for 79% of trade.

    So reliable is America’s currency that merchants in some unstable economies demand payment in dollars, instead of their own country’s currency. Consider Sri Lanka, battered by inflation and a dizzying drop in the local currency. Earlier this year, shippers refused to release 1,000 containers of urgently needed food unless they were paid in dollars. The shipments piled up at the docks in Colombo because the importers weren’t able to obtain dollars to pay the suppliers.

    “Without (dollars), we can’t do any transaction,” said Nihal Seneviratne, a spokesman for Essential Food Importers and Traders Association. “When we import, we have to use hard currency — mostly the U.S. dollars.’’

    Likewise, many shops and restaurants in Lebanon, where inflation has raged and the currency has plunged, are demanding payment in dollars. In 2000, Ecuador responded to an economic crisis by replacing its own currency, the sucre, with dollars — a process called “dollarization’’ — and has stuck with it.

    THE GO-TO HAVEN FOR INVESTORS

    Even when a crisis originates in the United States, the dollar is invariably the go-to haven for investors. That’s what happened in late 2008, when the collapse of the U.S. real estate market toppled hundreds of banks and financial firms, including once-mighty Lehman Brothers: The dollar’s value shot up.

    “Even though we were the problem — we, the United States — there was still a flight to quality,’’ said Clay Lowery, who oversees research at the Institute of International Finance, a banking trade group. “The dollar is king.’’

    If the United States were to pierce the debt limit without resolving the dispute and the Treasury defaulted on its payments, Zandi suggests that the dollar would once again rise, at least initially, “because of the uncertainty and the fear. Global investors just wouldn’t know where to go except to where they always go when there’s a crisis and that’s to the United States.’’

    But the Treasury market would likely be paralyzed. Investors might shift money instead into U.S. money market funds or the bonds of top-flight U.S. corporations. Eventually, Zandi says, growing doubts would shrink the dollar’s value and keep it down.

    GOVERNMENT’S STRATEGY IF DEBT CAP IS BREACHED

    In a debt-ceiling crisis, Lowery, who was an assistant Treasury secretary during the 2008 crisis, imagines that the United States would continue to make interest payments to bondholders. And it would try to pay its other obligations — to contractors and retirees, for example — in the order that those bills became due and as money became available.

    For bills that were due on June 3, for example, the government might pay on June 5. A bit of relief would come around June 15. That’s when government revenue would pour in in as many taxpayers make estimated tax payments for the second quarter.

    The government would likely be sued by those who weren’t getting paid — “anybody who lives off veterans’ benefits or Social Security,’’ Lowery said. And ratings agencies would likely downgrade U.S. debt, even if the Treasury continued to pay interest to bondholders.

    The dollar, though it remains dominant globally, has lost some ground in recent years as more banks, businesses and investors have turned to the euro and, to a lesser extent, China’s yuan. Other countries tend to resent how swings in the dollar’s value can hurt their own currencies and economies.

    A rising dollar can trigger crises abroad by drawing investment out of other countries and raising their cost of repaying dollar-denominated loans. The United States’ eagerness to use the dollar’s clout to impose financial sanctions against rivals and adversaries is also viewed uneasily by some other countries.

    So far, though, no clear alternatives have emerged. The euro lags far behind the dollar. Even more so does China’s yuan; it’s hamstrung by Beijing’s refusal to let its currency trade freely in global markets.

    But the debt ceiling drama is sure to heighten questions about the enormous financial power of the United States and the dollar.

    “The global economy is in a pretty fragile place right now,’’ Obstfeld said. “So throwing into that mix a crisis over the creditworthiness of U.S. obligations is incredibly irresponsible.’’

    ______

    AP Writer Bharatha Mallawarachi in Colombo, Sri Lanka, contributed to this report.

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  • Brazil sends thousands of Venezuelan migrants to country’s rich southern states

    Brazil sends thousands of Venezuelan migrants to country’s rich southern states

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    PACARAIMA, Brazil — As the sun rose, Miguel Gonzalez, partner Maryelis Rodriguez and their four young children got off a passenger bus after an 18-hour ride south from the eastern Venezuelan community they desperately wanted to leave.

    The parents, with minds still muzzy from sleep, retrieved two duffel bags and assessed needs before entering the station: Diaper change for the 1-year-old. Restrooms for the 2-, 4- and 6-year-old. Directions to Brazil.

    “Taxi? Taxi?” hawkish cab drivers asked everyone walking through the Santa Elena de Uairen station, where thousands of people every month walk through Venezuelan territory one last time. Roughly a half hour later, the Gonzalez family, like dozens of others every day, became migrants for the first time when they exited a taxi in Pacaraima, Brazil.

    More than 7.2 million people have left Venezuela since the country’s political, economic and social crisis began last decade. Most have gone to Spanish-speaking countries of South America — with 2.4 million in Colombia alone — and many to the U.S. and Spain.

    Further down the list of destinations has been Venezuela’s Portuguese-speaking, next-door neighbor: Brazil.

    But Brazil has become a popular choice for many Venezuelans partly because of a five-year-old program that offers eligible applicants work permits and even free flights to faraway parts of the huge country. Approvals into the program have surged in the post-pandemic period.

    “I want to give well-being to my children,” said Gonzalez, who began planning to migrate in October after witnessing violent clashes around the gold mine where he worked.

    “There is no life” in Venezuela, he said, because if the family stays there the children “are not going to study, they are not going to have a future.”

    The Gonzalez family is applying for Brazil’s “interiorization” program, launched in 2018 to ease pressure on the country’s far northern state of Roraima as it dealt with Venezuelans flowing across the border after food and medicine shortages at home became acute.

    The program moves the migrants to other cities with better economic opportunities, especially in the country’s rich southern states. It has taken in about 100,000 of the 426,000 Venezuelans who have migrated to Brazil during the crisis — with the highest monthly rate so far in March of this year with 3,377.

    The Gonzalez family sold their fridge, fan, kitchen, bed and other furniture, stuffed clothes and diapers in duffel bags and backpacks, and began their migration journey from their community of San Felix with $500. They spent $90 to get to Santa Elena de Uairen and $20 to get to Pacaraima, where they applied for the program.

    They decided to migrate even though Gonzalez had one of the most lucrative jobs in Venezuela, earning about $600 in two weeks, and occasionally, up to $1,200 — far more than the country’s $5 monthly minimum wage. But mining communities are dangerous, thanks to armed groups who are believed to collude with authorities.

    “There is a lot of crime. You’re alive one moment and dead the next. You get me?” Gonzalez said said.

    Those accepted into the interiorization program receive documentation, temporary shelter, vaccines and relocation flights. It also offers classes on Brazil’s labor market, laws and rights.

    Brazil’s monthly minimum wage currently is $265. A survey of 800 households encompassing 3,529 Venezuelans living in Brazil in June and July of last year showed that 76% of them earned up to two minimum wages.

    Applicants must submit paperwork, and undergo a physical and interviews.

    On an early April morning, Maria Rodriguez, her father, husband, daughter, two sons, twin grandsons and four more relatives were among hundreds of people at the Pacaraima border crossing, navigating steps of the program. She laughed with an energetic grandson, but her eyes betrayed fatigue.

    At the crack of dawn, migrants form lines where they wait to get or provide information. They cheer when they or their new migrant friends are told they can hop on waiting passenger buses headed roughly 125 miles (200 kilometers) south to Boa Vista, where they will catch flights to their new communities.

    Rodriguez’s group already had waited six weeks in Pacaraima. They had sheltered from the scorching sun under a makeshift tent and spent nights in a shelter.

    The family closed its unprofitable cheese-making business in Venezuela earlier this year and decided to join other relatives in the southern Brazilian state of Paraná, where the men plan to work in construction. Rodriguez said another of her sons already living there has done well in just a short time.

    “His children are studying in a good school, and meanwhile, I could see my other sons … struggling,” Rodriguez, 45, said while she waited for portable toilets to be cleaned for the day. “As adults, we can last all day even with just an arepa, but with those kids, how do you tell a child there’s no food?”

    Venezuela was once one of the most prosperous countries in Latin America thanks to billions in oil dollars, but mismanagement by its self-described socialist government and a decline in crude prices plunged it into crisis over the past decade. International economic sanctions meant to topple President Nicolás Maduro have worsened conditions.

    Elsewhere in the hemisphere, Venezuelans are making their second or even third migrations as economic opportunities in initial host countries dry up. Most of those coming across the border into Brazil are migrating for the first time, said the Rev. Agnaldo Pereira de Oliveira, director of Jesuit Service for Migrants and Refugees in Brazil.

    “They are people who held on until now and no longer could,” Pereira de Oliveira said. “Now come the last ones who had resisted in Venezuela out of attachment to their business, to their home. They say ’I had a job, but the living conditions no longer exist.’”

    Brazil’s interiorization program took shape after a period of tensions in the mid- to late-2010s when arriving Venezuelans strained public services in Roraima, which includes both Pacaraima and Boa Vista. At one point, a man set fire to two residences where Venezuelans lived, injuring five people.

    Brazil’s southern states like Paraná are not without challenges for Venezuelans. There they must brave much colder weather than they’re accustomed to, and lack of fluency in Portuguese can sometimes be a barrier to formal jobs, meaning some of them become street vendors and Uber drivers.

    In Boa Vista, shelters have long been available, but many adults and children sleep on sidewalks or outside a bus station. Some find the shelters overcrowded and overheated. Others do not feel safe or dislike the mandatory early wake-up.

    On the western bank of the Branco River next to Boa Vista, members of the Figuera family cook, wash clothes, splash in the water or rest under shade trees. Their hair is peppered with sand.

    Eleven-year-old Kisberlin Figuera, her father, stepmother and baby sister are on their second attempt to legally relocate to Paraná. They gave up on their first try so that the baby could be born near extended family in Carupano, Venezuela.

    Kisberlin has learned some Portuguese and become friends with other migrant girls. They joke and play tag or cards near where they sleep outside the bus station. She said she misses family but the access to water in Boa Vista — in public restrooms near a beach — is better than what she had at home.

    Sitting by the river, she imagined Paraná “full of parks, loads of food, lots of money and a lot of water to take showers and drink.”

    ____

    AP writers Carla Bridi in Brasilia and Eléonore Hughes in Rio de Janeiro contributed.

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  • CEO pay again in focus as the heads of failed banks appear before Senate panel

    CEO pay again in focus as the heads of failed banks appear before Senate panel

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    NEW YORK — The recent failures of a trio of midsize banks has once again raised questions about whether senior executives in the U.S. are being rewarded more for short-term gains — like rising stock prices — than for ensuring their companies’ long-term health.

    Executives at Silicon Valley Bank, Signature Bank and First Republic Bank were paid millions of dollars over their tenures up until their banks failed, the bulk of the compensation coming in the form company stock. That stock is now largely worthless but the CEOs still pocketed millions from the planned sales of their shares before the banks’ collapse.

    The heads of the two of the three failed banks will appear Tuesday in front of the Senate Banking Committee to respond to questions about why their banks went under and what regulators could have done to avoid the calamities. Executive compensation is almost certainly to come up as well, most likely raised by senators including Elizabeth Warren, D-Mass., who wrote letters to First Republic Bank about its compensation practices after the bank failed.

    Silicon Valley Bank’s former CEO Greg Becker received compensation valued at roughly $9.9 million in 2022, and also sold stock in the company only a few weeks before it failed. Joseph DePaolo, CEO of Signature Bank, also sold stock in the company in the years leading up to its collapse.

    DePaolo will not appear in front of the Senate on Tuesday, instead Signature’s co-founder and the bank’s president have agreed to testify.

    The anger over CEO pay echoes that of roughly 15 years ago, when the 2008 financial crisis led to taxpayer-funded bailouts of major banks. The CEOs and high-level bankers still received millions in pay and bonuses, most notably at nearly failed insurance conglomerate American International Group.

    “The recent bank failures prove yet again that banker compensation is at the core of causing banks to take too much risk, act irresponsibly if not recklessly, and blow themselves up,” said Dennis Kelleher, co-founder of Better Markets, which was founded after the Great Recession focused on financial industry reform.

    Clawing back CEO pay has gained bipartisan attention despite the fierce divisions between the two political parties.

    Four senators — two Democrats and two Republicans — have introduced legislation that would give the Federal Deposit Insurance Corporation authority to claw back any pay made to executives in the five years leading up to a bank’s failure.

    The bill is sponsored by Warren, Josh Hawley, R-Mo., Catherine Cortez Masto, D-Nev. and Mike Braun, R-Ind. The White House, while not endorsing the specific bill, has called on Congress to pass laws to reform how bank CEOs are paid in the event of a failure.

    “Bank executives who make risky investments with customers’ money shouldn’t be permitted to profit in the good times, and then avoid financial consequences when things go south,” Hawley said when the bill was introduced in late March.

    Kelleher said he supports the congressional efforts to claw back CEO pay following a bank failure.

    Executives at big companies also tend get most of their pay each year in company stock. That means CEOs and other insiders have much to gain if the company’s stock rises. And shareholders typically like it this way. The thought is that by tying a CEO’s compensation to the stock price, it better aligns their interests with shareholders.

    But the executives also have a lot to gain if they can sell their stock before the share price takes a steep dive.

    Since 2000, the Securities and Exchange Commission has given CEOs and other corporate insiders a way to defend themselves against charges that they bought or sold stock using information unavailable to others, an illegal practice known as insider trading.

    The method, known as the 10b5-1 rule, lets insiders enter into written plans to buy and sell stock in the future. The goal was to let insiders make trades, but not when they have their hands on material information not available to the public.

    In prepared remarks for the Senate, Becker says he believed that these plans were “the most ethical means to manage this part of my compensation” and that his selling of Silicon Valley Bank stock before the bank failed was preplanned.

    Over the years, complaints have risen about insiders abusing some loopholes in the 10b5-1 rule. In December, the SEC announced added amendments to close the loopholes.

    Key among them was a “cooling-off period.” That meant directors and officers have to wait at least 90 days in many cases after establishing or modifying a trading plan before any purchases or sales could be made. The changes also limit insiders’ ability to use multiple overlapping 10b5-1 plans.

    In March, the Justice Department announced the first insider trading prosecution based exclusively on the use of 10b5-1 trading plans. It charged the CEO of a health care company in California with securities fraud for allegedly avoiding more than $12.5 million in losses by entering into two 10b5-1 trading plans while knowing the company’s then-largest customer might be terminating its contract.

    The SEC also charged the CEO with insider trading after avoiding the 44% drop in the company’s stock price when it announced the customer had terminated the contract.

    _____

    AP Business Writer Stan Choe contributed to this report from New York.

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  • CEO pay again in focus as the heads of failed banks appear before Senate panel

    CEO pay again in focus as the heads of failed banks appear before Senate panel

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    NEW YORK — The recent failures of a trio of midsize banks has once again raised questions about whether senior executives in the U.S. are being rewarded more for short-term gains — like rising stock prices — than for ensuring their companies’ long-term health.

    Executives at Silicon Valley Bank, Signature Bank and First Republic Bank were paid millions of dollars over their tenures up until their banks failed, the bulk of the compensation coming in the form company stock. That stock is now largely worthless but the CEOs still pocketed millions from the planned sales of their shares before the banks’ collapse.

    The heads of the two of the three failed banks will appear Tuesday in front of the Senate Banking Committee to respond to questions about why their banks went under and what regulators could have done to avoid the calamities. Executive compensation is almost certainly to come up as well, most likely raised by senators including Elizabeth Warren, D-Mass., who wrote letters to First Republic Bank about its compensation practices after the bank failed.

    Silicon Valley Bank’s former CEO Greg Becker received compensation valued at roughly $9.9 million in 2022, and also sold stock in the company only a few weeks before it failed. Joseph DePaolo, CEO of Signature Bank, also sold stock in the company in the years leading up to its collapse.

    DePaolo will not appear in front of the Senate on Tuesday, instead Signature’s co-founder and the bank’s president have agreed to testify.

    The anger over CEO pay echoes that of roughly 15 years ago, when the 2008 financial crisis led to taxpayer-funded bailouts of major banks. The CEOs and high-level bankers still received millions in pay and bonuses, most notably at nearly failed insurance conglomerate American International Group.

    “The recent bank failures prove yet again that banker compensation is at the core of causing banks to take too much risk, act irresponsibly if not recklessly, and blow themselves up,” said Dennis Kelleher, co-founder of Better Markets, which was founded after the Great Recession focused on financial industry reform.

    Clawing back CEO pay has gained bipartisan attention despite the fierce divisions between the two political parties.

    Four senators — two Democrats and two Republicans — have introduced legislation that would give the Federal Deposit Insurance Corporation authority to claw back any pay made to executives in the five years leading up to a bank’s failure.

    The bill is sponsored by Warren, Josh Hawley, R-Mo., Catherine Cortez Masto, D-Nev. and Mike Braun, R-Ind. The White House, while not endorsing the specific bill, has called on Congress to pass laws to reform how bank CEOs are paid in the event of a failure.

    “Bank executives who make risky investments with customers’ money shouldn’t be permitted to profit in the good times, and then avoid financial consequences when things go south,” Hawley said when the bill was introduced in late March.

    Kelleher said he supports the congressional efforts to claw back CEO pay following a bank failure.

    Executives at big companies also tend get most of their pay each year in company stock. That means CEOs and other insiders have much to gain if the company’s stock rises. And shareholders typically like it this way. The thought is that by tying a CEO’s compensation to the stock price, it better aligns their interests with shareholders.

    But the executives also have a lot to gain if they can sell their stock before the share price takes a steep dive.

    Since 2000, the Securities and Exchange Commission has given CEOs and other corporate insiders a way to defend themselves against charges that they bought or sold stock using information unavailable to others, an illegal practice known as insider trading.

    The method, known as the 10b5-1 rule, lets insiders enter into written plans to buy and sell stock in the future. The goal was to let insiders make trades, but not when they have their hands on material information not available to the public.

    In prepared remarks for the Senate, Becker says he believed that these plans were “the most ethical means to manage this part of my compensation” and that his selling of Silicon Valley Bank stock before the bank failed was preplanned.

    Over the years, complaints have risen about insiders abusing some loopholes in the 10b5-1 rule. In December, the SEC announced added amendments to close the loopholes.

    Key among them was a “cooling-off period.” That meant directors and officers have to wait at least 90 days in many cases after establishing or modifying a trading plan before any purchases or sales could be made. The changes also limit insiders’ ability to use multiple overlapping 10b5-1 plans.

    In March, the Justice Department announced the first insider trading prosecution based exclusively on the use of 10b5-1 trading plans. It charged the CEO of a health care company in California with securities fraud for allegedly avoiding more than $12.5 million in losses by entering into two 10b5-1 trading plans while knowing the company’s then-largest customer might be terminating its contract.

    The SEC also charged the CEO with insider trading after avoiding the 44% drop in the company’s stock price when it announced the customer had terminated the contract.

    _____

    AP Business Writer Stan Choe contributed to this report from New York.

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  • Stock market today: Asian shares turn lower after China economic data weaker than expected

    Stock market today: Asian shares turn lower after China economic data weaker than expected

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    Asian shares were mostly higher on Tuesday even though the latest data showed China’s economy is weaker than expected, with domestic demand failing to bounce back as much as hoped for after the pandemic.

    Benchmarks advanced in Tokyo, Hong Kong and Seoul but fell in Shanghai and Sydney.

    China’s economic recovery after the pandemic faces pressure from sluggish consumer and export demand, a government official said Tuesday, with retail sales and other activity in April weaker than expected.

    Retail sales rose 18.4% over a year earlier, up 7.8 percentage points from March, official data showed. Other indicators were mixed: Factory output rose 5.6% over a year ago but was off 0.5% from March. Investment in factories, real estate and other fixed assets was up 4.7% in the first four months of 2023, but that was off 0.4 percentage points from the first quarter’s growth rate.

    “Today’s activity data suggest China is mired in an extended soft patch,” said Stephen Innes of SPI Asset Management in a report.

    Julian Evans-Pritchard of Capital Economics said the post-pandemic recovery was likely to “fizzle out” in the second half of the year. “Meanwhile, the challenging global picture will prevent much pick-up in Chinese exports,” he said.

    Tokyo’s Nikkei 225 index surged 0.7% to 29,842.99, continuing a climb toward its highest level since the early 1990s that has been helped by strong corporate earnings and signs that inflationary pressures might be easing.

    The Hang Seng in Hong Kong fell 0.2% to 19,945.86, while the Shanghai Composite index lost 0.5% to 3,292.99.

    In Seoul, the Kospi edged 0.1% lower, 2,477.14, while Australia’s S&P/ASX 200 slipped 0.4% to 7,240.90.

    On Monday, the S&P 500 rose 0.3% to 4,136.28 and the Dow Jones Industrial Average edged 0.1% higher, to 33,348.60. The Nasdaq composite climbed 0.7% to 12,365.21.

    Some of the sharper moves came from companies announcing takeovers of rivals, including a 9.1% drop for energy company Oneok after it said it’s buying Magellan Midstream Partners. Magellan jumped 13%.

    But market was relatively quiet as several concerns dragged on sentiment.

    A chief one is the fear of a recession hitting later this year, mainly because of high interest rates meant to knock down inflation. Cracks in the U.S. banking system and the U.S. government’s inching toward a possible default on its debt as soon as June 1 are added worries.

    So far, a resilient job market has helped U.S. households keep up their spending despite all the pressures. That in turn has offered a powerful pillar to prop up the economy. On Tuesday, the government will show how much sales at retailers across the country grew last month.

    Several big retailers — Home Depot on Tuesday, Target on Wednesday and Walmart on Thursday — will give updates on their earnings in the first quarter of the year.

    The majority of companies in the S&P 500 have topped expectations so far but overall they are on track to report a drop of 2.5% in earnings per share from a year earlier. That would be the second straight quarter they’ve seen profit drop, according to FactSet.

    Looming ahead is the risk of the federal government’s first-ever default if Congress doesn’t raise the credit limit set for federal borrowing.

    Most investors expect Democrats and Republicans to come to a deal, simply because the alternative would be so disastrous for both sides. U.S. Treasurys form the bedrock of the global financial system because they’re seen as the safest possible investment on the planet.

    But one worry is that politicians may not feel much urgency to reach an agreement until financial markets shake sharply to convince them of the importance.

    In other trading Tuesday, U.S. benchmark crude oil picked up 32 cents to $71.43 per barrel in electronic trading on the New York Mercantile Exchange. It gained $1.07 on Monday, to $71.11 per barrel.

    Brent crude oil, the international pricing standard, gained 33 cents to $75.55 per barrel.

    The dollar slipped to 136.01 Japanese yen from 136.12 yen. The euro rose to $1.0881 from $1.0875.

    ___

    AP Business Writer Joe McDonald contributed.

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  • Stock market today: Wall Street is mixed ahead of updates on U.S. shoppers

    Stock market today: Wall Street is mixed ahead of updates on U.S. shoppers

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    NEW YORK — Wall Street is drifting Monday ahead of reports that will show how much a slowing economy is hurting what’s prevented a recession so far: solid spending by U.S. households.

    The S&P 500 was virtually unchanged in its first trading after closing out a second straight down week. The Dow Jones Industrial Average was edging down 19 points, or 0.1%, to 33,280, as of 11 a.m. Eastern time, while the Nasdaq composite was 0.1% higher.

    Some of the sharper moves came from companies announcing takeovers of rivals, including a 6.3% drop for energy company Oneok after it said it’s buying Magellan Midstream Partners. Magellan jumped 15.5%. But the larger market was relatively quiet as several concerns continue to drag on Wall Street.

    Chief among them is the fear of a recession hitting later this year, in large part because of high interest rates meant to knock down inflation. But concerns are also rising about cracks in the U.S. banking system and the U.S. government’s inching toward a possible default on its debt as soon as June 1, which economists warn could be catastrophic.

    So far, a resilient job market has helped U.S. households keep up their spending despite all the pressures. That in turn has offered a powerful pillar to prop up the economy. On Tuesday, the government will show how much sales at retailers across the country grew last month.

    Several big retailers will also show how much profit they made individually during the first three months of the year, including Home Depot on Tuesday, Target on Wednesday and Walmart on Thursday.

    They’re among the few companies left who have yet to report their results for the start of the year. The majority of companies in the S&P 500 have topped expectations so far, though the bar was set particularly low for them coming in.

    S&P 500 companies are still on track to report a drop of 2.5% in earnings per share from a year earlier. That would be the second straight quarter they’ve seen profit drop, according to FactSet.

    As earnings reports slide out of the spotlight, the U.S. government’s debt-ceiling negotiations are shoving in. The federal government is risking its first-ever default if Congress doesn’t raise the credit limit set for federal borrowing.

    Democrats and Republicans are arguing about whether an increase should be tied to cuts in government spending, and talks are continuing.

    Most of Wall Street expects the two sides to come to a deal after loudly complaining about it, simply because the alternative would be so disastrous for both sides. U.S. Treasurys form the bedrock of the global financial system because they’re seen as the safest possible investment on the planet.

    But one worry is that politicians may not feel much urgency to come to an agreement until financial markets shake sharply to convince them of the importance.

    “A debt default may not be the most likely scenario, but any prolonged debate or unexpected development has the potential to trigger higher volatility,” said Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.

    In the bond market, Treasury yields rose after taking a brief dip following another discouraging report on the U.S. manufacturing industry. A survey of manufacturers in New York state plunged by much more than economists expected.

    The yield on the 10-year Treasury climbed back to 3.50%, up from 3.46% late Friday. It helps set rates for mortgages and other loans.

    The two-year Treasury yield, which more closely tracks expectations for the Fed, ticked up to 4.00% from 3.99%.

    High interest rates have meant particular pain for some smaller- and mid-sized banks. Customers are leaving to park their deposits in money-market funds and other options that are paying higher yields. High rates are meanwhile knocking down the value of investments that banks made when rates were lower.

    The pressures have already caused three high-profile bank failures since March, and Wall Street has been on the hunt for other potential weak links.

    Several were holding a bit steadier Monday after dropping sharply last week. PacWest Bancorp. rose 7.5% after losing 21% last week, for example.

    In markets abroad, Japan’s Nikkei 225 gained 0.8% and is near its highest level since the early 1990s. It’s climbed on strong corporate earnings reports and signs that inflationary pressures might be easing.

    Over the weekend, finance ministers of the Group of Seven advanced economies wrapped up a meeting in Japan with a call for vigilance given many uncertainties for the global economy.

    However, they also said financial systems have shown resilience despite recent failures of several banks in the U.S. and Europe. No mention was made of the urgency of resolving the debt ceiling standoff between President Joe Biden and Republicans.

    ___

    AP Business Writers Elaine Kurtenbach and Matt Ott contributed.

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  • Stock market today: Wall Street is mixed ahead of updates on U.S. shoppers

    Stock market today: Wall Street is mixed ahead of updates on U.S. shoppers

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    NEW YORK — Wall Street is drifting Monday ahead of reports that will show how much a slowing economy is hurting what’s prevented a recession so far: solid spending by U.S. households.

    The S&P 500 was virtually unchanged in its first trading after closing out a second straight down week. The Dow Jones Industrial Average was edging down 19 points, or 0.1%, to 33,280, as of 11 a.m. Eastern time, while the Nasdaq composite was 0.1% higher.

    Some of the sharper moves came from companies announcing takeovers of rivals, including a 6.3% drop for energy company Oneok after it said it’s buying Magellan Midstream Partners. Magellan jumped 15.5%. But the larger market was relatively quiet as several concerns continue to drag on Wall Street.

    Chief among them is the fear of a recession hitting later this year, in large part because of high interest rates meant to knock down inflation. But concerns are also rising about cracks in the U.S. banking system and the U.S. government’s inching toward a possible default on its debt as soon as June 1, which economists warn could be catastrophic.

    So far, a resilient job market has helped U.S. households keep up their spending despite all the pressures. That in turn has offered a powerful pillar to prop up the economy. On Tuesday, the government will show how much sales at retailers across the country grew last month.

    Several big retailers will also show how much profit they made individually during the first three months of the year, including Home Depot on Tuesday, Target on Wednesday and Walmart on Thursday.

    They’re among the few companies left who have yet to report their results for the start of the year. The majority of companies in the S&P 500 have topped expectations so far, though the bar was set particularly low for them coming in.

    S&P 500 companies are still on track to report a drop of 2.5% in earnings per share from a year earlier. That would be the second straight quarter they’ve seen profit drop, according to FactSet.

    As earnings reports slide out of the spotlight, the U.S. government’s debt-ceiling negotiations are shoving in. The federal government is risking its first-ever default if Congress doesn’t raise the credit limit set for federal borrowing.

    Democrats and Republicans are arguing about whether an increase should be tied to cuts in government spending, and talks are continuing.

    Most of Wall Street expects the two sides to come to a deal after loudly complaining about it, simply because the alternative would be so disastrous for both sides. U.S. Treasurys form the bedrock of the global financial system because they’re seen as the safest possible investment on the planet.

    But one worry is that politicians may not feel much urgency to come to an agreement until financial markets shake sharply to convince them of the importance.

    “A debt default may not be the most likely scenario, but any prolonged debate or unexpected development has the potential to trigger higher volatility,” said Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.

    In the bond market, Treasury yields rose after taking a brief dip following another discouraging report on the U.S. manufacturing industry. A survey of manufacturers in New York state plunged by much more than economists expected.

    The yield on the 10-year Treasury climbed back to 3.50%, up from 3.46% late Friday. It helps set rates for mortgages and other loans.

    The two-year Treasury yield, which more closely tracks expectations for the Fed, ticked up to 4.00% from 3.99%.

    High interest rates have meant particular pain for some smaller- and mid-sized banks. Customers are leaving to park their deposits in money-market funds and other options that are paying higher yields. High rates are meanwhile knocking down the value of investments that banks made when rates were lower.

    The pressures have already caused three high-profile bank failures since March, and Wall Street has been on the hunt for other potential weak links.

    Several were holding a bit steadier Monday after dropping sharply last week. PacWest Bancorp. rose 7.5% after losing 21% last week, for example.

    In markets abroad, Japan’s Nikkei 225 gained 0.8% and is near its highest level since the early 1990s. It’s climbed on strong corporate earnings reports and signs that inflationary pressures might be easing.

    Over the weekend, finance ministers of the Group of Seven advanced economies wrapped up a meeting in Japan with a call for vigilance given many uncertainties for the global economy.

    However, they also said financial systems have shown resilience despite recent failures of several banks in the U.S. and Europe. No mention was made of the urgency of resolving the debt ceiling standoff between President Joe Biden and Republicans.

    ___

    AP Business Writers Elaine Kurtenbach and Matt Ott contributed.

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  • Stock market today: Global shares decline ahead of reports

    Stock market today: Global shares decline ahead of reports

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    TOKYO — Global shares mostly fell Tuesday as investors took a wait-and-see view on the week ahead, including stubbornly high inflation across the economy.

    Data showing lagging imports in China sent Chinese benchmarks lower. Oil prices fell.

    France’s CAC 40 slipped 0.4% in early trading to 7,412.85. Germany’s DAX inched down 0.1% to 15,938.15. Britain’s FTSE 100 fell 0.2% to 7,762.54. U.S. shares were set to drift lower with Dow futures dipped 0.3% to 33,599.00. S&P 500 futures were down 0.2% to 4,143.00.

    Japan’s benchmark Nikkei 225 gained 1.0% to finish at 29,242.82. But other regional benchmarks fell.

    Australia’s S&P/ASX 200 slipped 0.2% to 7,264.10. South Korea’s Kospi shed 0.1% to 2,510.06. Hong Kong’s Hang Seng lost 2.1% to 19,867.58, after new data on China’s trade showed declining imports. The Shanghai Composite dropped 1.1% to 3,357.67.

    Chinese exports grew 8.5% in April, showing more unexpected strength despite weakening global demand, according to customs data. Exports grew to $295.4 billion compared with a year earlier, although at a slower pace, building on momentum seen in the March data when exports rose 14.8%.

    But imports shrank at a faster pace, with the total slumping 7.9% to $205.2 billion compared to the same time last year, according to data Tuesday from the General Administration of Customs. It was down 1.4% in March. Trade with the U.S. and European Union showed a contraction in comparison with last year. China’s trade surplus in April widened, growing 82.3% compared to the same period last year.

    “Asian equities traded sideways on Tuesday after U.S. stocks traded within a tight range, remaining mostly unchanged in volatile trading, as investors reacted to the mixed response to the Fed’s senior loan officer survey,” said Anderson Alves, analyst at ActivTrades. “The survey showed a tightening of credit availability, impacting companies’ margins and signaling an imminent economic slowdown.”

    The larger concern for markets is that all the turmoil could cause U.S. banks to pull back on their lending. That in turn could raise the risk of a recession that many investors already see as highly likely.

    A report Monday from the Federal Reserve showed many banks tightened their lending standards during the first three months of the year. Not only that, the survey suggested banks widely expect to raise their standards over the course of 2023. Among the reasons some smaller and mid-sized banks gave for the forecast were wanting to take less risk and worries about deposit outflows.

    The Federal Reserve has lifted its benchmark interest rate to a range of 5%-5.25%, up from virtually zero early last year, in hopes of slowing high inflation. High rates do that by slowing the economy and hurting prices for investments, which runs the risk of causing a recession if they stay too high for too long.

    The Fed said it’s not sure of its next move, as swaths of the economy have shown sharp slowdowns but the job market remains largely resilient.

    Later this week, the U.S. government will give the latest monthly updates on inflation at the consumer and wholesale levels. Earnings reports will also arrive from Duke Energy, The Walt Disney Co. and News Corp., as well as Toyota Motor Corp. in Japan.

    In energy trading, benchmark U.S. crude fell 97 cents to $72.19 a barrel. Brent crude, the international standard, lost 96 cents to $76.05 a barrel.

    In currency trading, the U.S. dollar inched down to 134.86 Japanese yen from 135.04 yen. The euro cost $1.0981, down from $1.1008.

    ___

    AP Business Writer Stan Choe in New York contributed to this report.

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  • Oil giant Saudi Aramco’s 1st quarter profit down 20% to $31B

    Oil giant Saudi Aramco’s 1st quarter profit down 20% to $31B

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    DUBAI, United Arab Emirates — Oil giant Saudi Aramco reported a first-quarter profit on Tuesday of $31.88 billion, down nearly 20% from the same period last year as energy prices have sunk over global recession concerns.

    The firm known formally as the Saudi Arabian Oil Co. blamed the drop — compared to $39.47 billion in the same quarter last year — on the lower crude oil prices. Aramco made a $30.73 billion profit in the fourth quarter of last year.

    “The results reflect Aramco’s continued high reliability, focus on cost and our ability to react to market conditions as we generate strong cash flows and further strengthen the balance sheet,” Aramco President and CEO Amin H. Nasser said in a statement.

    Aramco separately said that it “believes it is well positioned to withstand fluctuating commodity prices through its low-cost upstream production.” Benchmark Brent crude traded early on Tuesday around $76 a barrel, down from a high of $125 in the last year.

    Saudi Arabia’s vast oil resources, located close to the surface of its desert expanse, make it one of the world’s least expensive places to produce crude. For every $10 rise in the price of a barrel of oil, Saudi Arabia stands to make an additional $40 billion a year, according to the Institute of International Finance.

    In March, Aramco announced earning $161 billion last year, claiming the highest-ever recorded annual profit by a publicly listed company and drawing immediate criticism from activists amid concerns about climate change.

    While saying Aramco was “working to further reduce the carbon footprint of our operations,” Nasser remained bullish on the world’s need for crude and natural gas.

    “We are also moving forward with our capacity expansion, and our long-term outlook remains unchanged as we believe oil and gas will remain critical components of the global energy mix for the foreseeable future,” he added.

    Those earnings came off the back of energy prices rising after Russia launched its war on Ukraine in February 2022, with sanctions limiting the sale of Moscow’s oil and natural gas in Western markets.

    However, oil prices have sunk in recent weeks amid fears of a coming recession as central banks in the U.S. and elsewhere raise interest rates to try to tame inflation. That’s even after OPEC+, a group of countries including the cartel and those outside it like Russia, announced surprise production cuts in April totaling up to 1.15 million barrels. Recent OPEC+ cuts have seen U.S. President Joe Biden warn of potential “consequences” for Riyadh, even though his national security adviser just visited the kingdom and met with Saudi Crown Prince Mohammed bin Salman.

    Aramco stock traded at $9.55 a share on Riyadh’s Tadawul stock exchange at close Monday, giving the oil firm a $2.1 trillion valuation and putting it only behind Apple and Microsoft for the highest market capitalization in the world. Just a sliver of its worth, under 2%, is traded on the exchange. The Saudi government holds 90% of the company, with about 8% held by Saudi sovereign wealth funds.

    Separately Tuesday, Aramco announced it would begin issuing performance-based dividends to stockholders, on top of the dividends it already offers. Its base dividend in the fourth quarter of last year was $19.5 billion, ranking it as the highest in the world for a publicly traded firm.

    ___

    Follow Jon Gambrell on Twitter at www.twitter.com/jongambrellAP.

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  • A.I. trade is leaving investors vulnerable to painful losses: Evercore

    A.I. trade is leaving investors vulnerable to painful losses: Evercore

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    The artificial intelligence trade may be leaving investors vulnerable to significant losses.

    Evercore ISI’s Julian Emanuel warns Big Tech concentration in the S&P 500 is at extreme levels.

    “The AI revolution is likely quite real, quite significant. But… these things unfold in waves. And, you get a little too much enthusiasm and the stocks sell off,” the firm’s senior managing director told CNBC’s “Fast Money” on Monday.

    In a research note out this week, Emanuel listed Microsoft, Apple, Amazon, Nvidia and Alphabet as concerns due to clustering in the names.

    “Two-thirds [of the S&P 500 are] driven by those top five names,” he told host Melissa Lee. “The public continues to be disproportionately exposed.”

    Emanuel reflected on “odd conversations” he had over the past several days with people viewing Big Tech stocks as hiding places.

    “[They] actually look at T-bills and wonder whether they’re safe. [They] look at bank deposits over $250,000 and wonder whether they’re safe and are putting money into the top five large-cap tech names,” said Emanuel. “It’s extraordinary.”

    It’s particularly concerning because the bullish activity comes as small caps are getting slammed, according to Emanuel. The Russell 2000, which has exposure to regional bank pressures, is trading closer to the October low.

    For protection against losses, Emanuel is overweight cash. He finds yields at 5% attractive and plans to put the money to work during the next market downturn. Emanuel believes it will be sparked by debt ceiling chaos and a troubled economy over the next few months.

    “You want to stay in the more defensive sectors. Interestingly enough with all of this AI talk, health care and consumer staples have outperformed since April 1,” Emanuel said. “They’re going to continue outperforming.”

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  • Biden hopes strong job market means soft landing for economy

    Biden hopes strong job market means soft landing for economy

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    WASHINGTON — For President Joe Biden, the past few days have raised hopes that the U.S. economy can stick a soft landing—possibly avoiding a recession as the 2024 election nears.

    Most U.S. adults have downbeat feelings about Biden’s economic leadership, as high inflation has overshadowed a strong jobs market. It’s long been economic orthodoxy that efforts to beat back inflation by the Federal Reserve would result in unemployment rising and the country sinking into recession.

    But to the president and some economists, the April jobs report issued Friday challenged that theory with its 3.4% unemployment rate and 253,000 jobs gained.

    The strong jobs report came after a Wednesday Fed meeting that suggested the U.S. central bank might pause on its rate hikes, the primary tool for cutting inflation from its still high 5% to something closer to 2%. Talks are also starting over the need to raise the debt limit — with Biden inviting congressional leaders to the White House for a Tuesday meeting in hopes of ultimately getting a commitment to avoid a default.

    For a president seeking a second term, Biden struck a confident tone Friday when meeting with aides even as he pushed GOP lawmakers for a clean increase on the debt cap.

    “We’re trending in the right direction and I think we’re making real progress,” he said about the overall economy, telling Republican lawmakers to not “undo all this progress” with the debt limit standoff.

    The economy could still stumble. Several economists forecast a recession this year, considering the wild cards of the war in Ukraine, global tensions and the debt limit fight. But the steady job gains have suggested to some policymakers and economists that it’s possible to curb inflation without layoffs.

    Fed Chair Jerome Powell told reporters Wednesday that the current trends are going against history.

    “It wasn’t supposed to be possible for job openings to decline by as much as they’ve declined without unemployment going up,” Powell said. “Well, that’s what we’ve seen. There’s no promises in this, but it just seems that to me that it’s possible that we will continue to have a cooling in the labor market without having the big increases in unemployment.”

    Heidi Shierholz, president of the Economic Policy Institute, a liberal think tank, said there are currently no signs of a recession and if one erupts it will be due to Fed overreach.

    “We are in the middle of a soft landing right now — we have shown we can bring down wage growth, bring down inflation,” she said.

    But that doesn’t mean voters are pleased with the economy. Inflation remains a persistent irritant as Biden has begun the process of launching his reelection campaign. GOP lawmakers have used the high prices in the wake of the pandemic as a political cudgel, with House Speaker Kevin McCarthy, R-Calif., insisting on spending cuts as part of a debt limit deal in order to reduce inflation. The debt limit deals with spending obligations that the United States has already incurred and not future spending.

    Just as Biden trumpets the solid job market, Fed officials could interpret the hiring as evidence that they need to raise rates higher and that could cause more pain for the economy and the Democratic administration.

    “The starting point is the fact that inflation remains stubbornly high and politically troublesome,” said Douglas Holtz-Eakin, a former director of the Congressional Budget Office and president of the center-right American Action Forum. ”The Fed would like to get it down. The data don’t just seem to behave. The Fed could very well hike again in June — and that would cause the financial markets to lose their collective mind.”

    There is also the possibility that lawmakers fail to avert a default. Or, there could be so much drama over getting to a debt limit deal that the economy gets weaker this summer. The Treasury Department has forecast that its accounting maneuvers to keep the government running could be exhausted by early June, at which point an agreement would need to be in place.

    The White House released estimates showing that brinkmanship over the debt limit — even if a deal comes together — could still cost the economy 200,000 jobs.

    Nor are all economists convinced the U.S. economy has escaped the gravitational pull of a recession.

    Many believe it could occur later this year, possibly shaping the 2024 campaign. The jobs report might only be a temporary reassurance for Biden, rather than a lasting win. The historical pattern could reassert itself right as the campaign season begins to intensify.

    “The strong performance of the labor market dampens expectations of an immediate recession,” said Kathy Bostjancic, chief economist at the insurance company Nationwide. “Our view remains that a recession remains on the horizon, unfolding in the second half of the year, but the ongoing solid job gains and buoyancy in wage growth does suggest it could start later in the year.”

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  • US adds a strong 253,000 jobs despite Fed’s rate hikes

    US adds a strong 253,000 jobs despite Fed’s rate hikes

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    WASHINGTON — America’s employers added a robust 253,000 jobs in April, evidence of a labor market that still shows surprising strength despite rising interest rates, chronically high inflation and a banking crisis that could weaken the economy.

    The unemployment rate ticked down to 3.4%, matching a 54-year low. Last month’s hiring gain compared with 165,000 in March and 248,000 in February, and is at a level considered vigorous by historical standards.

    The job market has remained strong despite the Federal Reserve’s aggressive campaign of interest rate hikes over the past year to fight inflation. Layoffs are still relatively low, job openings comparatively high. Still, the ever-higher borrowing costs the Fed has engineered have weakened some key sectors of the economy, notably the housing market.

    Since hitting a four-decade high last year, inflation has steadily eased yet is still well above the Fed’s 2% target level.

    Fed Chair Jerome Powell himself sounded somewhat mystified this week by the job market’s durability. The central bank has expressed concern that a robust job market exerts upward pressure on wages — and prices. It hopes to achieve a so-called soft landing – cooling the economy and the labor market just enough to tame inflation yet not so much as to trigger a recession.

    One way to do that, Powell has said, is for employers to post fewer job openings. And indeed the government reported this week that job openings fell in March to 9.6 million — a still-high figure but down from a peak of 12 million in March 2022 and the fewest in nearly two years.

    The Fed chair said he was optimistic that the nation could avoid a recession. Yet many economists are skeptical and have said they expect a downturn to begin sometime this year.

    Another encouraging sign for the Fed is that more Americans are looking for work. The more workers who are available to employers, the less pressure employers face to raise pay.

    Still, steadily rising borrowing costs have inflicted some damage. Pounded by higher mortgage rates, sales of existing homes were down a sharp 22% in March from a year earlier. Investment in housing has cratered over the past year.

    America’s factories are slumping, too. An index produced by the Institute for Supply Management, an organization of purchasing managers, has signaled a contraction in manufacturing for six straight months.

    Even consumers, who drive about 70% of economic activity and who have been spending healthily since the pandemic recession ended three years ago, are showing signs of exhaustion: Retail sales fell in February and March after having begun the year with a bang.

    The Fed’s rate hikes are hardly the economy’s only serious threat. Congressional Republicans are threatening to let the federal government default on its debt, by refusing to raise the limit on what it can borrow, if Democrats don’t accept sharp cuts in federal spending. A first-ever default on the federal debt would shatter the market for U.S. Treasurys — the world’s biggest — and possibly cause an international financial crisis.

    The global backdrop already looks gloomier. The International Monetary Fund last month downgraded its forecast for worldwide growth, citing rising interest rates around the world, financial uncertainty and chronic inflation.

    Since March, America’s financial system has been rattled by three of the four biggest bank failures in U.S. history. Worried that jittery depositors will withdraw their money, banks are likely to reduce lending to conserve cash. Multiplied across the banking industry, that trend could cause a credit crunch that would hobble the economy.

    At the staffing firm Robert half, executive director Ryan Sutton still sees “pent-up demand’’ for workers.

    Applicants, not employers, still enjoy the advantage, he said: To attract and keep workers, he said, businesses — especially small ones — must offer flexible hours and the chance to work from home when possible.

    “Giving a little bit of schedule flexibility so that somebody might finish their work late or early so that they can take care of children and family and elderly parents — these are the things that the modern employee needs,’’ Sutton said. “To not offer those and to try to still have a 2019 business model of five days a week in an office — that’s going to put you at a disadvantage” in finding and retaining talent.

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  • April jobs report may point to US labor market’s resilience

    April jobs report may point to US labor market’s resilience

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    WASHINGTON — Month after month, the nation’s job market has stood its ground against howling headwinds — rising interest rates, chronic inflation, major bank failures and economic uncertainties across the world.

    Hiring has gradually slowed, along with pay growth and job openings. Yet by historical standards, the labor market has remained surprisingly strong, with an unemployment rate still hovering near half-century lows.

    When the Labor Department issues the April jobs report Friday morning, it’s expected to show that the trend has continued: Forecasters surveyed by the data firm FactSet predict that employers added 182,000 jobs last month. Though that would be well off the whopping 472,000 jobs that were added in January, the 326,000 in February and the 236,000 in March, it would still be a respectable gain that would show that many employers still need to fill jobs.

    The unemployment rate is thought to have edged up to 3.6%, only slightly above a 54-year low of 3.4% set in January.

    The job market has so far withstood the Federal Reserve’s aggressive drive to stamp out high inflation, which last year hit a four-decade high and is still well above the Fed’s 2% target. On Wednesday, the Fed raised its benchmark rate for a 10th time since March 2022, a move that will likely further drive up borrowing costs for businesses and consumers.

    Yet employers keep hiring.

    Fed Chair Jerome Powell himself sounded somewhat mystified this week by the job market’s durability.

    “We’ve raised rates by 5 percentage points in 14 months” — from a range of 0%-0.25% to a range of 5%-5.25%, Powell said at a news conference Wednesday. “And unemployment is 3 1/2 percent — pretty much where it was, even lower than where it was, when we started.’’

    The Fed has expressed concern that a robust job market exerts upward pressure on wages — and prices. It hopes to achieve a so-called soft landing – cooling the economy and the labor market just enough to tame inflation yet not so much as to trigger a recession.

    One way to do that, Powell has said, is for employers to post fewer job openings. So far, so good: The government reported this week that job openings fell in March to 9.6 million — a still-high figure but down from a peak of 12 million in March 2022 and the fewest in nearly two years.

    “It wasn’t supposed to be possible for job openings to decline by as much as they’ve declined without unemployment going up,’’ Powell said. “It’s possible that we can continue to have a cooling in the labor market without having the big increases in unemployment’’ that usually occur.

    The Fed chair said he was optimistic that the nation could avoid a recession. Yet many economists are skeptical and have said they expect a downturn to begin sometime this year.

    Another encouraging sign for the Fed is that more Americans are looking for work. The labor force — defined as the number of adults who either have a job or are looking for one — has grown by 1.8 million this year. The more workers who are available to employers, the less pressure employers face to raise pay.

    Still, steadily rising borrowing costs have inflicted some damage. Pounded by higher mortgage rates, sales of existing homes were down a sharp 22% in March from a year earlier. Investment in housing has cratered over the past year.

    America’s factories are slumping. An index produced by the Institute for Supply Management, an organization of purchasing managers, has signaled a contraction in manufacturing for six straight months.

    Even consumers, who drive about 70% of economic activity and who have been spending healthily since the pandemic recession ended three years ago, are showing signs of exhaustion: Retail sales fell in February and March after having begun the year with a bang.

    The Fed’s rate hikes are hardly the economy’s only serious threat. Congressional Republicans are threatening to let the federal government default on its debt, by refusing to raise the limit on what it can borrow, if Democrats don’t accept sharp cuts in federal spending. A first-ever default on the federal debt would shatter the market for U.S. Treasurys — the world’s biggest — and possibly cause an international financial crisis.

    The global backdrop already looks gloomier. The International Monetary Fund last month downgraded its forecast for worldwide growth, citing rising interest rates around the world, financial uncertainty and chronic inflation.

    Since March, America’s financial system has been rattled by three of the four biggest bank failures in U.S. history. Worried that jittery depositors will withdraw their money, banks are likely to reduce lending to conserve cash. Multiplied across the banking industry, that trend could cause a credit crunch that would hobble the economy.

    So was April the month when the job market finally started to crumble? Economists are betting probably not.

    This week, the payroll processor ADP reported that private employers added a lofty 296,000 jobs in April. And Goldman Sachs’ economic team offered a rosy forecast: It predicted that employers added 250,000 jobs in April, well above the consensus estimate.

    At the staffing firm Robert half, executive director Ryan Sutton still sees “pent-up demand’’ for workers.

    Applicants, not employers, still enjoy the advantage, he said: To attract and keep workers, he said, businesses — especially small ones — must offer flexible hours and the chance to work from home when possible.

    “Giving a little bit of schedule flexibility so that somebody might finish their work late or early so that they can take care of children and family and elderly parents — these are the things that the modern employee needs,’’ Sutton said. “To not offer those and to try to still have a 2019 business model of five days a week in an office — that’s going to put you at a disadvantage” in finding and retaining talent.

    ___

    AP Economics Writer Christopher Rugaber contributed to this report.

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  • Further turmoil likely ahead for regional banks, economist says

    Further turmoil likely ahead for regional banks, economist says

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    Rupert Thompson, chief economist at Kingswood Group, assess the outlook for the economy and says that further turmoil is likely ahead for regional banks, but that the Fed has taken measures to contain risks to the broader economy.

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  • Former CEOs of failed banks to testify before Senate panel

    Former CEOs of failed banks to testify before Senate panel

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    The former top executives of two failed banks will testify before Congress this month

    BySTEPHEN GROVES Associated Press

    WASHINGTON — The former top executives of two failed banks will testify before Congress this month as lawmakers dig into what caused a series of collapses at mid-sized financial institutions.

    The Senate Banking Committee indicated Tuesday that it will hold a hearing May 16 with Silicon Valley Bank’s former CEO, Gregory Becker, as well as Signature Bank’s former chairman and co-founder, Scott Shay, and its former president, Eric Howell.

    The committee, which is chaired by Sen. Sherrod Brown, an Ohio Democrat, will also hold two other hearings this month on the collapse of the banks. Several industry experts will testify at a hearing on Thursday. Then on May 18, Michael Barr, the Federal Reserve’s chief regulator, and Martin Gruenberg, chairman of the Federal Deposit Insurance Corp., will testify.

    The Fed board was the primary regulator for Silicon Valley Bank in California, while the FDIC was the primary federal regulator for Signature Bank in New York.

    Barr issued a report last month that blamed Silicon Valley Bank’s collapse on poor management, watered-down regulations and lax oversight by Fed staffers. It called for the industry to do a better job policing on multiple fronts to prevent future bank failures.

    A separate report from the FDIC said the failure of Signature Bank was likely fallout from the collapse of Silicon Valley Bank, but also found regulatory deficiencies at FDIC, notably insufficient staffing to adequately supervise the bank.

    Senators have directed plenty of ire at the banking industry, regulators and a roll-back of financial stress tests in 2018. But between Democrats and Republicans in a closely divided Congress, there is little agreement on whether any legislation is needed.

    Brown, alongside the Senate Banking Committee’s top Republican, Sen. Tim Scott, sent a letter in March to executives at Silicon Valley Bank and Signature Bank telling them that they would be expected to testify and warning “you must answer for the bank’s downfall.”

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  • Revlon emerges from bankruptcy with new board and new owners

    Revlon emerges from bankruptcy with new board and new owners

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    NEW YORK — Less than a year after filing for chapter 11, Revlon emerged from bankruptcy protection Tuesday as a privately held company with new owners, reduced debt and a new board.

    “Today marks an important moment in Revlon’s history and evolution,” said Debra Perelman, president and CEO of Revlon, in a statement. “We look forward to unlocking the full potential of our globally recognized brands and continuing to offer our customers the iconic products they have loved for decades.”

    Revlon said it emerged from bankruptcy reorganization with $1.5 billion in debt after eliminating more than $2.7 billion in debt from its balance sheet. It also has $236 million in available liquidity. It also changed its corporate name to Revlon Group Holdings.

    The majority of the company’s reorganized equity is now owned by its former lenders, including affiliates of Glendon Capital Management, King Street Capital Management, Angelo, Gordon & Co., Oak Hill Advisors and Cyrus Capital Partners LP, among others.

    Revlon’s largest shareholder had been MacAndrews & Forbes, owned by Perelman’s father Ron Perelman. MacAndrew & Forbes held 85% of the company’s stock at the time of its bankruptcy filing in June 2022. He had acquired the company through a hostile takeover in 1985.

    The new board consists of Executive Chair Elizabeth A. Smith, former executive chairman and CEO of Bloom’ Brands, and former chair of the Federal Reserve of Atlanta; Martin Brok, former global president and CEO of Sephora; Timothy McLevish, former chief financial officer at Walgreens Boots Alliance; Hans Melotte, former president of Starbucks’ global channel development; and Paul Pressler, chairman of eBay.

    Revlon, a cosmetics maker that broke racial barriers and dictated beauty trends for much of the last century, has been a mainstay on store shelves since its founding 91 years ago in New York City. It oversees a stable of household names from Almay to Elizabeth Arden.

    But Revlon failed to keep pace with changing tastes, slow to follow women as they traded flashy red lipstick for more muted tones in the 1990s.

    In addition to losing market share to big rivals like Procter & Gamble, newcomer cosmetic lines from Kylie Jenner and other celebrities successfully capitalized on the massive social media following of the famous faces that fronted the products.

    Already weighed down by rising debt, Revlon’s problems only intensified with the pandemic as lipstick gave way to a new era in fashion, this one featuring medical-grade masks. Sales rebounded but still lagged from pre-pandemic days. The global supply chain disruptions that hobbled hundreds of international companies were also too much for Revlon, which barely escaped bankruptcy in late 2020.

    But the company’s latest results look promising. Net sales for the first quarter were $490 million, surpassing the $483 million forecasted in the company’s business plan set forth in December. Operating income was $51 million, more than double the $19 million projected in the business plan.

    ___________

    Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio

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  • Regulators seize First Republic Bank, sell to JPMorgan Chase

    Regulators seize First Republic Bank, sell to JPMorgan Chase

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    NEW YORK — Regulators seized troubled First Republic Bank and sold all of its deposits and most of its assets to JPMorgan Chase Bank in a bid to head off further banking turmoil in the U.S.

    San Francisco-based First Republic is the third midsize bank to fail in two months. It has struggled since the collapse of Silicon Valley Bank and Signature Bank and investors and depositors had grown increasingly worried it might not survive because of its high amount of uninsured deposits and exposure to low interest rate loans.

    The Federal Deposit Insurance Corporation said early Monday that First Republic Bank’s 84 branches in eight states will reopen Monday as branches of JPMorgan Chase Bank.

    Regulators worked through the weekend to find a way forward before U.S. stock markets opened. Markets in many parts of the world were closed for May 1 holidays Monday. The two markets in Asia that were open, in Tokyo and Sydney, rose.

    As of April 13, First Republic had approximately $229 billion in total assets and $104 billion in total deposits, the FDIC said. At the end of last year, the Federal Reserve ranked it 14th in size among U.S. commercial banks.

    Before Silicon Valley Bank failed, First Republic had a banking franchise that was the envy of most of the industry. Its clients — mostly the rich and powerful — rarely defaulted on their loans. The 72-branch bank has made much of its money making low-cost loans to the wealthy, which reportedly included Meta Platforms CEO Mark Zuckerberg.

    Flush with deposits from the well-heeled, First Republic saw total assets more than double from $102 billion at the end of 2019’s first quarter, when its full-time workforce was 4,600.

    But the vast majority of its deposits, like those in Silicon Valley and Signature Bank, were uninsured — that is, above the $250,000 limit set by the FDIC. And that worried analysts and investors. If First Republic were to fail, its depositors might not get all their money back.

    Those fears were crystalized in the bank’s recent quarterly results. The bank said depositors pulled more than $100 billion out of the bank during April’s crisis. San Francisco-based First Republic said that it was only able to stanch the bleeding after a group of large banks stepped in to save it with $30 billion in uninsured deposits.

    Since the crisis, First Republic has been looking for a way to quickly turn itself around. The bank planned to sell off unprofitable assets, including the low interest mortgages that it provided to wealthy clients. It also announced plans to lay off up to a quarter of its workforce, which totaled about 7,200 employees in late 2022.

    Investors remained skeptical. The bank’s executives have taken no questions from investors or analysts since the bank reported its results, causing First Republic’s stock to sink further.

    And it’s hard to profitably restructure a balance sheet when a firm has to sell off assets quickly and has fewer bankers to find opportunities for the bank to invest in. It took years for banks like Citigroup and Bank of America to return to profitability after the global financial crisis 15 years ago, and those banks had the benefit of a government-aided backstop to keep them going.

    ___

    Associated Press Staff Writer Matt O’Brien in Providence, Rhode Island, contributed to this report.

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  • Stock market today: Tokyo gains, most Asian markets closed

    Stock market today: Tokyo gains, most Asian markets closed

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    Shares advanced Monday in Tokyo and Sydney while most Asian markets were closed for May 1 holidays.

    The traditional Labor Day holidays around the globe likely limited initial market reactions to a delay in an expected decision by U.S. regulators on what to do with troubled First Republic Bank.

    San Francisco-based First Republic has struggled since the collapses of Silicon Valley Bank and Signature Bank in early March, as investors and depositors fret that the bank may not survive as an independent entity for much longer.

    First Republic has been seen as the most likely next bank to collapse due to its high amount of uninsured deposits and exposure to low interest rates. Regulators were thought to be seeking to sell all or part of the bank before markets reopened for trading Monday.

    The bank’s stock closed at $3.51 on Friday, a fraction of the roughly $170 a share it traded for a year ago.

    “A quiet Monday open shaded by a holiday feel with an undertone of no-news-is-good-news on the Frist Republic Front,” Stephen Innes of SPI Asset Management said in a commentary.

    In Asian trading Monday, Tokyo’s Nikkei 225 index added 0.9% to 29,123.18 and the S&P/ASX 200 in Sydney advanced 0.5% to 7,344.20. Other markets in the region were closed.

    On Friday, the S&P 500 gained 0.8% to 4,169.48. Despite some sharp swings this week, it still clinched a second straight winning month. The Dow Jones Industrial Average climbed 0.8% to 34,098.16, and the Nasdaq composite gained 0.7% to 12,226.58.

    Exxon Mobil did some of the market’s heavier lifting after it rose 1.3%. It reported stronger profit and revenue for the latest quarter than forecast.

    Intel gained 4% after reporting a milder loss than expected and stronger revenue for the latest quarter. Mondelez International, the food giant behind Oreo and Ritz, rose 3.9% after topping Wall Street’s estimates. It also raised its forecast for revenue and earnings over the full year.

    They helped to offset a 4% drop for Amazon, which weighed heavily on the market despite reporting stronger profit and revenue for the latest quarter than expected. Analysts pointed to a slowdown in revenue growth at its AWS cloud computing business.

    The economy is slowing under the weight of higher interest rates meant to get inflation under control. Even though most companies so far this reporting season have beaten expectations, those were set low given forecasts that the economy may tip into recession.

    Based on recent economic reports, traders are betting the Federal Reserve will raise interest rates again at a meeting next week and possibly again in June.

    A report on Friday said the inflation measure that the Fed prefers to use came in close to expectations for March, but is well above the target. Also, wages rose more during the first three months of the year than economists expected, potentially keeping inflation more entrenched.

    The Fed has raised its key overnight interest rate to its highest level since 2007, up from its record low, following a barrage of hikes since early last year. Together, they’ve already slowed the economy’s growth down to an estimated 1.1% annual rate at the start of this year.

    They’ve also caused cracks in the banking system.

    The Federal Reserve released a report Friday blaming the failure of Silicon Valley Bank on a combination of poor bank management, weakened regulations and lax government supervision.

    In other trading Monday, U.S. benchmark crude oil gave up 75 cents to $76.06 per barrel in electronic trading on the New York Mercantile Exchange. It gained $2.02 on Friday.

    Brent crude, the standard for pricing for international trading, shed 65 cents to $79.68 per barrel.

    The U.S. dollar rose to 136.92 Japanese yen from 136.24 yen. The euro weakened to $1.1002 from $1.0023.

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