What’s Up? (March 20-26)
Responding to Western Sanctions
President Vladimir V. Putin of Russia said last week that he would require “unfriendly countries” to pay for Russian gas in rubles. The move was intended to force countries like the United States and Britain to prop up Russia’s currency, which crashed after sanctions targeting Russia’s central bank effectively froze hundreds of billions of dollars of assets. People, in turn, rushed to exchange their rubles for dollars or euros. Officials in Europe and experts in the United States have already rejected the idea of paying in rubles. In another attempt to mitigate economic ruin, the Russian stock market reopened for limited trading on Thursday after a monthlong shutdown. The MOEX index rose 4.4 percent, but this upward trend was probably because of government measures aimed at avoiding a sell-off.
Dealing With Accelerating Inflation
The Federal Reserve chair, Jerome H. Powell, foreshadowed the central bank’s more aggressive approach to inflation, speaking urgently last week about the Fed’s willingness to take additional measures to ease demand and curb record inflation. His comments followed the Fed’s decision to increase its key interest rate by a quarter of a percentage point, the first of several increases the Fed is now projecting for 2022. “If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so,” Mr. Powell said last Monday. In Britain, where inflation is at a three-decade high, officials announced measures on Wednesday to help people cope with the rising prices, including plans to cut taxes on gasoline and diesel and release more funds to support low-income households.
Biden Eases Trump-Era Tariffs
The Biden administration made two moves to roll back tariffs imposed by President Donald J. Trump that sought to limit trade with Britain and China. On Tuesday, the administration announced an end to Trump-era tariffs on British steel and aluminum. In return, Britain agreed to lift tariffs on a variety of American products including whiskey and blue jeans. The agreement removed some of the remaining trans-Atlantic trade tensions, which bubbled up under Mr. Trump. The next day, the Office of the United States Trade Representative said it would allow some Chinese products to bypass tariffs imposed during a trade war between Mr. Trump and Beijing.
What’s Next? (March 27-April 2)
A New Climate Disclosure Rule
The Securities and Exchange Commission has opened a comment period for a far-reaching rule that would require public companies to report their impact on the environment to shareholders and the federal government. The public can respond for 30 days after the proposed rule is published in the Federal Register or until May 20, whichever comes first. The rule is intended to inform shareholders about the risks that climate change may pose to a company’s bottom line, including whether consumers may lose interest in products or services that contribute to global warming. Advocates for the measure say it will hold companies accountable for how they affect the climate and give investors more leverage to nudge businesses toward more environmentally friendly practices. But the proposed rule is already facing opposition from some business trade groups and the prospect of potential court challenges.
Union Efforts at Starbucks and Amazon
Union drives continue to sweep Starbucks locations across the country, with employees in Seattle, the franchise’s hometown, and Mesa, Ariz., voting last week to unionize. The stores are the seventh and eighth locations to vote for unions. Since December, more than 100 Starbucks stores have filed for union elections. Amazon has been trying to fend off unions in two of its own elections: Employees in Staten Island were still casting their ballots, and voting ended on Friday in Bessemer, Ala. A union victory in either location would be a first for Amazon’s operations in the United States. There is special attention on Bessemer, where the union lost an election last year and Amazon was hit with complaints from the National Labor Relations Board for its activities during the union efforts. This time, Amazon has relied largely on mandatory meetings intended to discourage workers from supporting the union.
A Pivotal Jobs Report
Last month’s jobs report showed a strong gain, with U.S. employers adding 678,000 jobs in February. The March report is also expected to be strong — though how strong will depend on the elasticity of demand, which has to do with whether factors like changing prices affect consumer behavior. The March report from the Department of Labor will not have registered any effects of the Fed’s rate increase, which was announced midway through the month. But the central bank’s moves will be a big caveat going forward as a potential recession looms large.
The Russia-Ukraine War and the Global Economy
Rising concerns. Russia’s invasion on Ukraine has had a ripple effect across the globe, adding to the stock market’s woes and spooking investors. The conflict has already caused dizzying spikes in energy prices, and could severely affect various countries and industries.
The cost of energy. Oil prices already were the highest since 2014, and they have continued to rise since the invasion. Russia is the third-largest producer of oil, so more price increases are inevitable.
Gas supplies. Europe gets nearly 40 percent of its natural gas from Russia, and it is likely to be walloped with higher heating bills. Natural gas reserves are running low, and European leaders worry that Moscow could cut flows in response to the region’s support of Ukraine.
Food prices. Russia is the world’s largest supplier of wheat; together, it and Ukraine account for nearly a quarter of total global exports. Countries like Egypt, which relies heavily on Russian wheat imports, are already looking for alternative suppliers.
Shortages of essential metals. The price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.
Financial turmoil. Global banks are bracing for the effects of sanctions intended to restrict Russia’s access to foreign capital and limit its ability to process payments in dollars, euros and other currencies crucial for trade. Banks are also on alert for retaliatory cyberattacks by Russia.
What Else?
Germany released plans to drastically cut its dependence on Russian energy. Uber and New York City’s taxis formed a partnership. The European Union approved sweeping legislation to regulate the biggest tech companies. And the billionaire MacKenzie Scott has donated $12 billion to 1,257 groups since 2020.
