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Fighting in south increases sharply – DW – 01/20/2023
Fighting has “sharply increased” in the southern Ukrainian region of Zaporizhzhia, where the front has been largely stagnant for months, a senior Moscow-installed official in the area said on Friday.
“In the direction of Zaporizhzhia, the intensity of military activity has sharply increased,” the official, Vladimir Rogov, said on the Telegram social media platform.
Both Rogov and the Russian army said Moscow’s forces had seized the village of Lobkove, some 50 kilometres (30 miles) south of the Ukrainian-held regional capital also called Zaporizhzhia.
According to Rogov, Russian forces had fired at Ukrainian positions with “tanks, mortar and artillery” in a dozen villages in the region. He had also announced a “local offensive” near the town of Orikhiv a day earlier.
The Ukrainian army did not confirm the Russian claims, but said that “more than 20 settlements” in the region had been attacked.
The front in southern Ukraine has been considerably quieter recently than the east, with Moscow withdrawing from the major city of Kherson in November.
Also on Friday, Russia said it had captured a hamlet Klishchiivka near the town of Bakhmut, now the epicentre of fighting between Kyiv and Moscow’s forces.
Klishchiivka, which had an estimated population of around 500 people before Moscow sent troops to Ukraine, lies southwest of Bakhmut, suggesting Russian forces were attempting to encircle the town.
Here are other updates on the war in Ukraine on Friday, January 20:
Inspections of Ukrainian grain ships halved since October
Inspections of ships carrying Ukrainian grain and other food exports have slowed to half their peak rate under a UN-brokered wartime agreement, creating backlogs in vessels meant to carry supplies to developing nations where people are going hungry, United Nations and Ukrainian officials say.
As the grain initiative got rolling in August, only 4.1 inspections of ships both heading to and leaving Ukraine took place each day on average, according to data from the Joint Coordination Center in Istanbul. In September, inspections jumped to 10.4 per day, then a peak rate of 10.6 in October. Since then, it’s been downhill: 7.3 in November, 6.5 in December and 5.3 so far in January.
“The hope had been that going into 2023, you would see every month the daily rate of inspection going up, not that you would see it halved,” USAID Administrator Samantha Power said at the World Economic Forum meeting in Davos.
More than 100 vessels are waiting in the waters off Turkey either for inspection or for their applications to participate to clear, with the waiting time of vessels between application and inspection averaging 21 days in the last two weeks, according to the UN.
Despite fewer average daily inspections, UN figures showed that more grain actually got through last month, up 3.7 million metric tons from 2.6 million in November. The coordination center explained that that was due to use of larger vessels in December.
Der Spiegel: German intelligence concerned about Ukraine’s Bakhmut losses
Germany’s foreign intelligence service, the BND, is concerned by the losses Ukraine is suffering in fighting against Russian forces in the eastern Ukrainian city of Bakhmut, news magazine Der Spiegel reported.
The Ukrainian army is losing a three-digit number of soldiers every day, the BND told a group of Bundestag lawmakers focused on security at a secret meeting this week, Der Spiegel reported.
The BND also warned that the capture of Bakhmut by Russian forces would have significant consequences, as it would allow Russia to make further advances.
Although Russian losses are considerably high as well, the report said this plays no role in the war tactics of the Russian army leadership as it is acting mercilessly around Bakhmut and throwing soldiers forward like cannon fodder.
UK joins international push to hold Russia accountable for Ukraine invasion
The UK said it joined a group of international partners pursuing criminal accountability for Russia’s invasion of Ukraine. The government said in a statement it had been invited by Ukraine to join the group and encouraged other G7 nations to also take part.
British Foreign Secretary James Cleverly said, “These atrocities must not go unpunished,” citing the deaths of soldiers and civilians and the displacement of millions of Ukrainians.
“That’s why the UK has accepted Ukraine’s invitation to join this coalition, bringing our legal expertise to the table to explore options to ensure Russia’s leaders are held to account fully for their actions,” he added.
The statement said Britain’s involvement would include assessing the feasibility of a new ‘hybrid’ tribunal, which it described as a specialized court integrated into Ukraine’s national justice system with international elements.
Defense ministers discuss tanks for Ukraine at Ramstein
Defense ministers and senior military officers from around the world are weighing how best to support Ukraine, with the provision of powerful battle tanks high on the agenda, in talks at a US air base in western Germany.
US Defense Secretary Lloyd Austin invited the members of the Ukraine Contact Group to the conference at Ramstein, the largest US air base outside the United States, and urged them to “dig deeper” into their stocks to supply Ukraine with the weapons it needs to repel Russia’s invasion.
Pressure is mounting on Germany to send its Leopard 2 battle tanks to help Ukraine fight off the Russian invasion and to allow its allies to do so as well.
Berlin has so far refused to act unilaterally, insisting that it can only do so in concert with its allies, though domestically and abroad calls are growing louder to provide more modern and heavier weapons to Ukraine.
Czech Republic and Slovakia ready to send Leopard tanks — reports
The Czech government supports the idea of supplying Ukraine with Leopard 2 tanks that it received recently from Germany, the Frankfurter Allgemeine Zeitung reported citing diplomatic sources.
Both the Czechs and the Slovaks have already supplied Ukraine with dozens of their own Soviet-era tanks, but now they want to hand over the Leopards they received from Germany in a so called ring exchange.
In this exchange, Germany would replace the Soviet-era tanks with refurbished Leopard 2A4s. The first of these tanks were delivered to the Czech Republic and Slovakia in December, and crew training has already begun.
First UN aid convoy reaches sites near Ukraine’s Soledar
A UN spokesperson said that a three-truck humanitarian convoy had brought aid to around 800 people close to Soledar in Ukraine’s eastern Donetsk region.
The supplies of food, water, hygiene and medicines are the first such UN convoy to reach the area where intense fighting between Ukrainian and Russian forces is taking place.
Jens Laerke from the United Nations Office for the Coordination of Humanitarian Affairs said that the vehicles, which departed from Dnipro, were being offloaded on Friday morning in areas controlled by the Ukrainian government, without giving an exact location.
Russian forces say they control Soledar, while Ukrainian sources say the military is still fighting in the area.
US media report CIA director met Zelenskyy in Kyiv last week
CIA Director William Burns met with Ukrainian President Volodymyr Zelenskyy late last week in Kyiv to discuss what he believes Russia is planning in the weeks and months ahead, The Washington Post and other outlets reported.
A US official told the paper, “Director Burns traveled to Kyiv where he met with Ukrainian intelligence counterparts as well as President Zelenskyy and reinforced our continued support for Ukraine in its defense against Russian aggression.”
Burns, a former ambassador to Russia, stressed “the urgency of the moment on the battlefield” but communicated that “at some point assistance would be harder to come by.”
Sources told the paper that Zelenskyy and his aides had the impression from the talks that the US administration still strongly supports the $45 billion (€41.5 billion) in emergency funding passed by Congress in December.
That funding expected to last through July or August.
Poland ready to send Ukraine tanks regardless of German permission
Poland could send Leopard 2 tanks to Ukraine even without Germany’s re-export approval, a Polish deputy foreign minister said.
“I do not rule out that we are ready to take such a step,” Pawel Jablonski told radio station RMF FM. Jablonski was referring to the possibility of sending tanks to Ukraine even if Germany opposes it.
He said he hoped Poland would encourage Berlin “also to do so themselves.”
On Wednesday, Polish Prime Minister Mateusz Morawiecki suggested Warsaw could send Leopard 2 tanks to Ukraine as part of a wider coalition, should Germany fail to give its approval.
Finland to send heavy artillery to Ukraine
Finland announced a new donation of more than €400 million euros ($434 million) worth of defense equipment for Ukraine, not including Leopard 2 heavy tanks, which it said it could also send if there is an agreement with allies.
It is the Nordic country’s twelfth package of defense materiel to Ukraine. The previous 11 aid packages had a combined value of €190 million.
Miika Pynnonen, special adviser to Finland’s defense minister, said a decision on donating Leopard 2 tanks, of which Finland has some 200, would be taken separately, following discussions with allies at Ramstein air base in Germany.
Finland had earlier indicated it could send the German-made Leopard tanks if there were an agreement among allies.
The ministry also said Finland would sign a so-called statement of intent with Sweden on support for Ukraine to make sure the aid “would not endanger the national defense of the two countries.”
“Finland supplies defense materiel to Ukraine, and Sweden expresses its readiness to support Finland as necessary,” the statement said.
Ukraine says detained seven ‘Russian agents’
Ukraine said it had detained seven “Russian agents” suspected of handing coordinates to Moscow’s forces to carry out strikes in the city of Dnipro, where dozens of civilians were recently killed in a missile attack.
“The detainees gave the Russians the coordinates of critical infrastructure facilities,” Ukraine’s security services said in a statement.
“Information about the possible involvement of the detainees in the Russian missile attack on a residential building in Dnipro on January 14, 2023 is currently being checked,” the statement added.
Russian Wagner group officially registers as ‘consultancy’
In its latest intelligence report, the UK Ministry of Defense said the Russian mercenary Wagner group formally registered in Russia as a legal entity, marking a new development in the history a traditionally secretive group.
Wagner now commands up to 50,000 fighters in Ukraine and has become “a key component” in Russia’s war against its neighbor, the UK ministry said.
Wagner cited its business activities as “management consultancy,” in the filing, which was made on December 27. No mention of its paramilitary activities appeared.
It is not clear to what extent the registration would be used to manage the group’s mercenary activities. Private security and military companies are technically illegal in Russia.
Ukrainians wrap up landmine clearance exercises in Cambodia
A group of 15 Ukrainian deminers wrapped up a week of training in Cambodia, where experts who have cleared minefields from one of the most mined countries on the planet shared their expertise with the relative newcomers to the dangerous job.
Oum Phumro, deputy secretary general of the Cambodian Mine Action Center said the training will continue with regular video conference calls and a team of three to five Cambodian experts will travel to Poland in April to train more Ukrainians.
He also said Cambodia was giving Ukraine experienced sniffer dogs and training them on how to use them to detect mines.
Cambodia is still strewn with mines from three decades of war and internal conflicts that ended in 1998, while the conflict in Ukraine is a new one since the Russian invasion last year.
Germany promises Ukraine €52 million more in reconstruction aid
Germany’s Development Minister Svenja Schulze promised Ukraine an additional €52 million ($56 million) for reconstruction during a visit to the southern Ukrainian port city of Odesa.
“We are in the midst of war to rebuild Ukraine into a free, independent Ukraine,” she said on Thursday. The visit was kept secret until Friday morning for security reasons.
The additional millions in aid for Ukrainian municipalities is to go toward heating, electricity generators, medical care and administrative costs.
In 2022, the German Development Ministry (BMZ) provided Ukraine with around €600 million in aid.
Schulze was on her second visit to Ukraine since the Russian invasion in February last year, after making a trip to Kiev at the end of May. She was accompanied by Ukrainian Deputy Prime Minister and Infrastructure Minister Olexandr Kubrakov.
Nearly one-fifth of Western companies remaining in Russia are German
Despite widespread outrage over Russia’s war against Ukraine, fewer Western companies than many would believe have actually left Russia, according to a Swiss study.
Politico reported that researchers at the University of St. Gallen and at the IMD institute in Lausanne in Switzerland found that less than 10% of companies from the EU and G7 nations with Russian subsidiaries had divested.
When Moscow launched its invasion, 1,404 companies based in the EU and the G7 counted a total of 2,405 subsidiaries that were active in Russia, the study showed.
By late November, only 120, or about 8.5% of those companies, had divested at least one subsidiary in Russia. There were more confirmed exits from US-headquartered companies than firms based in Europe and Japan.
Fewer than 18% of the US subsidiaries operating in Russia were completely divested in after last year’s February 24 invasion. By contrast, 15% of Japanese firms and only 8.3% of EU firms had divested from Russia, it said.
Of those who continue to do business in Russia, 19.5% are German and 12.4% are US-owned.
dh/ar (AP, AFP, dpa, Reuters)
China manufacturing contracts sharply as Covid infections soar
A textile factory on December 30, 2022 in Jiangxi Province. Chinese manufacturing activity contracted at its sharpest pace in nearly 3 years in December.
Vcg | Visual China Group | Getty Images
China’s factory activity shrank for the third straight month in December and at the sharpest pace in nearly three years as Covid infections swept through production lines across the country after Beijing’s abrupt reversal of anti-virus measures.
The official purchasing managers’ index (PMI) fell to 47.0 from 48.0 in November, the National Bureau of Statistics (NBS) said on Saturday. Economists in a Reuters poll had expected the PMI to come in at 48.0. The 50-point mark separates contraction from growth on a monthly basis.
The drop was the biggest since the early days of the pandemic in February 2020.
The data offered the first official snapshot of the manufacturing sector after China removed the world’s strictest Covid restrictions in early December. Cumulative infections likely reached 18.6 million in December, UK-based health data firm Airfinity estimated.
Analysts said surging infections could cause temporary labour shortages and increased supply chain disruptions. Reuters reported on Wednesday that Tesla plans to run a reduced production schedule at its Shanghai plant in January, extending the reduced output it began this month into next year.
Weakening external demand on the back of growing global recession fears amid rising interest rates, inflation and the war in Ukraine may further slow China’s exports, hurting its massive manufacturing sector and hampering an economic recovery.
While (the factory PMI) was lower than expected, it is actually hard for analysts to provide a reasonable forecast given the virus uncertainties over the past month.”
Zhou Hao
chief economist, Guotai Junan International
“Most factories I know are way below where they could be this time of year for orders next year. A lot of factories I’ve talked to are at 50%, some are below 20%,” said Cameron Johnson, a partner at Tidalwave Solutions, a supply chain consulting firm.
“So even though China is opening up, manufacturing is still going to slow down because the rest of the world’s economy is slowing down. Factories will have workers, but they will have no orders.”
NBS said 56.3% of surveyed manufacturers reported that they were greatly affected by the epidemic in December, up 15.5 percentage points from the previous month, although most also said they expected the situation will gradually improve.
Recovery hopes?
“While (the factory PMI) was lower than expected, it is actually hard for analysts to provide a reasonable forecast given the virus uncertainties over the past month,” said Zhou Hao, chief economist at brokerage house Guotai Junan International.
“In general, we believe that the worst for the Chinese economy is behind us, and a strong economic recovery is ahead.”
The country’s banking and insurance regulator pledged this week to step up financial support to small and private businesses in the catering and tourism sectors that were hit hard by the Covid-19 epidemic, stressing a consumption recovery will be a priority.
The non-manufacturing PMI, which looks at services sector activity, fell to 41.6 from 46.7 in November, the NBS data showed, also marking the lowest reading since February 2020.
The official composite PMI, which combines manufacturing and services, declined to 42.6 from 47.1.
“The weeks before Chinese New Year are going to remain challenging for the service sector as people won’t want to go out and spend more than necessary for fear of catching an infection,” said Mark Williams, Chief Asia Economist at Capital Economics.
“But the outlook should brighten around the time that people return from the Chinese New Year holiday – infections will have dropped back and a large share of people will have recently had Covid and feel they have a degree of immunity.”
China’s Exports Drop Sharply as Global Economy Slows
SINGAPORE—China’s exports to the rest of the world shrank unexpectedly in October, a sign that global trade is in sharp retreat as consumers and businesses cut back spending in response to central banks’ aggressive moves to tame inflation.
The slide in exports from the world’s factory floor adds to the gloom surrounding the global economy as leaders from the Group of 20 advanced and developing countries prepare to gather in Indonesia next week.
A buoyant U.S. labor market is showing signs of cooling as the Federal Reserve jacks up interest rates to tame high inflation. Many economists expect a recession in the U.S. within the next 12 months.
Europe is bracing for a difficult winter after Russia decided to throttle energy supplies in response to sanctions over the war in Ukraine. The European Central Bank raised interest rates by three-quarters of a percentage point for the second time in a row last month, but signaled mounting concerns about economic growth, prompting speculation among investors that it may soon dial back the pace of rate increases.
For China, the world’s second-largest economy, the sharp pullback in demand for its goods abroad removes a key prop for growth at a time when its economy is pressured by the government’s zero-tolerance approach to Covid-19 and a severe real-estate slump.
“It’s almost like it doesn’t have a leg to stand on,” said Steve Cochrane, chief economist for Asia Pacific at Moody’s Analytics in Singapore.
Chinese health officials said Saturday that China would stick to its tough Covid-prevention strategy, dashing hopes that had built up in recent days for an easing of strict pandemic measures following a closely watched Communist Party congress last month.
With growth slowing in the U.S., Europe and China, economists are downbeat about the global economy’s prospects this year and next. The International Monetary Fund warned last month that “the worst is yet to come,” saying it expects global gross domestic product to expand 3.2% this year, before slowing to 2.7% in 2023.
The China export slowdown “is a worrying sign for global growth,” said Duncan Wrigley, chief China economist at Pantheon Macroeconomics in London.
Exports from China declined 0.3% last month compared with a year earlier, China’s General Administration of Customs said Monday, the weakest pace of growth since May 2020, when trade was hobbled by countries’ early efforts to contain a worsening global pandemic. That was well below the expectations of economists polled by The Wall Street Journal, who had expected exports to increase 4% year over year.
Monday’s data showed exports to the U.S. fell 13% on the year in October, the third month of decline, while sales to the European Union fell 9%.
The data showed big falls in exports of products including home appliances and medical supplies, and weakening growth in exports of mobile phones and automobiles.
Other bellwether exporters in Asia, such as South Korea and Taiwan, have also reported faltering overseas sales, pointing to a broad slowdown in trade as the global economy loses momentum.
South Korea’s trade ministry said Nov. 1 that exports fell 5.7% in October compared with a year earlier, led by sinking exports of memory chips, petrochemicals and computers.
The cost of shipping containers full of goods around the world has fallen in recent months, as consumers retrench following a splurge on gadgets and home improvements while stuck at home during the depths of the pandemic. Prices for moving goods from Asia to the U.S. West Coast last week were 87% lower than the same time last year, according to data from online freight marketplace Freightos. Ocean carriers are canceling dozens of sailings on the world’s busiest routes during what is normally peak season.
The data showed weakening growth in Chinese exports of mobile phones and automobiles.
Photo:
Cfoto/Zuma Press
The decline in Chinese exports in October followed several months of slowing growth. Exports in September rose at an annual 5.7% rate, down from the double-digit pace Chinese exports posted around the middle of the year.
China’s imports from the rest of the world dropped 0.7% in October from a year earlier, underscoring weak domestic spending in China’s economy.
That was also weaker than the flat import performance expected by economists, which meant China’s trade surplus widened in October to $85.15 billion, from $84.7 billion in September.
Zichun Huang, an economist at Capital Economics, said in a note to clients Monday that he expects Chinese exports to fall further in the months ahead as the global economy slides closer to recession.
Weakening exports aren’t the only headwind facing the world’s second-largest economy.
Lockdowns have hurt economic activity throughout the year, and the threat of further measures to snuff out even the tiniest Covid-19 outbreaks means consumers are reluctant to spend and businesses hesitant to invest, compounding the drag from a deflating property bubble.
Economists say China is poised to fall well short of officials’ earlier goal of expanding 5.5% this year, and will likely record its worst 12 months for growth—aside from the first year of the pandemic—in decades.
Xiao Xiao in Beijing contributed to this article.
Write to Jason Douglas at jason.douglas@wsj.com
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Stocks rise sharply as Wall Street crawls out of a brutal September
U.S. stocks bounced Monday morning after the S&P 500 and Nasdaq Composite closed out their first three-quarter losing streak since the 2008 Global Financial Crisis and the Dow logged its first such span of losses since 2015.
The benchmark S&P 500 index gained 1% at the open, while the Dow Jones Industrial Average jumped 330 points, or around 1.2%. The technology-heavy Nasdaq Composite advanced 0.7%.
Sizable moves in energy markets kicked off the week, with oil prices swinging higher as reports surfaced that OPEC+ is considering a big production cut of more than one billion barrels per day. West Texas Intermediate (WTI) crude oil futures surged 5.6% to $83.99 per barrel, while Brent crude climbed about 3.9% to $88.45 per barrel.
On the corporate front, shares of Credit Suisse (CS) fell 3% at the start of trading after the global investment bank’s CEO issued a memo over the weekend attempting to calm major investors about the institution’s financial health – an effort that backfired and instead raised questions about its financial stability.
The bank said last week that it was exploring potential sales of assets and certain business units as part of a strategic plan set to be revealed at the end of the month.
Tesla (TSLA) stock was also a mover Monday morning after the electric vehicle giant reported Sunday that it delivered 343,830 cars in the third quarter, a fresh record that came even as the company grappled with the shutdown of its China factory. Still, the figure came in below Wall Street expectations, which ranged from 358,000 to 371,000 vehicles. Shares fell more than 6% early into the session.
Investors are reeling from a brutal month and quarter that saw all three major averages enter a bear market. In September, the S&P 500 recorded a 9.3% loss, its worst monthly decline since the onset of the pandemic in March 2020. The Dow erased more than 8% and the Nasdaq Composite more than 10%. For the quarter, the indexes shed roughly 5.3%, 4.1%, and 6.7%, respectively.
As Wall Street turned the page, some strategists look ahead to October, which has been deemed a “bear-market killer” based on historically strong returns, especially in midterm election years. Every time the S&P 500 has dropped 7% or more in September, stocks have done well in October, Carson Group’s Ryan Detrick noted.
A high-stakes earnings season likely to be wrought by slashed forecasts and worsening fundamentals tied to inflation and rising interest rates, however, makes this time different.
“The focus will be on earnings because we’re going from a moderation shock, with higher interest rates, to a growth shock,” Luca Paolini, chief strategist at Pictet Asset Management, told Yahoo Finance Live in a recent interview. “This is where we feel more worried, and next earnings season is going to be really critical.”
—
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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Recession fears mount as stocks fall sharply
A wave of heavy selling driven by investors’ concerns that the global economy could fall into recession rocked major stock indexes around the world Friday.
The Dow Jones Industrial Average, the S&P 500 and the Nasdaq each lost more than 1.5% on Friday, with the Dow closing at its lowest level since late 2020. The S&P is down 23% since its peak in January.
As Michael George reports for “CBS Saturday Morning,” interest rate hikes aimed at cutting inflation are having a ripple effect on the economy. On Friday at the New York Stock Exchange, the president of a company called Sustainable Development Equity officiated the close of what was a terrible 486-point drop-day, preceded by a terrible week.
The market has dropped more than 5,000 points in 12 months, with more than 1,000 points lost this week. And there are more storm clouds ahead, according to UC Berkeley economist James Wilcox.
“It is very likely that we are going to have a recession, and the probability of that occurring has been rising all year really, and especially since the summer with the Fed being so aggressive about raising interest rates,” he said.
The Federal Reserve board’s trio of 2022 interest rate hikes has made borrowing harder for companies that want to grow, and for consumers — particularly those who hope to own a home. The average 30-year fixed mortgage interest rates have spiked from 3.3% to 6.7% over the past nine months thanks to the Federal Reserve board hikes.
“How much further mortgage interest rates might go up is awfully hard to know, but I think we could still see some other interest rates, auto rates, credit card interest rates, moving up, and that’ll make it more difficult for people to buy new cars or to buy more expensive cars,” said Wilcox.
In all of this, White House press secretary Karine Jean-Pierre addressed the economy on Friday.
“That is why we passed, that is why Democrats in Congress passed the Inflation Reduction Act. By the way, no Republicans supported that,” she said.
The White House also points to gas prices, which have fallen significantly over the past few months, and one part of the economiy that remains strong: the job market. Unemployment is at 3.7%.
Bed Bath & Beyond shares are down sharply after CFO jumps to his death
Gustavo Arnal, the chief financial officer of the beleaguered retailer, jumped to his death from a high-rise apartment in Manhattan on Friday afternoon, a law enforcement source previously told CNN. The NYPD said in a statement Sunday that Arnal, 52, was found unconscious and unresponsive outside his luxury 57-story skyscraper in the neighborhood of Tribeca.
The law enforcement source told CNN on Sunday that Arnal’s wife witnessed him jump. The source said while no suicide note was found, no criminality is suspected.
Bed Bath & Beyond (BBBY) is “profoundly saddened by this shocking loss”, a company spokesperson said. In a statement Sunday, the Independent Chair of Bed Bath & Beyond’s Board of Directors Harriet Edelman said, “I wish to extend our sincerest condolences to Gustavo’s family.”
“Our focus is on supporting his family and his team and our thoughts are with them during this sad and difficult time. Please join us in respecting the family’s privacy,” Edelman said. Arnal joined Bed Bath & Beyond in May 2020 following a career in finance at Avon, Walgreens Boots Alliance (WBA) and Procter & Gamble. (PG)
Amal was named as a defendant in a class action lawsuit accusing him, Ryan Cohen and other large shareholders of engaging in a “pump and dump” scheme to artificially inflate the price of the company’s stock. The lawsuit was filed last month in United States District Court for the District of Columbia.
The lawsuit claims that Arnal and others made misleading statements and omissions when communicating to investors regarding the company’s strategic plans and financial condition, and delayed disclosures about holding and selling their own shares. The suit also alleges the stakeholders shared fake revenue numbers and company plans for spinning off its “Buy Buy Baby” brand to fuel a stock buying frenzy.
Bed Bath & Beyond is in deep financial turmoil. The company is trying to rescue itself and stay out of bankruptcy by shrinking. The chain said last week that it will lay off approximately 20% of corporate employees, close around 150 stores and slash several of its in-house home goods brands. The company also said it secured more than $500 million in financing to shore up its ailing financial straits.
On Tuesday, the company named Laura Crossen, its senior vice president of finance, as its interim CFO, and she will continue her role as its principal accounting officer.
If you or someone you know is struggling with suicidal thoughts or mental health matters, please call the National Suicide Prevention Lifeline at 988 to connect with a trained counselor or visit the NSPL site.
–CNN’s Brynn Gingras, Liam Reilly, Ramishah Maruf and Samantha Beech contributed to this report.
Gasoline price drop restrains U.S. consumer spending; monthly inflation brakes sharply
WASHINGTON, Aug 26 (Reuters) – U.S. consumer spending barely rose in July as falling gasoline prices hurt sales at service stations, but monthly inflation slowed sharply, which could reduce the need for the Federal Reserve to deliver another three-quarters of a percentage point interest rate hike next month.
Though the report from the Commerce Department on Friday showed a modest gain in personal income last month, wages increased strongly. That could help to underpin consumer spending and keep the economy growing, albeit moderately.
The slowdown in inflation is likely to be welcomed by U.S. central bank officials. Fed Chair Jerome Powell told the annual Jackson Hole global central banking conference in Wyoming on Friday that the U.S. will need tight monetary policy “for some time.” Powell gave no indication of how high interest rates might rise before the Fed is done. The central bank has raised its policy rate by 225 basis points since March. read more
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“With gasoline prices on track for an even larger fall than in July, and mounting signs that core goods inflation is stepping down, we suspect that could clear the way for a smaller 50 basis points hike in September,” said Michael Pearce, a senior U.S. economist at Capital Economics in New York.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1% last month after advancing 1.0% in June. Economists polled by Reuters had forecast consumer spending would gain 0.4%.
The national average gasoline price dropped to about $4.27 per gallon in the last week of July after hitting an all-time high just above $5 in mid-June, according to data from motorist advocacy group AAA.
While that freed money for spending on motor vehicles, clothing, recreational goods, furniture as well as housing and utilities, it depressed sales at service stations. As a result, spending on goods fell 0.2% after surging 1.5% in June.
Outlays on services rose 0.3% amid moderate gains in spending at restaurants and bars as well as on recreation services. Services spending increased 0.7% in June.
A moderate pace of consumer spending in the second quarter helped to blunt the drag on the economy from a sharp slowdown in inventory accumulation caused by supply bottlenecks. Gross domestic product contracted at a 0.6% annualized rate last quarter after shrinking at a 1.6% pace in the first quarter.
Stocks on Wall Street fell on Powell’s comments. The dollar slipped against a basket of currencies. The yield on the two-year U.S. Treasury note briefly popped to its highest level since October 2007 before stabilizing near two-month highs.
ECONOMY STILL GROWING
The economy is, however, not in a recession. When measured from the income side, it grew at a 1.4% pace, slowing from the January-March quarter’s 1.8% rate, the government reported on Thursday. read more
Though the Fed’s aggressive monetary policy tightening has raised the risk of an economic downturn, easing price pressures, if sustained, could give it leeway to scale back its rate hikes.
Financial markets see a 50/50 chance of 75 basis points or half-a-percentage point increase at the Sept. 20-21 meeting.
The personal consumption expenditures (PCE) price index dipped 0.1% last month, the first drop since April 2020, after surging 1.0% in June. In the 12 months through July, the PCE price index increased 6.3%. That was the slowest year-on-year rise since January and followed a 6.8% jump in June.
Excluding the volatile food and energy components, the PCE price index gained 0.1%, the weakest reading since February 2021, after racing 0.6% in June.
The so-called core PCE price index increased 4.6% on a year-on-year basis in July. The smallest annual advance in nine months followed a 4.8% rise in June.
There was more encouraging news on inflation. The University of Michigan’s consumer sentiment survey on Friday showed households’ near-term inflation expectations fell to an eight-month low in August. read more
Fed officials are closely watching inflation expectations, the PCE price indexes, in addition to the consumer price index.
Though oil prices have dropped significantly, rental costs have remained hot, leaving some economists hesitant to declare that inflation has peaked.
“Previous instances of slowing inflation momentum this past year have unexpectedly pivoted back to acceleration,” said Will Compernolle, as senior economist at FHN Financial in New York.
With monthly inflation subsiding, inflation adjusted consumer spending increased 0.2% in July after being unchanged in June, indicating a steady pace of growth at the start of the third quarter.
Personal income rose 0.2%, but wages shot up 0.8% after increasing 0.6% in June. Personal income was restrained by a decrease in non-wage income.
Strong wage growth amid a tight labor market bodes well for consumer spending, especially if inflation continues to cool. The saving rate was unchanged at 5%.
Despite the tepid consumer spending rise, GDP growth is expected to rebound this quarter, thanks to a shrinking trade deficit. A separate report from the Commerce Department on Friday showed the goods trade deficit narrowed 9.7% to $89.1 billion in July as imports declined. Wholesale inventories rose 0.8%, while stocks at retailers increased 1.1%.
“The baseline outlook is for the U.S. economy to remain recession-free,” said Matt Colyar, an economist at Moody’s Analytics in West Chester, Pennsylvania.
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Reporting by Lucia Mutikani; Editing by Paul Simao, Nick Zieminski and Chizu Nomiyama
Our Standards: The Thomson Reuters Trust Principles.
Russia’s Economy Contracts Sharply as War and Sanctions Take Hold
The Russian economy contracted steeply in the second quarter as the country felt the brunt of the economic consequences of its war in Ukraine, in what experts believe to be the start of a yearslong downturn.
The economy shrank 4 percent from April through June compared with a year earlier, the Russian statistics agency said on Friday. It is the first quarterly gross domestic product report to fully capture the change in the economy since the invasion of Ukraine in February. It was a sharp reversal from the first quarter, when the economy grew 3.5 percent.
Western sanctions, which cut off Russia from about half of its $600 billion emergency stash of foreign currency and gold reserves, imposed steep restrictions on dealings with Russian banks and cut access to American technology, prompting hundreds of major Western corporations to pull out of the country.
But even as imports to Russia dried up and financial transactions were blocked, forcing the country to default on its foreign debt, the Russian economy proved more resilient than some economists had initially expected, and the fall in G.D.P. reported on Friday was not as severe as some had expected in part because the country’s coffers were flush with energy revenue as global prices rose.
Analysts, though, say the economic toll will grow heavier as Western nations increasingly turn away from Russian oil and gas, critical sources of export revenue.
“We thought it would be a deep dive this year and then even out,” Laura Solanko, a senior adviser at the Bank of Finland Institute for Economies in Transition, said of the Russian economy. Instead, there has been a milder economic decline, but it will continue into next year, putting the economy in a shallower recession for two years, she said.
Russia, a $1.5 trillion economy before the war started, moved quickly in the days after the invasion to mitigate the impact of sanctions. The central bank more than doubled the interest rate to 20 percent, severely restricted the flow of money out of the country, shut down stock trading on the Moscow Exchange and loosened regulations on banks so lending didn’t seize up. The government also increased social spending to support households and loans for businesses hurt by sanctions.
The measures blunted some of the sanctions’ impact. And as the ruble rebounded, Russia’s finances benefited from high oil prices.
“Russia withstood the initial sanction shock” and “has been relatively resilient so far,” said Dmitry Dolgin, the chief economist covering Russia at the Dutch bank ING. But, he noted, unless Russia manages to diversify its trade and finances, the economy will be weaker in the long term.
Our Coverage of the Russia-Ukraine War
Retail trade declined about 10 percent, the statistics agency said, while wholesale business activity fell 15 percent.
Michael S. Bernstam, a research fellow at the Hoover Institution at Stanford University, said the data released on Friday were in line with other reports from Russia. He, too, expects the economy to deteriorate in the second half of this year, and then again in 2023.
As the war drags on, many countries and companies will look to permanently end relationships with Russia and its domestic companies. Businesses will have trouble getting replacement parts for Western-made machines, and software will need updates. Russian companies will need to rearrange their supply chains as imports seize up.
The prospects for Russia’s energy industry, central to the country’s economy, are deteriorating. The United States and Britain have already banned Russian oil imports, and the country’s oil output will fall further early next year when the full impact of a European Union ban on imports comes into effect. Russia would need to find customers for roughly 2.3 million barrels of crude and oil products a day, which is about 20 percent of its average output in 2022, according to the International Energy Agency.
So far countries including India, China and Turkey have absorbed some of the lost trade from Europe and the United States, but it’s unclear how many new buyers can be found.
Reliance on Russian natural gas is also being reduced. In the final week of June, total European Union gas imports from Russia were down 65 percent from a year earlier, according to a report by the European Central Bank. Some of these declines were forced on Europe because Russia has been cutting its supplies of gas. But European countries have ramped up efforts to find alternative sources and are, for example, quickly developing infrastructure for additional imports of liquefied natural gas.
The economy will suffer as the “exhaustion of inventories of investment imports, enforcement of the E.U. oil embargo, higher financial pressure on households and their higher dependence on the state” take their toll, while the ability of the central bank and government to provide monetary and fiscal support is limited, Mr. Dolgin of ING wrote.
Shortly after the invasion of Ukraine, inflation in Russia soared as households scrambled for goods they expected to become scarce. In July, inflation was running more than 15 percent, according to the Russian central bank. Already, though, there are signs inflation is slowing down, and as a result the central bank has slashed interest rates to 8 percent, lower than they were before the war.
Last month, the bank said that business activity had not slowed as much as expected, but that the economic environment “remains challenging and continues to significantly constrain economic activity.”
The bank forecast that the economy will shrink 4 percent to 6 percent this year, much less than it originally expected right after the start of the war. That 6 percent figure also matches the latest update from the International Monetary Fund.
The economy will have a deeper contraction next year and not return to growth until 2025, the central bank said on Friday. The bank forecast that inflation would be 12 percent to 15 percent by the end of the year.
In coming months, supply chain issues will present challenges, as businesses constrained by sanctions try to alter their supply chains to replenish stockpiles of finished and raw goods.
“I don’t think the Russian economy is doing well at the moment,” Ms. Solanko said. But the idea that sanctions and the departure of companies from Russia would cause the economy to rapidly collapse was never realistic. “Economies just don’t vanish,” she said.