Global Market News

Global equities decline

Global equities tumbled this week. The S&P 500 and Dow Jones closed the week down 2.75% and 1.86% respectively, while the Nasdaq fell 3.83%. The yield on the US 10-year Treasury note ticked up several basis points to 2.90%, while the price of a barrel of West Texas Intermediate crude oil dropped to $101.21 on Friday afternoon. Volatility, as measured by the CBOE Volatility Index, rose to 26.9.

IMF, World Bank warn of debt crises

The International Monetary Fund (IMF) and World Bank are raising concerns of rising debt in poor countries. As the war in Ukraine disrupts food supply chains and exacerbates inflation, the risk of debt crises is heightening. According to the IMF, 60% of low-income countries are suffering or are close to suffering debt distress. This year, the IMF predicts consumer prices will increase 8.7% in emerging-market economies while prices are set to rise 5.7% in advanced economies. Bloomberg reports that Sri Lanka, El Salvador, Ethiopia, Pakistan, and Tunisia are particularly at risk of default. The IMF and World Bank are calling for action to prevent debt crises before it is too late.

Coronavirus Updates

Covid-19 by the numbers

Global Confirmed Covid-19 cases: 508,732,000

Global Covid-19 deaths: 6,240,997

US Confirmed Covid-19 cases: 82,628,000

US Covid-19 deaths: 1,018,000
*As of Friday evening

Airlines drop mask mandates

Following a federal court ruling which struck down the Biden administration’s transportation mask mandate, major US airlines including Delta, United, American, and Southwest, among others, have dropped their mask mandates. In Florida, US District Judge Kathryn Kimball Mizelle ruled that the CDC did not have the authority to impose a travel mask mandate. Shortly after the ruling was announced, the White House said the Transportation Security Administration would not enforce the mask rule while the ruling is being reviewed.

International Developments

Ukraine Updates: Putin claims victory in Mariupol, launches large scale assault on eastern Ukraine

Early this week, Russian Foreign Minister Sergei Lavrov declared “another phase” of the war had begun. Russia has shifted its focus on eastern Ukraine, launching a large-scale assault on the region in the last few days. According to a Ukrainian official, Russia controls about 80% of Luhansk, one of the two regions in Ukraine’s eastern Donbas. Also this week, Russian President Vladimir Putin claimed victory in the eastern port city of Mariupol, but Ukrainian President Volodymyr Zelensky says Ukrainian forces are still resisting. Diplomatic efforts to end the war remain stalled.

China signs security pact with the Solomon Islands

China and the Solomon Islands have signed a security agreement. After a draft of the agreement was leaked, the US and Australia publicly criticized the pact with the US State Department warning that “such an agreement could increase destabilization within the Solomon Islands and will set a concerning precedent for the wider Pacific Island region.” Despite warnings from the US and a visit from top Australian officials, Prime Minister Manasseh Sogavare signed the pact with China. The draft of the agreement suggested it would allow Beijing to dock warships in the Solomon Islands but the nation’s prime minister said the country had no intention of asking Beijing to build a military base there. The US sent a US delegation to the Solomon Islands to discuss concerns about China and the reopening of a US embassy.

US Social & Political Developments

Biden increases aid to Ukraine

On Thursday, US President Joe Biden authorized an additional $1.3 billion in aid for Ukraine. The new aid package includes $800 million in heavy artillery and tactical drones, among other weapons, as well as $500 million in economic support. President Biden also said the US will expedite processing for Ukrainian refugees with a US sponsor. With this latest disbursement of aid, President Biden has almost exhausted the draw-down authority he was given by Congress for Ukraine in a spending bill last month. Additional aid to Ukraine will need to be approved by Congress through supplemental budget requests. Since Russia invaded on February 24th, more than 100,000 US troops have been sent to NATO-member countries and $3.4 billion in security assistance has been authorized. 

US co-chairs Panama Conference on migration

Secretary of State Antony Blinken co-chaired the Panama Conference this week in Panama City. Secretary of State Blinken and Secretary of Homeland Security Alejandro Mayorkas joined their counterparts from 20 other western hemisphere countries to discuss migration challenges. More than one-fifth of the estimated 82.4 million people forcibly displaced around the world are in the Americas, according to the UNHCR. Leaders at the conference warned that migration issues in the western hemisphere should not become an “afterthought” despite the focus on Ukraine’s migration crisis.

Corporate/Sector News

Musk goes after Twitter

Elon Musk wants to buy Twitter. Musk has secured enough funding for a $46.5 billion financing package for his bid for Twitter Inc, making it the largest acquisition financing ever put forward by an individual. More than two-thirds of the package would come from Musk’s assets while the remainder comes from bank loans secured against the social media company’s assets. Twitter’s board is reportedly rejecting Musk’s bid as too low, but Musk, who has amassed a more than 9% stake in the company, said he is exploring the possibility of taking the bid directly to shareholders with a tender offer.

Netflix tanks after earnings 

Following Netflix’s first quarter earnings report, the stock lost more than a third of its value on Wednesday, losing more than $50 billion in market capitalization as shares declined 35%. The streaming company reported that it lost 200,000 subscribers last quarter and forecasted that it would lose another 2 million subscribers in the current quarter. The stumble may allow Netflix’s competitors to take the lead, but a decline across all major streaming stocks this week signals that investors are cautious of the industry.

White House to bail out nuclear plants

On Tuesday, the Biden administration launched a $6 billion program to revive America’s nuclear power industry. The funds will be used to bail out the operators of nuclear power plants in economic distress. The Energy Department has presented the program as part of its strategy to fight climate change. Energy Secretary Jennifer Granholm said in a statement this week, “U. S. nuclear power plants contribute more than half of our carbon-free electricity, and President Biden is committed to keeping these plants active to reach our clean energy goals.” Over the past several decades, nuclear energy has accounted for about 20% of the US power supply. While it is considered by some as carbon neutral, nuclear power has been controversial among climate activists because of its other environmental risks.

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Video of the Week

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Source: Bloomberg