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The World
Global commodity prices are on track for the biggest weekly rally in more than 50 years and Europe’s natural gas prices have hit a new record, as the war in Ukraine triggers “exceptional moves” in raw materials from oil to wheat. The S&P GSCI index, a broad barometer for the price of global raw materials, has jumped 16% this week, leaving it on track for the sharpest rise on records dating back to 1970. It is now at its highest level since 2008. US oil prices also hit the highest level since 2008 on Thursday. Wheat futures in Chicago shot above $12 a bushel. Other commodities including aluminum and coal have also soared this week, in a move that will have profound effects on global businesses and consumers. Meanwhile, Asia stocks slid to 16-month low. (Financial Times, Reuters)
If Russian currency reserves aren’t really money, the world is in for a shock: Sanctions have shown that currency reserves accumulated by central banks can be taken away. With China taking note, this may reshape geopolitics, economic management and even the international role of the U.S. dollar. (Wall Street Journal)
Running a siege economy: Russia prepares to endure pain of sanctions. Economists expect the sanctions to push Russia into a deep recession while driving inflation even higher this year, but do not think the economy will fail to function as long as the political will in the Kremlin exists to soften the impact of the measures. (Financial Times)
Following Ukraine’s plea to join the EU as it battles Russia’s invasion, Georgia and Moldova submitted their own applications to join the bloc. The two countries are highly unlikely to join the union any time soon but their applications reflected their deep alarm at Moscow’s war on Ukraine and a desire to move closer politically to the EU. (Politico EU)
Accenture axed its entire 2,300-person business in Russia while McKinsey and Boston Consulting Group moved to suspend all client work there. (Financial Times)
SAP will be “stopping business in Russia aligned with sanctions” and pausing sales of products and services in Russia. Meanwhile, Reddit banned links to Russian state media outlets across its entire site for all users worldwide and ads that either originate from Russia or target the country. Spotify closed its office in Russia “indefinitely” and removes all content from RT and Sputnik in the EU and other markets, except for Russia. (The Register, Engadget, Variety)
China declared its Russia friendship had “no limits.” It’s having second thoughts: Xi Jinping wanted Vladimir Putin to join in a united front against the U.S., and he got it Feb. 4. Now the Ukraine war threatens to undo Beijing’s yearslong effort to become a world leader. In Beijing, the ripple effects of a move that may cost China dearly are now sinking in, say the officials and advisers. Some officials say they are fearful of the consequences of getting so close to Russia at the expense of other relationships—especially when Russian aggression against Ukraine is isolating Moscow in much of the world. Already, many politicians from Washington to Brussels have grouped Beijing together with Moscow as a new “axis”—a term giving Western alliances more reason to disengage from China and form closer ties among themselves. (Wall Street Journal)
If China tries to help Russia evade sanctions in the wake of Moscow’s invasion of Ukraine, it will face countermeasures, said State Department counsellor Derek Chollet. He added the allied nations that have joined in sanctioning Russia represent a combined 50% of the global economy; China accounts for around 15%. (South China Morning Post)
French President Emmanuel Macron officially declared as a candidate for the presidential election, seeking a second term to "make these times of crisis the starting point of a new era." (Le Monde)
The CDC said some 93% of the U.S. population live in locations where COVID-19 levels are low enough that people do not need to wear masks indoors. (Reuters)
The California Supreme Court rejected a request from UC Berkeley to pause a lower court order to freeze its enrollment. The decision means the school will need to shrink its student population from 45,057 to 42,347 by the time fall semester begins. The university’s admissions department has said a mandated reduction in students would result in the loss of more than 3,000 undergraduate seats and 5,100 fewer admissions offers being sent to high school seniors and transfer applicants. That decision stemmed from a fight between UC Berkeley and a neighborhood group called Save Berkeley’s Neighborhoods, which has a history of challenging the university’s building projects. (Politico)
Economy
Wall Street is already pouncing on Russia’s cheap corporate debt: Goldman Sachs and JPMorgan have been purchasing beaten-down corporate bonds tied to Russia. (Bloomberg)
Senate Democrats urged the Treasury Department to make sure crypto is following the rules when it comes to sanctions against Russia. The move underscored the growing concern that Russia will use DeFi to defy the penalties for invading Ukraine. It also signaled a heightened focus on how well the crypto industry is complying with a basic tenet of financial regulation: Do crypto companies really know their customers? (Protocol)
After a pandemic and a global chip crunch, Russia’s war in Ukraine has unleashed auto makers’ third supply-chain crisis in as many years. The fighting in Ukraine has shut down small but important industry suppliers, shutting plants far away from the conflict zone, while sanctions and severed trade routes are hindering car and parts shipments to and from Russia, once seen as a growth market. (Wall Street Journal)
California is on a collision course with $5-per-gallon gasoline. The average price of unleaded fuel in the Golden State reached $4.94, up 17 cents in the last week and up $1.25 from a year ago. Several regions have already topped $5, including San Francisco at $5.05 and Los Angeles-Long Beach at $5.01. (Axios)
The 20 largest economies spent at least US$14 trillion on pandemic economic recovery packages, some of which was committed to climate action — including ‘green new deals’ and ‘building back better’. So far, those promises have not been met, say three researchers who analyzed the spending. Only 6% of total stimulus spending (or about $860 billion) has been allocated to areas that will cut greenhouse-gas emissions. That’s proportionately less than the green investments that followed previous recessions. (Nature)
Nearly half a million families are estimated to be stranded without reliable child care, exacerbating the nation's worker shortage as parents continue to stay home. The report, published by Wells Fargo economists, adds to a growing cache of economic evidence highlighting job losses in the sector and the ripple effects the nation's beleaguered child care industry continues to have on the US economy. Employment in the day care services industry remains 12.4% below its pre-pandemic level, as compared to a total employment deficit of 1.9%. By Wells Fargo's estimates, that leaves about 460,000 families scrambling to find reliable long-term child care. (CNN)
Podcast: Implications of the Russia-Ukraine Conflict. “The outlook for monetary policy is mixed. Commodity prices are moving sharply higher given Russia’s role as a major producer and exporter of oil, gas and other commodities, which is feeding through to higher inflation and tighter financial conditions, says Daan Struyven, senior global economist: “Our own baseline views, both for ECB and the Fed, remain quite hawkish.” Equity risk premiums are rising. Investors are getting nervous about holding equities, especially European stocks, as reflected by rising risk premiums, says Peter Oppenheimer, chief global equity strategist. “The difficulty when we get a shock event like this — which has so many consequences, of course humanitarian, economic, and monetary in terms of policy — the uncertainty levels go up,” he says. Emerging markets at risk. The U.S. dollar is rising amid a flight to safe-haven assets while risky assets, such as emerging markets that are “closest to the theatre of conflict,” could fall further, explains Kamakshya Trivedi, co-head of Global Foreign Exchange, Interest Rates and Emerging Markets Strategy Research. “If that perception of cyclical risk broadens out — either because the crisis escalates or because the inflationary impact is seen as being big enough or important enough that central banks have to raise rates further — I think a lot of risky assets like EM assets that are levered to cyclical risks...could see more pressure,” Trivedi says. (Goldman Sachs)
Technology
As major U.S. cities recover from the pandemic, San Francisco is getting left behind. The tech hub, an economic boomtown over the last decade, is struggling with the nation’s weakest office occupancies, stubbornly low transit ridership and one of the country’s slowest recoveries of jobs. White-collar employees embracing remote work have decamped to less pricey areas, raising the question of if they’ll ever come back. (City Lab)
Twitter CEO Parag Agrawal said the company is reopening all of its corporate offices around the world starting March 15 and resuming business travel effective immediately. (Protocol)
Millions for crypto start-ups, no real names necessary: The ability to operate anonymously is a central tenet of crypto technology. All cryptocurrency transactions are recorded on decentralized ledger systems called blockchains, which let users transact namelessly, without registering a bank account or interacting with traditional financial gatekeepers. Now as crypto transforms into an increasingly mainstream industry, even the ostensibly legitimate actors — start-up founders, engineers and investors — insist on anonymity. A growing number of crypto entrepreneurs, many of whom control hundreds of millions of dollars in investor funds, conduct business via mysterious internet avatars scrubbed of identifying information. Some venture capital firms are backing founders without ever learning their real names. (New York Times)
Disney is discussing launching a cheaper, ad-supported tier of its Disney+ streaming service in the U.S. The entertainment giant seeks to hit its goal of profitability for its direct-to-consumer business in 2024, and the move could fire up slowing subscriber growth for the service. Disney would be joining the majority of entertainment companies, including WarnerMedia, Discovery, NBCUniversal and Paramount Global, that have launched ad-supported tiers of their streaming services as they seek to grow in the increasingly competitive streaming market. The moves signal how the focus of video streaming has shifted away from ad-free services, like that pioneered by Netflix more than a decade ago, to a more traditional ad-supported television model. (The Information)
Twitch plans to ban “harmful misinformation superspreaders” who share debunked theories on or off the site, including about COVID-19 vaccines and election fraud — The new policy will target channels that persistently lie about vaccines and election fraud, as well as Russian state-run media. (New York Times)
Twitch has lost at least six executives alongside 60+ employees in 2022; sources say the platform is losing touch with its community of game streamers. (Bloomberg)
Smart Links
Twitter is opening all offices on March 15, reinstates business travel, effective immediately. (Protocol)
Civica aims to launch low-cost insulin in U.S. by 2024. (Reuters)
New Jersey’s governor proposes tax rebates for income up to $250,000. (Bloomberg)
Block CFO says customers repay almost all buy now, pay later loans. (CNBC)
Shake Shack tests bitcoin rewards to lure younger consumers. (Wall Street Journal)
Amazon is expanding its 'free college' benefit and adding ESL classes. (Protocol)
Venezuela’s Maduro announces 18-fold minimum wage increase to roughly 126 bolivars, or $28. (Bloomberg)