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The World
The U.S. economy grew rapidly in 4Q21, advancing to a 6.9% annual rate, capping the strongest year of growth in nearly four decades as the country rebounded quickly from the pandemic-induced recession. But the report contained warning signs. Most of the growth owed to companies’ restocking rather than people and firms buying stuff. In part, the rise in inventory investment reflected a rebound from super-low inventory levels in the summer. Inventory levels remain low because of persistent shortages. Excluding the inventory effects, output grew at a modest annual rate of 1.9% in 4Q21. Also, Americans reined in shopping toward the end of the quarter. (Wall Street Journal)
Epic pandemic trade gap: In the arithmetic around U.S. economic output, trade acted as a more severe drag last year than it has in a generation. In 2021, net exports subtracted 1.39 percentage points from overall economic growth, the highest since 1984. Before that, you have to go back to 1948. That is closely related to higher consumer spending on durable goods, which added 1.38 percentage points to the GDP, the most since 1955. The same thing shows up in trade deficit data. Through the first 11 months of 2021, Americans imported $290 billion more in goods than in the same period of 2019, as exports of goods rose only $86 billion. The overall trade deficit from January through November is 48% higher than in 2019. (Axios)
Dollar hits highest level since 2020 as traders brace for Fed rate rises. (Financial Times)
American officials fear that they will be unable to impose effective sanctions on President Putin if Russia invades Ukraine because of years of British tolerance of suspect money flooding into London. Diplomatic sources told The Times that US State Department officials had expressed “dismay and frustration” at the British government’s failure to take tough action against the flow of Russian funds, particularly in “Londongrad.” (The Times)
British organizations and large businesses should prepare for possible Russian state-backed cyber attacks, the National Cyber Security Centre warned, citing recent hacks of dozens of official Ukrainian websites. (Financial Times)
Recruitment of necessary workers is becoming difficult for companies operating in Hong Kong as a result of the city's political situation and COVID-19 restrictions, a string of surveys appear to indicate. 37% of 251 Japanese companies in Hong Kong noted it was more difficult to hire locally than it had been a year earlier. And according to a survey for members of the American Chamber of Commerce in Hong Kong, 53% answered they were "somewhat more likely to leave" or "more likely to leave" Hong Kong for personal reasons because of stringent travel restrictions. 21% of the Japanese companies polled noted a deterioration of business conditions in Hong Kong from a year earlier. (Nikkei Asia Review)
Rep. Pramila Jayapal (D-Wash.) is calling for Congress to pass portions of the shelved $1.7 trillion social spending package before the State of the Union address on March 1. Jayapal said Sen. Joe Manchin (D-W.Va.) called her the day after he scuttled the bill on Fox News to say he supports these portions of the House-passed legislation: $550 billion on climate change, universal pre-K, eldercare, child care, lowering prescription drug costs and housing provisions. She indicated a willingness to get parts of the package enacted sooner and then return to other components like the Child Tax Credit. (Politico)
Economy
The IMF cut its global growth forecast for 2022. Omicron, bunged-up supply chains and China’s property bust will cause the global economy to grow by half a percentage point less in 2022 than previously expected, down from 4.9% to 4.4%. (The Economist)
Hospitals request more federal help battling rising labor expenses, staffing shortages amid omicron. The hospital lobby also is renewing its push in requesting the FTC investigate travel-nurse staffing firms for anticompetitive behavior as facilities have seen elevated pay rates throughout the pandemic. (Healthcare Dive)
Matrix Partners China, one of the most prolific early-stage venture capitalists in China, is looking to raise at least $1.5 billion, mainly from U.S. institutional investors, for its biggest-ever fund, according to people with knowledge of the matter. If successful, it would become one of the largest pools of money dedicated to young startups based in China. (The Information)
As Rates Rise and Stocks Sell Off, What's Next? The recent moves mask the changing dynamics beneath the surface, says David Kostin, chief U.S. equity strategist in Goldman Sachs Research, on Exchanges at Goldman Sachs. Tech companies with fast-growing revenues but thin-to-negative profit margins have seen their valuations “severely punished,” while their peers with strong revenues and strong margins have seen smaller declines. “The idea of a higher interest rate environment reduces the value of that future expected growth. And that's really important for these companies where their margins are very thin,” Kostin tells host Allison Nathan. Meanwhile, investors are repositioning their portfolios and hedging strategies, according to Jonathan Shugar, who manages equity sales on the cross-asset sales team in the Global Markets Division. “What people own [today] is different than when we started going through this roller coaster back in November,” Shugar says, adding that investors are also more cautious about buying the dips. “People feel like you're going to have a long path ahead of rates hitting markets,” he says. “There's no sense of urgency to act—which is interesting because if you went back to the start of the pandemic where we had a massive sell-off and then a recovery, a lot of people felt that they hadn't taken advantage of those opportunities quickly enough.” (Goldman Sachs)
Research: Gender Diversity Performs, Pay Gap Persists. European companies that scored the highest on gender diversity have been outperformers in the stock market since 2008, according to senior European equity strategist Sharon Bell. The firm’s research indicates that having more women in upper management is a sign of lower risk: Companies that have better gender balance tend to have stronger balance sheets, higher margins and more stable earnings, Bell said this week during Goldman Sachs’ virtual Global Macro Conference Asia Pacific. But that shift hasn’t propelled women into the top corporate ranks—only about 6% of the CEOs of companies in the STOXX Europe 600 index are women. The gender pay gap, meanwhile, tends to be narrower in Europe than in the U.S. and Asia, but it’s still there—women are paid about 15% less on average than men. “We’ve made progress in Europe, but it’s still slow,” Bell said. (Goldman Sachs)
Female senior faculty and top administrators earn more at institutions with female presidents and provosts than at institutions where men are in charge. For every dollar a man makes, female senior officers at male-led colleges earn $0.92, while female senior officers at female-led colleges earn $0.97. Female administrators at male-led colleges earn $0.91 for every dollar their male counterparts earn, while female administrators at female-led colleges earn $0.92. The pay gap among female division heads breaks away quite a bit: for every dollar a male division head earns, female division heads at male-led colleges earn $0.94, while female division heads at female-led colleges earn $1.06. (Inside Higher Ed)
Technology
Apple posted quarterly results that shattered previous records, answering the concerns of jittery investors about the toll supply chain constraints are having on the world’s biggest company. Chief Executive Tim Cook said those challenges are improving. Shares rose more than 4% after markets closed, following Apple’s report that 4Q21 revenue hit $123.9 billion and profit reached $34.6 billion, both company records that exceeded Wall Street expectations. (Wall Street Journal)
iOS 15.4 beta adds Face ID use with a mask for iPhone 12 and newer, without needing Apple Watch authentication, by recognizing “unique features around the eye.” Also, iPadOS 15.4 and macOS Monterey 12.3 betas add the long-delayed Universal Control, which lets users control nearby Macs and iPads with a single mouse or keyboard. (MacRumors)
Apple says it now has over 1.8B active devices worldwide, up from 1.65B in January 2021 and 1.5B in January 2020. (MacRumors)
Apple News was the most widely used UK news app in December 2021 with 13.2M users and 1.2B minutes spent; BBC News had 12.5M users and 2.2B minutes spent. (Press Gazette)
The FCC voted unanimously to advance a new plan that would require internet providers, like Comcast and Verizon, to offer new labels disclosing an internet plan’s price, speed, data allowances, including introductory rates and later price hikes, as well as network management practices, like throttling, at the point of sale. This allows for greater transparency into market rates and could lead to lower prices down the line. (The Verge)
The tech job market is on fire. And one of the hottest roles in tech right now is also one of the least understood: the developer relations professional. DevRel teams are not marketers. They are not PR. They are communicators, usually with engineering and software backgrounds, who act as the conduit for feedback between the developers who use software and the engineers who make it. And while DevRel advocates used to spend most of their time on the road, traveling to conferences and hackathons to talk about their product and get developer feedback, in the last year most of them have become more like influencers, chatting up developers on Twitch livestreams and getting micro-famous on TikTok. (Protocol)
Meta took another step toward erasing the Oculus brand from its line of VR headsets. The company bit the bullet and switched the address of its official Twitter account for all things VR from @Oculus to @MetaQuestVR. (The Information)
Smart Links
Tesla delays Cybertruck until 2023. (Axios)
Robinhood shares fell below $10 after reporting disappointing 4Q21 earnings and a weak outlook. (Protocol)
5 U.S. cities where bike commuting is booming: Boston; Chicago; Austin, Texas; Oakland, California; and Missoula, Montana. (City Lab)
ACA open enrollment period drove record number of sign-ups. (Healthcare Dive)
Supreme Court Justice Ruth Bader Ginsburg’s library sells for nearly $2.4 million in auction. (CNBC)