Week of June 25, 2022 Weekly Recap & The Week Ahead
“When the demand for goods increases relative to the supply, there can be “demand-pull” inflation. When inputs to production such as labor and raw materials increase in price, there can be “cost-push” inflation. Finally, when the value of an importing country’s currency declines relative to that of an exporting country, the cost of the exporter’s goods can rise in the importing country.” ― Howard Marks
1. Fed Chair Jerome Powell Says Higher Interest Rates Could Cause a Recession — Federal Reserve Chairman Jerome Powell said the central bank’s battle against inflation could lead it to raise interest rates high enough to cause an economic downturn. His remarks underscore the challenge facing the central bank as it raises interest rates at the most rapid clip since the 1980s to slow the economy and cool inflation. Mr. Powell said the Fed plans to continue raising interest rates until it sees clear proof that inflation is slowing to the central bank’s 2% target. Officials raised interest rates by 0.75 percentage point last week, the largest increase since 1994, and Mr. Powell and several colleagues have signaled that another such increase could be warranted at their next meeting, July 26-27.
2. FDA to Order Juul E-Cigarettes Off U.S. Market — the Food and Drug Administration is preparing to order Juul Labs Inc. to take its e-cigarettes off the U.S. market, according to people familiar with the matter. Uncertainty has clouded Juul since it landed in the FDA’s sights four years ago, when its fruity flavors and hip marketing were blamed for fueling a surge of underage vaping. The company since then has been trying to regain the trust of regulators and the public. It limited its marketing and in 2019 stopped selling sweet and fruity flavors. Juul’s sales have tumbled in recent years.
3. U.S., European Economies Slow Sharply as Recession Risks Grow — the U.S. and European economies slowed sharply in June as surging prices of energy and food weakened demand for other goods and services, business surveys showed, increasing the risk of recessions around the world. Data firm S&P Global said on Thursday that its U.S. composite purchasing managers index—which measures activity in both the manufacturing and services sectors—fell to 51.2 in June from 53.6 the previous month to reach a five-month low. In the eurozone, the index fell to 51.9 in June from 54.8 in May, a 16-month low. A reading above 50.0 points to an expansion in activity, while a figure below that threshold points to a contraction.
4. Supreme Court Overturns Roe v. Wade, Eliminates Constitutional Right to Abortion — a deeply divided Supreme Court eliminated the constitutional right to an abortion, overruling the 1973 Roe v. Wade decision and leaving the question of abortion’s legality to the states.
The court’s decision in Dobbs v. Jackson Women’s Health Organization upheld a law from Mississippi that bans abortion after 15 weeks of pregnancy, roughly two months earlier than what has been allowed under Supreme Court precedent dating back to Roe. In siding with Mississippi, the court’s conservative majority said the Roe decision was egregiously wrong in recognizing a constitutional right to an abortion, an error the court perpetuated in the decades since. “The Constitution makes no reference to abortion, and no such right is implicitly protected by any constitutional provision,” Justice Samuel Alito wrote for the court.
5. CDC Recommends Moderna’s Covid-19 Vaccine for Kids 6 to 17 Years — the Centers for Disease Control and Prevention recommended use of Moderna Inc.’s Covid-19 vaccine in children ages 6 to 17 years. The CDC’s move on Friday means the youths, who have been able to get the Covid-19 vaccine made by Pfizer Inc. and its partner BioNTech SE, will also have the choice of Moderna’s shot. Uptake of Moderna’s shot in the age group might be limited, however, since many eligible children have gotten the Pfizer-BioNTech shot. About 60% of 12- to 17-year-olds and 30% of children ages 5 to 11 are fully vaccinated against Covid-19, according to the American Academy of Pediatrics.
The week ahead — Economic data from Econoday.com:
