US Fed raises interest rates amid global banking turmoil

The United States Federal Reserve on Wednesday raised interest rates by a quarter of a percentage point, but indicated it was on the verge of pausing further increases in borrowing costs after the recent collapse of two US banks.

Fed chairman Jerome Powell sought to reassure investors about the soundness of the banking system, saying that the management of Silicon Valley Bank failed badly, but that the bank’s collapse did not indicate wider weaknesses in the banking system.

“These are not weaknesses that are running broadly through the banking system,” he said, adding that the takeover of Credit Suisse seemed to have been a positive outcome.

Wall Street ended sharply lower after Powell told a news conference that officials were still intent on fighting inflation while also eyeing the extent to which recent bank failures had cooled demand and slowed lending.

The much anticipated rate hike by the Fed, which had delivered eight previous rate increases in the past year, sought to balance the risk of rampant inflation with the threat of instability in the banking system.

But in a key shift driven by the sudden failures in March of Silicon Valley Bank (SVB) and Signature Bank, the Fed’s latest policy statement no longer says that ongoing increases in rates are likely to be appropriate.

The banking sector has been in turmoil after California regulators on March 10 closed SVB in the largest US bank failure since the 2008 financial crisis.

The collapse of the Santa Clara, California-based bank and Signature Bank, another US mid-sized lender, prompted a rout in banking stocks as investors worried about other ticking bombs in the banking system and led to UBS Group’s takeover of the 167-year-old Credit Suisse Group to avert a wider crisis.

The Fed’s relentless rate increases to rein in inflation are among factors blamed for the biggest banking sector meltdown since 2008.

“The Fed is now living on a hope and a prayer that they haven’t done irreparable harm to the banking system,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments in Menomonee Falls, Wisconsin.

Meanwhile, as the beleaguered First Republic Bank considers its options, Treasury Secretary Janet Yellen said on Wednesday that there is no discussion on insurance for all deposits.

She told a congressional hearing that the government is not considering insuring all uninsured bank deposits.

She also said the Treasury Department has not considered anything to do with guarantees for assets. First Republic shares closed down more than 15%.

As officials grapple with restoring confidence in the banking system, JPMorgan Chase & Co chief executive Jamie Dimon is scheduled to meet Dr Lael Brainard, the director of the White House’s National Economic Council, during the executive’s planned trip to Washington, according to a source familiar with the situation.

Across the Atlantic, European Central Bank top brass said they will watch for signs of stress in bank lending, a day after the ECB warned banks not to be caught off guard by rising rates.

As investors wonder whether the ECB will be able to continue its own rate increases to fight inflation, its chief economist Philip Lane said market jitters may turn out to be a non-event for monetary policy, while a full-blown

 

US and Europe losing battle against Russia

The crisis of the power of United States has begun. Its economy is tipping over, and Western financial markets are quietly panicking. Imperiled by rising interest rates, mortgage-backed securities and US Treasuries are losing their value. The market’s proverbial vibes —feelings, emotions, beliefs, and psychological penchants—suggest a dark turn is underway inside the US economy.

The US power is measured by its military capability as well as economic potential and performance. There is growing realization that the US and European military-industrial capacity cannot keep up with Ukrainian demands for ammunition and equipment. It is an ominous signal sent during the proxy war that Washington insists its Ukrainian surrogate is winning.

Russian economy of force operations in southern Ukraine appear to have successfully ground down attacking Ukrainian forces with the minimal expenditure of Russian lives and resources. While Russia’s implementation of attrition warfare worked brilliantly, Russia mobilized its reserves of men and equipment to field a force that is several magnitudes larger and significantly more lethal than it was a year ago.

Russia’s massive arsenal of artillery systems including rockets, missiles, and drones linked to overhead surveillance platforms converted Ukrainian soldiers fighting to retain the northern edge of the Donbas into pop-up targets. How many Ukrainian soldiers have died is unknown, but one recent estimate wagers between 150,000-200,000 Ukrainians have been killed in action since the war began, while another estimates about 250,000.

Given the glaring weakness of NATO members’ ground, air, and air defense forces, an unwanted war with Russia could easily bring hundreds of thousands of Russian Troops to the Polish border, NATO’s Eastern Frontier. This is not an outcome Washington promised its European allies, but it’s now a real possibility.

In contrast to the Soviet Union’s hamfisted and ideologically driven foreign policymaking and execution, contemporary Russia has skillfully cultivated support for its cause in Latin America, Africa, the Middle East, and South Asia.

The fact that the West’s economic sanctions damaged the US and European economies while turning the Russian ruble into one of the international system’s strongest currencies has hardly enhanced Washington’s global standing.

Biden’s policy of forcibly pushing NATO to Russia’s borders forged a strong commonality of security and trade interests between Moscow and Beijing that is attracting strategic partners in South Asia like India, and partners like Brazil in Latin America. The global economic implications for the emerging Russo-Chinese axis and their planned industrial revolution for some 3.9 billion people in the Shanghai Cooperation Organization (SCO) are profound.

Washington’s military strategy to weaken, isolate, or even destroy Russia is a colossal failure and the failure puts Washington’s proxy war with Russia on a truly dangerous path. To press on, undeterred in the face of Ukraine’s descent into oblivion, ignores three metastasizing threats:

1. Persistently high inflation and rising interest rates that signal economic weakness. (The first American bank failure since 2020 is a reminder of US financial fragility.)

2. The threat to stability and prosperity inside European societies already reeling from several waves of unwanted refugees/migrants.

3. The threat of a wider European war.

Inside presidential administrations, there are always competing factions urging the president to adopt a particular course of action. Observers on the outside seldom know with certainty which faction exerts the most influence, but there are figures in the Biden administration seeking an off-ramp from involvement in Ukraine.

Even Secretary of State Antony Blinken, a rabid supporter of the proxy war with Moscow, recognizes that Ukrainian President Volodymyr Zelensky’s demand that the West help him recapture Crimea is a red line for Putin that might lead to a dramatic escalation from Moscow.

Backing down from the Biden administration’s malignant and asinine demands for a humiliating Russian withdrawal from eastern Ukraine before peace talks can convene is a step Washington refuses to take. Yet it must be taken.

The higher interest rates rise, and the more Washington spends at home and abroad to prosecute the war in Ukraine, the closer American society moves toward internal political and social turmoil. These are dangerous conditions for any republic.

From all the wreckage and confusion of the last two years, there emerges one undeniable truth. Most Americans are right to be distrustful of and dissatisfied with their government. President Biden comes across as a cardboard cut-out, a stand-in for ideological fanatics in his administration, people that see executive power as the means to silence political opposition and retain permanent control of the federal government.

Americans are not fools. They know that members of Congress flagrantly trade stocks based on inside information, creating conflicts of interest that would land most citizens in jail. They also know that since 1965 Washington led them into a series of failed military interventions that severely weakened American political, economic, and military power.

Far too many Americans believe they have had no real national leadership since January 21, 2021. It is high time the Biden administration found an off-ramp designed to extricate Washington DC, from its proxy Ukrainian war against Russia.

It will not be easy. Liberal internationalism or, in its modern guise, moralizing globalism, makes prudent diplomacy arduous, but now is the time. In Eastern Europe, the spring rains present both Russian and Ukrainian ground forces with a sea of mud that severely impedes movement. But the Russian High Command is preparing to ensure that when the ground dries and Russian ground forces attack, the operations will achieve an unambiguous decision, making it clear that Washington and its supporters have no chance to rescue the dying regime in Kiev. From then on, negotiations will be extremely difficult, if not impossible.

 

UAE and Jordan considering reducing diplomacy with Israel

The Jordanian parliament voted on Wednesday to demand that the government expel Israel's ambassador, according to Jordanian newspaper Al-Dustur.

The vote came after Finance Minister Bezalel Smotrich said, "There is no such thing as a Palestinian people" in Paris at a podium that showed a map of Israel whose borders extended into Jordan.

Saudi reports on Monday also claimed that The United Arab Emirates is considering reducing its level of diplomatic representation in Israel.

According to the report, the Emirati Foreign Ministry ordered Emirati Ambassador to Israel Mohammed Al Khaja not to meet with any Israeli government officials.

Khaldoon al-Mubarak, the senior advisor to the President of the UAE, is currently visiting Israel, according to Walla News.

Miri Regev, Israel's transportation minister Miri Regev wrote an update on Twitter on Wednesday afternoon, saying that she spoke with her friend, the Ambassador of the United Arab Emirates, Mohammed Al-Khaja. He also understood what the media was trying to do - take things out of context. The attempt [to create] conflict between countries became an invitation for another visit."

The office of Prime Minister Benjamin Netanyahu denied allegations by Channel 12 that Israel is experiencing a crisis in its relations with the UAE after the country announced that it plans to stop a purchase of Israeli-made defense systems in protest of Netanyahu's government, The Jerusalem Post reported earlier this month.

“Until we can be sure that Prime Minister Netanyahu has a government he can control, we will not be able to jointly operate,” Emirati President Sheikh Mohamed bin Zayed had reportedly told Israeli officials.

Last month, the UAE was among numerous countries that condemned a comment by Smotrich that the West Bank Palestinian town of Huwara needs to be wiped out, calling the comment racist.

Smotrich had later claimed that his comment had not been sincere and had apologized for it.

OPEC Plus likely to stick to output plan

OPEC Plus is likely to stick to its deal on output cuts of 2 million barrels per day (bpd) until the end of the year 2023, even after a banking crisis sent crude prices plunging, three delegates from the producer group told Reuters.

Oil prices hit 15-month lows on Monday in response to the banking crisis that followed the collapse of two US lenders and resulted in Credit Suisse being rescued by Switzerland's biggest bank UBS.

Brent crude was trading around US$75 a barrel on Wednesday morning.

Last October OPEC Plus, which comprises the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, agreed steep output cuts of 2 million bpd from November until the end of 2023 despite major consumers calling for increases to production.

That decision helped to push Brent close to $100 a barrel, but prices have come under pressure since then as rising interest rates to combat high inflation threaten to stymie oil demand growth.

Falling oil prices are a problem for most of the group's members because their economies rely heavily on oil revenue.

Russian Deputy Prime Minister Alexander Novak on Tuesday said that Moscow will continue with a 500,000 bpd production cut it announced last month, lasting until the end of June.

"This is only a unilateral cut of Russia," one of the delegates said.

"No changes for the group until the end of year," he added.

Another delegate added that no further cuts were planned by the group.

A third delegate said the recent slump in oil prices was related to speculation in the financial market, not market fundamentals.

The heads of top oil traders and hedge funds that spoke at an industry event this week said that they expected oil prices to strengthen by the end of the year as continued easing of COVID-19 restrictions in China drive up demand in the world's biggest oil importer.

Pierre Andurand, founder of hedge fund Andurand Capital, was the most bullish and forecast a potential Brent oil price of US$140 a barrel by the end of the year.

In its most recent monthly report, OPEC upgraded its forecast for Chinese oil demand growth this year but maintained its projection for global demand growth at 2.32 million bpd.

OPEC Plus is due to hold a virtual meeting of its ministerial committee, which includes Russia and Saudi Arabia, on April 3 before a full ministerial meeting in Vienna on June 04, 2023.

 

Syngenta fourth quarter profit falls

Swiss agrichemicals and seeds group Syngenta on Wednesday reported a 25% drop in fourth quarter earnings due to higher raw materials and energy costs.

Syngenta, which plans to list within the next few months, also spent more on reorganizing its business and set cash aside to cover macro-economic uncertainties such as further raw material spikes or potential bad debts by customers.

The Chinese-owned company said its earnings before interest, tax, depreciation and amortization (EBITDA) dropped 25% to US$900 million in the three months to the end of December 2022.

Sales rose 4% to US$7.5 billion boosted by strong growth in its seeds business.

"As previously indicated, farmers accelerated their purchases earlier in the year due to supply concerns, moderating fourth quarter growth," the company said.

"The group continued to maintain higher prices necessary to offset elevated raw material and other costs," it added.

During 2022 Syngenta's sales increased 19% to US$33.4 billion while EBITDA rose 20% to US$5.6 billion.

Much of the growth came from China, where the company added 136 more MAP training and sales centers to take its total to 628 sites.

Syngenta, which competes with US entity Corteva and Germany's BASF and Bayer, was bought in 2017 for US$43 billion by ChemChina, which was folded into Sinochem Holdings Corp in 2021.

The parent company plans to keep a majority stake after its US$10 billion flotation, which is expected to value Syngenta at around US$50 billion.

 

 

United States: Deadly fungal infection spreading at an alarming rate

A drug-resistant and potentially deadly fungus has been spreading rapidly through US health care facilities, NBC News reported quoting a new government study.

The fungus, a type of yeast called Candida auris, or C. auris, can cause severe illness in people with weakened immune systems. The number of people diagnosed with infections — as well as the number of those who were found through screening to be carrying C. auris — has been rising at an alarming rate since it was first reported in the United States.

The increases, “especially in the most recent years, are really concerning to us,” the study’s lead author, Dr. Meghan Lyman, chief medical officer in the CDC’s Mycotic Diseases Branch, said in an interview. “We’ve seen increases not just in areas of ongoing transmission, but also in new areas.”

The CDC's new warning, published in the Annals of Internal Medicine, comes as Mississippi is fighting a growing outbreak of the fungus. Since November, at least 12 people have been infected with C. auris with four "potentially associated deaths," according to the state's health department, Tammy Yates, spokesperson for Mississippi State Department of Health said in an email.

There has been ongoing transmission at two long-term care facilities, although cases have been identified at several other facilities in the state.

"Unfortunately, multi-drug resistant organisms such as C. auris have become more prevalent among our highest risk individuals, such as residents in long-term care facilities," said Yates.

The fungus can be found on the skin and throughout the body, according to the CDC. It's not a threat to healthy people, but about one-third of people who become sick with C. auris die.

In the CDC report, researchers analyzed state and local health department data on people sickened by the fungus from 2016 through December 31, 2021, as well as those who were “colonized,” meaning they were not ill but were carrying it on their bodies with the potential of transmitting it to others who might be more vulnerable to it.

The number of infections increased by 59%, to 756, from 2019 to 2020 and then by an additional 95%, to 1,471, in 2021.

The researchers also found that the incidence of people not infected with the fungus but colonized by it increased by 21% in 2020, compared to 2019, and by 209% in 2021, with an increase to 4,041 in 2021 compared to 1,310 in 2020.

Most concerning was the increasing numbers of fungus samples resistant to the common treatments for it. Lyman hopes the paper will put C. auris on health care providers’ radar and spur facilities to practice “good infection control.”

The new findings are “worrisome,” said Dr. Waleed Javaid, an epidemiologist and an infectious disease expert and director of infection prevention and control at Mount Sinai Downtown in New York.

“But we don’t want people who watched 'The Last of Us' to think we’re all going to die,” Javaid said. “This is an infection that occurs in extremely ill individuals who are usually sick with a lot of other issues.”

Even if C. auris moves beyond health care facilities and into communities, it’s unlikely to become a problem for healthy people who do not have invasive medical devices, such as catheters, inserted into their blood vessels, Javaid said.

The main problem is preventing the fungus from spreading to patients in hospital intensive care units, Javaid said. Unfortunately C. auris can colonize not only people who come in contact with the fungus, but also patient rooms.

“By its nature it has an extreme ability to survive on surfaces,” he said. “It can colonize walls, cables, bedding, chairs. We clean everything with bleach and UV light.”

While the fungus was first identified in 2009 in Asia, scientists have determined that C. auris first appeared around the world about a decade earlier, after they re-examined older data and discovered instances where C. auris had been mistakenly identified as a different fungus, Dr. Graham Snyder, medical director of infection prevention at University of Pittsburgh Medical Center, said in an interview.

“It’s the pattern we’ve observed with these types of pathogens,” he said. “Often they start out extremely rare, then they emerge in more and more places and become widespread.”

It's important to stop the pathogen so it doesn’t spread beyond hospitals and long-term facilities like the drug-resistant bacteria MRSA did, Snyder said.

“It’s not unusual to see MRSA in the community now,” Snyder said. “Will that happen with C. auris? I don’t know. That’s partly why the CDC is raising the alarm.”

Dozens of platforms in UKCS to go standstill

Unite the union announced on Monday, March 20 that major oil and gas operators in the UK Continental Shelf (UKCS) face a tsunami of industrial unrest within weeks as around 1400 offshore workers across five companies demand a better deal on jobs, pay and conditions.

Unite, whose members will take action at companies enjoying record-busting profits, predicts that platforms and offshore installations will be brought to a standstill due to the specialized roles its members undertake. 

The action will hit major oil and gas operators including BP, CNRI, EnQuest, Harbour, Ithaca, Shell and Total.

Unite general secretary Sharon Graham said, “Oil and gas companies have been given free rein to enjoy massive windfall profits in the North Sea; drilling concessions are effectively licences to print money.

“1400 offshore workers are now set to take strike action against these employers who are raking it but refusing to give them a fair share of the pie. This will create a tsunami of industrial unrest in the offshore sector.  

“Unite will support these members every step of the way in their fight for better jobs, pay and conditions.”

The prospective action includes electrical, production and mechanical technicians in addition to deck crew, scaffolders crane operators, pipefitters, platers, and riggers working for Bilfinger UK Limited, Stork construction, Petrofac Facilities Management, the Wood Group UK Limited and Sparrows Offshore Services.

John Boland, Unite industrial officer, added: “Unite has received unprecedented support in favour of industrial action in the UK Continental Shelf. It is the biggest mandate we have received in a generation in the offshore sector. There is no doubt that this is directly linked to oil and gas companies reaping record profits while the workforce gets scraps from the table. 

 “Unite’s members are angry at the corporate greed being shown by offshore operators and contractors. Now these major global companies are set to face the consequences as dozens of offshore platforms will be brought to a standstill in a matter of weeks.”

Around 700 offshore workers at Bilfinger UK Limited are set to down tools after Unite members voted in favor of taking industrial action as part of a pay dispute.  Bilfinger workers are demanding an increase above the base rate of pay set in the Energy Services Agreement (ESA) for 2022.  

Meanwhile, 350 Stork construction workers are set to take strike action after Unite members also supported industrial action in a dispute over working rotas and rates of pay.

Unite members employed by Petrofac Facilities Management Limited on the FPF1 platform also voted in favour of strike action. Around 50 workers are involved in the dispute over holiday entitlements. Offshore workers can be asked to work at any time for no additional payment. The operator, Ithaca Energy, has a clawback policy of 14 days, double the industry norm of 7 days.

Unite members employed by the Wood Group UK Limited on TAQA platforms similarly voted to take strike action. Around 80 members are involved in the dispute which is focused on a 10% cut made to salaries in 2015 worth around £7,000 a year.

The mandates for industrial action follow the recent announcement by Unite that around 200 Sparrows Offshore Services workers will take strike action across more than 20 oil and gas platforms in disputes over pay. Strike action is set to hit various platforms from 29 March and until 7 June in a series of 24, 48 and 72-hour stoppages. This action will hit a number of major operators including BP, Shell, Apache and Harbour Energy. 

A further two industrial action ballots are due this week at Petrofac BP involving around 80 workers (21 March), and at Worley Services UK Limited on Harbour Energy platforms involving around 50 workers (24 March) in disputes over pay. The pending ballot results could bring the final total to around 1500 offshore workers taking industrial action.

Unite recently blasted the UK Government's inaction on taxing oil firms as BP posted the biggest profits in its history as it doubled to £23 billion in 2022. BP’s bonanza profits come after Shell reports earnings of £32 billion, bringing the combined total profits of the top two energy companies in Britain to a record £55 billion.