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Adidas is set to update investors Friday about the unsold Yeezy shoes that have put the German sportswear giant in a predicament since it cut ties with Kanye West over his antisemitic comments late last year.

Executives are expected to tackle the issue when the company reports first-quarter results Friday which will likely show a 4% decline in net sales to $5.07 billion, according to a company-compiled consensus.

Investors have high hopes new CEO Bjorn Gulden can turn Adidas around: the stock has gained around 65% since Nov. 4 when the former Puma CEO was first floated as a successor to Kasper Rorsted, despite Adidas warning it could make a $700 million loss this year if it writes the Yeezy shoes off entirely.

Adidas has been in discussions over the footwear, including with people who “have been hurt” by West’s antisemitic comments, Gulden said in March, but there are no easy fixes.

The value of Yeezy shoes in the resale market has rocketed since Adidas stopped producing them, with some models more than doubling in price, but the company has yet to decide what to do with its unsold stock.

If Adidas decides to sell the shoes, any proceeds should go towards efforts to fight antisemitism, said Holly Huffnagle, U.S. Director for Combating Antisemitism at the American Jewish Committee, a non-governmental organization.

“The challenge is if these shoes are going to be out there and be worn by people, we must ensure that the antisemitic messaging of the shoes’ creator doesn’t spread,” she said.

Gulden in March said the company could donate the proceeds of the Yeezy sale to charities, but Adidas has given no updates since. “We continue to evaluate options for the use of the existing Yeezy inventory,” an Adidas spokesperson said, declining to comment on the possible timeline for a decision.

The market would welcome a resolution, but it may be too early given the complexities involved, said Geoff Lowery, analyst at Redburn in London, who sees a donation to charities as the most likely outcome.

The Anti-Defamation League, an international Jewish non-governmental organization based in New York, told Reuters it “stands ready and prepared to work with Adidas.”

Adidas in November donated more than $1 million to the organization.

The American Jewish Committee met with Adidas executives in December to discuss their commitment to reject antisemitism.

Adidas said it continues to “stand with the Jewish community in the fight against antisemitism and with all communities around the world facing injustice and discrimination.”

Shareholders want Adidas to draw a line under the Yeezy episode and develop ways to reboot the brand.

“Being successful with Yeezy probably made Adidas lazy on finding other growth drivers,” said Cedric Rossi, nextgen consumer analyst at Bryan Garnier in Paris.
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The Federal Reserve, the U.S. central bank, raised its benchmark interest rate by another quarter percentage point on Wednesday but signaled that it could pause further increases as it watches what effect a string of rate hikes has on controlling months of increasing consumer prices.

The policymakers’ action, its 10th straight decision to push rates higher, moves the benchmark rate to a range of 5% to 5.25%, a 16-year high. The increased rate is again likely to increase borrowing costs for consumers using their credit cards to buy everyday goods and big-ticket items and loan rates for businesses paying for supplies they need.

In announcing the latest rate increase, policymakers said they would now watch to see whether further rate increases are necessary to curb inflation. U.S. consumer prices rose at an annual pace of 5% through March, which is down sharply from the 9.1% pace nearly a year ago but still well above the 2% goal that the Fed policymakers strive for.

The Fed’s wait-and-see stance is a shift in policy. For months, the Federal Reserve had said it assumed further rate increases would be needed.

The policy-setting Federal Open Market Committee said in a statement, “In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

“A decision on a pause was not made today,” Fed Chair Jerome Powell told reporters.

Despite the rising cost of spending for U.S. consumers, the world’s largest economy has remained resilient in its recovery from the 2020 coronavirus pandemic. Employers have continued to add hundreds of thousands of jobs month after month and the unemployment rate remains at a five-decade low.

Even so, three banks have failed in the last two months after bad decisions on investments by their managers and runs on deposits by their customers.

Some economic analysts continue to predict the American economy will slip into a recession later this year but such ongoing predictions over the last year have so far proven wrong.

The theory behind raising interest rates is it makes it more expensive for families and businesses to borrow and thus will curb economic growth and tame inflation.

Higher borrowing costs slow both consumer spending and hiring by employers. The concern for Fed policymakers, however, is to not slow the economy too much, to push it into a recession. 
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President Joe Biden next week will meet with the Democratic and Republican leaders of the House and Senate in an effort to avoid a catastrophic default on the nation’s debts, which could occur in as little as one month.

The United States government’s ability to borrow money is constrained by a limit on the amount of debt the U.S. Treasury Department can incur, known as the debt ceiling. The debt ceiling is currently set at $31.4 trillion, which the government hit in January, forcing the Treasury to use what it refers to as “extraordinary measures” to continue paying the nation’s bills without going into default.

On Monday, Treasury Secretary Janet Yellen warned that the extraordinary measures will soon be exhausted, possibly as soon as June 1, and that unless Congress authorizes more borrowing, the country will soon be unable to pay all of its obligations on time.

In a letter to lawmakers on Monday, Yellen said it was urgent that Congress acts quickly “to preserve the full faith and credit” of the U.S., reminding them that waiting until the last minute can result in damage to the country, even if technical default is averted.

“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” Yellen wrote.

Also on Monday, the nonpartisan Congressional Budget Office issued a statement essentially agreeing with Yellen.

“Because tax receipts through April have been less than the Congressional Budget Office anticipated in February, we now estimate that there is a significantly greater risk that the Treasury will run out of funds in early June,” it said.

Same goal, different path

Leaders of both parties have expressed their desire to avoid a federal default, but they advocate different methods of doing so.

House Republicans, led by Speaker Kevin McCarthy, say they intend to raise the debt ceiling, but only after Democrats agree to a slate of broad spending cuts that would eviscerate Biden’s domestic agenda and institute a number of policies popular with conservatives, including new work requirements on individuals receiving public assistance.

Last week on a party-line vote, the House passed the Limit, Save, Grow Act, which would raise the debt ceiling by up to $1.5 trillion through March 31, 2024. The bill would cut government spending by $4.8 trillion over the next decade. Much of the savings would come from unspecified spending cuts spread across much of the government.

Specific programs targeted for major cuts include recent increases to the budget of the Internal Revenue Service, a controversial student debt relief measure taken by the White House, and spending on renewable energy that the president has championed.

‘Hostage-taking’

The threat implicit in the Republican position is that if Democrats fail to accept the cuts, the country will advance closer and closer to default until lawmakers strike a deal, or the government finds itself unable to pay its bills.

Biden and Democratic leaders in the House and Senate argue that Republicans’ strategy, which they criticize as “hostage-taking,” is irresponsible. They have called for Congress to pass a “clean” debt ceiling extension, meaning a bill with no additional provisions attached. They frequently point out that Congress passed three clean debt limit bills during former President Donald Trump’s term, all with Democratic support.

Any debt limit increase would have to pass both the House and the Senate, and with the latter under slim Democratic control, the House bill gutting Biden’s agenda is a non-starter.

House Democrats on Tuesday said they would attempt to force a vote on a clean debt limit increase through an arcane mechanism known as a “discharge petition,” which allows a majority of members of the House to demand a vote on a bill without the cooperation of leadership. Discharge petitions are rarely successful, and because Republicans have the majority in the House, this one would require at least five Republicans to join the Democrats — an unlikely prospect.

Impact of default could be global

Experts warn that if Congress and the White House are unable to strike a deal, and the U.S. finds itself unable to pay its bills on time, the impact on the economy — for the United States and the broader world — could be devastating.

“The result would be a self-inflicted severe recession that is totally unnecessary and obviously counterproductive,” Mark Hamrick, Washington bureau chief for Bankrate, told VOA. “It’s been demonstrated time and time again that the debt ceiling is not a useful tool in restraining federal spending. Therefore, we’re talking about adding potential downside to the U.S. and global economies for no reason, and at a time when there’s already heightened concern about the risk of recession.”

Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics, told VOA that the disruption caused by a default by the U.S. Treasury would reverberate far beyond the U.S. itself.

He pointed out that the Great Recession of 2008-2009 was a global financial crisis partially triggered by the collapse of two major U.S. firms — the investment bank Lehman Brothers, which failed, and the insurance and financial services conglomerate American International Group, which was bailed out.

“That really caused a huge panic around the world, not just in the U.S.,” Gagnon said. “And realize that the U.S. Treasury is far, far bigger and has far, far more financial [obligations] being held by other people.”
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The sowing season is in full swing in Ukraine despite a series of significant challenges that farmers face as Russia continues its war on the country. The agricultural industry faces mined fields, instability with the Black Sea Grain Initiative, and a ban on the export of four key products to five European Union countries. Lesia Bakalets has more from Warsaw, Poland. VOA footage by Daniil Batushchak.
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U.S. job openings fell in March to the lowest level in nearly two years, a sign that the American labor market is cooling in the face of higher interest rates.

Employers posted 9.6 million vacancies in March, down from nearly 10 million in February. Layoffs rose to the highest level since December 2020, the Labor Department reported Tuesday.

The American job market is strong but losing momentum. The Federal Reserve has raised its benchmark interest rate nine times in just over a year in a bid to rein in inflation that last year hit a four-decade high. And higher borrowing costs are taking an economic toll.

The job market is strong but losing momentum.

Monthly job openings had never exceeded 10 million until 2021, then reeled off 20 straight months above that threshold. The streak ended in February.

The Labor Department on Friday released the jobs report for last month. Forecasters surveyed by the data firm FactSet expect that employers added fewer than 182,000 jobs last month, the third straight monthly drop since payrolls rose by a robust 472,000 in January.

The unemployment rate is expected to blip up to 3.6% in April, a couple of notches above January’s half-century low 3.4%.

 
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