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U.S. President Joe Biden is due to speak Wednesday about gas prices and economic effects of Russia’s war in Ukraine as he considers whether to support suspending the nation’s federal gas tax. 

Biden has said he would make his decision by the end of the week. 

The gas tax is set at 18.4 cents per gallon, with most of the money going toward road construction projects. 

Average gas prices in the United States are at about $5 per gallon. Fuel prices around the world have risen in recent months, with rebounds in demand, refining capacity challenges, and sanctions against major oil producer Russia among the contributing factors. 

White House press secretary Karine Jean-Pierre told reporters Tuesday that the issue is a top priority for Biden and “all options are on the table.” 

“He’s going to do everything that he can to make sure he relieves some pain and some pressure that Americans are feeling at the pump,” Jean-Pierre said. 

Opponents of suspending the tax, including some Democratic lawmakers, say the move would not address supply problems and would take money away from infrastructure needs. 

Some information for this report came from The Associated Press and Reuters.
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A group of U.S. solar energy project developers on Tuesday said they would jointly spend about $6 billion to support expansion of the domestic solar panel supply chain. 

The U.S. Solar Buyer Consortium, which includes developers AES Corporation AES.N, Clearway Energy Group, Cypress Creek Renewables and DE Shaw Renewable Investments, said in a statement that the funds would address current supply chain issues. 

Since the start of the pandemic, companies that buy solar panels for large power plants have struggled with global supply chain disruptions that have driven up costs, as well as potential U.S. tariffs on imported panels from Asia. Duties on those products, which supply most U.S. projects, would make solar energy more expensive and less competitive with power produced by fossil fuels. 

The consortium will invest $6 billion as it recruits solar panel manufacturers in a long-term strategic plan to supply up to 7 gigawatts (GW) of solar modules per year from 2024 — which could power nearly 1.3 million homes. 

“Our joint commitment to procure at this scale can provide the certainty suppliers need to ramp up capacity and overcome current supply chain constraints,” David Zwillinger, chief executive of DE Shaw Renewable Investments, said in a statement. 

The United States installed 23.6 gigawatts of solar capacity in 2021, according to industry trade group the Solar Energy Industries Association. 

Asian imports account for most U.S. panel demand from solar facility developers. In response, the tiny domestic manufacturing sector in recent years has sought tariffs on Asia-made panels repeatedly, saying their products cannot compete with cheap overseas-made components. 

U.S. President Joe Biden this month waived tariffs on solar panels from four Southeast Asian nations for two years and invoked the Defense Production Act to spur solar panel manufacturing at home. 

In their statement, the panel consortium said more needed to be done and called on Congress to pass proposed legislation to support domestic solar manufacturing. 

 
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A British subsidiary of mining and trading giant Glencore on Tuesday formally pleaded guilty to seven counts of bribery in connection with oil operations in Cameroon, Equatorial Guinea, Ivory Coast, Nigeria and South Sudan.

At a Southwark Crown Court hearing in London, Glencore Energy admitted to paying more than $28 million in bribes to secure preferential access to oil and generate illicit profit between 2011 and 2016. The company will be sentenced on Nov. 2 and 3, the U.K. Serious Fraud Office, or SFO, said.

Glencore, a Swiss-based multinational, has already said it expects to pay up to $1.5 billion to settle allegations of bribery and market manipulation and three subsidiaries in the United States, Brazil and Britain have now pleaded guilty to criminal offenses.

U.S. authorities will see the bulk of those funds after Glencore agreed to a $1.1 billion U.S. settlement last month to resolve a decade-long scheme to bribe foreign officials across seven countries — and separate charges alleging a trading division manipulated fuel oil prices at U.S. shipping ports.

But the guilty plea by a corporate heavyweight in London is a much-needed boost for the SFO, which has faced sharp criticism and awaits the outcome of a “forensic” government-ordered review after senior judges overturned two convictions in its Unaoil bribery investigation because of disclosure failings.

“The SFO’s success with Glencore will certainly not protect it from any flak that comes its way,” said Syed Rahman, a partner at Rahman Ravelli. “But the result it has in this case is an indicator of what the agency is capable of when it does not make mistakes.”

Helen Taylor, a legal researcher at pressure group Spotlight on Corruption, urged the SFO now to investigate and prosecute senior executives who had condoned the wrongdoing.

The SFO said only that its Glencore investigation was ongoing.

Glencore is also paying $29.6 million directly to state-run Brazilian oil company Petrobras in compensation for defrauding the company and roughly $10 million to authorities in civil penalties, prosecutors have said.
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British rail workers launched their biggest strike in decades on Tuesday. 

Last-minute talks to avoid the stoppage failed Monday, with the rail management and the Rail, Maritime and Transport Workers union unable to resolve a dispute about pay and job security. 

Union leaders say pay has failed to keep pace with inflation. 

British Transport Secretary Grant Shapps warned the strike would cause “mass disruption.” 

The union of more than 40,000 workers plans to strike on Thursday and Saturday as well. 

Some information for this report came from The Associated Press, Agence France-Presse and Reuters.
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“I’m in a cryptocurrency chat group at work,” software engineer Adam Hickey of San Diego, California told VOA.

Over the last few days, Hickey said, members of the group have been writing things like, “Bloodbath” and, “Are we still good?”

“It shook me, honestly,” he admitted. “I just had to stop looking at my balance. At one point, months ago, my investment in crypto had tripled. Now I’m down 40%.”

Hickey is far from alone. Serious and casual investors across the United States have seen the value of their investments in the publicly available digital asset known as cryptocurrency shrink dramatically in recent months, with steep plunges recorded in just the last week.

The value of bitcoin, the most popular form of cryptocurrency, has dropped more than 70% since its peak in November of last year, erasing more than 18 months of growth and causing many investors to wonder if this is the bottom, or if the worst is still to come.

“I have to remind myself that when I got into bitcoin in 2017, it was more of something I just kind of hoped would be the next Amazon.com,” Hickey said. Like many others, Hickey dreamed cryptocurrency could be a way to get rich in the long-term, or at least would be a part of his retirement savings.

“I’ve always seen it as a long-term investment. Still, this is the most nervous I’ve been about it,” he said. “You hear people on social media saying this is all a Ponzi scheme. Now I’m having thoughts like maybe those warnings are right – that the people pushing bitcoin so hard are the ones who bought it at the earliest low prices. Of course they want people to buy and drive the value back up. It’s good for them, but is it good for me?” 

Getting in 

Those skeptical of cryptocurrency point to its lack of regulatory oversight from government as a major reason for concern, making it susceptible to scams and wild price fluctuations.

“I’ve always seen it as a highly speculative investment,” said Marigny deMauriac, a certified financial planner in New Orleans, Louisiana. “This isn’t something any individual should have the majority of their wealth in unless they’re looking to take a significant amount of unnecessary risk.”

“I tell my clients to stay clear of investing any significant portion of their wealth in cryptocurrency, or any other highly speculative investment type,” deMaruiac told VOA. Many of the most ardent cryptocurrency supporters, however, invest precisely because it isn’t tied to governments as traditional currencies are. Digital currency’s demonstrated capacity for meteoric rises is a big part of its appeal. 

Steve Ryan, a self-employed poker player living in Las Vegas, Nevada, began investing in digital currency nearly a decade ago. “I’ve been in it for so long, I understand this stuff much better than your average person who only read about it on the internet a year or two ago,” he said.

Ryan invested on the advice of entrepreneurial friends; back when a single bitcoin sold for only a couple of hundred dollars as opposed to the tens of thousands they sell for today.

“Most of my money is in crypto, and I wish I had kept more in there rather than selling some of it,” he told VOA. “Even after this downturn, I’d be a multimillionaire had I kept it all in.”

Losing value 

U.S. inflation at 40-year highs has caused the Federal Reserve to raise interest rates, sending jitters throughout financial markets. At the same time, some Americans have lost their appetite for riskier investments.

Many have sold their cryptocurrency holdings and reinvested in safer, more stable assets. At the end of last week, the value of one share of bitcoin dropped below $18,000 from a high late last year of more than $64,000. The total crypto market value dropped from a peak of $3.2 trillion to below $1 trillion. 

“I’m definitely worried today,” Ryan said on Saturday as bitcoin reached its lowest point since December 2020. 

Still, Ryan maintained he still believes in bitcoin.

“I’m worried because we’ve got a war going on in Europe, huge amounts of inflation, we’re trying to recover from the impacts of a pandemic, and governments might try to regulate bitcoin,” he said. “But I’m not worried about bitcoin itself – I think it’s as solid as ever. That’s how cycles work and this could prove to be one of the best times in history to get into crypto.”

Casual cryptocurrency investors may not be so sure, but many seem willing to hold on to what they have in the hopes of a rebound. “Of course, when it rose to over $60,000, I had big dreams that I could earn enough money to go on a big trip or to make a down payment on a property,” said Joe Frisard, a semi-retired resident of Atlanta, Georgia.

The downturn has lowered Frisard’s ambitions, he acknowledged, but he still planned on hanging on to the cryptocurrency he hadn’t already sold when it was closer to its peak. “I’ve lost a good bit of money in the stock market, too,” he said, “but I’m not looking to dump my stocks. They’re a long-term investment and I see bitcoin in a similar way.”

Weathering the storm 

Gordon Henderson, a retired collegiate marching band director from Los Angeles, California, is also not panicking.

“I’m much more concerned about my stocks in my retirement fund than in my relatively small crypto holdings,” he said. Henderson remembers his father, at age 69 in 1987, converting his retirement fund to cash before a recession temporarily decimated the stock market.

“He was pretty proud of his timing,” Henderson recalled, “but in reality, he would have ended up with eight times more money if he had weathered the storm and kept his money in the stock market for another two decades. That’s how I look at cryptocurrency. I’ll hang onto it and maybe it will pay for college for my kids. If not, I was prepared for the loss.”

Colin Ash, an urban planner in New Orleans, Louisiana, has owned bitcoin for years, but said he thinks of it as “a fun gamble.”

“Of course, I wish I would have timed it perfectly and sold it all at the peak,” he said, “but it’s not realistic to think you can ever do that with any kind of investment. I think of it as something separate from the rest of my money. If something comes of it in the long run, then great. If not, at least I already sold some and paid off some debt.” 

For Hickey in San Diego, as well as many other investors, the key is to not invest more than you can afford to lose, particularly with an asset as speculative as cryptocurrency.

“Under the current circumstances, with everything falling so far down, I’ve decided to halt my weekly recurring purchase of bitcoin,” he said. “I think I’m done investing for now.”

He paused for a moment, and then said, “Now, that’s kind of hard, because if you want to make money you should buy low and sell high. Bitcoin prices are low, so I’ll probably be back in before you know it.”
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An International Monetary Fund (IMF) team arrives in Sri Lanka on Monday for talks on a bailout program, but time is short for a country just days from running out of fuel and likely months from getting any relief money. 

Sri Lanka is battling its worst financial crisis since independence in 1948, as decades of economic mismanagement and recent policy errors coupled with a hit from COVID-19 to tourism and remittances, shriveling foreign reserves to record lows. 

The island nation of 22 million people suspended payment on $12 billion debt in April. The United Nations has warned soaring inflation, a plunging currency and chronic shortages of fuel, food and medicine could spiral into a humanitarian crisis. 

The IMF team, visiting Colombo through June 30, will continue recent talks on what would be Sri Lanka’s 17th rescue program, the IMF said on Sunday. 

“We reaffirm our commitment to support Sri Lanka at this difficult time, in line with the IMF’s policies,” the global lender said in a statement. 

Colombo hopes the IMF visit, overlapping with debt restructuring talks, will yield a quick staff-level agreement and a fast track for IMF board disbursements. But that typically takes months, while Sri Lanka risks more shortages and political unrest. 

“Even if a staff-level agreement is reached, final program approval will be contingent upon assurances that official creditors, including China, are willing to provide adequate debt relief,” said Patrick Curran, senior economist at U.S. investment research firm Tellimer. “All considered, the restructuring is likely to be a protracted process.” 

Waiting for guess, for 

But the crisis is already overwhelming for average Sri Lankans, like autorickshaw driver Mohammed Rahuman, 64, who was recently standing in line for gasoline for more than 16 hours. 

“They say petrol will come but nothing yet,” he told Reuters. “Things are very difficult. I cannot earn any money, I cannot go home and I cannot sleep.” 

Snaking lines kilometers long have formed outside most fuel pumps since last week. Schools in urban areas have closed and public workers have been asked to work from home for two weeks. 

Bondholders expect the IMF visit to give clarity on how much debt Sri Lanka can repay and what haircuts investors may have to take. 

“This IMF visit is very important – the country will need every help and support it can get,” said Lutz Roehmeyer, portfolio manager at Berlin-based bondholder Capitulum Asset Management. “For many international bondholders, this will be a key requirement to ensure they come to the table and talk about a debt restructuring in the first place.” 

Prime Minister Ranil Wickremesinghe said this month an IMF program is crucial to access bridge financing from sources such as the World Bank and Asian Development Bank. 

Representatives from Sri Lanka’s financial and legal advisers, Lazard and Clifford Chance, are in Colombo.
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U.S. President Joe Biden is considering declaring a federal gas tax holiday and curbing some tariffs on imported Chinese goods to help Americans cope with the surging cost of consumer goods, Treasury Secretary Janet Yellen said Sunday. 

“President Biden wants to do anything he possibly can to help consumers,” Yellen told ABC’s “This Week” show. “Gas prices have risen a great deal and it’s clearly burdening households.” 

U.S. gasoline prices are at an all-time high of about $5 a gallon (3.8 liters), up more than 48% over a year ago. She said eliminating the 18.4-cent-per-gallon federal gas tax for a time was “an idea that’s certainly worth considering” and that Biden was willing to work with Congress to enact it. 

Biden last week called on major oil refinery companies to take “immediate actions” to increase supply, telling them in a new letter that “historically high” profit margins were unacceptable as prices at service station pumps for Americans continued to soar. 

American Petroleum Institute Chief Executive Mike Sommers rebuffed Biden’s complaint, saying, “The administration’s misguided policy agenda shifting away from domestic oil and natural gas has compounded inflationary pressures and added headwinds to companies’ daily efforts to meet growing energy needs while reducing emissions.” 

‘Caught unaware’

Yellen, on ABC, said, “What’s happened is production has gone down. Refinery capacity has declined in the United States and oil production has declined. I think producers were partly caught unaware by the strength of the recovery in the economy.  High prices should induce them to increase supply.” 

But she called the higher prices “a medium-term matter,” stressing the need to continue to move to renewable energy sources. 

Food prices, monthly rental payments, airline fares, housing and other costs of daily life in the United States have risen sharply, up 8.6% in May compared with a year ago, the fastest increase in 40 years.  

Analysts point to a variety of causes for the inflation: strong consumer demand, Russia’s invasion of Ukraine, worldwide supply chain disruptions and sizable government payments to most American consumers that put extra cash in their pockets as the coronavirus pandemic swept into the country.  

Yellen said Biden was also reviewing the tariff policy toward China because some tariffs imposed by the previous administration of former President Donald Trump served “no strategic purpose and raise costs to consumers.” 

“Inflation really is unacceptably high,” Yellen said. Part of the reason, she said, is that Russia’s war on Ukraine has boosted gas and food prices. 

She said American consumers cannot expect immediate relief, but “over time, I would certainly expect inflation to come down.” 

Yellen said she expected the American economy, the world’s largest, to slow in the coming months, but added, “I don’t think a recession [two successive three-month periods of declining growth] is at all inevitable.”
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The price of bitcoin fell below $20,000 Saturday for the first time since late 2020, in a fresh sign that the sell-off in cryptocurrencies is deepening. 

Bitcoin, the most popular cryptocurrency, fell below the psychologically important threshold, dropping by as much as 9% to less than $19,000 and hovering around that mark, according to the cryptocurrency news site CoinDesk. 

The last time bitcoin was at that level was in November 2020, when it was on its way up to its all-time high of nearly $69,000, according to CoinDesk. Many in the industry had believed it would not fall under $20,000. 

Bitcoin has now lost more than 70% of its value since reaching that peak. 

Ethereum, another widely followed cryptocurrency that’s been sliding in recent weeks, took a similar tumble Saturday. 

It’s the latest sign of turmoil in the cryptocurrency industry amid wider turbulence in financial markets. Investors are selling off riskier assets because central banks are raising interest rates to combat quickening inflation. 

The overall market value of cryptocurrency assets has fallen from $3 trillion to below $1 trillion, according to coinmarketcap.com, a company that tracks crypto prices. On Saturday, the company’s data showed crypto’s global market value stood at about $834 billion. 

A spate of crypto meltdowns has erased tens of billions of dollars of value from the currencies and sparked urgent calls to regulate the freewheeling industry. Last week, bipartisan legislation was introduced in the U.S. Senate to regulate the digital assets. The crypto industry has also upped its lobbying efforts — flooding $20 million into congressional races this year for the first time, according to records and interviews. 

Cesare Fracassi, a finance professor at the University of Texas at Austin who leads the school’s Blockchain Initiative, believes Bitcoin’s fall under the psychological threshold isn’t a big deal. Instead, he said the focus should be on recent news from lending platforms. 

Cryptocurrency lending platform Celsius Network said this month that it was pausing all withdrawals and transfers, with no sign of when it would give its 1.7 million customers access to their funds. Another crypto lending platform, Babel Finance, said in a notice posted on its website Friday that it will suspend redemptions and withdrawals on products due to “unusual liquidity pressures.” 

“There is a lot of turbulence in the market,” Fracassi said. “And the reason why prices are going down is because there is a lot of concern the sector is overleveraged.” 

The cryptocurrency exchange platform Coinbase announced Tuesday that it laid off about 18% of its workforce, with the company’s CEO and co-founder Brian Armstrong placing some of the blame on a coming “crypto winter.” 

Stablecoin Terra imploded last month, losing tens of billions of dollars in value in a matter of hours. 

Crypto had permeated much of popular culture before its recent tumble, with many Super Bowl ads touting the digital assets and celebrities and YouTube personalities routinely promoting it on social media. 

David Gerard, a crypto critic and author of “Attack of the 50 Foot Blockchain,” said the recent meltdowns show a failure by regulators, who he believes should have put more scrutiny on the industry years ago. Many nascent investors — especially young people — invested in crypto based on a false hope that was sold to them, he said. 

“There are real human victims here that are ordinary people.” 
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After all-night talks, members of the World Trade Organization early Friday reached a string of deals and commitments aimed at limiting overfishing, broadening production of COVID-19 vaccines in the developing world, improving food security and reforming a 27-year-old trade body that has been back on its heels in recent years.

WTO Director-General Nzogi Okonjo-Iweala, after a pair of sleepless nights in rugged negotiations, concluded the WTO’s first ministerial conference in 4 1/2 years by trumpeting a new sense of cooperation at a time when the world faces crises like Russia’s war in Ukraine and a once-in-a-century pandemic that has taken millions of lives.  

“The package agreements you have reached will make a difference to the lives of people around the world,” said Okonjo-Iweala, landing what she called an “unprecedented package of deliverables” after 15 months in the job. “The outcomes demonstrate that the WTO is in fact capable of responding to emergencies of our time.”

The agreements could breathe new life into a trade body that faced repeated criticism from the administration of former U.S. President Donald Trump, which accused the WTO of a lack of fairness to the United States and was caught in a growing economic and political rivalry between the U.S. and China. In recent years, Washington has incapacitated the WTO’s version of an appeals court that rules on international trade disputes.

The WTO operates by consensus, meaning that all of its 164 members must agree on its deals — or at least not get in the way. The talks at times took place in backrooms or inside chats because some delegates didn’t want to be in the same space as their counterparts from Russia — as a way to protest President Vladimir Putin’s invasion of Ukraine, which has had fallout far beyond the battlefield, such as on food and fuel prices.

Among the main achievements Friday was an accord, which fell short of early ambitions, to prohibit both support for illegal, unreported and unregulated fishing and for fishing in overtaxed stocks in the world’s oceans. It marked the WTO’s first significant deal since one in 2013 that cut red tape on treatment of goods crossing borders — and arguably one of its most impactful.

“WTO members have for the first time, concluded an agreement with environmental sustainability at its heart,” Okonjo-Iweala said. “This is also about the livelihoods of the 260 million people who depend directly or indirectly on marine fisheries.”

The WTO chief said the deal takes a first step to curb government subsidies and overcapacity — too many operators — in the fishing industry.

More controversial was an agreement on a watered-down plan to waive intellectual property protections for COVID-19 vaccines, which ran afoul of advocacy groups that say it did not go far enough — and could even do more harm than good.

“The TRIPS waiver compromise will contribute to ongoing efforts to concentrate and diversify vaccine manufacturing capacity so that a crisis in one region does not leave others cut off,” Okonjo-Iweala said of the waiver of intellectual property protections.

U.S. Trade Representative Katherine Tai hailed a “concrete and meaningful outcome to get more safe and effective vaccines to those who need it most.”

“This agreement shows that we can work together to make the WTO more relevant to the needs of regular people,” she said in a statement.  

Her announcement a year ago that the U.S. would break with many other developed countries with strong pharmaceutical industries to work toward a waiver of WTO rules on COVID-19 vaccines served as an impetus to talks around a broader waiver sought by India and South Africa.

But some advocacy groups were seething. Aid group Doctors Without Borders called it a “devastating global failure for people’s health worldwide” that the agreement stopped short of including other tools to fight COVID-19, including treatments and tests.  

“The conduct of rich countries at the WTO has been utterly shameful,” said Max Lawson, co-chair of the People’s Vaccine Alliance and head of inequality policy at Oxfam.  

He said the European Union, United States, Britain and Switzerland blocked a stronger text.

“This so-called compromise largely reiterates developing countries’ existing rights to override patents in certain circumstances,” Lawson said.  

Indian Commerce Minister Piyush Goyal, whose tough negotiating stance had frustrated some developed countries during the talks, said the ministerial meeting was a “big boost for multilateralism” and showed progress on issues — like fisheries — that have been lagging for decades.

“India is 100% satisfied with the outcome,” he told reporters in Geneva. “I am not returning to India with any worries.”  

The meeting also agreed to lift export restrictions that have weighed on the U.N.’s World Food Program, which is trying to offset the impact of rising food prices and fallout from the war in Ukraine on shipments of wheat, barley and other food staples from the country that is a key producer.
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Fear swept through financial markets Thursday, and Wall Street tumbled as worries roared back to the fore that the world’s fragile economy may buckle under higher interest rates. 

The S&P 500 fell 3.3% in a widespread wipeout to more than reverse its blip of a 1.5% rally from a day before. Analysts had warned of more big swings given deep uncertainties about whether the Federal Reserve and other central banks can tiptoe the narrow path of hiking interest rates enough to get inflation under control but not so much that they cause a recession. 

The Dow Jones Industrial Average lost 2.4% and was briefly down more than 900 points, while the Nasdaq composite sank 4.1%. It was the sixth loss for the S&P 500 in its last seven tries, and all but 3% of the stocks in the index dropped. 

Wall Street fell with stocks across Europe after central banks there followed up on the Federal Reserve’s big interest-rate hike on Wednesday. The Bank of England raised its key rate for the fifth time since December, though it opted for a more modest increase of 0.25 percentage points than the 0.75-point hammer brought by the Fed. 

Switzerland’s central bank, meanwhile, raised rates for the first time in years, a half-point hike. Taiwan’s central bank raised its key rate by an eighth of a point. Japan’s central bank began a two-day meeting, though it has held out on raising rates and making other economy-slowing moves that investors call “hawkish.” 

Such moves and expectations for plenty more have sent investments tumbling this year, from bonds to bitcoin. Higher interest rates slow the economy by design, in hopes of stamping out inflation. But they’re a blunt tool that can choke off the economy if used too aggressively. 

“Another concern is that with the change in policy, there’s been weakening economic data already,” said Bill Northey, senior investment director at U.S. Bank Wealth Management. “That raises the odds of a recession in the latter part of 2022 into 2023.” 

The worries dragged the S&P 500 into a bear market earlier this week, meaning it had dropped more than 20% from its peak. It’s now 23.6% below its record set early this year and back to where it was in late 2020. That effectively erases 2021, which was one of the best years for Wall Street since the turn of the millennium. 

The S&P 500 fell 123.22 points to 3,666.77. The Dow lost 741.46 to 29,927.07, and the Nasdaq dropped 453.06 to 10,646.10. Thursday’s biggest losses hit the stocks of the smallest companies, a signal of pessimism about the economy’s strength. The Russell 2000 index of smaller stocks sank 81.30, or 4.7%, to 1,649.84. 

Not only is the Federal Reserve hiking short-term rates, it also this month began allowing some of the trillions of dollars of bonds it purchased through the pandemic to roll off its balance sheet. That should put upward pressure on longer-term interest rates. It’s another way central banks have been ripping away supports they earlier propped underneath markets to juice the economy. 

The U.S. economy is still holding up, driven in particular by a strong jobs market. Fewer workers filed for unemployment benefits last week than a week before, a report showed on Thursday. But more signs of trouble have been emerging. 

On Thursday, one report showed homebuilders broke ground on fewer homes last month. Rising mortgage rates resulting directly from the Fed’s moves are digging into the industry. A separate reading on manufacturing in the mid-Atlantic region also unexpectedly fell. 

“Corporate earnings estimates have not yet changed to reflect some of the softening economic data and that could lead to the second leg of this repricing,” Northey said. 

Treasury yields swung sharply on Thursday, with the 10-year yield down to 3.23% from 3.39% late Wednesday. It had climbed as high as 3.48% in the morning, near its highest level since 2011. 

Higher rates have been delivering the hardest hits this year to the investments that soared the most through the easy, ultralow rates of earlier in the pandemic, which now look to be among the most expensive and risky investments. That includes bitcoin and high-growth technology stocks. 

Big Tech stocks were among the heaviest weights on the market Thursday, but the sharpest losses hit stocks whose profits depend more on the strength of the economy and whether customers can keep up their purchases amid the highest inflation in decades. 

Cruise operators Norwegian Cruise Line Holdings, Royal Caribbean Group and Carnival all lost more than 11%. 

It’s all a sharp turnaround from a day earlier, when stocks rallied immediately after the Fed’s biggest hike to rates since 1994. Analysts said investors seemed to latch onto a comment from Fed Chair Jerome Powell, who said mega-hikes of three-quarters of a percentage point would not be common. 

Powell said Wednesday the Fed is moving “expeditiously” to get rates closer to normal levels after last week’s stunning report that showed inflation at the consumer level unexpectedly accelerated last month, which dashed hopes that inflation may have already peaked. 

The Fed is “not trying to induce a recession now, let’s be clear about that,” Powell said. He called Wednesday’s big increase “front-end loading.” 

 
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President Joe Biden told The Associated Press on Thursday that the American people are “really, really down” after a tumultuous two years with the coronavirus pandemic, volatility in the economy and now surging gasoline prices that are slamming family budgets.

He said a recession is not inevitable and bristled at claims by Republican lawmakers that last year’s COVID-19 aid plan was fully to blame for inflation reaching a 40-year high, calling that argument bizarre.

As for the overall American mindset, Biden said, “People are really, really down.”

“They’re really down,” he said. “The need for mental health in America, it has skyrocketed, because people have seen everything upset. Everything they’ve counted on upset. But most of it’s the consequence of what’s happened, what happened as a consequence of the COVID crisis.”

Speaking to the AP in a 30-minute Oval Office interview, Biden addressed the warnings by economists that the United States could be headed for a recession.

“First of all, it’s not inevitable,” he said. “Secondly, we’re in a stronger position than any nation in the world to overcome this inflation.”

As for the causes of inflation, Biden flashed some defensiveness on that count.

“If it’s my fault, why is it the case in every other major industrial country in the world that inflation is higher? You ask yourself that? I’m not being a wise guy,” he said.

The president said he saw reason for optimism with the 3.6% unemployment rate and America’s relative strength in the world.

“Be confident, because I am confident we’re better positioned than any country in the world to own the second quarter of the 21st century,” Biden said. “That’s not hyperbole, that’s a fact.”

Biden’s bleak assessment of the national psyche comes as voters have soured on his job performance and the direction of the country. Only 39% of U.S. adults approve of Biden’s performance as president, according to a May poll from The Associated Press-NORC Center for Public Research, dipping from negative ratings a month earlier.

The president outlined some of the hard choices he has faced, saying the U.S. needed to stand up to Russian President Vladimir Putin for invading Ukraine in February even though tough sanctions imposed as a result of that war have helped caused gas prices to surge, creating a political risk for Biden in an election year. He called on oil companies to think of the world’s short-term needs and increase production.

Asked why he ordered the financial penalties against Moscow that have helped disrupt food and energy markets globally, Biden said he made his calculation as commander in chief rather than as a politician thinking about the election.

“I’m the president of the United States,” he said. “It’s what’s best in the country. No kidding. No kidding. So what happens? What happens if the strongest power in NATO, the organizational structure we put together, walked away from Russian aggression?”

Biden talked about the possibility of chaos in Europe if an unimpeded Russia kept moving deeper into the continent, China was emboldened to take over Taiwan and North Korea grew even more aggressive with its nuclear weapon ambitions.

Biden renewed his contention that major oil companies have benefited from higher prices without increasing production as much as they should. He said the companies needed to think of the world in the short term, not just their investors.
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Amid a major stock market downturn, sharply rising inflation, and plummeting consumer confidence, the Federal Reserve Board interest rate-setting body decided Wednesday to raise interest rates by three-quarters of 1% in the hope of taming runaway prices.

The decision by the Federal Open Market Committee (FOMC) to increase the target for the federal funds rate to between 1.5% and 1.75% marked the largest single-day increase since 1994. The move illustrates the grave concern among policymakers about inflation, which rose at an annual rate of 8.6% last month, a 40-year high.

In remarks delivered at a press conference after the FOMC meeting, Federal Reserve Board Chair Jerome Powell indicated that more rate hikes are on the horizon, with another a half- or three-quarter-point increase likely in July, and other increases in three further meetings before the end of the year.

“My colleagues and I are acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing and transportation,” Powell said, adding that the Fed is “strongly committed to returning inflation to our 2% objective.”

Trying to cool demand

Inflation drives up the cost of most items people buy on a regular basis, from gasoline to food to clothing. It can also drive up prices on big-ticket items, such as cars, appliances and furniture.

The strategy behind the Fed’s interest rate increases is to cool demand, which can help lower prices.

As interest rates increase, consumers become less likely to borrow money to make large purchases like cars and homes. In recent weeks, for example, the interest rate for a 30-year home mortgage loan in the U.S., which was under 5% in March, has spiked to above 6.7%. It also affects decisions by business owners to make new investments.

The central bank’s task is to cool demand enough to bring inflation back down to its target rate of 2% per year without pushing too far and causing a recession, which could lead to job losses and more economic pain.

‘Behind the curve’

Until last week, the assumption had been that the central bank would raise rates by half a point in this meeting, with other half-point increases in the pipeline later in the year. However, last week’s consumer price index report from the Bureau of Labor Statistics showed that rather than flattening out as expected, inflation had risen, from an 8.3% annualized pace to 8.6%.

The surprise report increased pressure on the central bank, which has been criticized for waiting too long to address rising prices, to take more dramatic action.

“The Fed is behind the curve on inflation and it knows it,” Greg McBride, senior vice president and chief financial analyst for Bankrate.com, told VOA. “Given the ugly inflation report from last week,” he said, a half-point increase would have felt insufficient.

The Fed tries hard not to surprise the financial markets and prefers to signal its rate changes well in advance through “forward guidance” that lets market participants know what to expect.

In his remarks Wednesday, Powell stressed that the circumstances under which the Fed took its decisions on rates was very uncommon, with the Labor Department’s surprising inflation data coming just days before the FOMC was set to meet.

Strong economy

During his remarks, Powell several times stressed that while inflation is high and consumer sentiment is low, the underlying U.S. economy is still strong, with demand for goods and services remaining high.

“We’re not seeing a broad slowdown,” he said. “We see job growth slowing, but it’s still at quite robust levels. We see the economy slowing a bit, but still, healthy growth levels.”

The Fed chair pushed back against concerns that higher interest rates could damage the economy, pointing out that while rates are rising, they are doing so from a historically low starting point — the Fed held rates at near zero through much of the pandemic and of the last decade.

“There’s a lot going on,” Powell said. “There are a lot of flows back and forth, but ultimately, it does appear that the U.S. economy is in a strong position, and well-positioned to deal with higher interest rates.”

Unemployment increase expected

As part of the post-FOMC meeting presentation, the Fed released its Summary of Economic Projections, which contains the committee members’ expectations about a number of economic indicators over the coming years, one of which is the unemployment level.

Employment levels in the U.S. have been one of the major success stories of the pandemic recovery. After spiking to a post-World War II high of 14.7% in April 2020, the jobless rate in the U.S. began to plummet and hit 3.6% in May, just one-tenth of a percent above the level in the months before the pandemic.

Looking forward, though, the members of the FOMC expect that the U.S. unemployment rate will begin rising as interest rates rise, perhaps to above 4% by 2024, with inflation rates down to 2%.

“A 4.1% unemployment rate, with inflation well on its way to 2%, I think that would be a successful outcome,” Powell said.

“We don’t seek to put people out of work,” he added. “Of course, we never think too many people are working and fewer people need to have jobs. But we also think that you really cannot have the kind of labor market we want without price stability.”

Recession worries remain

In their efforts to tame inflation, Powell and his colleagues at the Fed have been aiming for what economists characterize as a “soft landing.” That is, a cooling of demand that slows price rises but does not reverse economic growth and push the country into a recession.

Asked about the likelihood of a soft landing on Tuesday, Powell said, “That is our objective, and I do think it’s possible.”

However, he said that events such as supply shocks caused by Russia’s invasion of Ukraine and pandemic-related lockdowns in major Chinese manufacturing hubs make predictions difficult.

“Events of the last few months have raised the degree of difficulty and created great challenges,” he said, adding, “There’s a much bigger chance now that it will depend on factors that we don’t control.”

Despite the Fed chair’s assessment that it remains possible to avoid a recession, others said they were not convinced that getting back to 2% inflation by 2024 is possible any other way.

“It’s hard to see how we get to that level without a recession,” Bankrate’s McBride told VOA.
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The U.S. Federal Reserve announced Wednesday it would raise interest rates by the largest amount in nearly 30 years in an effort to cool inflation without tipping the economy into a recession. 

The central bank said it would raise its key interest rate by three-quarters of a percentage point, the largest amount since November 1994, and signaled more hikes to come. 

The rate increase comes as inflation, which measures the price of common goods such as food and fuel, rose by 8.6% over the 12 months ending in May — the highest rate in 40 years — driven by high post-pandemic demand for homes, cars, travel and other goods and services, global supply chain problems, strict COVID-19 lockdowns in China, and Russia’s invasion of Ukraine. 

In a statement announcing the rate hike, the Federal Open Market Committee, the Federal Reserve’s policy-setting board, said it remains “strongly committed to returning inflation to its 2% objective.” 

The three-quarter-point rate increase exceeds the one-half-point rate increase that Federal Reserve Chairman Jerome Powell had previously suggested would be imposed.  

He told reporters Wednesday that the latest information showed higher inflation than expected. 

“We thought strong action was warranted at this meeting,” he said, “and we delivered that.”

Shortly after the Fed’s announcement, Powell said if inflation shows no sign of abating, the central bank would likely impose either a half- or three-quarter-point increase at its next meeting in July.   

Some information for this report came from The Associated Press, Reuters and Agence France-Presse.  

 
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President Joe Biden on Wednesday called on U.S. oil refiners to produce more gasoline and diesel, saying their profits have tripled during a time of war between Russia and Ukraine as Americans struggle with record high prices at the pump.

“The crunch that families are facing deserves immediate action,” Biden wrote in a letter to seven oil refiners. “Your companies need to work with my Administration to bring forward concrete, near-term solutions that address the crisis.”

Gas prices nationwide are averaging roughly $5 a gallon, an economic burden for many Americans and a political threat for the president’s fellow Democrats going into the midterm elections. Broader inflation began to rise last year as the U.S. economy recovered from the coronavirus pandemic, but it accelerated in recent months as energy and food prices climbed after Russia invaded Ukraine in February and disrupted global commodity markets.

The government reported on Friday that consumer prices had jumped 8.6% from a year ago, the worst increase in more than 40 years.

The letter notes that gas prices were averaging $4.25 a gallon when oil was last near the current price of $120 a barrel in March. That 75-cent difference in average gas prices in a matter of just a few months reflects both a shortage of refinery capacity and profits that “are currently at their highest levels ever recorded,” the letter states.

As Biden sees it, refineries are capitalizing on the uncertainties caused by “a time of war.” His message that corporate greed is contributing to higher prices has been controversial among many economists, yet the claim may have some resonance with voters.

Some liberal lawmakers have proposed cracking down on corporate profits amid the higher inflation. Sen. Bernie Sanders, a Vermont independent, in March proposed a 95% tax on profits in excess of companies’ pre-pandemic averages.

The president has harshly criticized what he views as profiteering amid a global crisis that could potentially push Europe and other parts of the world into a recession, saying after a speech Friday that ExxonMobil “made more money than God this year.” ExxonMobil responded by saying it has already informed the administration of its planned investments to increase oil production and refining capacity.

“There is no question that [Russian President] Vladimir Putin is principally responsible for the intense financial pain the American people and their families are bearing,” Biden’s letter says. “But amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain.”

The letter says the administration is ready to “use all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term, and to ensure that every region of this country is appropriately supplied.” It notes that Biden has already released oil from the U.S. strategic reserve and increased ethanol blending standards, though neither action put a lasting downward pressure on prices.

The president is sending the letter to Marathon Petroleum, Valero Energy, ExxonMobil, Phillips 66, Chevron, BP and Shell.

He also has directed Energy Secretary Jennifer Granholm to convene an emergency meeting and consult with the National Petroleum Council, a federal advisory group that is drawn from the energy sector.

Biden is asking each company to explain to Granholm any drop in refining capacity since 2020, when the pandemic began. He also wants the companies to provide “any concrete ideas that would address the immediate inventory, price, and refining capacity issues in the coming months — including transportation measures to get refined product to market.”

There may be limits on how much more capacity can be added. The U.S. Energy Information Administration on Friday released estimates that “refinery utilization will reach a monthly average level of 96% twice this summer, near the upper limits of what refiners can consistently maintain.”

The letter says that roughly 3 million barrels a day of refining capacity around the world have gone offline since the pandemic began. In the U.S., refining capacity fell by more than 800,000 barrels a day in 2020.
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Wall Street is back in the claws of a bear market as worries about inflation and higher interest rates overwhelm investors. 

The Federal Reserve has signaled it will aggressively raise interest rates to try to control inflation, which is the highest in decades. Throw in the war in Ukraine and a slowdown in China’s economy, and investors have been forced to reconsider what they’re willing to pay for a wide range of stocks, from high-flying tech companies to traditional automakers. Big swings have become commonplace and Monday was no exception. 

The last bear market happened just two years ago, but this is still a first for those investors who got their start trading on their phones during the pandemic. Thanks in large part to extraordinary actions by the Federal Reserve, stocks have for years seemed to go largely in only one direction: up. But the “buy the dip” rallying cry popular after every market slide has grown more fainter — a recent rebound in stock prices was wiped out by a furious bout of selling over the past four days. 

Here are some common questions asked about bear markets 

Why is it called a Bear Market?

A bear market is a term used by Wall Street when an index like the S&P 500, the Dow Jones Industrial Average, or even an individual stock, has fallen 20% or more from a recent high for a sustained period of time. 

Why use a bear to represent a market slump? Bears hibernate, so bears represent a market that’s retreating, said Sam Stovall, chief investment strategist at CFRA. In contrast, Wall Street’s nickname for a surging stock market is a bull market, because bulls charge, Stovall said. 

The S&P 500, Wall Street’s main barometer of health, slid 3.9% Monday to 3,749. That’s nearly 22% below the high set on Jan. 3. The Nasdaq is already in a bear market, down 32.7% from its peak of 16,057.44 on Nov. 19. The Dow Jones Industrial Average is more than 17% below its most-recent peak. 

The most recent bear market for the S&P 500 ran from February 19, 2020, through March 23, 2020. The index fell 34% in that one-month period. It’s the shortest bear market ever. 

What’s bothering investors?

Market enemy No. 1 is interest rates, which are rising quickly as a result of the high inflation battering the economy. Low rates act like steroids for stocks and other investments, and Wall Street is now going through withdrawal. 

The Federal Reserve has made an aggressive pivot away from propping up financial markets and the economy with record-low rates and is focused on fighting inflation. The central bank has already raised its key short-term interest rate from its record low near zero, which had encouraged investors to move their money into riskier assets such as stocks or cryptocurrencies to get better returns. 

Last month, the Fed signaled additional rate increases of double the usual amount are likely in upcoming months. Consumer prices are at the highest level in four decades and rose 8.6% in May compared with a year ago. 

The moves by design will slow the economy by making it more expensive to borrow. The risk is the Fed could cause a recession if it raises rates too high or too quickly. 

Russia’s war in Ukraine has also put upward pressure on inflation by pushing up commodities prices. And worries about China’s economy, the world’s second largest, have added to the gloom. 

So, we just need to avoid a recession?

Even if the Fed can pull off the delicate task of tamping down inflation without triggering a downturn, higher interest rates still put downward pressure on stocks. 

If customers are paying more to borrow money, they can’t buy as much stuff, so less revenue flows to a company’s bottom line. Stocks tend to track profits over time. Higher rates also make investors less willing to pay elevated prices for stocks, which are riskier than bonds, when bonds are suddenly paying more in interest thanks to the Fed. 

Critics said the overall stock market came into the year looking pricey versus history. Big technology stocks and other winners of the pandemic were seen as the most expensive, and those stocks have been the most punished as rates have risen. But the pain is spreading widely, with retailers signaling a shift in consumer behavior. 

Stocks have declined almost 35% on average when a bear market coincides with a recession, compared with a nearly 24% drop when the economy avoids a recession, according to Ryan Detrick, chief market strategist at LPL Financial. 

So I should sell everything now, right?

If you need the money now or want to lock in the losses, yes. Otherwise, many advisers suggest riding through the ups and downs while remembering the swings are the price of admission for the stronger returns that stocks have provided over the long term. 

While dumping stocks would stop the bleeding, it would also prevent potential gains. Many of the best days for Wall Street have occurred either during a bear market or just after the end of one. That includes two separate days in the middle of the 2007-2009 bear market where the S&P 500 surged roughly 11%, as well as leaps of better than 9% during and shortly after the roughly monthlong 2020 bear market. 

Advisers suggest putting money into stocks only if it won’t be needed for several years. The S&P 500 has come back from every one of its prior bear markets to eventually rise to another all-time high. 

The down decade for the stock market following the 2000 bursting of the dot-com bubble was a notoriously brutal stretch, but stocks have often been able to regain their highs within a few years. 

How long do bear markets last and how deep do they go?

On average, bear markets have taken 13 months to go from peak to trough and 27 months to get back to break even since World War II. The S&P 500 index has fallen an average of 33% during bear markets in that time. The biggest decline since 1945 occurred in the 2007-2009 bear market when the S&P 500 fell 57%. 

History shows that the faster an index enters into a bear market, the shallower they tend to be. Historically, stocks have taken 251 days (8.3 months) to fall into a bear market. When the S&P 500 has fallen 20% at a faster clip, the index has averaged a loss of 28%. 

The longest bear market lasted 61 months and ended in March 1942 and cut the index by 60%. 

How do we know when a bear market has ended?

Generally, investors look for a 20% gain from a low point as well as sustained gains over at least a six-month period. It took less than three weeks for stocks to rise 20% from their low in March 2020.
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U.S. Federal Reserve officials, beset by ongoing high inflation and a weakening growth picture, will lay out on Wednesday how they think their increasingly difficult goal of cooling the economy without sending it into a tailspin may play out in the months ahead.

That thorny predicament will be on display as Fed policymakers are expected to deliver their second half-percentage-point interest rate hike in a row and issue their latest projections through 2024 and beyond for economic growth, unemployment and inflation. As critically, they will signal the speed and scale of rate rises policymakers believe are needed to quash inflation at a 40-year-high.

What is certain is their forecasts are likely to bear little resemblance to those issued in March, which showed inflation going down without a rise in unemployment or policy being particularly restrictive.

The meeting comes two weeks after Fed Chair Jerome Powell and U.S. President Joe Biden met amid rising anxiety at the White House that a plentiful jobs picture is being drowned out by soaring costs for everything from rent and food to gasoline and airline tickets. 

Powell has previously said the central bank, which in March lifted interest rates for the first time in three years, will keep raising them until price increases ease in a “clear and convincing” way. Policymakers already signaled they plan to match this week’s expected rate increase with another half-point hike at their next meeting in July, bringing borrowing costs up to between 1.75% and 2.0% – right where just three months ago they thought they would be at year-end.

A hotter-than-expected inflation reading last Friday has even thrown some doubt on those expectations with economists at Barclays calling for a three-quarter-point move either this week or in July and Fed funds futures contracts now reflect better-than-even odds of a 75-basis-point rate hike by July, with a one-in-four chance of that occurring next week.

“It’s going to be a tricky meeting messaging-wise,” said Julia Coronado, a former Fed economist and president of MacroPolicy Perspectives. “It’s not a rosy outlook. They don’t have any easy choices to make.”

New forecasts, new questions

U.S. consumer price growth accelerated in May to 1.0% as gasoline prices hit a record high and the cost of services rose further, while core prices climbed 0.6% after advancing by the same margin in April, the Labor Department reported on Friday, underscoring the need for the Fed to keep its foot on the brakes. In the 12 months through May, headline inflation rose to 8.6%.

The new set of policymaker projections is set to reflect a faster pace of hikes, slower growth, higher inflation and a higher unemployment rate. The key will be how much for each.

All policymakers are now agreed the Fed needs to get its policy rate up to neutral – the level that neither stimulates nor constrains economic growth – by the end of this year. That rate is seen roughly between 2.4% and 3%.

The median dot for the end of 2022 could easily rise enough to signal at least another half-point increase in September given Friday’s worse-than-expected inflation reading. How far the Fed will have to raise rates overall will also move up, with most economists seeing them topping out between 3% and 3.5%.

For the unemployment rate over the next two years, the key is whether policymakers raise it by just a notch or two or show a material rise in layoffs, which would be at odds with their contention that inflation can be tamed without excessive joblessness.

Fed Governor Christopher Waller recently said if the Fed could bring down inflation to near its 2% goal while keeping the unemployment rate, currently at 3.6%, from rising above 4.25%, it would be a “masterful” performance.

“I don’t think it will change a lot but if it does … that’s a sign they’re worried about the possibility of a serious slowdown or recession,” said Roberto Perli, also a former Fed economist and head of global policy at Piper Sandler.

How much pain the Fed’s willing to swallow

Some of the factors keeping inflation so elevated, in particular supply shocks outside the Fed’s control due to Russia’s invasion of Ukraine that have caused a jump in food and oil prices, show no sign of abating. Overall the central bank still faces tremendous uncertainty on the outlook from that and other supply-chain disruptions caused by the COVID-19 pandemic.

Nor are officials getting much help yet on the demand side with the healthy finances of U.S. banks, companies and households a possible obstacle to curbing inflation as they raise rates in an economy able so far to pay the price.

The longer the Fed struggles to stifle demand and the longer inflation persists, the more likely the rate of price increases becomes embedded and the Fed needs to ramp up its action, reducing the chances of Powell’s hope for what he calls a “softish” landing.

Newly sworn-in Fed governors Philip Jefferson and Lisa Cook, who take their place among the 18-strong policymaking body for the first time, are unlikely to diverge from their colleagues’ resolve to lower inflation.

“While Cook and Jefferson are expected to be dovish additions to the Fed, that won’t matter much while inflation is 8%, and we doubt they will push back on the Fed’s tightening plans any time soon,” said Andrew Hunter, senior U.S. economist at Capital Economics.

If the committee consensus does not align with Powell’s view of what is needed, he has shown by his recent inter-meeting guidance that he is prepared to lead from the front to make sure inflation is decisively dented.

David Wilcox, a former Fed research director now director of U.S. economic research at Bloomberg Economics and a senior fellow at the Peterson Institute for International Economics, expects Powell to maintain a razor-sharp focus on the inflation side of the Fed’s mandate like Paul Volcker, the towering Fed chief who tamed inflation in the 1980s. 

“Powell has every intention of going down in history, if necessary, as Paul Volcker version 2.0,” said Wilcox. 
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