The nationwide shortage of baby formula in the United States could last for some time, a top White House economic adviser cautioned on Friday.
The problem “is not going to solve itself in a day or week,” Brian Deese told CNN.
US families have grown increasingly desperate for formula amid a perfect storm of supply issues compounded by a massive recall.
While he would not offer a specific timeline, Deese said, “We are looking at every possible angle that we can to try to address this issue.”
The average out-of-stock rate for baby formula last week hit 43 percent, according to Datasembly, which collected information from more than 11,000 retailers.
The scarcity initially was caused by supply chain problems and labor shortages, but the problem has been worsening since February 17 when manufacturer Abbott announced a “voluntary recall” for formula made at its factory in Michigan after the death of two infants,.
That recall included Similac, a brand used by millions of American families.
A subsequent investigation cleared the formula, but production has yet to resume.
“We’ve got to see how this progresses in real time,” Deese said.
It is the latest crisis to confound President Joe Biden’s push to get the US economy on sound footing amid the highest inflation in four decades and the ongoing global supply chain bottlenecks.
The United States produces about 98 percent of the formula it consumes, and the Biden administration plans to increase imports of the powdered milk.
“The most important step that we can take right now is to give retailers more flexibility on the types of formula that they can sell, and consumers more flexibility for the types that they can buy,” Deese said.
Officials also are working with manufacturers and he noted that domestic output has been recovering.
Over the past month “there has been more production of formula than there was in the weeks preceding the recall,” Deese said.
Stocks bounce after Fed boss calms nerves over rates
The rebound on global stock markets extended further Friday on easing fears about the pace of interest rate rises in the United States that are aimed at bringing down the country’s highest inflation in decades.
Wall Street opened higher with the Dow up 0.8 percent.
European equities were up more than one percent in afternoon trading following solid gains in Asia.
Stocks have suffered sharp losses this week, particularly on Wall Street, as investors also sought safety amid the Ukraine war and China’s Covid lockdowns.
“Investors are continuing to wrestle with worries over inflation as the oil price climbs back up again and supply concerns resurface amid ongoing geopolitical tensions,” noted Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Stocks have tumbled for much of this week on fears the Federal Reserve was planning to lift US interest rates by 75 basis points at a single meeting.
However, equities on Friday staged “a relief rally” after Fed boss Jerome Powell calmed nerves over the potential hefty increase, said Jeffrey Halley, analyst at OANDA trading group.
“The rally today looks more like a technical rebound after a torrid week than a structural turn in sentiment,” he added.
Analysts have also pointed towards positive developments in China.
“Global sentiment seems to be getting some relief as China officials suggested that Covid-related lockdowns — which have been another source of uneasiness — may be set to ease,” analysts at Charles Schwab investment bank said.
Oil prices pushed higher Friday after much volatility, while the euro struck a new five-year low against the dollar.
Bitcoin held above $30,000, a day after the cryptocurrency slumped under $27,000, its lowest level since late 2020.
Its crash this week was fuelled by the collapse of two so-called “stablecoin” cryptocurrencies — TerraUSD and Tether — which proved to be anything but stable, leaving investors panicked.
On the corporate front, Twitter’s share price plunged after Elon Musk said he was putting a temporary halt on his much-anticipated deal to buy the social media giant.
It was down 10.7 percent at $40.27 after around 10 minutes of trading.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” he wrote on the platform.
Musk, the world’s richest man and founder of automaker Tesla, had made the eradication of spam accounts and bots one of the centrepieces of his proposed $44 billion takeover of Twitter.
– Key figures at around 1330 GMT –
London – FTSE 100: UP 1.8 percent at 7,362.78 points
Frankfurt – DAX: UP 1.3 percent at 13,922.93
Paris – CAC 40: UP 1.7 percent at 6,309.49
EURO STOXX 50: UP 1.5 percent at 3,668.92
New York – Dow: UP 0.8 percent at 31,975.41
Hong Kong – Hang Seng Index: UP 2.7 percent at 19,898.77 (close)
Shanghai – Composite: UP 0.9 percent at 3,084.28 (close)
Tokyo – Nikkei 225: UP 2.6 percent at 26,427.65 (close)
Brent North Sea crude: UP 2.7 percent at $110.31 per barrel
West Texas Intermediate: UP 3.0 percent at $109.26 per barrel
Euro/dollar: DOWN at $1.0376 from $1.0382 at 2100 GMT Thursday
Pound/dollar: DOWN at $1.2196 from $1.2199
Euro/pound: UP at 85.11 pence from 85.08 pence
Dollar/yen: DOWN at 129.01 yen from 129.97 yen
The gas ‘poker game’ between Russia and Europe
The drop in Russian gas flows to the European Union has had no major effect on supplies, but it raises pressure on the region to wean itself from Moscow’s energy.
Here is a look at the issue:
– Heavy dependence –
The EU relies heavily on Russian gas, raising concerns that Moscow could use its export to blackmail the 27-nation bloc.
Last year, the EU received around 155 billion cubic metres of Russian gas, accounting for 45 percent of its imports of the fossil fuel.
While the EU is discussing an embargo on Russian oil, a gas ban is less likely for now as some countries such as Germany, the EU’s economic engine, are heavily reliant on the energy source.
“Of course, the Europeans have been quite bad in this poker game — they showed too openly how scared they were to lose the Russian gas that now, Russia is gaining the upper hand,” said Ipek Ozkardeskaya, analyst at Swissquote Bank.
Ukraine has pleaded with the EU to ban Russian gas, pointing out that it gives Moscow the financial means to press on with its war against its neighbour.
In the first two months following the February 24 invasion, Russia has raked in 63 billion euros ($65.5 billion) in gas exports, including 44 billion euros from the EU, according to the Centre for Research on Energy and Clean Air.
– Low gas flows –
Russian gas flows via Ukraine fell this week.
Ukraine’s pipeline operator GTSOU said it halted gas transport at the Sokhranivka transit point from Wednesday as Russian occupying forces now in control were interfering with operations.
Ukraine urged Russian energy firm Gazprom to increase supplies via another site, Sudzha, but the company said it was impossible to reroute all the supplies through there.
“Roughly one third of Russia’s total Ukrainian transit flows through the Sokhranivka entry point, while the rest (two thirds) passes through the Sudzha station,” said Ole Hvalbye, commodities analyst at SEB bank.
The loss amounts to two percent of Europe’s Russian gas consumption, according to Hvalbye.
“This does not scream crisis, but it is a wake-up call for what is to come,” he said.
Gazprom also announced on Thursday that it would stop sending natural gas via the Polish section of the Yamal-Europe gas pipeline after Moscow imposed retaliatory sanctions against Western energy companies.
The pipeline can carry up to 33 billion cubic meters of gas from fields in Russia’s Yamal peninsula and western Siberia through Belarus and Poland to Germany.
But a market source said the impact is limited as the pipeline had already been carrying low volumes for months.
The move will make “no difference” as long as long-term contracts for Russian gas via other pipelines are fulfilled.
– Russian and Ukrainian intentions –
Some analysts suggest that Ukraine has deliberately disrupted Russian gas flows to Europe in frustration over the EU’s reluctance to impose an embargo on Russia’s energy exports.
Carsten Fritsch, analyst at Commerzbank, said it was “possible” that Ukraine, which relies heavily on Russian oil, is pressuring Hungary to drop its opposition to an EU crude embargo.
While the EU has balked at a gas ban, there are fears that Russia could turn off the taps in retaliation at Western sanctions over the war.
Kaushal Ramesh, senior analyst at the research firm Rystad Energy, said “supplies could be stopped unilaterally by Gazprom”.
“The chances of this happening are slim, but not zero,” Ramesh said.
EU buyers are “not caught completely off guard” as storage levels are currently sufficient to last through “most of 2022, even if Russian flows were to stop instantly”.
But, he added, “the outlook for winter 2022 supply is now a lot more pessimistic”.
– The alternatives –
The EU has set a goal of cutting Russian gas imports by two thirds this year.
Germany says it can make up for the recent drop in Russian deliveries by getting gas from Norway and the Netherlands to stock up before winter.
Europeans are also counting on liquefied natural gas (LNG), which can be shipped by boat from other countries such as Qatar and the United States.
Denmark is looking into possibly raising its own natural gas production in its North Sea fields, while Romania is eyeing legislation to encourage gas extraction in the Black Sea.
Experts say the situation is another argument in favour of speeding up the transition away from fossil fuels.
“The rollout of clean energy solutions alone can lead to a reduction of 101 bcm (101 billion cubic metres of gas), which is equivalent to two thirds of Russian imports, already by 2025,” according to the E3G climate think tank.
The European Biogas Association is also ready to step in, saying it could nearly double its production to 35 billion cubic meters by 2030, equivalent to 20 percent of Russian gas imports.
Lebanese activists launch mock ‘lollar’ currency
Lebanese activists Friday rolled out mock banknotes featuring paintings of a gutted central bank or the Beirut port explosion to denounce high-level corruption that has helped to wreck the country.
The collapse of the Lebanese pound and frozen bank accounts have left Lebanon with a confusing currency system, with a multitude of exchange rates applying to various situations in daily life.
The dollars stuck in accounts that citizens can only withdraw in Lebanese pounds at a fraction of their original value are known locally as “lollars”.
With parliamentary elections two days away, the Lebanese Transparency Association (LTA) decided to take the joke to the streets, with a stunt encouraging people to use “lollars” for the day.
The “monetary disobedience” campaign, entitled “Currency of Corruption”, encourages people to print their own “funny money” at home and try to use it as a means of raising awareness.
“We will not adapt to this mockery anymore, we are #NotPayingThePrice,” the LTA said in a statement unveiling the campaign and its hashtag.
The mock banknotes feature paintings by acclaimed Lebanon-based artist Tom Young depicting calamities that have hit Lebanon in recent years, from the deadly August 2020 port blast to forest fires, solid waste pollution and shortages.
On one of Beirut’s main squares Friday, organisers installed a fake ATM from which passers-by could withdraw “lollars”.
LTA communications officer Hazar Assi said the campaign was aimed at reminding voters that their current plight was to blame on the country’s corrupt hereditary leaders.
“When people vote, they should make a choice based on accountability and rejecting the corruption that is affecting all of our lives,” she said.
Lebanon’s traditional sectarian parties will seek extend their stranglehold on power in parliamentary elections on Sunday but a new generation of independent candidates are hoping for a breakthrough.
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