Markets Close Out Month of Losses with Modest Gains in Final Week

 Today marked the end of a wild month for stocks, and while major indices closed roughly flat from May 1 to My 31, this month saw wild fluctuations in stock prices and investors attempted to price in growing uncertainty as interest rates rise and threats of a recession loom.

The S&P 500 had sustained 7 consecutive weeks of losses prior to last week, the largest such streak since 2001. The Dow Jones Industrial Average (DJIA) suffered an eight-week losing streak, the longest since 1923. These losses came as the Federal Reserve has tightened monetary policy in an attempt to rein in inflation. Central banks, like the Fed, pursue tighter monetary policy by raising interest rates, which reduce available credit, reducing money supply and reducing the size of the overall economy. In theory, this reduces the rate of price increases and should bring inflation to a stable, low level.

However, with the markets used to the easy money policies since the 2008 financial crash, a tight monetary policy brings uncertainty. Strained supply chains, sticky labor costs, and concerns of the availability of fuel and food have investors concerned about a possible recession and economic turmoil.

While the Russian invasion of Ukraine aggravated much of this turmoil, especially related to food supply given both country’s critical role in supplying food to the world, supply chains have come under enormous strain following the lifting of the coronavirus restrictions, which had reduced supply but also reduced demand. The removal of restrictions helped boost demand, especially given the amount of stimulus provided by governments throughout the pandemic, but supply has not caught up with the demand, creating an inability to fulfill consumer desires.

 

Emmanuel Macron Wins Reelection as French President

 

Credit: Nathanael Mergui 

French President Emmanuel Macron won reelection as president of France this past week, defeating his right-wing Eurosceptic rival Marine Le Pen in a rematch of the 2017 election. Macron led Le Pen 59% to 41%.

Macron and Le Pen had finished first and second respectively in the first round of the presidential election earlier this month, defeating a wide array of other rivals. The third-place finisher, Jean-Luc Melanchon, did not endorse either candidate, but encouraged his voters not to vote for Le Pen.

While Macron’s victory will prevent any marked change in France’s involvement in the European Union, Le Pen’s performance marked a highest level of support for her right-wing to far-right party in French presidential elections.

 

 

White House Reportedly Weighing Student Loan Debt Relief

President Joe Biden is reportedly weighing forgiving up to $10,000 of federal student loans. This comes as he struggles to regain footing among younger voters. Biden has previously resisted pressure to eliminate debt even while he extended repayment relief multiple times during his term.

Activists and politicians who have been advocating loan forgiveness, such as Sen. Elizabeth Warren (D-MA), have pushed for Biden to forgive up to $50,000 in debt. The White House has so far ruled out that amount.

The administration is also considering limiting relief to borrowers below a certain income threshold.

 

Economy Contracts in Q1 as Fed Attempts to Rein in Inflation

The US economy contracted in the first quarter for the first time since the coronavirus pandemic began.

Gross Domestic Product (GDP) fell by 1.4% annualized in Q1, which fell far below the consensus view that the economy would actually grow around 1% at an annual rate for the quarter. The major driver of the decline was an increase in the trade deficit, with imports surging from Q4 2021, while exports dropped from the same period. Imports are subtracted in GDP calculations, while exports are added. Inventories also decreased in Q1 after a buildup of inventories in the previous quarter.

While an economic contraction is not an ideal scenario, a deeper look reveals some more encouraging metrics. Consumer spending rose in Q1, with private demand rising 3.7%. This occurred even in the midst of accelerating inflation brought on existing economic conditions as well as the economic turmoil caused by the Russian invasion of Ukraine and the resulting financial sanctions.

While the Federal Reserve is often reluctant to raise interest rates amid a slowing economy, the latest numbers are unlikely to halt the Fed from raising interest rates this year in an attempt to tamp down on rising prices. Financial markets have experienced volatility the past few weeks as they price in the expected increases, which, by raising the cost of borrowing money, will slow down the economy, in turn reducing price increases. Besides reducing inflation, the Fed will also attempt to avoid a recession, which is defined as two consecutive quarters of economic contraction, though given the rates of inflation seen over the past year, this will remain a difficult balancing act.

 

Ketanji Brown Jackson Heads Towards Likely Confirmation

The Senate Judiciary Committee completed the Supreme Court confirmation hearings for US Appeals Court Judge Ketanji Brown Jackson last week, with Jackson likely heading towards confirmation to become the first black woman on the Supreme Court given Sen. Joe Manchin’s (D-WV) announcement that he will support her nomination.

Jackson, who was nominated to succeed retiring Justice Stephen Breyer, was first installed on the US District Court for the District of Columbia in 2013 by President Obama and was elevated to the Appeals Court for the DC Circuit in 2021 by President Biden. Prior to her service on the federal bench, Jackson was vice chair of the US Sentencing Commission and had worked as a federal public defender.

Jackson’s ascension to the Supreme Court would likely not have a major effect on the ideological makeup of the court, as she, widely perceived as a liberal jurist, would be replacing Breyer, another liberal jurist. One possible shift, however, would be in the court’s approach to certain criminal justice issues. Breyer was often deferential to prosecutors and police, while Jackson’s record does not show such a deference.

 

Manchin Reportedly Working to Revive Spending Package

Sen. Joe Manchin (D-WV) has given signals that he may be willing to negotiate on a slimmed down version of the previous Build Back Better bill, which he effectively killed in December 2021 after he announced his opposition to it on Fox News Sunday. This bill would likely focus on controlling drug prices, energy policy, and tax increases.

Any legislation he puts forth will still need the support of the 49 other Democratic senators (barring any GOP defections), including fellow moderate Kyrsten Sinema from Arizona. Sinema has been in the past been hesitant to support some of the tax increases proposed last year.

Russia's War in Ukraine Continues

The Russian invasion of Ukraine has completed its first month, and while President Vladimir Putin’s forces have failed to take Ukraine’s capital Kyiv or its second largest city Kharkiv, Russian forces have taken large areas of Ukraine's southeast. Russia so far has captured few large cities and has encountered fierce resistance throughout the country.

Meanwhile, sanctions from Western countries continue to affect Russia’s economy, preventing it from easily selling its exports, including oil and food.

The current state of the war is much different from the consensus just before the war started, that the Russian military would be able to relatively quickly topple the Ukrainian government and control large swaths of territory. Any hope for a Ukrainian victory would likely lie in a long-term insurgency similar to Afghanistan in the aftermath of the Soviet invasion in the 1980s. Rather, the strong Ukrainian resistance has kept the government in power and prevented the seizure of many large cities, even though Russia has managed to control territory along the border and in the east and south of the country.

Putin’s actions in Ukraine have been characterized as war crimes given his military’s targeting of civilian neighborhoods. Russia’s attacks on civilian neighborhoods represent a dark turn in the conflict as following their failure to occupy most of Ukraine's major cities.

Russia last week announced they will shift focus to the eastern front, where Russia has been helping separatists since 2014 fight to remove Ukrainian control. Western nations have responded incredulously to the statement, skeptical of whether Russia will actually shift focus or will try a new offensive to capture Kyiv and other major cities.

 

Biden Struggles to Gain Political Footing Ahead of Midterms

President Joe Biden’s approval continues to lag as several domestic and foreign policy challenges cast a shadow over his presidency.

While coronavirus cases have been dropping nationwide, inflation remains a top issue among voters ahead of the midterm elections that will determine control of Congress. Biden’s approval rating stands at 40.7%, according to the 538 polling aggregate, around the same level as former President Donald Trump’s average rating when he was president.

The recent Russian invasion of Ukraine also poses a challenge for the administration. Biden faces pressure from both those arguing for a more interventionist stance as well as those arguing for a more hands-off approach.

A possible positive development for the president is his nomination of Ketanji Brown Jackson to fill the vacancy on the Supreme Court caused by the retirement of Stephen Breyer. While Jackson’s ascension of the court will not cause any substantial change in the ideological makeup of the court, Democrats hope the first black woman on the Supreme Court will excite their base.

 

Russian Invasion of Ukraine Continues as Western Countries Respond with Sanctions, Aid

Russian President Vladimir Putin began his country’s large-scale invasion of Ukraine last week, capping months of speculation over whether Russia would invade Ukraine, and if so, to what extent. The invasion is a large-scale manuever, with Russian troops advancing into Ukraine along its borders with Russia and Belarus, a key Russian ally.

The first days of the invasion have seen Russia take over sections of the country, though Russia has failed to establish air superiority over the country’s air space even after strikes aimed to take out Ukraine's air defenses on the first day. No major cities have been taken yet, though both sides have engaged in heavy fighting in the capital and largest city Kiev as well as Ukraine’s second largest city Kharkiv. Both cities are close to the borders of Belarus and Russia respectively and are vulnerable to Russian attacks. 

Ukrainian President Volodomyr Zelensky has vowed to remain in Kiev while fighting for control of the capital continues. He has posted videos on social media in attempts to boost morale at home as well as garner support from international audiences.

Meanwhile, Russian President Vladimir Putin has encouraged Ukrainian soldiers to stage a coup against the Zelensky government, calling them ‘drug addicts’ and ‘neo-Nazis,’ and claimed that reaching a peace between Russia and a replacement government will be easier. Such a peace would likely entail Russian suzerainty over Ukraine and the possible cession of lands in the eastern part of Ukraine.

While the consensus has been that Ukraine will eventually fall to Russia should Russia use the full force of its conventional forces to take over the country, some observers have remarked positively on the strength of the Ukrainian resistance to the invasion, which has prevented the capture of any major cities thus far and prevented the capture of a critical airfield near Kiev.

Western countries have been providing Ukraine with military aid and intelligence both prior to and during the Russian invasion. The US and European Union have announced additional sanctions against Russia, as well as removing certain Russian banks from the SWIFT financial system, which allows international financial transactions to occur.

Russian Troops Loom on Ukrainian Border as Invasion Threat Continues

As thousands of Russian troops remain stationed threateningly close to Ukraine’s border, Western countries have tried to convince Russia to back off its threats of moving troops into the country. Russian President Vladimir Putin has counteroffered that NATO refuse any new members, a non-starter for the alliance.

NATO leaders are making trips to Kiev, Ukraine’s capital, including the prime ministers of the UK, the Netherlands, and Poland. Turkish President Recep Tayyip Erdogan, who himself has clashed with many Western leaders during his time in power, will also visit Kiev.

Germany, the largest economy in NATO after the US, has so far been tepid in its support of Ukraine, refraining from sending weapons while other NATO countries have done so. Germany is currently working with Russia to complete the Nord Stream 2 pipeline to transport natural gas from Russia to Germany. Some in the US government have threatened sanctions over the pipeline, though such sanctions have been opposed, most notably by President Joe Biden, over concerns such measures could weaken the relationship between the US and Germany.

Russia currently is supporting an armed rebellion in eastern Ukraine, where ethnic Russian separatists are trying to break away from the government in Kiev. Russia also controls the Crimean Peninsula, considered by most countries as still part of Ukraine.

Russia fears Ukraine falling further into the West’s orbit as popular opinion in Ukraine has turned strongly against Russia since the 2014 revolution which toppled pro-Russian president Viktor Yanukovich and prompted Russia to take over Crimea.

 

Nor'easter Dumps Massive Amounts of Snow over the Weekend

Cities across the Northeast are cleaning up after a strong nor’easter tore through the region this weekend, dumping massive amounts of snow and bringing freezing temperatures.

Boston experienced 23.6 inches of snow in one day, tying a record set in 2003.

Authorities had urged residents to stay off the roads and away from any downed powerlines.

 

President Biden’s Approval Rating Suffers Amid Challenges

President Joe Biden had a politically rough first month of 2022, with his polling numbers falling to the lowest point of his year-old presidency.

According to the 538 polling aggregate, Biden has 41.6% approval rating among registered and likely voters, with 53.3% disapproving. Most polls show strong majorities disapproving of the president’s handling of the economy, foreign policy, and immigration. His approval of handling of the coronavirus pandemic, once a strong point, has suffered, with one recent poll finding a slight net approval, 50-49%.

His party is also facing challenges ahead of the midterm elections. Currently, Republicans lead Democrats by 4.1 points in the congressional generic ballot RealClearPolitics polling aggregate.

While President Biden has time before November to recover his standing, he will need to overcome several challenges to make it happen. Inflation, which rose to the highest level in four decades, continues to cause economic hardship for millions of Americans. The threat of a Russian invasion in Ukraine will also test the president’s diplomatic and foreign policy skills in the coming months.

 

Iconic Actress Betty White Dies at 99

Betty White, who set the record for the longest television career in history, spanning eight decades, died Friday at the age of 99.

White, born on January 17, 1922, in Oak Park, Illinois, a suburb of Chicago. Her first media appearance was a guest call to a radio show in 1930. She began modeling and acting after graduating high school, but she put her career on hold to serve in the American Women’s Voluntary Services during World War II.

After the war, she began appearing on television, where she would be a regular fixture for decades. Notably, in 1954, when The Betty White Show received criticism for the inclusion of black tap dance performer Arthur Duncan, White defended his appearance on the show and even expanded his role.

White was the last surviving main cast member of two notable shows, The Mary Tyler Moore Show and The Golden Girls. She was also the oldest main cast member of both shows, with all her younger castmates predeceasing her.

White would have celebrated her 100th birthday on January 17. A cinema event celebrating her birthday and documenting her career had been planned to mark the occasion; the filmmaker who created the documentary confirmed that it will still be shown in theaters on the 17th.

 

Notable People We Lost this Month

Former Senate Majority Leader Harry Reid

Sen. Harry Reid of Nevada was a force in American politics for decades, serving as Democratic Senate leader from 2005 to 2015, eight of those years as Senate Majority Leader. While he faced criticism for his tactics and rhetoric during his tenure, Reid was successful in pushing through the Senate much of President Obama’s agenda in 2009 and 2010, including his health care package and the Dodd-Frank financial regulatory legislation.

NFL Coach and Commentator John Madden

John Madden was known for his near decade-long tenure as head coach of the Oakland Raiders and leading the team to victory in Superbowl XI. He later became a NFL commentator, and he was commemorated with popular NFL Madden video game series.

Grichka Bogdanoff

Grichka, along with his twin brother Igor, were known for their appearances in French science television shows in the 1970s and 1980s. The brothers courted controversy when they published scientific papers in peer-reviewed journals which critics say were non-sensical and had no scientific value, known as the Bogdanoff Affair.

The Bogdanoff brothers are often featured in internet memes, usually relating to cryptocurrency, in which they are portrayed as omnipotent market manipulators who pump and dump financial assets, often to comedic effect.

 

Soviet Union's End: Thirty Years Later

On December 25, 1991, Mikhail Gorbahev resigned as general secretary of the Communist Party. For Western countries, this occurred on Christmas day, though it was a much more typical day in the largely Orthodox Soviet Union, as Orthodox Christians observe Christmas in January. 

In Gorbachev's speech, he said, "I hereby discontinue my activities at the post of President of the USSR", and declared an end to the Cold War, which had subsumed geopolitics for over over four decades. His powers were then transferred to Russian president, Boris Yelstin. 

After his speech, the Soviet flag was lowered over the Kremlin, and the Russian flag was raised. The next day, upper chamber of the Soviet legislature formally voted to end the Soviet Union. 

Watch Gorbahev's speech translated to English here:

Pearl Harbor 80 Years Later

Today marks the 80th anniversary of the attack on Pearl Harbor on December 7, 1941, which led to United States' entry into World War II.

Several survivors of the attack, many of whom are 100 or over, visited the site today to observe the memorials for those lost on that day.

Bob Dole, Former Republican Presidential Candidate and Elder Statesman, Dies at 98

Bob Dole, the former US senator from Kansas who was the Republican presidential candidate in the 1996 election, died Sunday at 98. Dole had been battling lung cancer, and was taking immunotherapy to treat the disease.

Dole was born on July 22, 1923 in Russell, Kansas. He enrolled in the University of Kansas, where he played several sports including basketball and track, but left in 1942 to fight in World War II, where he became an officer in the US Army. He was severely injured in combat in Italy, and while he never regained use of his right arm, he managed to recover the use most of the rest of his body.

Dole was elected to the Kansas House of Representatives in 1950, and two years later became the county attorney of Russell County, a position in which he served for 8 years. He ran for the US House of Representatives in 1960 for Kansas's 6th Congressional District, and after he was elected, he served in the chamber for 8 years. During that time, he supported several notable civil rights bills, including the Civil Rights Act of 1964 and the Voting Rights Act of 1965.

Dole ran for and won a seat in the US Senate in 1968, and he served in the chamber until 1996. Dole became Senate Majority Leader in 1985, became Senate Minority Leader two years later when the GOP lost the chamber in the 1986 elections, and regained the Majority Leader post when Republican recaptured Congress in 1994. He also served as chairman of the Republican National Committee (RNC) from 1971 to 1973. 

Dole was selected as Gerald Ford's running mate in the 1976 presidential election, replacing Nelson Rockefeller, who was seen as too moderate for many in the party. His addition to Ford's ticket was an attempt to keep conservative delegates from supporting Ronald Reagan's presidential candidacy at the 1976 convention, the last contested presidential election to date. While the Ford-Dole ticket emerged victorious at the convention, it ultimately lost to the Carter-Mondale ticket that year.

During his time in Congress, he created relationships and friendships across the aisle that helped achieve the passage of several pieces of legislation, including the American with Disabilities Act and legislation dealing with social security and food assistance.

Dole ran for president in 1980 and 1988, losing in the primaries to Ronald Reagan and George H.W. Bush respectively. The third time proved the charm in 1996, when he won the Republican primary and faced off against incumbent Democratic President Bill Clinton. He resigned from the Senate to focus on his campaign, which ended unsuccessfully that November when Clinton managed to win another term. Republicans did manage to keep both chambers of Congress that year.

Dole became an elder statesman in the Republican Party in his post-elected career. He also appeared in several television advertisements, including for Pepsi and Viagra (he was open about his struggles with erectile disfunction and aimed to remove the stigma of the condition).

Dole notably was the only former Republican presidential nominee to support Donald Trump after he won the Republican primary in the 2016 election. Dole reiterated his support for Trump in the 2020 election and defended him from what he saw as unfair treatment of Trump from the Commission on Presidential Debates during the debates with eventual election winner Joe Biden. 

While Dole referred to himself as a "Trumper" following the 2020 election and expressed his disappointment in Trump's loss, he also said he was "Trumped out" and criticized Trump's claims of election fraud, saying that there was no evidence for it.

Dole had spoken well of Biden following his election victory, calling him "a great, kind, upstanding, decent person," though he was critical of what he perceived as Biden leaning too far left and the cancellation of the Keystone XL pipeline.

Other than his political statements, Dole managed to keep an active life until the end, even in face of his cancer diagnosis, visiting the Dole Institute frequently at the University of Kansas and even visiting all of Kansas's 105 counties.

Speaker Nancy Pelosi called for the flags at the Capitol to be set to half-mast in honor of Dole. Other politicians from across the aisle have also issued statements of remembrance following the announcement of his death, highlighting his commitment to work across the aisle and his bravery in his military service.