Category: Breaking News

Oil Prices Drop For 2nd Straight Day As IEA Set To Release Oil From Its Reserve

Crude oil prices dropped on Friday, extending their slide from the previous session, as the International Energy Agency (IEA) said its members have agreed to release oil from strategic reserve to stabilize global energy markets.

“Details of the new emergency stock release will be made public early next week,” the IEA said, a day after the United States pledged its biggest oil release ever.

West Texas Intermediate Crude oil futures for May ended down by $1.01 or about 1% at $99.27 a barrel. WTI crude futures shed nearly 13% in the week, posting the biggest weekly loss in two years.

Brent crude futures settled lower by $0.32 or about 0.3% at $104.39 a barrel today, recovering from a low of $102.37. Brent crude futures too dropped about 13% in the week.

On Thursday, U.S. President Joe Biden authorized the release of 1 million barrels of oil per day from the nation’s Strategic Petroleum Reserve, for the next six months.

The White House made the announcement about the historic release from SPR, aiming to combat the spike in oil prices sparked by Russia’s invasion of Ukraine.

“The scale of this release is unprecedented: the world has never had a release of oil reserves at this 1 million per day rate for this length of time,” the White House said. “This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up.”

A report released by Baker Hughes this afternoon said U.S. energy firms added oil and natural gas rigs for a second week in a row. The rig count rose by three to 673 this week, the highest level since March 2020.

The total rig count increased by 243 or 57% over this time last year, the report said.

Oil rigs increased by two to 533 this week, while gas rigs rose one to 138.

Median home prices hit record $405K in US: report

Housing prices in the U.S. hit a record high in March.

The median home price in the country was $405,000, according to Realtor.com’s latest Monthly Housing Trends Report, which the company published on Thursday, March 31.

Data from the report shows the record-breaking median listing price is up 13.5% from March 2021. Compared to March 2020 – the start of the COVID-19 pandemic – the current March 2022’s median listing price is up 26.5%.

Despite the record price tag, the experts at Realtor.com believe the housing market is set to “moderate” in the near future.

The median home price in the U.S. in March 2022 was $405,000, according to Realtor.com. (iStock)

“Buyer demand is moderating in the face of high costs, and we’re beginning to see more homeowners take price cuts on their listings and overall inventory declines lessen in response,” said Realtor.com’s Chief Economist Danielle Hale, in a statement.

“Assuming all these factors and new construction hold steady, we could begin to see inventory increases this summer – welcome news for buyers who have endured pandemic home shopping and can continue their journey despite higher buying costs,” Hale continued. “For buyers currently in the market, there’s good reason to aim to find a home before interest rates increase further. But if it takes longer than a few months, don’t give up hope, as there may be more to choose from in the summer months.”

While the national listing price median for March was $405,000, home prices varied significantly in the 50 U.S. metro areas Realtor.com evaluated, which it selected based on size.

California was home to three of the priciest housing metros in the country in March 2022, according to Realtor.com’s Monthly Housing Trends Report. (iStock)

Not so surprisingly, California was home to some of the most costly home price medians in the country.

The Golden State’s San Jose-Sunnyvale-Santa Clara had a home sale median that nearly reached $1.4 million while San Francisco-Oakland-Hayward had a home sale median the $1.04 million. San Diego-Carlsbad came in third place with a home sale median of $884,000.

Outside California, Boston-Cambridge-Newton, Mass.-N.H.and Seattle-Tacoma-Bellevue, Wash. tied with a median of $755,000.

The four U.S. metros that had the lowest median home sale prices on Realtor.com’s list were Buffalo-Cheektowaga-Niagara Falls, N.Y. ($225,000), Pittsburgh, Pa. ($223,000), Rochester, N.Y. ($220,000) and Cleveland-Elyria, Ohio ($199,000).

Cleveland-Elyria, Ohio was the U.S. metro on Realtor.com’s list that had the lowest median home sale price in March 2022, which was $199,000. (iStock)

Last year, mortgage-finance company Freddie Mac estimated that the U.S. had a shortage

US economy sees solid job growth in March as payrolls jump by 431,000

U.S. job growth continued at a brisk clip in March, suggesting the labor market is still strong as it confronts the highest inflation in four decades, global supply chain constraints and new headwinds from the Russian war in Ukraine. 

The Labor Department said in its monthly payroll report released Friday that payrolls in March rose by 431,000, missing the 480,000 jobs forecast by Refinitiv economists. The unemployment rate, which is calculated based on a separate survey, fell to 3.6%, the lowest level since February 2020. 

Job gains were broad-based, with the biggest increases in leisure and hospitality (112,000), professional and business services (102,000) and retail (49,000).

“Although today’s job report was a little softer than expected, it still paints a picture of a steaming labor market,” said Seema Shah, chief strategist at Principal Global Investors. “In fact, the final vestiges of COVID-19 are close to being fully eradicated from the economic data.”

Businesses are eager to onboard new employees and are raising wages in order to attract workers as they confront a labor shortage. There are roughly 11.3 million open jobs – the third-highest on record – while the pace of layoffs has moderated in recent months. 

Friday’s payroll report also painted a brighter employment picture in the first two months of the year, with upward revisions to the jobs figure in January (504,000, up from the initially reported 481,000) and February (750,000, up from the initially reported 678,000). There are still about 1.6 million more out-of-work Americans than there were in February 2020, before the pandemic shut down broad swaths of the economy. 

Why the global supply chain mess is getting so much worse

Problems with global supply chains were supposed to be getting better by now. Instead, experts say they are getting worse.Russia’s invasion of Ukraine, which cut off exports from Ukraine and put Russian businesses under sanction, has set off a series of new supply-chain bottlenecks. So has a surge in Covid cases in China, which has led to temporary lockdowns in parts of the country.No one was predicting that the supply chain would return to normal by this point. Even before these latest crises, shortages of some parts and raw materials had been expected to continue into 2023. But companies had been confident that there was finally a light at the end of the tunnel. In early February, three weeks before Russia invaded Ukraine, GM forecast that it would be able to build 25% to 30% more cars this year than last year.

“[We’re] definitely seeing improvement in first quarter over fourth quarter. We saw fourth quarter better than third quarter. And we really see with the plans we have in place now, by the time we get to third and fourth quarter, we’re going to be really starting to see the semiconductor constraints diminish,” GM CEO Mary Barra told investors when discussing fourth quarter results and 2022 outlook.

But GM just announced a two-week shutdown starting next week at its plant in Fort Wayne, Indiana, that builds Chevrolet Silverado and GMC Sierra pickup trucks, because of the lack of computer chips.

Ukraine and Russia don’t produce computer chips used by global automakers. But Ukraine is the world’s leading source of neon, a gas needed for the lasers used in the chip-making process. While some chipmakers have stockpiled neon ahead of the fighting, there are concerns about the long-term availability of the gas.

Russia-Ukraine crisis replaces Covid as top risk to global supply chains, Moody’s says“People expected the semiconductor shortage to continue. But nobody predicted Ukraine,” said Bernard Swiecki, director of research at the Center for Automotive Research, a Michigan think tank.Supply chain disruption is a major factor driving prices higher around the globe, as demand for goods such as cars, oil and computer chips have outpaced supplies. And predicting when those disruptions will end is nearly impossible due to the uncertain nature of the war in Ukraine. The longer it goes on, the more problems it’s likely to cause.”We were looking at 2023 for things to get back to normal before the [Ukraine] crisis,” said Joe Terino, who leads management consultant Bain & Co.’s global supply chain practice. “Now it’s hard to say when it might end, because we don’t know how long it will go, how far reaching it could become.”Problems keep piling on top of another. Global supply chains may be disrupted for quite some time.”We lived under the assumption that products, resources can move freely across geography,” said Hernan Saenz, who leads the global performance Improvement practice at Bain. “When that’s no longer true, it has massive implications. You can adapt in the long term but short-term, recovery is very painful.”Problems in the supply chain caused by fire, bad weather or other natural disasters are the norm for those who manage supply chains said Kristin Dziczek, policy advisor at Fed Reserve of Chicago. The difference is that those problems generally affected one city or region, not the entire globe as the pandemic did.”Supply chain managers were miracle workers and we never noticed this because these things happen all the time and they are able to adjust,” she said. “But it’s never happened like this before.”

And the widespread nature of the disruptions clogged the system. The old expression about a chain only being as strong as its weakest link is an apt one for supply chains she said, since the problems with current supply chains have demonstrated a number of weak links that existed.” Chains are an apt metaphor and always have been,” she said

Scotiabank increases size of share buyback to 36 million from 24 million

The Bank of Nova Scotia is increasing the size of its share buyback plan.

The bank says it now plans to buy back and cancel up to 36 million of its common shares compared with its initial plan for up to 24 million that it announced late last year.

Bank of Nova Scotia says the new amount represents about 3 per cent of its issued and outstanding common shares as of Nov. 22, 2021.

The effective date of the change is Wednesday.

To date, the bank says it has bought back 20.2 million of its common shares for cancellation since the start of its current normal course issuer bid, which ends Dec. 1.

By buying back its shares, the bank spreads its profits over fewer shares, increasing its earnings per share, a key ratio used to evaluate a company.

Dollarama set to hike prices up to $5, raise dividend as profits continue to grow

Inflation is coming to the dollar store.

Discount retailer Dollarama Inc.DOL-T +3.04%increase announced on Wednesday that price tags up to $5 will begin appearing on its store shelves in the coming year. Until now, Dollarama’s highest price point was $4.

The decision is yet one more signal that prices are rising across the board: The Montreal-based company has consistently said that it would only pass on elevated costs to shoppers if competitors do so first. Retailers are facing higher costs for everything from transportation, to wages, to packaging and the raw materials such as plastic that go into making products.

“We’ve seen huge pressure on all retailers to increase their prices and mitigate some of the pressures that are coming from all the multiple points and inputs that create the final retail [price],” Dollarama president and chief executive officer Neil Rossy said on a conference call Wednesday to discuss the company’s fourth-quarter results.

Even with the increasing costs, Dollarama has continued to grow its profits, as sales have increased and costs related to COVID-19 have come down. The company reported that its net earnings jumped to nearly $220-million, or 74 cents per share in the fourth quarter, compared to $173.9-million or 56 cents per share in the same period last year.

At times of high inflation, shoppers typically become more price-sensitive, which can benefit discount stores. Grocery giant Loblaw Cos. Ltd. for example, recently noted that traffic to its No Frills stores has been rising. Dollarama is focused on maintaining “relative value” compared to other stores, even as its prices rise, Mr. Rossy said.

It has been more than six years since Dollarama introduced the $4 price point at its stores, and the company has been absorbing any rising costs since then, he said. Adding new price points will allow the company to offset higher costs, and will also mean new products will be offered at Dollarama stores that otherwise would be out of the price range.

On Wednesday, the company announced a 10-per-cent increase to its quarterly dividend, to 5.5 cents per common share.

Dollarama has been opening new stores, which helped push its sales to $1.2-billion in the 13 weeks ended Jan. 30, up 11 per cent compared to the same period in the prior year. Comparable sales – an important metric that tracks sales growth not related to new store openings – also grew, by 5.7 per cent in the quarter.

The sales bump was partly due to easing restrictions related to COVID-19: in the same period the prior year, a temporary ban on the sale of non-essential items in Quebec affected roughly 30 per cent of Dollarama’s stores. While fourth-quarter sales this year were impacted by the Omicron variant of the virus – which changed people’s shopping patterns and led to some provincial restrictions in December and January – Dollarama was able to sell its full product assortment, and reported strong sales for its seasonal products and for household items. As restrictions have eased, the retailer has seen shoppers generally stocking up less on each trip, but visiting more frequently.

The company now has 1,421 stores across Canada, and plans to open 60 to 70 new locations in the coming year. Dollarama is forecasting comparable sales growth in the 4 to 5 per cent range. But the company also expects that it will be more impacted by supply chain and other inflationary pressures, including rising costs for shipping.

“The real challenge for everybody who imports a large quantity of goods, across the entire retail platform, is a logistics challenge – for the last six months to a year and will continue for the foreseeable future,” Mr. Rossy said. “… Those goods are en route, and we have enough goods that it’s a non-issue. But certainly it is more of a challenge than it’s ever been.”

The company’s warehouse space provides a buffer that has allowed it to handle supply chain delays better than many other companies, Mr. Rossy said. To support its store growth, the company is currently building a new 500,000-square-foot warehouse in Laval, Que., its seventh warehouse in Canada.

“There is something to be said, at times, for not-just-in-time delivery,” Mr. Rossy said.

For the full fiscal year ended Jan. 30, Dollarama reported net earnings of $663.2-million or $2.19 per share, compared to $564.3-million or $1.82 per share in the prior year. Sales for the full year grew by 7.6 per cent to $4.3-billion.

China’s rich are moving their money to Singapore. Beijing’s crackdown is one of the reasons

More and more wealthy Chinese are worried about keeping their money on the mainland and some see Singapore as a safe haven.

Since protests disrupted Hong Kong’s economy in 2019, affluent Chinese have looked for alternative places to store their wealth. Singapore proved attractive because of its large Mandarin Chinese-speaking community and, unlike many countries, it doesn’t have a wealth tax. 

The trend appeared to pick up last year after Beijing’s sudden crackdown on the education industry and emphasis on “common prosperity” — moderate wealth for all, rather than just a few. 

That’s according to CNBC’s interviews with firms in Singapore that are helping wealthy Chinese move their assets to the city-state via the family office structure.

A family office is a privately held company that handles investment and wealth management for an affluent family. In Singapore, setting up a family office typically requires at least $5 million in assets.

Over the last 12 months, inquiries about setting up a family office in Singapore have doubled at Jenga, a five-year-old accounting and corporate services firm, according to its founder Iris Xu. She said the majority of inquiries come from people in China or emigrants from the country. [Wealthy Chinese] believe there are plenty of opportunities to make a fortune in China, but they are not sure whether it is safe for them to park money there.Iris XuFOUNDER OF JENGA

About 50 of her clients have opened family offices in Singapore — each with at least $10 million in assets, Xu said. 

China’s rapid economic growth has minted hundreds of billionaires in just a few decades. Many more joined their ranks their last year, according to Forbes.

That brought the total number of billionaires in China to 626, second only to the United States’ 724 billionaires, the data showed.

Xu said her Chinese clients “believe there are plenty of opportunities to make a fortune in China, but they are not sure whether it is safe for them to park money there,” according to a CNBC translation of the interview in Mandarin. 

‘Common prosperity’ worries

New family office-related work is coming disproportionately from Chinese clients, said Ryan Lin, a director at Bayfront Law in Singapore. His firm also has clients from India, Indonesia and parts of Europe.

Mainland China’s tight capital controls — an official limit of $50,000 in overseas foreign exchange a year — limit those billionaires’ ability to move money out of the country, Lin said.

That cap is set by the State Administration of Foreign Exchange, which did not immediately respond to a CNBC request for comment.

Although those capital controls mean many Chinese clients are opening family offices with smaller amounts of capital, Lin said most own revenue-generating business outside the mainland. 

https://www.cnbc.com/2022/03/30/chinas-wealthy-moving-money-to-singapore-amid-common-prosperity-push.html

Recession warning from Germany’s top economic advisors as Putin’s gas deadline nears

Germany’s heavy reliance on Russian energy could tip its economy into recession, an independent economic think tank warned on Wednesday.

There are rapidly rising concerns over what Russia’s unprovoked invasion of Ukraine will mean for European economies. The war has contributed to higher energy prices, it’s pushing up food prices too and there are additional expenses to deal with a massive influx of Ukrainians fleeing the war.

There is also the ongoing threat that Moscow might choose to cut its supplies of natural gas into the bloc — which could mean the collapse for many businesses.

“The high dependence on Russian energy supplies entails a considerable risk of lower economic output and even a recession with significantly higher inflation rates,” the German Council of Economic Experts, which advises the government in Berlin, said in a report Wednesday.

Germany’s Chancellor Olaf Scholz expressed a similar concern last week when addressing the country’s Parliament, saying that imposing an immediate ban on Russia energy imports “would mean plunging our country and the whole of Europe into a recession.”

His comments highlighted the dependence of Germany, and other EU nations, on Russia for energy supplies.

In 2020, for example, Germany imported almost 59% of its natural gas from Russia, according to data from Europe’s statistics office. Other EU nations registered even higher dependencies with the Czech Republic importing 86% of Russian gas, and Latvia and Hungary importing more than 100% — meaning they were buying more than their domestic needs.Germany should immediately do everything possible to take precautions against a suspension of Russian energy supplies.German Council of Economic Experts

Earlier on Wednesday, Germany’s Economy Minister Robert Habeck triggered a first warning, out of three possible levels, on gas stockpiles. He urged businesses and households to reduce their energy consumption, saying “every kilowatt hour counts,” according to Reuters.

Energy dependency has become even more concerning for Europe after Russia’s President Vladimir Putin said last week that “unfriendly” nations would have to pay for natural gas in rubles. This plan would prop up the Russian currency, which has plummeted in the wake of the invasion of Ukraine. Putin has previously set a March 31 deadline for the ruble payments.

However, western nations, including Germany, have said this would be a breach of contract and urged businesses to keep paying in euros or U.S. dollars. The division increases the chances of a disruption in energy flows.

“Germany should immediately do everything possible to take precautions against a suspension of Russian energy supplies and quickly end its dependence on Russian energy sources,” the German Council of Economic Experts also said on Wednesday.

The academic institution projected a gross domestic product rate of 1.8% this year and 3.6% in 2023 for Germany — provided that there is no suspension of energy deliveries.

In terms of inflation, its estimates point to a rate of 6.1% this year and 3.4% in 2023 for Europe’s largest economy.

Speaking Wednesday, European Central Bank President Christine Lagarde said that the war in Ukraine “poses significant risks to growth” and added that European households “are becoming more pessimistic and could cut back on spending.”

Russia will ‘always’ be a part of OPEC+, UAE energy minister says

The United Arab Emirates’ energy and infrastructure minister has insisted that Russia will always be a part of OPEC+ even as governments across the globe shun the oil exporter over its war in Ukraine.

Speaking to CNBC on Monday, Suhail Al Mazrouei, a former president of the oil alliance, said no other country could match Russia’s energy output and argued politics should not distract from the group’s efforts to manage energy markets.

“Always, Russia is going to be part of that group and we need to respect them,” he told Hadley Gamble at the Atlantic Council’s sixth annual Global Energy Forum in Dubai.

“OPEC+, when they speak to us, they need to speak to us including Russia,” he said, referring to the group’s negotiations with energy importers.

The U.S., Europe and Japan have called on oil-producing nations to do more to tackle record-high prices amid the war in Ukraine and ongoing supply shortages.

But, Al Mazrouei said Russian oil would play a vital role in achieving that. The comments come as Western allies express concern that Russian energy imports are indirectly topping up President Vladimir Putin’s war chest with oil and gas revenue.

“Who can replace Russia today? I cannot think of a country that can in a year, two, three, four or even 10 years replace 10 million barrels. It’s not realistic,” he said.

OPEC+, led by Saudi Arabia and Russia, has the capacity to increase oil output and bring down crude prices, which have jumped to over $100 a barrel.They are doing something but expecting the opposite reaction, and it’s not going to happen.Suhail Al MazroueiUAE MINISTER OF ENERGY AND INFRASTRUCTURE

“We are in agreement with their target or their objective of trying to calm the market and balance the market,” Al Mazrouei said. “But you don’t do it this way. You don’t do it by putting sanctions on a hydrocarbon that you cannot replace — unless you want the prices to go high.”

“They are doing something but expecting the opposite reaction, and it’s not going to happen.”

OPEC and non-OPEC ministers are slated to meet on Thursday via videoconference to determine the next phase of production policy.

It comes amid renewed pressure for the influential alliance to boost oil supplies after G-7 energy ministers said OPEC “has a key role to play” in easing market tensions.

“We call on oil and gas producing countries to act in a responsible manner and to examine their ability to increase deliveries to international markets particularly where production is not meeting full capacity noting that OPEC has a key role to play,” G-7 energy ministers said in a joint statement on March 10.

“This will help to ease tensions and note with appreciation announcements already made to this end.”WATCH NOWVIDEO02:51Russia’s war with Ukraine was a shock to the market, UAE energy minister says

The G-7 group of major economies is comprised of the U.K., U.S., Canada, Japan, Germany, France and Italy.

OPEC+ is in the process of unwinding record supply cuts of roughly 10 million barrels per day. The historic production cut was put in place in April 2020 to help the energy market recover after the coronavirus pandemic cratered demand for crude.

Most recently, the group’s been raising output by 400,000 barrels per day each month. The energy alliance has stayed the course despite sustained pressure from top consumers to pump more to cool prices and aid the economic recovery.

OPEC alone accounts for around 40% of the world’s oil supply.