🐌 The dreaded S-word

When you blink and gas is $5... Your move, J-Pow. Two months ago, the Fed thought conditions were ripe for hiking interest rates to fight inflation: Covid in retreat, a strong labor market, and a rebounding economy. Then Russia invaded Ukraine.

• Surge: Sanctions against Russia have sent the prices of commodities like oil and wheat soaring.
• Change of plans: Last week, the Fed hiked rates by a quarter point, half of what some expected pre-war.
• Soft landing: The Fed’s still worried about inflation and signaled six more hikes this year. But it’s also worried rapid hikes could slow growth.

A ’70s economic monster could return… its name: stagflation (aka inflation + stagnant growth). Typically, inflation and recessions don’t happen simultaneously. But when they do, profits can shrink, assets like stocks can tumble, and workers can lose jobs. When stagflation last reared its head in the 1970s after an oil shock, economists weren’t sure what to do and markets slumped for a decade. Former Fed Chair Paul Volcker intervened by raising rates to historic levels, which led to a painful recession.

• Echoes: The war keeps pushing oil higher, and since it still fuels the world, that could contribute to a recession.
• Outlook: Goldman Sachs estimates that the odds of a US recession are as high as 35%, and it’s already cut its growth forecast for this year.
• Pocketbooks: Higher rates = higher borrowing costs for consumers. E.g.: the rate on a 30-year mortgage just ticked above 4% for the first time since 2019.
• Limits: While rate hikes can curb inflation, they can’t fix geopolitical jolts.

Late fees... After a slew of Western sanctions, Russia’s hurtling toward default as it struggles to pay off foreign debts in USD. Moscow said it paid $117M due in interest last week, avoiding its first default since 1998. But it’s unclear whether Russia will make its $2B payment in April. Experts say a default likely won’t drag down global markets as it did in ’98, since banks have reduced Russian exposure. Still, Russia’s central bank says sanctions will cripple the country’s economy. Russian-linked entities owe international banks $121B.

The golden honor… This could be the year Netflix breaks its Oscar curse. The streamer’s favored to nab its first best-picture trophy on Sunday for “The Power of the Dog.” A win for the Flix would be a milestone for the Oscars, which have been slow to recognize streamer-made films in top categories. Another scoreboard to watch: ratings. Last year’s Oscars drew 10.4M viewers — 60% fewer than a year earlier (and 80% fewer from 1998’s high). ABC paid $1B in 2016 for rights to the Oscars, which now get a quarter of the viewers of NFL playoff games.

Checking the “LOL” tab... while waiting for BuzzFeed’s first earnings. The 16-year-old digi-media pioneer has evolved from a cat-meme extraordinaire to a Pulitzer winner. But its shares have plunged by half since its December SPAC IPO, as investors doubt the profitability of virality. The company did report a 51% jump in annual revenue ahead of its listing. BuzzFeed is still reliant on third-party sites like Twitter and YouTube for more than two thirds of its audience. We'll see if that dependence has eased when BuzzFeed reports Tuesday.

China’s shutdown... means your iPhone might be delayed. A week ago China locked down Shenzhen. The city is home to Tencent and ships 90% of China’s exports from Apple supplier Foxconn and others, and the shutdown’s weighing on an already strained global supply chain. US-listed Chinese stocks then took their worst tumble since 2008 as investors worried about China’s “zero Covid” strategy and Beijing’s Moscow ties. We’ll see whether Chinese businesses took a hit when US-listed Tencent Music, PetroChina, China Life Insurance, Nio, and China Petroleum report this week.

• Gap: Women earn 82 cents on the dollar compared to men. Now, in a push for transparency, states from Colorado to Connecticut are passing laws that make employers include pay ranges in job postings.
• Sun: Hold your clocks: The Senate unanimously passed a bill to make daylight-saving time permanent. While the vast majority of Americans want a single time system, there’s still disagreement over which one.
• House: 1900s “company towns” are having a comeback. Resorts like Vail, where rents spiked 20% during the pandemic, are building housing for workers to make living more affordable in WFH hotspots.

• Build: Building credit is key to everything from getting a car loan to a mortgage, but using credit can be daunting. Watch a money mentor share tips on how to use credit to help reach financial goals.
• Sip: Oatly has milked the alternative-drink trend, tasting a $10B IPO last May. But the dairy-free darling’s manufacturing has been over budget and under producing, costing the company key customers like Starbucks.
• Protect: California is creating the country’s’ first “privacy police,” an agency tasked with controlling how titans like Google, Meta, and Amazon use data. Their tools: a $10M budget and a strict privacy law.

• Monday: Earnings expected from Nike and Tencent Music
• Tuesday: Earnings expected from Adobe, Poshmark, and BuzzFeed
• Wednesday: Earnings expected from Cintas, General Mills, Trip.com, KB Home, Jefferies Financial, HB Fuller, and Winnebago
• Thursday: Weekly jobless claims. March Madness: Sweet 16 round begins. Earnings expected from PetroChina, China Life Insurance, Nio, Darden Restaurants, Mister Car Wash, and Movado
• Friday: Earnings expected from China Petroleum
• The weekend: The Oscars air Sunday

Authors of this Snacks own shares of Amazon, Netflix, Spotify, Google, Starbucks, and Apple

ID: 2088127