On the Russian front, the US government is attempting to design economic sanctions that will have a potentially dramatic impact on Russia, including sanctions on the largest banks and financial institutions. Obviously, that strategy is not without risk, both political and economic, and it would potentially injure Russia but also other nations, as well. Russia may well cut-off gas supplies to Europe, discussed earlier, and Russia could also retaliate by not only cutting off natural gas shipments, but also mounting cyber-attacks against American and European infrastructure. This in many senses is not different than developing a military strategy that also has potential negative consequences for all of the participants. This is a difficult position to be in, and one that has to be thought through carefully and planned for, so that the US and Europe has some capacity to have counter measures in place to reduce the impact of Russia’s potential nonmilitary responses.
We have another conservative Republican, this time from the State of Wisconsin who emphatically declared that Joe Biden won Wisconsin and that there was no evidence that wide spread voting fraud occurred in 2020, and urged that the “charade” needs to be rapped up sooner rather than later. As I have commented over the last several weeks, there are at least some brave Republicans who are out there taking an appropriate institutional position while preserving their conservative credentials. Her name is Kathy Bernier, a state Senator in Wisconsin.
Forbes reports that our top trading partners are now primarily from Asia with Canada, Mexico and China in an essential tie for first place at 14% each, followed then by Japan at 4.6% and Germany at 4.4%. It is very important that we keep the USMCA strong in order to compete with and combat the EU and the Asia trade pact countries, this is essential to our long-term economic health.
As the Russia, US, Europe, Ukraine standoff continues the number of issues and options becomes both broader and narrower in terms of what our collective response must me. One of the biggest issues that must be dealt with of course is supplying energy to Europe which Russia has the ability to substantially interrupt and likely with the stance taken by Europe and individual members of the EU could certainly create a crisis in terms of people getting access to fuel and obviously a very negative economic impact. The US continues its attempt to try to create a lifeline that we are patching together from all parts of the world in an attempt to avoid a crisis. It is obviously something of a logistical nightmare as many of the producers have long-term contracts in place and we are now in the middle of one of the highest use periods that occur annually in Europe. We will continue to follow this but if the Russians do invade, obviously there will be any number of adverse consequences that could affect us all.
The Wall Street Journal report this week that our national debt reached 30 trillion. The interesting aspect of the story from my perspective was a chart in the article that showed the increase in the debt from 21 trillion to 30 trillion from the period prior to 2018 through the beginning of 2022. It stood at approximately slightly less than 28 trillion when Mr. Biden took office and increased approximately 2 trillion. This means that during a portion of the Trump presidency it grew by approximately 7.5 trillion. The wild claims that this is a Biden debt is just that – widely inaccurate.
The US labor market continued its consistent activity as the Labor Department reported that there were 10.9 million job openings in December, up from 10.8 million. The number of times workers quit fell to 4.3% from 4.5%, hiring slowed to 6.3 million from 6.6 million, and private sector data for January showed that employers were pulling back on the demand for workers. 4.3 million workers changed jobs. This is a very difficult job market to read, but one simply has to stay on top of these issues in order to have any hope of understanding where we are going.
Unemployment insurance claims dropped to 238,000 from 261,000 in the last week of January, down from earlier in January of 290,000. This is a good trend in terms of declining unemployment claims; the number of open jobs has remained pretty consistent which is a bit of a troublesome scenario and it is not clear that the statistics we are receiving are telling the full story.
Europe Central Bank is deciding whether or not to raise interest rates, but are likely to do so again and this will be the first time since 2004 that there have been consecutive increases. Inflation in Europe is running at about 5.1%, in Great Britain 5.4%, and in the United States 7%. These numbers are fairly close statistically and evidence of a worldwide inflationary trend.
Recently META lost 223 billion in value, or 26%. That information leaves out an important relative comparison and that is that this stock is still worth close to 700 billion. Even though Zuckerberg’s wealth dropped, even if it went down 25%, he is still a very wealthy man and most likely this stock will bounce back.
Treasury rates for 2-year notes increased rapidly due to the jobs data, inflation, and the Treasury indications of rate hikes.
I don’t often comment on policing issues, because of the complex nature of the work however, the action of the police in Minneapolis entering under a no-knock warrant and shooting a man holding a licensed pistol because they panicked is very troubling. There is no indication that they asked him to drop the weapon, or took other actions to de-escalate the situation. Very troubling.
Bill Owens is a former member of Congress representing the New York 21st, a partner in Stafford, Owens, Piller, Murnane, Kelleher and Trombley in Plattsburgh, NY and a Strategic Advisor at Dentons to Washington, DC.
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