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Supply chain pressures driving inflation may have peaked, NY Fed index suggests



Container ships at anchor outside the Port of Los Angeles in Los Angeles, California, U.S., on Sunday, Nov. 21, 2021. Shipments to the Port of Los Angeles fell 8% year over year in October.

Tim Rue | Bloomberg | Getty Images

The global supply chain pressures blamed for disrupting the flow of goods and sparking high inflation may have finally peaked, according to a new gauge from the New York Federal Reserve.

The Fed’s new tool, which it unveiled in a blog post Tuesday, shows global supply chain pressures at dizzying levels. But it suggests those problems may have peaked in what could bring a welcome reprieve for a White House trying to quell fears about inflation levels not seen since Ronald Reagan was president.

The new metric, called the Global Supply Chain Pressure Index, documents disruptions to supply chains since 1997. The gauge has historically moved around its average.

The jump in supply-chain pressures seen during the pandemic blew away past increases in the index, including one in 2011 when a tsunami whacked Japan’s production and a flood in Thailand hamstrung the globe’s ability to produce cars and electronics, according to Fed researchers.

“The spikes in the GSCPI associated with the aforementioned events pale in comparison to what has been observed since the COVID-19 pandemic began,” the group wrote.

“The GSCPI jumps at the beginning of the pandemic period, when China imposed lockdown measures,” the researchers added. “The index then fell briefly as world production started to get back online around the summer of 2020, before rising at a dramatic pace during the winter of 2020 (with COVID resurgent) and the subsequent recovery period.”

The model shows global supply pressures are about 4.5 standard deviations above normal — an extreme level not seen at any point since 1997. But relief may be on the horizon.

The index’s latest findings suggest that supply-chain disruptions, while historically high, “have peaked and might start to moderate somewhat going forward,” wrote the New York Fed team, lead by economists Gianluca Benigno and Julian di Giovanni.

The projection is welcome news to the Biden administration, which for months has scrambled to pacify public angst over rising food and energy prices caused by supply-chain hiccups. Consumer inflation, which rose 6.8% in November, erodes the purchasing power of dollars as goods from milk to cars grow more expensive. November’s year-over-year inflation print was the hottest since 1982.

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Democrats argue that supply-chain issues will resolve as they enact their legislative agenda and workers return to their jobs. Republicans have seen success in blaming President Joe Biden and his colleagues for rising costs.

In a recent poll published by CNBC and Change Research, 60% of U.S. respondents said they disapprove of Biden’s handling of the economy, marking a six-point decline in approval from September. Some 72% disapprove of his handling of the price of everyday goods, while 66% disapprove of his efforts to help their wallets.

The novel gauge from the New York Fed combines several of Wall Street’s favorite supply-chain measures into one integrated tool.

The first set of indicators in the main gauge measure cross-border transportation costs. Those include the Baltic Dry Index, which tracks the cost of shipping raw materials, and the Harpex Index, which tracks container shipping rate changes. The New York Fed also added the Labor Department’s price indexes that measure the cost of air transportation of freight to and from the U.S.

Next, the economists added metrics that include country-level manufacturing data from Purchasing Managers’ Index surveys. The PMI surveys offer insight about the severity of delivery delays to manufacturers and the size of order backlogs in key economies including the U.S., euro zone and China.

The Fed then attempted to isolate the effect of supply-side hiccups on the PMI data by excluding changes in new orders, which are considered a gauge for demand. Since most economists blame supply for high inflation, the team tried to “purge” changes in demand from the model.

The New York Fed tested 27 total variables to estimate its GSCPI measure. The researchers said they will soon publish a blog post to show how shocks to the GSCPI affect producer and consumer price indexes such as the Labor Department’s CPI.

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Teladoc Tumbled 38% After Big First-Quarter Loss. Is It Just a Pandemic Play?



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After pandemic drop, Canada’s detention of immigrants rises again By Reuters



© Reuters. FILE PHOTO: Two closed Canadian border checkpoints are seen after it was announced that the border would close to “non-essential traffic” to combat the spread of novel coronavirus disease (COVID-19) at the U.S.-Canada border crossing at the Thousand Isla

By Anna Mehler Paperny

TORONTO (Reuters) – Canada is locking up more people in immigration detention without charge after the numbers fell during the pandemic, government data obtained by Reuters shows.

Authorities cite an overall rise in foreign travelers amid easing restrictions but lawyers say their detained clients came to Canada years ago.

Canada held 206 people in immigration detention as of March 1, 2022 – a 28% increase compared with March 1 of the previous year. Immigration detainees have not been charged with crimes in Canada and 68% of detainees as of March 1 were locked up because Canada Border Services Agency (CBSA) fears they are “unlikely to appear” at an immigration hearing, according to the data.

The rise puts Canada at odds with Amnesty International and other human rights groups that have urged Ottawa to end its use of indefinite immigration detention, noting CBSA has used factors such as a person’s mental illness as reason to detain them.

A CBSA spokesperson told Reuters that “when the number of entries (to Canada) goes up, an increase in detention is to be expected.” CBSA has said in the past it uses detention as a last resort.

A lawyer told Reuters her detained clients have been in Canada for years.

In the United Kingdom, too, immigration detention levels rose last year after dropping earlier in the pandemic, according to government statistics. Unlike Canada, the United States and Australia, European Union member states have limits on immigration detention and those limits cannot exceed six months.

The rise in detentions puts people at risk of contracting COVID-19 in harsh congregate settings, refugee lawyers say.

Julia Sande, Human Rights Law and Policy Campaigner with Amnesty, called the increase in detentions “disappointing but not surprising,” although she was reluctant to draw conclusions from limited data.

The number of immigration detainees in Canada dropped early in the pandemic, from a daily average of 301 in the fourth quarter (January through March) of 2019-20 to 126 in the first quarter (April through June) of 2020-21.


Detaining fewer people did not result in a significant increase in no-shows at immigration hearings – the most common reason for detention, according to Immigration and Refugee Board data.

The average number of no-shows as a percentage of admissibility hearings was about 5.5% in 2021, according to that data, compared to about 5.9% in 2019.

No-shows rose as high as 16% in October 2020, but a spokesperson for the Immigration and Refugee Board said this was due to people not receiving notifications when their hearings resumed after a pause in the pandemic.

Refugee lawyer Andrew Brouwer said the decline in detention earlier in the pandemic shows Canada does not need to lock up as many non-citizens.

“We didn’t see a bunch of no-shows. We didn’t see the sky fall … It for sure shows that the system can operate without throwing people in jail,” Brouwer said.

He added that detainees face harsh pandemic conditions in provincial jails – including extended lockdowns, sometimes with three people in a cell for 23 hours a day.

Refugee lawyer Swathi Sekhar said CBSA officials and the Immigration and Refugee Board members reviewing detentions took the risk of COVID-19 into account when deciding whether someone should be detained earlier in the pandemic but are doing so less now.

“Their position is that COVID is not a factor that should weigh in favor of release,” she said.

“We also see very, very perverse findings … [decision-makers] outright saying that individuals are going to be safer in jail.”

The Immigration and Refugee Board did not immediately respond to a Reuters request for comment.

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Nasdaq futures rise as market attempts comeback from April sell-off, Meta shares soar



Stock futures rose in overnight trading as the market shook off the April sell-off and investors reacted positively to earnings from Meta Platforms.

Futures on the Dow Jones Industrial Average added 70 points or 0.2%. S&P 500 futures gained 0.7% and Nasdaq 100 futures jumped 1.2%.

The moves came as shares of Meta surged more than 18% after hours following a beat on earnings but a miss on revenue, a sign that investors may see signs of relief in the beaten-up tech sector. Shares were down 48% on the year heading into the results.

Meanwhile, shares of Qualcomm gained 5.6% in extended trading on the back of strong earnings while PayPal rose 5% despite issuing weak guidance for the second quarter.

“I think a lot of people want to believe that earnings are going to pull us out of this, but earnings are not what got us into this,” SoFi’s Liz Young told CNBC’s “Closing Bell: Overtime” on Wednesday. “… But the reality is there are so many macro headwinds still in front of us in the next 60 days that the market is just hard to impress.”

The after-hour activity followed a volatile regular trading session that saw the Nasdaq Composite stoop to its lowest level in 2022, as stocks looked to bounce back from a tech-led April sell-off. The index is down more than 12% since the start of April.

In Wednesday’s regular trading, the tech-heavy Nasdaq ended at 12,488.93, after rising to 1.7% at session highs. The Dow Jones Industrial Average rose 61.75 points, or 0.2%, to 33,301.93 propped up by gains from Visa and Microsoft, while the S&P 500 added 0.2% to 4,183.96.

Investors await big tech earnings on Thursday from Apple, Amazon and Twitter, along with results from Robinhood. Jobless claims are also due out Thursday.

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