The Washington Post - USA (2022-03-02)

A24 EZ RE THE WASHINGTON POST.WEDNESDAY, MARCH 2 , 2022

Economy & Business

FINANCE

U.S. bank profits rose

in 2021, FDIC says

U.S. banks saw their profits
jump nearly 90 percent in 2021
as firms shrank how much
money they were setting aside to
protect against credit losses, the
Federal Deposit Insurance
Corporation said Tuesday.
Banks reported $279.1 billion
in profits in 2021, up $132 billion
compared with 2020, the FDIC
said. The jump was mainly
caused by economic growth and
banks rapidly shrinking their
credit loss provision expenses,
which dropped $163.3 billion in
2021, it added.
The rapid reduction in credit
losses came after banks moved
to build up huge cushions in the
early stages of the coronavirus
pandemic. But with feared losses
not materializing — the FDIC

reported noncurrent loan balances were down 3 percent in the fourth quarter — banks moved to shrink those reserves in 2021 and deploy the funds elsewhere. The FDIC reported that banks reduced their credit loss provisions across all four quarters of 2021. However, the pace of that change was slowing in the fourth quarter as banks had largely dispensed with their pandemic-boosted cushions. In the fourth quarter of 2021, banks reported $63.9 billion in profits, up 7.4 percent from the same quarter in 2020, the FDIC said. However, profits were down slightly from the third quarter, falling 8.1 percent as banks slowed down their aggressive reductions in loss provisions. A majority of banks reported an annual increase in profits, the FDIC said. Net interest and

noninterest income were both up from the third quarter to the fourth. — Reuters

RETAIL

Cartier sues Tiffany over trade secrets

Cartier sued Tiffany & Co. on Monday, accusing its luxury rival of stealing trade secrets concerning its high-end jewelry from an employee it lured away in December, in a sign competition in the fast-growing jewelry category is heating up. According to a complaint filed in a New York state court in Manhattan, Tiffany & Co. hired an underqualified junior manager away to learn more about Cartier’s “High Jewelry” collection, where pieces typically cost $50,000 to $10 million. Cartier, a unit of Switzerland’s

Richemont, called Tiffany’s hiring of Megan Marino a desperate bid to revive its own high jewelry unit after it was left in “disarray” following several departures, reflecting Tiffany’s “disturbing culture of misappropriating competitive information.” According to court papers, Tiffany & Co. appeared to pin ultimate blame on Marino by firing her after just five weeks. In an affidavit accompanying the complaint, Marino said Tiffany & Co. was “more interested in hiring me as a source of information than as a High Jewelry manager.” Cartier also accused Tiffany & Co., owned by luxury goods group LVMH, of letting a recently hired former Cartier executive work on a high jewelry project called the “Blue Book” despite her six-month noncompete agreement.

Contacted by Reuters, Tiffany & Co. said in a statement: “We deny the baseless allegations and will vigorously defend ourselves.” The lawsuit seeks an injunction requiring that Tiffany & Co. return and not use stolen trade secrets, plus unspecified damages. — Reuters

ALSO IN BUSINESS Target pushed through head winds — from inflation to congested ports — to deliver solid results for the three-month period that included the crucial holiday shopping season. Fourth-quarter profit rose nearly 12 percent, sales increased 9.4 percent and the Minneapolis retailer on Tuesday released an upbeat revenue outlook for 2022. Retailers are facing rising costs for labor, shipping and more, as supply chain backups hit

companies worldwide. Target, because of its size, was able to charter vessels and fill its shelves ahead of the holiday shipping crunch.

U.S. manufacturing activity picked up more than expected in February as coronavirus infections subsided, though hiring at factories slowed, contributing to keeping supply chains snarled and prices for inputs high. The Institute for Supply Management (ISM) said the outlook for manufacturing over the next two months was favorable, noting that backlog orders last month grew by the most in 11 years. Factories also reported strong order growth. The ISM’s index of national factory activity increased to a reading of 58.6 last month from 57.6 in January, which was the lowest since November 2020. — From news services

DIGEST

BY TAYLOR TELFORD AND AARON GREGG

Volatility raged on Wall Street Tuesday, with the Dow dropping 1.77 percent as investors moni- tored the cascading effects of sweeping government sanctions and Russia’s growing aggression toward Ukraine. A round of talks between dele- gations from Russia and Ukraine at the border of Belarus failed to deliver tangible progress Monday, the lack of resolution injecting further volatility into global markets that have already been alarmed over the conflict. On Tuesday, Russian forces threatened Ukraine’s capital, Kyiv, with a 40-mile convoy of tanks, troops and artillery, while bombardment continued in Kharkiv, its second- largest city. After staging a fragile come- back to start the week, the Dow Jones closed down 598 points, or nearly 1.8 percent. The broader S&P 500 index slid 1.5 percent, while the tech-heavy Nasdaq edged 1.6 percent lower. All three indexes are down 8 percent or more year to date. Cboe’s volatility index, known as Wall Street’s “fear gauge,” was up nearly 14 percent on Tuesday, signaling that March will likely see a continuation of the wild swings that have dominated 2022 trading so far. European indexes also closed in negative territory, with Russia- exposed indexes suffering steep losses: Germany’s DAX and France’s CAC40 both closed down nearly 4 percent, while the benchmark Stoxx 600 index gave up about 2.4 percent. Although markets normally look past geopolitical tensions, Russia’s mounting aggression toward Ukraine and the ava- lanche of financial consequences Russia is now facing have been in key focus for investors. Stocks have been moving in lockstep with headlines because of Russia’s role as a major global oil pro- ducer: Disruptions to energy markets and other commodities will exacerbate inflation that is already at a four-decade high. Lauren Goodwin, an economist at New York Life Investments, said that stocks could recover if evi- dence emerges that points to a “contained conflict and lighter sanctions,” but warned that they will face more volatility in “mo- ments of escalation.” In comments emailed Tuesday to The Washing- ton Post, Goodwin called the invasion “one of the most meaningful geopolitical events in decades.” “It is also taking place alongside a global transition from a two-year pandemic, and in a time of unprecedented monetary policy unwind,” Goodwin noted. “Both of these realities are clear drivers of the economy and markets ahead.” Paradoxically, the inflationary fears have also driven some feeble rallies as investors hope that “current global events will cause the Fed to pull back on its recent hawkish shift, driving increasing cash flows back into stocks,” Ivan Feinseth, chief investment officer at Tigress Financial Partners, said Tuesday in comments emailed to The Post. Oil prices surged past multi- year highs Tuesday as investors anticipated disruptions to energy markets, which could quickly rip- ple through the global economy. Brent crude, the international oil benchmark, gained 0.6 percent to

trade around $105.82 per barrel. West Texas Intermediate, the U.S. oil benchmark, rose 8.8 percent, to trade around $104.50 per barrel. On Tuesday, the International Energy Agency announced the co- ordinated release of 60 million barrels of oil reserves in an effort to relieve some pressure. The tensions sent investors flocking toward safer assets. Gold, a Russian export and safe haven in times of turmoil, climbed 2.2 percent to trade around $1,946.20 per troy ounce. Government bonds, another safe haven, saw major activity, with the yield on the 10- year U.S. Treasury note careening as low as 1.728 percent. Bond yields move inversely to prices. On Monday, the U.S. government and its European allies in- troduced sweeping penalties that banned all people in the United States and the European Union from trading with Russia’s central bank. The sanctions also apply to Russia’s Finance Ministry and its sovereign wealth fund. In recent days, officials had also moved to bar several major Russian banks from SWIFT (a global monetary transfer service), crack down on Russian oligarchs and prevent Russia’s central bank from bailing out the domestic economy. Meanwhile, Russia’s struggling economy came under further pressure from corporate action, with shipping giant Maersk freez- ing bookings of cargo in and out of the country and Visa and Master- card blocking its financial institu- tions. Russians can now only ac- cess the ailing ruble, which Rus- sia’s central bank tried to prop up by raising its key interest rate to 20 percent. So far, government sanctions have not targeted Russia’s energy sector in a meaningful way. Al- though Ukraine has requested that the European Union impose an embargo on Russian oil and gas imports, that is unlikely to hap- pen, according to Pavel Molcha- nov, an energy analyst with Ray- mond James. Giants such as Shell, BP and General Motors have announced plans to suspend or end their deal- ings with Russia in wake of the sanctions. These divestment ges- tures are largely symbolic, “simply changing shareholder A to shareholder B,” Molchanov told The Post in an email. But when a major bank or insurance company refus- es to provide actual services, that has a “tangible effect” on the business of Russian energy companies being targeted, he said. Russian markets were closed for the second straight day Tues- day as Russia tried to keep money from flooding out of its economy, which was already showing signs of severe distress before the new measures were implemented. Last week, Moscow’s MOEX index endured one of the steepest equity crashes in its stock market history. Russian President Vladimir Pu- tin has promised a tough response to sanctions, which he called “ille- gitimate.” Putin put Russia’s nu- clear force on higher alert, a move quickly condemned by the United States and NATO. U.S. businesses have been warned to prepare for possible cyberattacks, and Presi- dent Biden has acknowledged the crisis could lead to higher gasoline prices but said that limiting pain Americans feel at the pump is “critical.” The national average cost for a gallon of gas in the U.S. was $3.61 on Tuesday according to AAA, up about 25 cents from a month ago.

Dow slides 5 98 points

amid political tensions

BY CHRISTIAN DAVENPORT

When he returns to Earth on
March 30 aboard a Russian space-
craft alongside two Russian cos-
monauts, NASA astronaut Mark
Vande Hei will have spent more
time in space on a single mission
than any other American, a total of
355 consecutive days. That’s more
than Christina Koch’s 328-day
mission, and more than Scott Kel-
ly’s 340 days.
Inside the space agency, it is
being celebrated as another mile-
stone for one of NASA’s most suc-
cessful programs, the Internation-
al Space Station, which for more
than two decades has been a sym-
bol of exploration and interna-
tional collaboration.
But now, as Russia continues its
bloody invasion of Ukraine, the
partnership has come under more
strain than it has endured in years,
and it is unclear how the countries
will continue to work together in
space, as tensions between the
Cold War adversaries mount on
the ground.
Last week, after President
Biden said that the sanctions
against Russia would “degrade” its
space program, Dmitry Rogozin,
the head of Roscosmos, the Rus-
sian space agency, fired off tweets
asking if the United States wanted
to ruin the cooperation between
the countries in running the space
station. He reminded Biden that
Russia is responsible for firing the
thrusters that keep the station in
the correct orbit, and threatened
that without Russia, the station
could come crashing down.
NASA’s response has been far
less incendiary. It said it is con-
tinuing its normal spaceflight op-
erations in partnership with Ros-
cosmos “for ongoing safe opera-
tions.” It said that “no changes are
planned to the agency’s support
for ongoing in orbit and ground

station operations.” In a call with reporters Monday, Kathy Lueders, NASA’s associate administrator for space operations, said: “We are not getting any indications at a working level that our counterparts are not commit- ted to ongoing operation on the International Space Station. We as a team are operating just like we were operating three weeks ago.” She said NASA and its Russian counterparts “are still talking together. We're still doing training together. We're still working together. Obviously, we understand the global situation and where it is, but as a joint team, these teams are operating together.” She added that, “obviously we need to continue to monitor the situation.... We’ve operated in these kinds of situations before and both sides always operated very professionally and understand the importance of this fan- tastic mission and continuing to have peaceful relations between the two countries in space.” NASA continues to work to fly Russian cosmonauts on American spacecraft, and American astronauts fly on the Russia Soyuz spacecraft, like the one that is expected to bring Vande Hei home in a few weeks, the NASA spokes- person said. The spacecraft is expected to land in Kazakhstan on the morn- ing of March 30, and if NASA is conducting normal operations, as expected, it would have a team in place, including a flight doctor, ready to whisk Vande Hei home. Typically, NASA tries to return its astronauts to Houston as quickly as possible and has a helicopter ready near the landing site to take the astronaut to a nearby airport, from which the NASA team flies back to the United States on a NASA jet. During his time on the station,

Vande Hei, a retired Army colonel and an Iraq War veteran, has said he was “proud to be part of this team,” and helped support his Russian colleagues during a spacewalk. For years, Americans and Rus- sians have worked side by side in space and on the ground. After the space shuttle was retired in 2011, NASA was dependent on Russia to fly its astronauts to and from the station. That dependence bound the space agencies even more closely together. While in Kazakhstan, “we effec- tively operate as one team,” Kenny Todd, NASA’s former deputy space station program manager, said during a NASA podcast in 2020. “Whether it’s European astronauts, or NASA astronauts or Rus- sian cosmonauts... e verybody is acting as one. And again, it’s a wonderful partnership, and you really get to see it play out when you’re out in the field like that.” But more recently, the geopolitical strains between the countries have begun to fray the relation- ship. In 2019, then NASA Adminis- trator Jim Bridenstine was forced to rescind an invitation that he had offered Rogozin to visit the United States after some key sena- tors blasted the move. Rogozin had been placed on a sanctions list in 2014 by the Obama administration in response to Russia’s mili- tary actions in Ukraine when he was deputy prime minister. After the sanctions were put in place, Rogozin said Russia should stop flying NASA’s astronauts and that the United States should instead use “a trampoline” to get to space. While Rogozin is known for his bluster, “that was significant,” said Leroy Chiao, a former NASA astronaut who flew on the Soyuz. “It was the first time somebody in the space agency made some kind of

reference to threatening the partnership.” Still, he said that “cooler heads have got to prevail. It would be bad for Russia, too, to lose or compro- mise the ISS in any way.” Scott Pace, the director of the Space Policy Institute at George Washington University, who served as the executive secretary of the National Space Council in the Trump administration, told The Washington Post late last year that the partnership was delicate. The station “might be a high- water mark for U.S.-Russia relations. But it’s not invulnerable.... If we were to start over today, we would not have the Russians as partners on the station. That was done in another, more hopeful, era.” Bill Nelson, the current NASA administrator, has tried to keep an open dialogue with Rogozin and Roscosmos. But he strongly condemned Russia after it blew up a dead satellite last year, scattering hundreds of pieces of debris in orbit that threatened the space station. He called it “reckless and dangerous,” and said he was “out- raged by this irresponsible and destabilizing action.” Still, the Biden administration recently announced that despite the tensions with Russia, it wanted to keep its partnership going and extend the station’s life span from 2024 to 2030. “As more and more nations are active in space, it’s more impor- tant than ever that the United States continues to lead the world in growing international alliances and modeling rules and norms for the peaceful and responsible use of space,” Nelson said at the time. After the ISS, however, NASA isn’t looking to partner with Rus- sia. Instead, it is working with private-sector companies to de- velop commercial space stations.

NASA, Russia continue work in space

Ukraine invasion puts partnership under strain ahead of U.S. astronaut’s return from mission

YURI KOCHETKOV/AGENCE FRANCE-PRESSE/GETTY IMAGES

Dmitry Rogozin, the head of the Russian space agency Roscosmos, last week wrote a string of tweets a sking if the United States w anted to
ruin the cooperation between the countries in running the International Space Station. Rogozin was put on a U.S. sanctions list in 2014.

○

DOW 33,294.95 DOWN 597.65, 1.8% ○

NASDAQ 13,532.46 DOWN 218.94, 1.6% ○

S&P 500 4,306.26 DOWN 67.68, 1.6% ○

GOLD $1,943.80 UP $43.10, 2.3% ○

CRUDE OIL $103.41 UP $7.69, 8.0% ○

10-YEAR TREASURY YIELD 1.71% DOWN 6.37%

CURRENCIES $1=114.86 Y EN, 0.90 EUROS

The Washington Post - USA (2022-03-02)

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