US consider COVID restrictions for China / Inflation hit middle-income households hardest / Exxon sues EU over windfall tax

Plus: the Ukrainian foreign minister said that his government wants a peace summit with Russia within two months.

Inside.com Part of   Network December 28, 2022

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New studies by the non-partisan Congressional Budget Office (CBO) found that the last year of high inflation has disproportionately harmed middle-income households. The data shows that purchasing power from paychecks fell by 2.9% YoY for middle-income households in 2022. More: Low-income households have primarily benefited from low unemployment rates and high nominal wage growth, with the purchasing power from paychecks for the 20% of lowest-earning households rising by 1.5% from 2021 to 2022. High-income households saw their purchasing power grow by 1.1% from 2021 to 2022. Between 2020 and 2022, middle-income households saw inflation top 15%, compared to 14% and lower for the highest- and lowest-earning households. Zoom Out: The U.S. consumer-price index (CPI) fell to 7.1% in November after peaking at 9% in June.

U.S.-based oil giant Exxon Mobil filed a lawsuit against the European Union in an effort to block its new windfall tax on energy firm profits. Exxon is arguing that the tax is "counter-productive" and that it will discourage energy investment in Europe. More: Exxon said it had invested $3B+ in European refinery projects over the past decade. The oil company argues that these refineries have played a crucial role in European energy processing since Europe was been cut off from Russian energy exports. Exxon CFO Kathryn Mikells said that the tax would cost Europe an estimated $2B in investment over the next year.  Chevron has also said that the tax would discourage investment in Europe, leading to a reduced oil supply.  Zoom Out: Exxon CEO Darren Woods said earlier this month that the world would be dealing with liquefied natural gas (LNG) shortages through 2026.

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Ukrainian Foreign Minister Dmytro Kuleba told The Associated Press that his government wants a United Nations-mediated peace summit with Russia within two months. Kuleba insisted, however, that Russia face a war-crimes tribunal before any direct peace talks between Kyiv and Moscow can begin. More: The United Nations said that U.N. Secretary-General António Guterres "can only mediate if all parties want to mediate." Kuleba said that the U.S. government promised to ensure that the Patriot missile battery - which was provided to Ukraine as part of a $1.8B aid package - will be operational in Ukraine within six months. The training for the missile defense system typically takes a year. Kremlin spokesman Dmitry Peskov replied to Kuleba's proposal by saying that Russia will not follow conditions set by other nations. Zoom Out: During last month's G20 summit in Bali, Ukrainian President Volodymyr Zelensky proposed a 10-part peace plan.

GOOD NEWS: A Brazilian fisherman survived at sea for two days by hanging on to a signal buoy. 43-year-old David Soares said that he fell off of his fishing boat and swam for four hours before he found the buoy. After a failed effort at climbing back on his boat, he allowed the current to carry him so that he could save energy. When he found and scaled the buoy, he was concerned about dying of the cold. A fellow fisherman found him and recorded a video of Soares smiling and joking as they returned to shore.

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The age of negative-yielding government bonds appears to be at an end, with the total amount of outstanding negative-yielding debt falling from $18.4T in 2020 to just $254B today. The global campaign by central banks to fight high inflation with interest rate hikes has pushed bond yields up during the past year. More: Last week, the Bank of Japan indicated that it would allow the yield on 10-year Japanese bonds to rise above 0.25%. Shorter-term Japanese notes have seen their yields push into positive territory in recent weeks. Only Japanese bonds with a duration of one year or less offer a negative yield. The Bank of Japan has kept its benchmark interest rate in negative territory since 2016.  The European Central Bank's target interest rate rose from -0.5% in January 2022 to 2% today.

The U.S. is considering instituting new travel restrictions for people traveling from China due to concerns about a major wave of COVID infections in China. U.S. officials said that "the lack of transparent data" on the COVID surge in China was informing the potential restrictions. More:  U.S. officials went on to say that the lack of transparent data is making it "increasingly difficult for public health officials to ensure that they will be able to identify any potential new variants and take prompt measures to reduce the spread." Officials pointed out that the World Health Organization (WHO) has also expressed concern about the ongoing COVID surge in China. Japan recently announced that it would require negative COVID test results from travelers starting on December 30. Taiwan will also require tests beginning on January 1, 2023.

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Route de Sainte-Anne et le Faron by Felix Vallotton. 1925 ART OF THE DAY

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Daniel Smith is an Inside Analyst who currently resides in Miami, Florida. A native of Brooklyn, New York, Daniel spent the last four years as a PhD candidate in Politics and International Studies at Cambridge University in the United Kingdom. He is fascinated by tech, business, politics, venture capital, and everything in between. When he’s not writing for Inside he can be found kicking a ball on the nearest rugby pitch. Follow him on Twitter @DanSmithInside. Editor Jigney Pathak is a Business Researcher at Inside who loves technology, finance & sports. He has a Bachelor of Business Administration with a finance specialization & has previously worked at Salesforce.

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