The Weekly Scan March 14, 2022

Welcome to the Weekly Scan. Here’s what we’re following for the week of March 14, 2022.

No end in sight. Inflation continued to climb in February 2022, according to the latest data from the Bureau of Labor Statistics. The inflation rate, which is measured by the Consumer Price Index (CPI), was 7.9% for the year ending February 2022, the largest spike since 1982. Almost every category of consumer prices moved up from January to February 2022. Grocery prices surged 1.4%, the biggest one-month increase since 1990, except for during 2020, due to the pandemic. Fruit and vegetable costs jumped 2.3%, the highest since 2010. Gas prices went up 6.6% month-over-month, and 38% year-over-year. Housing prices increased 4.1% year-over-year. 

• The takeaway:  Price increases, strong consumer spending, pay raises, and supply chain issues have reportedly all contributed to inflation. But for most Americans, the inflation rate is outpacing pay bumps, making it hard to afford necessities, like groceries and gas. And experts say that last month’s numbers indicate that the U.S. hasn’t yet reached peak inflation. The most recent statistic also doesn’t include the increase in prices, specifically those of oil and gas, caused by Russia’s invasion of Ukraine. The Federal Reserve (the Fed) is hoping to stem inflation with its upcoming interest rate hike, but it could also make matters worse if it moves too quickly. 

US News

Oil and water. President Biden has banned imports of oil, gas, and coal from Russia as Russia continues to invade Ukraine. The decision last week came after a bipartisan group of U.S. Senators introduced legislation to fast track the banning of those imports. The House of Representatives and the Senate, meanwhile, passed a federal spending bill that included nearly $14 billion in aid for Ukraine last week. The United Kingdom also said it would phase out Russian oil imports by the end of the year. And the European Union pledged to reduce its reliance on Russian oil over the next few years. 

• The takeaway: Biden warned that the U.S. will likely see gas prices increase further due to the ban. The price of gas already reached $4.173 per gallon as a national average, which is roughly $.72 higher than it was a month earlier. The U.S. imports a relatively small percentage of its oil from Russia—7%—, while other countries, such as Italy, import a much greater portion of their oil from Russia. The U.S. could reportedly seek to cover the gap in Russian oil supply by working with Saudi Arabia, after pulling away from the country’s leader, the Crown Prince Mohammed bin Salman, a year ago. 

Reuters, New York Times

Elon wants his phone back. Tesla CEO Elon Musk asked a federal judge to throw out a previous settlement he reached with the Securities and Exchange Commission (SEC)  in 2018 over allegations of fraud. The SEC’s original complaint against Musk involved tweets suggesting he would take Tesla private at $420 per share, a large premium to its trading price at the time. As part of the settlement, Musk agreed to pay a $40 million fine, stepped down as Tesla chairman, and put in place a procedure to control his external communications. The settlement requires Musk to submit some of his tweets to the SEC for approval before sending them. Musk’s team has said that the policy is no longer sustainable, and that the SEC has overreached by asking for “round after round of demands for voluminous, costly document productions, with no signs of abatement.” 

• The takeaway: Musk’s choice to resurrect his old battles with the SEC comes after a recent SEC investigation into how Musk and his brother, Kimbal Musk, have traded their Tesla shares. In November 2021, Musk tweeted a poll to his followers asking them whether or not he should sell 10% of his holdings in Tesla. The following day he sold $5 billion worth of his stock in the company. The day before he tweeted the poll, Kimbal Musk sold $108 million worth of his shares. 

Wall Street Journal

Coupon for 20% off? Bed Bath & Beyond’s stock was the latest “meme stock” to see its value jump unexpectedly. Shares in Bed Bath & Beyond increased 34% last week when the chairman of GameStop, Ryan Cohen, announced he held a 10% stake in the retailer. Cohen wrote a letter to Bed Bath & Beyond’s board, suggesting multiple strategies, such as reducing the chief executive officer’s compensation, selling to a private equity firm, and spinning off BBB’s Buybuy Baby arm. 

• The takeaway: Cohen, who is also the founder of online pet supplies retailer Chewy, joined GameStop in January 2021, a move that reportedly contributed to the surge in share price as retail investors bought up shares in an attempt to cause a short squeeze. Bed Bath and Beyond has struggled in recent years, bringing on former Target executive Mark Tritton to take over as CEO in 2019. Tritton has closed hundreds of stores since taking over, but Cohen argued in his letter that Tritton’s “scattershot approach” is ineffective.

CNBC

 Here’s what we covered last week in the Scan: 

• President Biden gave his State of the Union address, discussing Ukraine, inflation, and Covid-19. 
• A cargo ship carrying vehicles from Germany to the U.S. sank in the mid-Atlantic.
• Credit reporting bureau Equifax will now record “pay-in-four” installment loans from Buy Now Pay Later (BNPL) services in credit reports.
• For the fourth quarter ending January 29, 2022, Target reported 9% sales growth.