Daily Comment (February 4, 2022)

by Patrick Fearon-Hernandez, CFA, and Thomas Wash

[Posted: 9:30 AM EST] | PDF

Good morning. Today’s report begins with U.S. economics and policy, including updates on Ukraine and President Biden’s pick for the FOMC.  Next, we discuss the significance of the Beijing Winter Olympics. International news follows, and we conclude with our pandemic coverage.

Economics and policy:


  • The 2022 Beijing Winter Olympics kick-off on Friday. Chinese President Xi Jinping will look to use the game to burnish his country’s reputation as a global power. Recently, China has come under increased scrutiny from abroad following its crackdown on Hong Kong protesters and has been accused of mistreating Uyghurs, a Muslim minority group. Additionally, there have been concerns that the government has ramped up its surveillance, leading some athletes to purchase burner phones. In protest of China’s human rights violations, several countries, including the U.S., have decided to boycott the games by not sending diplomats. Only a few countries have joined the boycott. That being said, the winter games will probably be an opportunity for Xi to show that China remains an attractive destination for foreign tourists and investors, despite its increased crackdown. Assuming that there is no controversy, similar to the Mexico City Olympics in 1968, we suspect the event will go off with little contention.

International news: 

  • The Spanish Parliament passed a controversial labor reform bill on Thursday, forcing the country to reduce the proportion of the Spanish workforce on temporary contracts. The bill’s passage allowed Spain to unlock additional funding from the EU Recovery Fund.
  • Chilean President Sebastián Piñera selected Rosanna Costa to take over the Bank of Chile. Costa will be Chile’s first female central bank chief. She was nominated based on her experience and support for inflation control.
  • After the Bank of England raised rates in back-to-back meetings, central bank governor Andrew Bailey tried to quell fears of market uncertainty. In an interview with CNBC, he stated the rate hikes would likely continue at a gradual pace as the BOE tries to stem rising inflation. On Thursday, the central bank raised rates by 25 bps. Although the rate hike was in line with expectations, four out of the nine members of the Monetary Policy Committee voted for a 0.50% raise, suggesting the committee has become increasingly hawkish. In a separate interview with the BBC, Bailey urged workers not to demand big pay raises as it could make inflation harder to contain. The comments indicate the BOE may also view their labor market as being too tight.

COVID-19:  The number of reported cases is 388,686,859 with 5,715,128 fatalities.  In the U.S., there are 75,994,966 confirmed cases with 897,377 deaths.  For illustration purposes, the FT has created an interactive chart that allows one to compare cases across nations using similar scaling metrics.  The CDC reports that 669,540,355 doses of the vaccine have been distributed with 541,410,847 doses injected.  The number receiving at least one dose is 250,593,665, the number of second doses is 212,336,183, and the number of the third dose, the highest level of immunity, is 88,983,833. The FT has a page on global vaccine distribution.

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