The daily business briefing: May 16, 2022
Wheat prices rise after India bans exports, McDonald's exits Russia after 32 years, and more
Wheat prices jump after India bans exports
Wheat futures jumped by more than 5 percent on Monday after India announced a ban on most exports of the grain as Russia's invasion of Ukraine threatened global shortages. Soft red winter wheat for July delivery locked in at $12.39 a bushel after rising as high as $12.47, its highest level since mid-March. The price of Chicago wheat futures has risen 60 percent this year. India announced the ban on Friday, but said Sunday it would continue exporting to needy nations. Russia and Ukraine account for a combined 25 percent of global wheat exports. The United States and the European Union are scrambling to boost crop yields and improve food supply chains. Group of Seven foreign ministers warned over the weekend that the Ukraine war is increasing the threat of a global hunger crisis.
McDonald's to sell Russia business
McDonald's announced Monday that it plans to sell its Russia business after 32 years. It paused operations in the country two months ago due to Russia's war in Ukraine. "This is a complicated issue that's without precedent and with profound consequences," McDonald's CEO Chris Kempczinski wrote in a letter to franchises, employees, and suppliers that The New York Times obtained. Numerous restaurant chains and consumer product manufacturers have suspended operations in Russia since it invaded Ukraine on Feb. 24, including Starbucks and Yum Brands, the parent company of KFC and Pizza Hut. McDonald's has 39,000 restaurants in over 100 countries. It has invested billions of dollars in Russia since opening in Moscow in 1990.
Shanghai to let businesses resume limited operations
Shanghai officials on Sunday detailed their plan to reopen businesses, including shopping malls and supermarkets, in China's largest city on a limited basis under an ongoing COVID-19 lockdown. Shanghai's deputy mayor, Chen Tong, said Sunday the city would allow limited operations starting Monday, under a transitional phase "from emergency response to normalized prevention and control." Daily new infections in the city of 25 million people have dropped from a high of more than 20,000 last month to about 1,200 on Saturday. Despite the falling infection rates, neighborhood-level authorities in many areas have increased restrictions in recent days out of fear new cases could spike again.
Goldman's Blankfein: Prepare for possible recession
Goldman Sachs Senior Chairman Lloyd Blankfein on Sunday warned that the United States faces a "very, very high risk" of recession. "If I were running a big company, I would be very prepared for it," Blankfein said on CBS's Face the Nation. "If I was a consumer, I'd be prepared for it." Blankfein said the Federal Reserve still has "very powerful tools" available to cool down the economy and contain inflation without cutting off growth completely, so a recession isn't "baked in the cake." The comments came as the investment bank's economists cut their growth forecast for 2022 to 2.4 percent, down from 2.6 percent, and their 2023 estimate to 1.6 percent from 2.2 percent.
Stock futures fall ahead of retail earnings
U.S. stock futures fell early Monday ahead of a week of earnings reports from retailers. Futures tied to the Dow Jones Industrial Average and the S&P 500 were down 0.2 percent and 0.4 percent, respectively, at 6:30 a.m. ET. Nasdaq futures were down 0.6 percent. The Dow and the S&P 500 gained 1.5 percent and 2.4 percent, respectively, on Friday. The tech-heavy Nasdaq jumped 3.8 percent in its best day since November 2020. But all three of the main U.S. indexes posted losing weeks as downward trends continued due to ongoing concerns about inflation and Russia's Ukraine invasion. The S&P 500 is now down 16 percent from its record high. The Nasdaq is down more than 27 percent.