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Hutchins Roundup: Data, firm entry, and more

What’s the latest thinking in fiscal and monetary policy? The Hutchins Roundup keeps you informed of the latest research, charts, and speeches. Want…

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By Sophia Campbell, Lorena Hernandez Barcena, Eric Milstein, David Wessel

What’s the latest thinking in fiscal and monetary policy? The Hutchins Roundup keeps you informed of the latest research, charts, and speeches. Want to receive the Hutchins Roundup as an email? Sign up here to get it in your inbox every Thursday.

Firms’ access to data impacts their market power

Jan Eeckhout of UPF Barcelona and Laura Veldkamp of Columbia develop a theoretical framework in which data reduces firms’ uncertainty. They identify two competing channels by which data access affects firms’ market power and markups. In the first, data helps firms better predict consumer demand, encouraging firms to increase production for any given level of investment and thereby lowering prices and markups. In the second, data reduces uncertainty surrounding investment decisions, encouraging firms to make larger investments that lower their marginal costs and increase markups. The authors find that the balance of these two channels depends on the relative efficiency of firms’ investments and their pricing of risk. Their model predicts that the growing volume of data will reduce markups at the product level, but increase them at the firm and industry level. The authors suggest that data is generally welfare-improving but can amplify the costs of market power.

Official data confirm surge in new businesses during second half of 2020

Official data on business entry and exit are released with long lags, making it difficult to identify firm exit and entry trends in real time. During the pandemic, many economists measured firm entry using data on applications to the IRS for employer identification numbers , which are released in a more timely manner. Comparing applications with the Bureau of Labor Statistics’ count of actual business entries, Ryan A. Decker of the Federal Reserve Board and John Haltiwanger of the University of Maryland find that the surge in applications in the second half of 2020 turned out to be a good predictor of business entry. While business exits also rose early in the pandemic (which was also predicted based on nontraditional data like mobile phone tracking), entries eventually came to outnumber exits in 2020. The authors note that official statistics—like those underlying GDP and the monthly jobs report from the Establishment Survey—do not account for business entry and exit in real time. They conclude that “the timeline of business entry and exit measurement remains a material limitation of the U.S. statistical system.”

Remote learning was a primary driver of widening achievement gaps during the pandemic

High-poverty schools were more likely to go remote during the pandemic and their students suffered greater learning losses when they did so, find Dan Goldhaber of the University of Washington and co-authors. Using data from 2.1 million students in schools across the U.S., the authors compare students’ actual and expected achievement growth during the pandemic. Within school districts that were mostly remote in 2020-21, high-poverty schools experienced 50% more achievement loss than their low-poverty counterparts. In in-person districts, by contrast, these gaps widened by less for reading and not at all for math. The authors also show that most of the widening achievement gap by race during the pandemic occurred not because Black and Hispanic students fell behind their peers within the same school, but because they attended schools that were more negatively impacted by the pandemic. Closing these gaps will not be cheap. Comparing the share of the school year needed to make up student learning losses with the share of schools’ annual budget that they have received in federal aid, the authors estimate that mostly remote, high-poverty districts would need to spend almost all their federal aid on academic recovery alone.

Chart of the Week: Inflation declines slightly

Quote of the week:

“Three major imbalances are contributing to an overheating economy and high inflation. First, the effects of the pandemic have significantly increased demand for certain categories of spending, especially for durable goods and housing. This increase in demand is occurring while supply in these sectors is being adversely affected by the pandemic,” says John C. Williams, President of the Federal Reserve Bank of New York.

“The second major imbalance is in the labor market, where overall demand far exceeds existing supply. The ratio of job vacancies to the unemployed is near its all-time high, workers are quitting jobs at a record rate, and employers are bidding up wages. This sizzling hot labor market is also related to the imbalance between demand and supply for goods and housing, as businesses seek to hire more workers to help meet the high demand. And labor supply shortages and rising labor costs are contributing to price pressures across a wide range of goods and services.

“Finally, global imbalances in supply and demand have also contributed to supply-chain problems that have affected the availability and costs of shipping, as well as a variety of inputs into production—including semiconductor chips used in making cars. The war in Ukraine and recent lockdowns in China have further constrained the global supply of goods and commodities, including food and energy.”

 

The Brookings Institution is financed through the support of a diverse array of foundations, corporations, governments, individuals, as well as an endowment. A list of donors can be found in our annual reports published online here. The findings, interpretations, and conclusions in this report are solely those of its author(s) and are not influenced by any donation.

 

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Economics

Morgan Stanley: SPX could return to its pre-pandemic 3,400 level

The S&P 500 index could return to its pre-pandemic 3,400 level in the coming months that translates to another 15% downside from here, warned a Morgan…

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The S&P 500 index could return to its pre-pandemic 3,400 level in the coming months that translates to another 15% downside from here, warned a Morgan Stanley analyst on Monday.

Don’t be fooled by the bear market rally

Michael Wilson dubs the recent bounce (about 4.0%) in U.S. equities a “bear market rally” and says investors should brace for more pain ahead as inflation and supply constraints remain a significant headwind. In his note, the analyst said:

With valuations now more attractive, equity markets so oversold an rates potentially stabilizing below 3.0%, stocks appear to have begun another material bear market rally. After that, we remain confident that lower prices are still ahead.

Last week, the U.S. Bureau of Labour Statistics said inflation stood at 8.30% in April – a marginal decline versus the prior month but still ahead of the Dow Jones estimate.

How to navigate the current environment?

Wilson continues to see a recession as unlikely, but agrees that the risk of such an economic downturn has certainly gone up. The U.S. economy unexpectedly shrank 1.40% in the first quarter of 2022.

That is just another reason why equity risk premium is too low, and stocks are still overpriced. The bear market won’t be over until valuations fall to levels (14 – 15x) that discount the kind of earnings cuts we envision, or earnings estimates get cut.

He recommends increasing exposure to real estate, health care, and utilities stocks to navigate the current environment, while tech and consumer discretionary stocks remain a big “no” for him.

The post Morgan Stanley: SPX could return to its pre-pandemic 3,400 level appeared first on Invezz.

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Jelenew becomes the only sports brand as the Signature Sponsor of amfAR Gala during the 75th Festival de Cannes

Jelenew becomes the only sports brand as the Signature Sponsor of amfAR Gala during the 75th Festival de Cannes
PR Newswire
WILMINGTON, Del., May 16, 2022

Jelenew x Stéphane cycling-pants dress will be auctioned off to support the fight against AID…

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Jelenew becomes the only sports brand as the Signature Sponsor of amfAR Gala during the 75th Festival de Cannes

PR Newswire

Jelenew x Stéphane cycling-pants dress will be auctioned off to support the fight against AIDS and COVID-19

WILMINGTON, Del., May 16, 2022 /PRNewswire/ -- AmfAR announced on April 26 that Jelenew would be an amfAR Signature sponsor during the 75th Cannes Film Festival. It is reported that Jelenew is the only athletic brand among them. And Jelenew will jointly create a cycling-pants dress newlook with Stéphane Rolland, and one of the cycling-pants dresses will auction at the dinner. This helps amfAR raise funds for the American AIDS Research Foundation to contribute to the global fight against AIDS (AIDS) and COVID-19.

As a pioneer challenger in the professional cycling apparel industry, Jelenew has always adhered to the brand concept of "born for women." It focuses on solving clothing and equipment problems in professional cycling for women. It is committed to providing women with cycling products that perfectly integrate "sport functionalism, comfort, and 3D structural aesthetics". The earliest motivation for Jelenew to develop "1+1 model" detachable outer padded cycling pants (1 pair of tight-fitting leggings + 1 pair of detachable outer padded cycling shorts) came from Jelenew's social responsibility and industry mission.

In tracing the evolution history of cycling pants, the Jelenew R&D team found that although there are significant structural differences and needs between men and women. In the past 100 years, male and female riders have worn the same built-in pad cycling pants structure. They know that the "cycling pad" significantly impacts cyclists; it is the core element that affects cycling pants' comfort, sports performance, and health and hygiene index. Unscientific structure and design will obliterate women's health, comfort, and beauty. The women's cycling apparel industry urgently needs a cycling brand that is "truly made for women," which can solve the pain points of female consumers from a female perspective. So those female cyclists can enjoy the same healthy riding as male cyclists.

Jelenew's creative director Di Liu, a former Chanel Haute Couture designer, established Jelenew's research team and product development team in Paris, France. According to the different physiological structures of men and women and the differentiated needs in the riding process, he took the lead in introducing the moulage technique into the design of professional cycling pants. He led the development of the first professional cycling pants for women, the Jelenew 1+1 model: detachable outer padded cycling pants. These cycling pants subvert the built-in pad structure of traditional cycling pants. They are the first professional cycling pants truly created for women globally. 

As the world's top charity dinner, amfAR has become one of the most anticipated events during the Cannes Film Festival. Each session has attracted many international celebrities to show up to help out. As a high-profile event, amfAR is also cautious in selecting cooperative brands. The list of official partners used to be Chopard, Bvlgari,Harry Winston and Louis Vuitton, the top brands loved by celebrities. This year, in the official invitation letter of amfAR, the cutting-edge brand Jelenew is listed, and it is the only signature sponsor other than Chopard.

Di Liu said: "Jelenew is honored to be the amfAR signature sponsor during the 75th Cannes Film Festival. Over the years, this good foundation has been dedicated to advocating the impact of AIDS and HIV, providing financial support to HIV/AIDS researchers worldwide, and seeking to translate their research findings into effective policy, prevention, and a therapeutic education program that benefits the world. Each of us has the power to drive transformation. As an individual, the power may not be that great. However, when we come together, we become world game-changers. Jelenew is proud to be a part of it. "

It is understood that the cycling-pants dress newlook of Jelenew x Stéphane Rolland, which will be auctioned at the charity dinner this time, draws inspiration from the golden age of Spain in the 17th century and is a "dark cycling bride" dress look with a sense of the times. Stéphane Rolland designs the black dress on the upper body according to the paintings of Goya and Velasquez and the large black tunic with more stripes. And sleeves are embroidered with Art Deco crystals. Jelenew is based on the first professional outer padded cycling pants. It is inspired by the "Goddess of Victory" in the Louvre Museum. It draws inspiration from the Spanish 17th-century noble knight pants to create a pair of cycling pants with feminine avant-garde. This is the first cross-field cooperation between Sports Technology and Haute Couture, a milestone in the fashion field. 

It is reported that all proceeds from the cycling-pants dress newlook auction will be donated to the "amfAR AIDS Research Fund."

About JELENEW 

Jelenew is an American avant-garde cycling brand born for women. It creates the first cycling pants truly made for women in the world. It brings the groundbreaking combination of "Haute Couture and Sportswear" and carefully designs each product with "luxury moulage technique" to provide a more refined sports experience and promote a healthy lifestyle for cyclists to enjoy elegant and stylish suburban cycling.

About amfAR and amfAR Gala 

amfAR, The Foundation for AIDS Research, is one of the world's leading nonprofit organizations dedicated to the support of AIDS research, HIV prevention, treatment education, and advocacy. Since 1985, amfAR has invested nearly $617 million in its programs and has awarded more than 3,500 grants to research teams worldwide.

Celebrities frequently donate items to be auctioned off for the foundation. Past donors have included Uma Thurman, Karlie Kloss, and Milla Jovovich. The 25th annual gala embraced the #MeToo movement. 25 prominent women chaired it on stage and screen, namely: Alessandra Ambrosio, Poppy Delevigne, Linda Evangelista, Sylvia Fendi, Aileen Getty, Kate Hudson, Scarlett Johansson, Milla Jovovich, Heidi Klum, Daphna Krim (daughter of Mathilde Krim), Karolina Kurkova, Sienna Miller, Angela Missoni, Mary Parent, Katy Perry, Natasha Poly, Aishwarya Rai, Vanessa Redgrave, Joely Richardson, Carine Roitfeld, Caroline Scheufele, Irina Shayk, Lara Stone, Donatella Versace, and Michelle Yeoh. Past items auctioned have included numerous photographs by Andy Warhol, Annie Leibovitz portrait sessions, stays in fashion moguls and celebrity houses, and 53-karat diamond jewelry. Heidi Klum notably donated her Bentley S3 convertible to garner one of the highest bids at €200,000.

View original content to download multimedia:https://www.prnewswire.com/news-releases/jelenew-becomes-the-only-sports-brand-as-the-signature-sponsor-of-amfar-gala-during-the-75th-festival-de-cannes-301548494.html

SOURCE Jelenew

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World a ‘virtual tinderbox’ for catastrophic levels of severe malnutrition in children – UNICEF

World a ‘virtual tinderbox’ for catastrophic levels of severe malnutrition in children – UNICEF
Canada NewsWire
NEW YORK, May 16, 2022

Soaring food prices driven by the war in Ukraine and pandemic-fuelled budget cuts set to drive up both need for, …

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World a 'virtual tinderbox' for catastrophic levels of severe malnutrition in children - UNICEF

Canada NewsWire

Soaring food prices driven by the war in Ukraine and pandemic-fuelled budget cuts set to drive up both need for, and cost of life-saving therapeutic food treatment, the latter by up to 16 per cent

Multimedia content available to download here

NEW YORK, May 16, 2022 /CNW/ - The number of children with severe wasting was rising even before war in Ukraine threatened to plunge the world deeper into a spiralling global food crisis - and it's getting worse, UNICEF warned in a new Child Alert.

Released today, Severe wasting: An overlooked child survival emergency shows that in spite of rising levels of severe wasting in children and rising costs for life-saving treatment, global financing to save the lives of children suffering from wasting is also under threat.

"Even before the war in Ukraine placed a strain on food security worldwide, conflict, climate shocks and COVID-19 were already wreaking havoc on families' ability to feed their children," said UNICEF Executive Director Catherine Russell. "The world is rapidly becoming a virtual tinderbox of preventable child deaths and child suffering from wasting."

Currently, at least 10 million severely wasted children – or 2 in 3 – do not have access to the most effective treatment for wasting, ready-to-use therapeutic food (RUTF). UNICEF warns that a combination of global shocks to food security worldwide – led by the war in Ukraine, economies struggling with pandemic recovery, and persistent drought conditions in some countries due to climate change – are creating conditions for a significant increase in global levels of severe wasting.

Meanwhile, the price of ready-to-use therapeutic food is projected to increase by up to 16 per cent over the next six months due to a sharp rise in the cost of raw ingredients. This could leave up to 600,000 additional children without access to life-saving treatment at current spending levels. Shipping and delivery costs are also expected to remain high.

"For millions of children every year, these sachets of therapeutic paste are the difference between life and death. A sixteen per cent price increase may sound manageable in the context of global food markets, but at the end of that supply chain is a desperately malnourished child, for whom the stakes are not manageable at all," said Russell.

Severe wasting – where children are too thin for their height resulting in weakened immune systems – is the most immediate, visible and life-threatening form of malnutrition. Worldwide, at least 13.6 million children under five suffer from severe wasting, resulting in 1 in 5 deaths among this age group.

South Asia remains the 'epicentre' of severe wasting, where roughly 1 in 22 children is severely wasted, three times as high as sub-Saharan Africa. And across the rest of the world, countries are facing historically high rates of severe wasting. In Afghanistan, for example, 1.1 million children are expected to suffer from severe wasting this year, nearly double the number in 2018. Drought in the Horn of Africa means the number of children with severe wasting could quickly rise from 1.7 million to 2 million, while a 26 per cent increase is predicted in the Sahel compared to 2018.

The Child Alert also notes that even countries in relative stability, such as Uganda, have seen a 40 per cent or more increase in child wasting since 2016, due to rising poverty and household food insecurity causing inadequate quality and frequency of diets for children and pregnant women. Climate-related shocks including severe cyclical drought and inadequate access to clean water and sanitation services are contributing to the rising numbers.  

The report goes on to warn that aid for wasting remains woefully low and is predicted to decline sharply in the coming years, with little hope of recovering to pre-pandemic levels before 2028. According to a new analysis for the brief, global aid spent on wasting amounts to just 2.8 per cent of the total health sector ODA (Official Development Assistance) and 0.2 per cent of total ODA spending.

To reach every child with life-saving treatment for severe wasting, UNICEF is calling for:

  • Governments to increase wasting aid by at least 59 per cent above 2019 ODA levels to help reach to help reach all children in need of treatment in 23 high burden countries.

  • Countries to include treatment for child wasting under health and long-term development funding schemes so that all children can benefit from treatment programmes, not just those in humanitarian crisis settings.

  • Ensure that budget allocations to address the global hunger crisis include specific allocations for therapeutic food interventions to address the immediate needs of children suffering from severe wasting.

  • Donors and civil society organizations to prioritize funding for wasting to ensure a diverse, growing and a healthy ecosystem of donor support.

"There is simply no reason why a child should suffer from severe wasting – not when we have the ability to prevent it. But there is precious little time to reignite a global effort to prevent, detect and treat malnutrition before a bad situation gets much, much worse," said Russell.

"Millions of children around the world are suffering from severe wasting, the most immediate, visible and life-threatening form of malnutrition. The triple threat of COVID-19, climate change and conflict are increasing severe wasting cases impacting millions of children around the world. The conflict in Ukraine is set to plunge the world in to even deeper nutrition and food crisis, with children paying the ultimate price. But the good news is we already have the knowledge and tools to make a lasting difference between life and death for the world's most vulnerable children. Canada, as a global leader, must build on its commitments and address the growing malnutrition crisis, including support for the prevention, detection and treatment of malnutrition and wasting. Canadian leadership on the global stage will help save lives. Now is the time to take action." - David Morley, President and CEO, UNICEF Canada

Notes to Editors

About RUTF
Ready-to-use therapeutic food (RUTF) paste is a lipid-based energy dense, micronutrient paste, using a mixture of peanuts, sugar, oil, and milk powder, packaged in individual sachets. UNICEF, the global leader in RUTF procurement, purchases and distributes an estimated 75-80 per cent of the world's supply from over 20 manufacturers located across the world.

About ODA
Official development assistance (ODA) is government aid that promotes and specifically targets the economic development and welfare of developing countries. The Development Assistance Committee (DAC) of the Organization for Economic Co-operation and Development (OECD) adopted ODA as the main instrument of foreign aid in 1969 and it remains the main source of financing for development aid. ODA data is collected, verified and made publicly available by the OECD.

About UNICEF
UNICEF is the world's leading humanitarian organization focused on children. We work in the most challenging areas to provide protection, healthcare and immunizations, education, safe water and sanitation and nutrition. As part of the United Nations, our unrivaled reach spans more than 190 countries and territories, ensuring we are on the ground to help the most disadvantaged children. While part of the UN system, UNICEF relies entirely on voluntary donations to finance our life-saving work. Please visit unicef.ca and follow us on Twitter, Facebook and Instagram.

SOURCE UNICEF Canada

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