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Pre-market actions: some big risks for investors have lurked in plain sight


For months, it’s clear that harassed supply chains could dampen the post-pandemic recovery and trigger worrying inflation. Now that fear is being brought to the fore again, triggering a global sell-off in tech stocks that is expected to continue on Tuesday.

What’s Happening: Futures on Nasdaq Composite are down sharply in pre-market trading. The high-tech index fell 2.6% on Monday. In Hong Kong, shares of tech giants Baidu and Alibaba fell 3.5% on Tuesday, while shares of delivery company Meituan plunged more than 5%.

While economists expect the price increases to be temporary, investors remain concerned that rising costs could force central banks to raise interest rates earlier than expected, hurting the economy. investment case for high growth stocks.

“The [Federal Reserve] reiterated its intention to stay behind the inflation curve, ”Jean Boivin, director of the BlackRock Investment Institute, told clients on Monday, referring to a new Fed policy that would allow inflation to temporarily exceed its target . a certain skepticism in the markets, against the backdrop of a powerful economic recovery. ”

It is clear that Wall Street has been in the forefront even as stocks continued to hit record highs, leaving markets vulnerable to any inflation-related triggers. This could come in the form of positive data, for example, which suggests the economy is on the verge of overheating.

Investors have been looking for signs of rising prices for months. Yet the pandemic is stretching supply chains in new ways that could put further upward pressure on prices.

See here: Record wave of Covid-19 infections in India threatens to send shockwaves across several major global industries. If the crisis deepens, it could affect everything from clothing and pharmaceuticals to financial services and global shipping.

Thus, the risks of the pandemic do not disappear. Then there is the cyber attack.

Security experts have warned for years that ransomware poses major risks to businesses, so it’s hard to describe the attack on the Colonial pipeline, which supplies nearly half of the diesel and gasoline consumed on the coast. Is, like a black swan event.

But with the disruption raising the specter of gasoline to $ 3 a gallon in the United States for the first time since 2014, it is a reminder that any problem with the economy’s supply has major resonance at a delicate time in the economy. reprise.

China posts slowest population growth in decades

China’s population has grown at its slowest rate in decades in the 10 years leading up to 2020, according to census data released on Tuesday – a trend that could pose serious problems for the world’s second-largest economy.

According to China’s National Bureau of Statistics, the population has grown 5.4% over the past decade – or 72 million people – to 1.4 billion people, report my CNN Business colleagues Ben Westcott and Eric Cheung .

The latest data represent an average annual population growth rate of 0.53%. It’s China’s slowest rate since at least the 1960s.

Ning Jizhe, the head of the National Bureau of Statistics, said the lower growth rate was a result of couples delaying having children for longer and rising costs of raising a family.

Why it matters: The numbers raise the prospect of a demographic crisis for the world’s most populous nation, with a falling birth rate and rapid aging of the workforce threatening to dampen its rapid economic growth .

Data from the 2020 census showed that the proportion of the population over the age of 65 increased rapidly from 8.9% in 2010 to 13.5% in 2020.

The increase is a “major headwind” for the Chinese economy, said Yong Cai, professor of sociology at the University of North Carolina. “[But] China is not alone in this area. “

The big picture: Aging populations pose a risk to countries around the world, pointing to rising pension costs as economic growth begins to slow.

“As our populations age, there will be fewer and fewer people of working age to support more and more older people,” wrote the Organization for Economic Co-operation and Development.

The race for lithium could wipe out this species

Less than 40 years after humans discovered Tiehm’s buckwheat, a yellow-flowering Nevada plant, they could lead it to extinction in pursuit of electric vehicles, reports my CNN Business colleague Matt McFarland.

Environmentalists say the benefits of Tiehm’s buckwheat could be substantial, but its full significance is unknown. They are in awe of its ability to thrive where few species can – poor soil filled with boron and lithium.

This lithium, an essential mineral in the batteries that power electric vehicles, is attracting more and more attention from companies and governments which are implementing sustainable development plans. Ioneer, an Australian mining company, said it was set to open a lithium mine later this year on the land where Tiehm’s buckwheat grows. The project was valued at $ 1.3 billion.

Take a step back: Tiehm’s Buckwheat Fate highlights the trade-offs and tough decisions about green tech.

Companies that talk about helping the environment may not be above putting a species in danger of extinction. Ioneer maintains that from a global perspective, building its lithium mine is good for the environment. He believes the plant can survive by being largely relocated, a claim environmentalists are questioning.

Patrick Donnelly, Nevada state director of the Center for Biological Diversity, told CNN Business his group was prepared for years to fight in court to protect Tiehm’s buckwheat. He thinks the company needs to think more critically about suitable sites for lithium mines.

“Besides an endangered buckwheat, this is not the right place,” he said. “Biodiversity is what gives us clean air to breathe and clean water to drink and it’s what puts food on our plates.”

following

Palantir publishes its results before the US markets open. Lemonade follows after closing.

Also today: The latest U.S. Consumer Price Index, a key measure of inflation, is released at 8:30 a.m. ET.

Coming tomorrow: another look at inflation from the producer price index.

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