Scramble continues for infant formula as supplies dry up
The scramble for baby formula continues across the U.S. as supply disruptions and a massive safety recall have swept many leading brands off store shelves.
Months of spot shortages at pharmacies and supermarkets have been exacerbated by the recall at Abbott, which was forced to shutter its largest U.S. formula manufacturing plant in February due to contamination concerns.
Early last week, White House press secretary Jen Psaki said the Food and Drug Administration was “working around the clock to address any possible shortages.”
The FDA on Tuesday said it was working with U.S. manufacturers to increase output while streamlining paperwork to allow more imports.
For now, pediatricians and health workers are urging parents who can't find formula to contact food banks or doctor's offices. They warn against watering down formula to stretch supplies or using online DIY recipes.
“For babies who are not being breastfed, this is the only thing they eat,” said Dr. Steven Abrams, of the University of Texas, Austin. “So it has to have all of their nutrition and, furthermore, it needs to be properly prepared so that it's safe for the smallest infants.”
High inflation persists but eases a bit in April
Inflation eased slightly in April after months of relentless increases but remained near a four-decade high, making it hard for millions of American households to keep up with surging prices.
Consumer prices jumped 8.3% last month from a year ago, the government said Wednesday. That was below the 8.5% year-over-year surge in March, which was the highest since 1981. On a monthly basis, prices rose 0.3% from March to April, the smallest rise in eight months.
Still, Wednesday's report contained some cautionary signs that inflation may be becoming more entrenched. Excluding the volatile food and energy categories, so-called core prices jumped twice as much from March to April as they did the previous month. The increases were fueled by spiking prices for airline tickets, hotel rooms and new cars. Apartment rental costs also kept rising.
Price jumps “make clear that there is still a long way to go before inflation returns to more acceptable levels,” said Eric Winograd, U.S. economist at asset manager AB.
Layoffs ahead for Carvana after losses, acquisition
Online automotive retailer Carvana Co. says it's letting go about 2,500 workers, roughly 12% of its workforce, as it tries to bring staffing and expenses in line with sales.
The Phoenix company said in a regulatory filing Tuesday that its executive team is giving up salaries for the rest of the year to help fund severance pay for the workers.
Carvana, which sells online and delivers used vehicles to buyers, says the laid-off workers will come from operational groups. The company says it will be “transitioning operations” away from its auto reconditioning center in Euclid, Ohio, near Cleveland, as well as from some logistics hubs.
The filing said the moves are difficult, but will “facilitate Carvana returning to efficient growth on its mission to change the way people buy and sell cars.”
The layoffs come just a few weeks after Carvana posted a $506 million loss in the first quarter, six times larger than the same period a year ago.
The company also recently acquired Adesa U.S.' used vehicle auction business for $2.2 billion.
So much of Wall Street and finance is predicated on relationships. But Pimco was like, “No, we don't owe you anything; you owe us.”
There is a story from the '80s where a very young bond salesman, who's a very big name in investment management now, went down to have lunch with Bill. The salesman was like, “Hey, I'd love your business.” And Bill said, “Oh, you need my business. You're going to lose money on every trade with me. And that's going to be good for you, because you need the information of what I'm doing.”
QHow much of an outlier would you say Pimco was in terms of having that sort of attitude?
AAs far as I understand it, pretty far out there.
QWere Bill and Pimco more clever than the competition and counterparties?
APeople always tell me, “Well, he was the beneficiary of a coin flip. Somebody was going to be the best performer. He had the wind at his back for 40 years. Of course he did well.” I'm like, that's just not it. That's just not the full story.
Q
How would you ultimately sum him up? What kind of person did you think he is?
AI think he makes the most sense if you view his actions through game theory. If you think about him as a gambler, he's always considering the odds; he's figuring out how much he should bet at any given moment. And he's a really reflective person; he was a psych major in college, and he thinks a lot about himself and his actions and his place in the world. And that makes him doubly interesting because I think he knows when he should stop himself, and then he sometimes just doesn't do it.
Some of the most gripping material were the interactions between Gross and El-Erian. Could that partnership ever have worked?
AMohamed and Bill just have such different personalities. And both of them, I think, would say this. Mohamed might say Bill can be autocratic and kind of domineering, and he wants to do what he wants to do and he might make a mess and that has to be cleaned up later. On the flip side, Bill would say about Mohamed, “You've just debated for hours and said nothing.”
QOne thing I was also struck by were all of the instances when Bill changed his mind or seemed to change his mind or ignored things and was hard to work with by being so mercurial. Why do you think he acted like this?
AA lot of these founderled companies depend so heavily on the founder, and he or she can kind of act however they want. In this instance, Pimco was supposed to be this big, professional company. By the end, Bill was still allowed a lot of latitude. Founders can be really rough around the edges. But after a certain point, you have to be a big professional company and get polished.
You see it at Bridgewater Associates and other places where they're having a hard time of succession planning. A lot of what makes a founder or entrepreneur successful is a micromanage-y, perfectionist bent. And that makes learning to sit down and step away from your creation really hard.
QWhat sort of stature would you say Pimco has now? And how do you think Gross is regarded today, now that he's been out of the game for a couple of years?
AGross said in one of the court hearings in the neighbor dispute that he's trying to have a reputation to die with. And that just kind of breaks your heart. He was this big legend. But people really latched on to that neighbor story.
Pimco has been working very hard to position themselves as a big, grown-up firm — a normal place. But every time Bill's in the headlines, they're like, “Oh, my God; it's this again.”
QWhy do you think Bill wasn't able to get anywhere close to duplicating Pimco's success at Janus?
AHe was starting fresh in a market that already was bumping along, not in the direction that benefits bonds. But I think the real answer is that he was trying too hard. He let emotion get the better of him, and he wanted to prove to them that he was still great.
QWhat were you thinking when the whole neighbor situation was playing out? How do his actions reflect on the man you've written about and spoken to people about for years?
AI think the bones of it are not entirely surprising. He is very accustomed to walking right up to the edge of the legal limit of something right and sitting down there and being like, “I'm here. If you have a problem, let me know.” He was playing the music right at the legal limit. It's not illegal to play the “Gilligan's Island” theme song.
Some sources called it the bond “King Lear.”
QPimco was a big winner of measures taken to protect the economy in the aftermath of the financial crisis. We're at another inflection point in the market. Why is now a good time for people to pick up a book about Bill Gross?
AIn the aftermath of the financial crisis, we made a lot of agreements in an emergency, and I think a lot of those weren't superexamined. Or maybe we couldn't come up with a better alternative at the moment. And I do think it's worth examining these structures and how we got there, and that enables us to think more strategically about what to do next.
You're seeing a seismic change in the economy and in the Fed's relationship to markets. Interest rates have had this incredibly long march lower, and that has obviously benefited the careers of people like Bill Gross. As we reimagine how our markets work, it's worth thinking about what we like here and what we don't.