A baby formula shortage in the United States is driving parents to swap, sell and offer leftover supplies to each other, while President Joe Biden plans to speak with manufacturers and retailers Thursday about the plight facing families.
The problem is the result of supply chain disruptions and a safety recall, and has had a cascade of effects: Retailers are limiting what customers can buy, and doctors and health workers are urging parents to contact food banks or physicians’ offices, in addition to warning against watering down formula to stretch supplies or using online DIY (do it yourself) recipes.
The shortage is weighing particularly on lower-income families after the recall by formula maker Abbott stemming from contamination concerns. That recall wiped out many brands covered by the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), a federal programme like food stamps that serves mothers, infants and children, though the programme now permits brand substitutes.
Jennifer Kersey, 36 of Cheshire, Connecticut, said she was down to her last can of formula for her seven-month-old son, Blake Kersey Jr, before someone saw her post on a Facebook group and came by with a few sample cans.
“At first I was starting to panic,” she said. “But, I’m a believer in the Lord, so I said, ’God, I know you’re going to provide for me and I just started reaching out to people, ‘Hey do you have this formula?’”
She said she and others in the group are helping each other, finding stores that may have the formula in stock and getting formula to mothers who need it.
“If someone offers me and says, ‘I have these three,’ I’ll say ‘I’ll take the purple can and then put the other ones on that website.’ I’m not going to hoard stuff. I’m making sure that everybody has.”
Kimberly Anderson, 34, of Hartford County, Maryland, said her 7 1/2-month-old son takes a prescription formula that’s been nearly impossible to find locally. She turned to social media and said people in Utah and Boston found the formula, which she paid to have shipped.
“They say it takes a village to raise a baby,” she said. “Little did I know my village spans the entire US as I ping friends/family for their zip codes so I can check their local Walmarts to have them ship directly to me.”
Erika Thompson, 28, a mother of three in Wallingford, Connecticut, said it’s become almost a full-time job for her to track down the hypoallergenic formula her 3 1/2-month-old daughter, Everly, must have. She said friends out of state have also been looking for her and shipping cans if they find them.
She is down to one small sample can, which she said might last a couple more days.
“You can travel everywhere — countless towns, stores, Amazon, online,” she said. “Honestly, it’s heartbreaking. Certain stores have absolutely nothing and now they’re limiting you. So what do you do?”
She said it’s been upsetting to read comments online telling her she should have breastfed instead. She said she was unable to produce an adequate supply of milk, but she should not have to explain that to people.
“It’s not our fault,” she said. “Someone posted that people should just have abortions basically. No. It’s not our fault for having kids. Stupid stuff like that aggravates me.”
In Washington, White House Assistant Press Secretary Kevin Munoz said on Twitter that the administration will also announce “additional actions” to address the formula shortage.
Shortages of basic goods have been a problem since the start of the coronavirus pandemic in early 2020. Access to medical supplies, computer chips, household appliances, autos and other goods has been hurt by closed factories and outbreaks of the virus, as well as storms and other climate-related events.
A safety recall compounded the challenges regarding baby formula.
The UD Food and Drug Administration (FDA) warned consumers on February 17 to avoid some powdered baby formula products from a Sturgis, Michigan facility run by Abbott Nutrition, which then initiated a voluntary recall. According to findings released in March by federal safety inspectors, Abbott failed to maintain sanitary conditions and procedures at the plant.
Abbott said in a statement that the recall involved four complaints about an environmental bacteria found in infants who consumed formula from the plant. Two infants became sick, while two died. “After a thorough review of all available data, there is no evidence to link our formulas to these infant illnesses,” the company said.
Abbott said that pending FDA approval, “We could restart the site within two weeks.” The company would begin by first producing EleCare, Alimentum and metabolic formulas and then start production of Similac and other formulas. Once production began, it would take six weeks to eight weeks for the baby formula to be available on shelves.
On Tuesday, the FDA said it was working with US manufacturers to increase their output and streamlining paperwork to allow more imports. The agency noted that supply chain issues associated with the pandemic were part of the problem and that consumers bought more baby formula in April than in the month before the recall.
White House Press Secretary Jen Psaki said this week that the FDA was “working around the clock to address any possible shortages”.
Canadian banks benefit from consumer spending rebound – The Globe and Mail
Rebounding consumer spending and business investment are boosting profits for three of Canada’s largest banks as customers travel and dine out more often, and bankers expect that growth to continue – perhaps at a more moderate pace – even amid mounting fears of an economic downturn.
Royal Bank of Canada and Toronto-Dominion Bank both reported profits for the fiscal second quarter ended April 30 that beat estimates, while Canadian Imperial Bank of Commerce’s earnings fell short of expectations as its costs swelled. All three banks saw revenue and loan balances in their core Canadian retail and business banking operations post strong gains compared with a year earlier.
As consumers open their wallets, the surge is pushing businesses to borrow and invest to meet that demand, which has helped drive up fees and interest income collected by banks.
But a key question confronting banks Thursday was whether the trend will continue in the face of high inflation, rapidly rising interest rates and growing gloom about the prospects for an economic downturn. Investors and analysts are on edge about whether demand for loans could wane and defaults on existing loans might rise if economies swing toward a recession.
The banks say their clients are still upbeat and the fundamentals that underpin retail banking look strong enough to withstand some economic headwinds.
“It feels like there’s certainly some more caution out there,” said Hratch Panossian, CIBC’s chief financial officer, in an interview. “But at this point in time, on the ground with our clients, there’s still a relatively high level of confidence and relatively high level of activity as the economy has opened up, the services sectors are coming back.”
On Wednesday, Bank of Nova Scotia and Bank of Montreal both reported higher second-quarter profits and rising loan balances, and executives from both banks offered optimistic outlooks for the financial sector.
There are two key factors bolstering banks’ confidence: a tight labour market that has Canada’s unemployment rate at its lowest level in decades, and the financial buffer many customers built during the COVID-19 pandemic in the form of higher savings and lower debt.
As public health restrictions lifted, spending came roaring back. Credit and debit transactions by RBC customers were 30-per-cent higher in April than before the pandemic, and that momentum carried into May, said chief executive officer Dave McKay. TD’s credit card retail sales were up 22 per cent year over year, according to Mr. Tran. And at CIBC, purchase volumes on cards were up 30 per cent from a year earlier, excluding the bank’s newly acquired portfolio of Costco-branded credit cards.
“We have seen, I’m going to say, full recovery in the categories that are travel, hotel, entertainment,” said Laura Dottori-Attanasio, CIBC’s head of personal and small business banking, on a Thursday conference call.
That spending could come under pressure as inflation and rising interest rates push up prices and borrowing costs for customers. “It’s definitely going to eat into their discretionary income … and consumers then need to make choices,” said Kelvin Tran, TD’s chief financial officer, in an interview.
“But I think for the consumer, what is a very important factor is the unemployment rate,” Mr. Tran said. “If people are gainfully employed and we continue to see the [labour] market continues to be very tight, that increases confidence.”
Many customers also have more financial breathing room in the form of lower debts from personal loans, as well as higher savings. At CIBC, use rates on lines of credit are about 20-per-cent lower than in 2019, and the rate of revolving credit card balances is down between 7 and 10 per cent.
“We’re feeling really good about the health of the consumer,” Ms. Dottori-Attanasio said. “We’re seeing very prudent behaviour when it comes to how people are managing their debt and how they’re making payments on their credit cards.”
Though bankers are confident their customers are resilient, they are still struggling to predict how the economy will react to rapidly rising interest rates. Central bankers “have to hit demand really hard” to tamp down inflation, Mr. McKay said. “Do we land it with a slight recession? I think our message today is it could go either way, it’s 50-50. Having said that, … there are good shock absorbers to absorb that uncertainty.”
In the fiscal second quarter, RBC earned $4.25-billion, or $2.96 a share, compared with $4-billion, or $2.76 a share, a year earlier. On an adjusted basis, RBC said it earned $2.99 a share, beating an estimate of $2.71, according to Refinitiv.
TD reported net income of $3.8-billion, or $2.07 a share, helped by a one-time boost of $224-million stemming from a lawsuit settlement. TD’s adjusted earnings amounted to $2.02 a share, down slightly from the year prior but ahead of the consensus analysts’ prediction of $1.93 a share.
And CIBC earned $1.52-billion, or $1.62 a share, compared with $1.65-billion, or $3.55 a share, in the same quarter last year – before the bank completed a 2-for-1 share split. CIBC said it earned $1.77 a share on an adjusted basis, just below analyst estimates of $1.80 a share.
RBC raised its quarterly dividend by 8 cents a share to $1.28, and CIBC increased its dividend by 2.5 cents a share to 83 cents.
RBC and TD continued to unwind large loan loss reserves they stockpiled to guard against the possibility COVID-19 could cause losses to swell. RBC recovered $342-million in provisions for credit losses in the quarter. TD earmarked just $27-million in total new provisions, while releasing some other reserves as loans are being paid back.
Executives at both banks said their expectations for credit are more optimistic now that pandemic-related risks have receded. But each bank also plugged more pessimistic assumptions into models they use to predict future losses, acknowledging the odds of some sort of economic downturn are rising.
“Omicron didn’t have a big impact on [provisions] so that was a favourable factor in this quarter,” Mr. Tran said. “And then you added something that is less favourable, which is this uncertainty, this outlook.”
With a report from Tim Kiladze
Editor’s note: Hratch Panossian’s title has been corrected in the online version of this story.
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Twitter shareholders sue Musk, say he 'deflated' stock price – CP24 Toronto's Breaking News
Barbara Ortutay, The Associated Press
Published Thursday, May 26, 2022 7:40PM EDT
Twitter shareholders have filed a lawsuit accusing Elon Musk of engaged in “unlawful conduct” aimed at sowing doubt about his bid to buy the social media company.
The lawsuit filed late Wednesday in the U.S. District Court for the Northern District of California claims the billionaire Tesla CEO has sought to drive down Twitter’s stock price because he wants to walk away from the deal or negotiate a substantially lower purchase price.
San Francisco-based Twitter is also named as a defendant in the lawsuit, which seeks class action status as well as compensation for damages.
A representative for Musk did not immediately respond to a message for comment on Thursday. Twitter declined to comment.
Musk last month offered to buy Twitter for $44 billion, but later said the deal can’t go forward until the company provides information about how many accounts on the platform are spam or bots.
The lawsuit notes, however, that Musk waived due diligence for his “take it or leave it” offer to buy Twitter. That means he waived his right to look at the company’s non-public finances.
In addition, the problem of bots and fake accounts on Twitter is nothing new. The company paid $809.5 million last year to settle claims it was overstating its growth rate and monthly user figures. Twitter has also disclosed its bot estimates to the Securities and Exchange Commission for years, while also cautioning that its estimate might be too low.
To fund some of the acquisition, Musk has been selling Tesla stock and shares in the electric carmaker have lost nearly a third of their value since the deal was announced on April 25.
In response to the plunging value of Tesla’s shares, the Twitter shareholders’ lawsuit claims Musk has been denigrating Twitter, violating both the non-disparagement and non-disclosure clauses of his contract with the company.
“In doing so, Musk hoped to drive down Twitter’s stock price and then use that as a pretext to attempt to re-negotiate the buyout,” according to the lawsuit.
Twitter’s shares closed Thursday at $39.54, 27% below Musk’s $54.20 offer price.
Before announcing his bid to buy Twitter, Musk disclosed in early April that he had bought a 9% stake in the company. But the lawsuit says Musk did not disclose the stake within the timeframe required by the Securities and Exchange Commission.
And the lawsuit says his eventual disclosure of the stake to the SEC was “false and misleading” because he used a form meant for “passive investors” – which Musk at the time was not, because he had been offered a position on Twitter’s board and was interested in buying the company.
Musk benefited by more than $156 million from his failure to disclose his increased stake on time, since Twitter’s stock price could have been higher had investors known Musk was increasing his holdings, the lawsuit claims.
“By delaying his disclosure of his stake in Twitter, Musk engaged in market manipulation and bought Twitter stock at an artificially low price,” the lawsuit says.
TD holds off on dividend hike; Beats Q2 profit estimates – BNN
The Toronto-Dominion Bank beat profit expectations in its latest quarter despite muted performances across its major divisions. It also became the only major bank thus far this earnings season to not raise its quarterly dividend.
TD said its net income in the fiscal second quarter, which ended April 30, rose three per cent year-over-year to $3.81 billion. On an adjusted basis, its profit fell to $2.02 per share from $2.04 a year earlier. Analysts, on average, expected $1.93 in adjusted earnings per share. Overall credit quality improved sequentially, as TD set aside $27 million for loans that could go bad, compared to $72 million in the prior quarter.
Revenue and expenses in TD’s Canadian retail banking unit both rose nine per cent year-over-year, while profit inched up two per cent to $2.24 billion. Lending activity ramped up in the quarter, with the total personal loan book hitting an average of $402.7 billion, compared to $373.3 billion a year earlier, while business loans jumped 16 per cent to almost $101 billion.
A number of one-time items affected profit in TD’s U.S. retail banking unit. On an adjusted basis, net income in that business fell 10 per cent year-over-year to $769 million. TD said the downturn was caused in part by a much more moderate release of funds from loan loss provisions (US$15 million, compared to US$173 million a year earlier).
TD is awaiting final regulatory approvals to proceed with its US$13.4-billion takeover of Memphis, Tenn.-based First Horizon Corp. That transaction was announced in February; at the time, TD said the deal would make it a top-six bank in the United States thanks to the addition of First Horizon’s 412 branches and more than 1 million customers. It also said it hoped to close the deal in the first quarter of fiscal 2023, which is a period that ends Jan. 31, 2023.
Meanwhile, similar to many of its peers that reported earlier this week, TD’s wholesale banking unit (which includes capital markets activity) suffered profit erosion as net income fell six per cent year-over-year to $359 million.
“As we continue to emerge from the COVID-19 pandemic we face new economic uncertainties and growing geopolitical tensions. TD has proven its ability to adapt to changing circumstances and deliver performance and progress,” said Bharat Masrani, TD’s president and chief executive officer, in a release.
TD most recently announced a dividend hike (to $0.89 per share) in December; before that, the last hike was announced in February 2020. Shortly thereafter, Canada’s banks were told by their regulator (the Office of the Superintendent of Financial Institutions) to hold off on dividend hikes and share buybacks due to the pandemic. That guidance was lifted in November.
Prior to OSFI’s intervention, TD regularly raised its dividend on an annual basis. However, Masrani has indicated dividend hikes aren’t on a pre-set schedule.
“It’s not a bad assumption that we like to look at this on an annual basis, and then hopefully we get into that cycle. But it doesn’t mean that we will not periodically look at it on a different cycle based on circumstance and the environment we might be in,” he said during a conference call with analysts on Dec. 2.
“Generally, our cycle has been annual and that has worked out reasonably well for us, but it will depend on the environment going forward.”
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