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Other voices: Bar members of Congress from playing stocks to repair public trust.

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Other voices: Bar members of Congress from playing stocks to repair public trust.

Ballotpedia tracks what it calls a “personal gain index” showing how much each member of Congress’ personal wealth has changed while in office. For the top 20, the average increase in net worth has been 422% per year. Data like that helps explain why regular Americans hold Congress in such low esteem, as they watch their supposed public servants seemingly benefiting personally from their positions. Bipartisan legislation in Congress to prohibit its members from buying and selling stocks while in office could help rebuild that trust.

In January 2020, when most of America had no idea what the coronavirus would soon do to the economy, many members of Congress did, because they were getting privileged information from experts. Several of those members started dumping stock they owned — this during a soaring stock market that most people didn’t know was about to tank as the pandemic arrived.

Sen. Richard Burr, R-N.C., sold between $628,000 and $1.72 million worth, including hotel holdings that would subsequently lose value because of the lockdowns. Then-Sen. Kelly Loeffler, R-Georgia, sold off even more doomed stocks — while picking up one for a tech company whose value would spike because of the coming necessity of teleconferencing for many more workers. The husband of Sen. Dianne Feinstein, D-Calif., sold at least $1.5 million worth of stock before the market plunged. The wife of Sen. Rand Paul, R-Ky., bought stock in February 2020 in a pharmaceutical company that developed an antiviral treatment for the coronavirus, well before most regular Americans knew it would be needed.

They and others all denied wrongdoing, and the Justice Department has dropped its investigations of those and other transactions (though the Securities and Exchange Commission is still looking at Burr’s case). But whether these were just happy coincidences for these lawmakers, or something more sinister, they looked awful and eroded public confidence in the honesty of Congress.

A recent investigation by Business Insider found scores of members of Congress have violated a requirement to disclose stock trades within 45 days of the transaction. Worse, when the website sought comment from House Speaker Nancy Pelosi (whose husband is a major stock trader), she dismissed the idea of requiring lawmakers to put their holdings in blind trusts while serving — a response that angered reformers on both sides of the aisle and has reinvigorated efforts to pass such a requirement.

Service in Congress is supposed to be just that — service — not a chance for the rich to get richer with games that might land them in jail if they were anyone else. Pelosi and other leaders in both parties should get behind these reforms and make them happen.

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Explainer: Why is Wall Street close to a bear market?

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Explainer: Why is Wall Street close to a bear market?

NEW YORK — The bears are rumbling toward Wall Street.

The stock market’s skid this year has pulled the S&P 500 close to what’s known as a bear market. Rising interest rates, high inflation, the war in Ukraine and a slowdown in China’s economy have caused investors to reconsider the prices they’re willing to pay for a wide range of stocks, from high-flying tech companies to traditional automakers.

The last bear market happened just two years ago, but this would still be a first for those investors that got their start trading on their phones during the pandemic. For years, thanks in large part to extraordinary actions by the Federal Reserve, stocks often seemed to go in only one direction: up. Now, the familiar rallying cry to “buy the dip” after every market wobble is giving way fear that the dip is turning into a crater.

Here are some common questions asked about bear markets:

WHY IS IT CALLED A BEAR MARKET?

A bear market is a term used by Wall Street when an index like the S&P 500, the Dow Jones Industrial Average, or even an individual stock, has fallen 20% or more from a recent high for a sustained period of time.

The S&P 500 index slid 165.17 points Wednesday to 3,923.68 It’s now down 18.2% from its high of 4,796.56 on Jan. 3. The Nasdaq is already in a bear market, down 29% from its peak of 16,057.44 on Nov. 19. The Dow Jones Industrial Average is 14.4% below its most recent peak.

The most recent bear market for the S&P 500 ran from February 19, 2020 through March 23, 2020. The index fell 34% in that one-month period. It’s the shortest bear market ever.

WHAT’S BOTHERING INVESTORS?

Market enemy No. 1 is interest rates, which are rising quickly as a result of the high inflation battering the economy. Low rates act like steroids for stocks and other investments, and Wall Street is now going through withdrawal.

The Federal Reserve has made an aggressive pivot away from propping up financial markets and the economy with record-low rates and is focused on fighting inflation. The central bank has already raised its key short-term interest rate from its record low near zero, which had encouraged investors to move their money into riskier assets like stocks or cryptocurrencies to get better returns.

Last week, the Fed signaled additional rate increases of double the usual amount are likely in upcoming months. Consumer prices are at the highest level in four decades, and rose 8.3% in April compared with a year ago.

The moves by design will slow the economy by making it more expensive to borrow. The risk is the Fed could cause a recession if it raises rates too high or too quickly.

Russia’s war in Ukraine has also put upward pressure on inflation by pushing up commodities prices. And worries about China’s economy, the world’s second largest, have added to the gloom.

SO, WE JUST NEED TO AVOID A RECESSION?

Even if the Fed can pull off the delicate task of tamping down inflation without triggering a downturn, higher interest rates still put downward pressure on stocks.

If customers are paying more to borrow money, they can’t buy as much stuff, so less revenue flows to a company’s bottom line. Stocks tend to track profits over time. Higher rates also make investors less willing to pay elevated prices for stocks, which are riskier than bonds, when bonds are suddenly paying more in interest thanks to the Fed.

Critics said the overall stock market came into the year looking pricey versus history. Big technology stocks and other winners of the pandemic were seen as the most expensive, and those stocks have been the most punished as rates have risen.

Stocks have declined almost 35% on average when a bear market coincides with a recession, compared with a nearly 24% drop when the economy avoids a recession, according to Ryan Detrick, chief market strategist at LPL Financial.

SO I SHOULD SELL EVERYTHING NOW, RIGHT?

If you need the money now or want to lock in the losses, yes. Otherwise, many advisers suggest riding through the ups and downs while remembering the swings are the price of admission for the stronger returns that stocks have provided over the long term.

While dumping stocks would stop the bleeding, it would also prevent any potential gains. Many of the best days for Wall Street have occurred either during a bear market or just after the end of one. That includes two separate days in the middle of the 2007-2009 bear market where the S&P 500 surged roughly 11%, as well as leaps of better than 9% during and shortly after the roughly monthlong 2020 bear market.

Advisers suggest putting money into stocks only if it won’t be needed for several years. The S&P 500 has come back from every one of its prior bear markets to eventually rise to another all-time high. The down decade for the stock market following the 2000 bursting of the dot-com bubble was a notoriously brutal stretch, but stocks have often been able to regain their highs within a few years.

HOW LONG DO BEAR MARKETS LAST AND HOW DEEP DO THEY GO?

On average, bear markets have taken 13 months to go from peak to trough and 27 months to get back to breakeven since World War II. The S&P 500 index has fallen an average of 33% during bear markets in that time. The biggest decline since 1945 occurred in the 2007-2009 bear market when the S&P 500 fell 57%.

History shows that the faster an index enters into a bear market, the shallower they tend to be. Historically, stocks have taken 251 days (8.3 months) to fall into a bear market. When the S&P 500 has fallen 20% at a faster clip, the index has averaged a loss of 28%.

The longest bear market lasted 61 months and ended in March 1942 and cut the index by 60%.

HOW DO WE KNOW WHEN A BEAR MARKET HAS ENDED?

Generally, investors look for a 20% gain from a low point as well as sustained gains over at least a six-month period. It took less than three weeks for stocks to rise 20% from their low in March 2020.

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Veiga reported from Los Angeles.

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‘Nobody likes it’: Orioles’ Trey Mancini responds after Aaron Judge, Yankees take aim at Camden Yards’ left field wall

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‘Nobody likes it’: Orioles’ Trey Mancini responds after Aaron Judge, Yankees take aim at Camden Yards’ left field wall

Asked about comments from New York Yankees manager Aaron Boone and outfielder Aaron Judge about Camden Yards’ new left field wall, Trey Mancini, the longest-tenured Oriole, acknowledged it’s not the first time he’s heard such complaints from visiting hitters.

“Nobody likes it,” Mancini said with a laugh. “No hitters like it, myself included.”

Both Boone and Judge were critical of the Orioles’ changes to their iconic ballpark after Tuesday’s 5-4 victory, in which Judge homered twice but lost a potential third home run on a ball that would have left every other ballpark, as well as Camden Yards a year ago. Judge called the changes, which featured moving the left field wall back nearly 30 feet and increasing its height by more than five feet to reduce the ease of homering to that portion of the ballpark, a “travesty.”

“It looks like a create-a-park now,” Judge told reporters, with Boone adding, “Build-your-own-park got him.”

Entering Wednesday, Judge’s lost home run is one of six balls hit by visitors that would have likely left Camden Yards with the ballpark’s prior dimensions, according to tracking from The Baltimore Sun. The Yankees were responsible for half of those in the previous two days; no visiting player had cleared the wall entering Wednesday’s game.

Mancini has twice lost a home run to the new wall, christening it with a double off the padding during Baltimore’s first homestand. The Orioles have lost eight home runs to the wall, with Ryan Mountcastle, Austin Hays and Anthony Santander managing to hit balls over it.

As he and other Orioles hitters have done since plans for the wall were first reported this offseason, Mancini repeatedly noted that “it is what it is.” Mountcastle, like Judge, has hit a ball that only stayed in because it was hit at Camden Yards, a blast hit off the very top of the new wall. Mancini said the players are able to laugh about such things, knowing it’s out of their control.

“There’s nothing we can do to change it,” Mancini said. “It’s nothing you can be thinking about when you’re up at the plate. But it doesn’t make it any less tough when you hit a ball that you think should definitely be a homer.”

Tuesday’s comments mark the second time this month New York has been involved in ballpark dimensions discourse. After Gleyber Torres’ walk-off home run May 8 over the short right field porch at Yankee Stadium, Texas Rangers manager Chris Woodward said the ball would have been “an easy out in 99% of ballparks. … He just happened to hit it in a Little League ballpark.” In response, Boone quipped Woodward’s “math is off” because there are 30 parks, meaning 99% wouldn’t be possible.

Since Yankee Stadium opened in 2009, Camden Yards is the only major league venue where more home runs have been hit.

Orioles manager Brandon Hyde, though, didn’t take a shot when Boone critiqued his team’s home park, saying he would “take the high road.” He referenced comments from Minnesota Twins manager Rocco Baldelli about how the changes to Camden Yards require right-handed hitters to, as Hyde put it, “become true hitters.”

“Before, fly balls to left field were homers, and it was really unfair a lot of times,” Hyde said. “It’s just playing more fair than before.”

The Orioles’ hitters, though, will naturally be affected by it more than those of any other team, so comments like Judge’s and Boone’s fall somewhat flat to Mancini. The changes came at a poor time for Mancini, who is a potential free agent and whose future earnings depend on a strong 2022 season.

“We play half our games here, so …,” Mancini said. “I know that [Judge’s] ball probably should be a homer, but yeah, we’ve had quite a few, too, that should have been. Like I said, we play half our games here, so not great as a right-handed hitter.

“It’s still our job to go out there and play, so complaining about it’s not going to help us out. But that doesn’t mean we necessarily like it, either.”

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Biden invokes Defense Production Act for formula shortage

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Biden invokes Defense Production Act for formula shortage

By ZEKE MILLER and KEVIN FREKING

WASHINGTON (AP) — President Joe Biden on Wednesday invoked the Defense Production Act to speed production of infant formula and authorized flights to import supply from overseas, as he faces mounting political pressure over a domestic shortage caused by the safety-related closure of the country’s largest formula manufacturing plant.

The Defense Production Act order requires suppliers of formula manufacturers to fulfill orders from those companies before other customers, in an effort to eliminate production bottlenecks. Biden is also authorizing the Defense Department to use commercial aircraft to fly formula supplies that meet federal standards from overseas to the U.S., in what the White House is calling “Operation Fly Formula.”

Supplies of baby formula across the country have been severely curtailed in recent weeks after a February recall by Abbott Nutrition exacerbated ongoing supply chain disruptions among formula makers, leaving fewer options on store shelves and increasingly anxious parents struggling to find nutrition for their children.

The announcement comes two days after the Food and Drug Administration said it was streamlining its review process to make it easier for foreign manufacturers to begin shipping more formula into the U.S.

In a letter Wednesday to the Department of Health and Human Services and the Department of Agriculture, Biden directed the agencies to work with the Pentagon to identify overseas supply of formula that meets U.S. standards over the next week, so that chartered Defense Department flights can swiftly fly it to the U.S.

“Imports of baby formula will serve as a bridge to this ramped-up production,” Biden wrote.

Regulators said Monday that they’d reached a deal to allow Abbott Nutrition to restart its Sturgis, Michigan, plant, the nation’s largest formula plant, which has been closed since February due to contamination issues. The company must overhaul its safety protocols and procedures before resuming production.

After getting the FDA’s OK, Abbott said it will take eight to ten weeks before new products begin arriving in stores. The company didn’t set a timeline to restart manufacturing.

The White House actions come as the Democratic-led House is expected to approve two bills Wednesday addressing the baby formula shortage as lawmakers look to show progress on what has become a frightening development for many families.

One bill expected to have wide bipartisan support would give the secretary of the Department of Agriculture the ability to issue a narrow set of waivers in the event of a supply disruption. The goal is to give participants in an assistance program commonly known as WIC the ability to use vouchers to purchase formula from any producer rather than be limited to one brand that may be unavailable. The WIC program accounts for about half of infant formula sales in the U.S.

The other measure, a $28 million emergency spending bill to boost resources at the Food and Drug Administration, is expected to have less bipartisan support and it’s unclear whether the Senate will take it up.

“This is throwing more FDA staff at a problem that needs more production, not more FDA staff,” said Rep. Bill Huizenga, R-Mich.

Rep. Rosa DeLauro, the Democratic chair of the House Appropriations Committee, said the money would increase FDA staffing to boost inspections of domestic and international suppliers, prevent fraudulent products from getting onto store shelves and acquire better data on the marketplace.

Abbott’s voluntary recall was triggered by four illnesses reported in babies who had consumed powdered formula from its plant. All four infants were hospitalized with a rare type of bacterial infection and two died.

After a six-week inspection, FDA investigators published a list of problems in March, including lax safety and sanitary standards and a history of bacterial contamination in several parts of the plant. Under Monday’s agreement, Abbott must regularly consult with an outside safety expert to restart and maintain production.

Chicago-based Abbott has emphasized that its products have not been directly linked to the bacterial infections in children. Samples of the bacteria found at its plant did not match the strains collected from two babies by federal investigators.

But FDA officials pushed back on that reasoning Monday on a call with reporters — their first time publicly addressing the company’s argument. FDA staffers noted they were unable to collect bacterial strains from two of the four patients, limiting their chances of finding a match.

“Right from the get-go we were limited in our ability to determine with a causal link whether the product was linked to these four cases because we only had sequences on two,” FDA’s food director Susan Mayne said.

Fixing the violations uncovered at Abbott’s plant will take time, according to former FDA officials. Companies need to exhaustively clean the facility and equipment, retrain staff, repeatedly test and document there is no contamination.

As part of the FDA’s new import policy, regulators said companies would need to provide documentation of their factory’s inspections.

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