February 17, 2022

What We’re Reading This Week [February 17, 2022]

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As reported by Bloomberg, hearings began on Monday to decide whether to dismiss Johnson & Johnson’s District of New Jersey bankruptcy case. Employing the so-called “Texas Two-Step” strategy, J&J used Texas law to create the subsidiary LTL Management to hold its talc-related liabilities. LTL then filed for bankruptcy, with a pledge from J&J to fund a $2 billion trust, as part of a confirmed Chapter 11 plan, which would be used to pay out on talc claimants’ claims. J&J’s use of Texas Two-Step, along with other companies’ pursuit of a similar strategy in recent years, has led to some in Congress considering whether legislation may be necessary to curtail the strategy. [Bloomberg; Feb. 13, 2022]

CNBC reports that the consumer price index rose 7.5% in January, surpassing expert estimates and reflecting the highest reading since February 1982. Rising inflation has had a ripple effect on Wall Street in recent months, leading to declines in futures, especially for rate-sensitive tech stocks, and the benchmark 10-year U.S. Treasury note reaching 2%, the highest it has been since August 2019. Consumers have also been greatly impacted with housing, vehicle, and food costs up significantly over the past 12 months. [CNBC; Feb. 10, 2022]

Per CNN Business, the Dow, S&P 500, and Nasdaq surged on February 15 after Russia announced its withdrawal of some troops near Ukraine suggesting a potential de-escalation in the region. Sources have suggested that armed conflict between Russia and Ukraine could lead to global disruption in energy supplies and further price hikes given that Russia is a major natural gas and oil exporter. Prior to Russia’s announcement, the Dow and S&P 500 had declined three days in a row, and more volatility is expected as the situation continues to develop. [CNN Business; Feb. 15, 2022]

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