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The Week in Business: Escalating US Sanctions Against Russia

    At midnight on Wednesday, the Biden administration dropped an exemption from sweeping sanctions against Russia that had allowed the country to continue paying its foreign debts during its war against Ukraine. The Treasury Department made the announcement just hours before the deadline. Russia is now hurtling toward a benchmark it wanted to avoid: defaulting on its foreign debt for the first time in more than a century. Treasury Secretary Janet L. Yellen said Tuesday that the exemption was always intended to be temporary. Still, the decision represents an escalation of US sanctions against Russia as Western countries try to increase pressure on its economy.

    Last week’s mass shooting at a school in Uvalde, Texas, which killed 19 children and two teachers, has cast a spotlight on how companies deal with weapons manufacturers. But while many members of the public would like to see companies move away from arms manufacturers – and while many companies might want to – a Texas law that went into effect last year has complicated that position. The law prohibits state agencies from collaborating with companies that “discriminate against” companies or individuals in the arms industry. That means a company like JPMorgan Chase could be banned from the state’s lucrative municipal bond market if it refuses to partner with arms or ammunition manufacturers. Just this month, before the Uvalde massacre, lawyers for Chase suggested in a letter to the Texas Attorney General that the bank was willing to do more business with gun companies, saying the bank “did not discriminate against a firearms entity.”

    Broadcom, the semiconductor maker, said Thursday it would buy the software company VMware for $61 billion. Broadcom offered VMware the equivalent of $138.23 per share, more than 40 percent higher than the company’s stock price before news of a potential takeover began to spread. The deal would be just the latest in Broadcom’s expansion efforts, as the chief executive has bought up many of the companies responsible for companies’ computing infrastructure over the years. VMware, a major player in cloud computing, has more than 500,000 customers worldwide and partners with all the other major cloud providers, including Amazon and Google. By acquiring the company, Broadcom would own a range of popular computing tools, making it more competitive in data center technology and cloud computing.

    Gasoline prices have risen about 50 cents a gallon in the past month, meaning Memorial Day weekend drivers will have a hard time finding gasoline for less than $4 a gallon. Russia’s war in Ukraine is the most immediate reason for the spike as sanctions on Russian energy reduce the world’s supplies. But drivers’ habits can add to the pressure. Analysts say a boom in travel, partly the result of Americans eager to leave after postponing plans due to Covid, is helping to keep prices high. Travelers don’t seem to be deterred by high airfares either: To offset rising fuel costs, many airlines have drastically increased ticket prices and notice that customers are still willing to pay. Southwest Airlines and JetBlue Airways last week said their second-quarter revenues were on track to be higher than initially expected.

    The Biden administration has already taken steps to immediately respond to the severe baby food shortage, working with Abbott Laboratories to restart production at the closed bottle-feeding facility and to fly emergency supplies out of Europe. But now the Federal Trade Commission wants to investigate the circumstances that led to the deficit in the first place: The agency announced last week that it was opening an investigation into consolidation in the sector, which is dominated by just four companies, and into demand or federal regulations and trade agreements prevent foreign companies from entering the market. The FTC will also investigate online formula resellers and is seeking information from families who either believe they have been scammed trying to buy formulas or paid exorbitant prices.

    For months, economists have been anticipating the point where the number of jobs in the United States, which has been steadily increasing this year, will peak. This week’s jobs report could be that point — or not. While Americans continue to complain about inflation, many are still paying the much higher prices for the goods and services they want and need. Consumer habits may change, but spending remains high, and that usually means a lot of vacancies. So it’s possible that job growth will continue even if the Federal Reserve raises interest rates.

    Twitter was fined $150 million by the FTC for misleading users about how it handled their personal information. New data showed that inflation eased in April but remained close to a four-decade high. And strong financial reports from retailers last week propelled markets higher.