German airport strike, China imposes sanctions and more

Time now to go overseas for a look at what's making headlines in the world of money, economy and finance. Rami Innocencio is joining us now as usual from the London Bureau for this week's Money Watch International. Good to see you again, Rami. So let's talk about sanctions implemented by China against two U.S. defense companies, Raytheon and Lockheed Martin. And this has to do with sales to Taiwan.

So explain why this is happening and what the possible fallout could be. Yeah, exactly. And Ray, good to see you. Shares of both companies actually initially dipped after that news hit, but they have recovered in the aftermath of those sanctions news. But Beijing says it's not related to the U.S. shoot down of that Chinese balloon, but that it is because Washington allows them to keep selling weapons to Taiwan.

But the two companies do make weapons linked to both issues. For example, Lockheed makes the F-22 Raptor jet. That's the jet that flew the mission to shoot that balloon down. Raytheon makes the Sidewinder missile, which did pop that balloon. And Taiwan, for its part, buys Sidewinder missiles from the U.S. too.

But really though, China's sanctions are more bark than they are bite. And that is because the two companies don't actually sell weapons to China because they're prohibited by Washington. But what it does do is it makes a political cool down between the world's two biggest economies that much harder to reach. Rami, looking back on the past week, we couldn't get away from more inflation readings. Both the U.S. and U.

K. reported monthly inflation easing again. How does that position each country's central bank for future rate hikes? Yeah, good question. Inflation, yes, is falling, but it is still too high. For the U.K., it's now at 10.

1 percent. And even though this has been slipping each month for the past three, that number, 10.1, is still more than five times the target that the Bank of England has set. That is just 2 percent. And then for the U.S. inflation is now at 6.

4 percent. That's still three times higher than the Fed's 2 percent target. And you know what's making this worse is that the employment rate for both countries is around a five decade low. That sounds good, right, that everyone has a job. But that means that if you're looking for a job, you can demand more money, and people are demanding more money. And then that pushes up inflation too. And that is why, as we're seeing here on your screen, why we've had so many strikes in the U.

K. Transport workers, postal workers, teachers, nurses. Another rate hike is already expected in March. And in the U.S. where you are, economists are saying that the rate hikes are going to go for much higher and for much longer. So you're right.

Speaking of the strikes, we certainly covered the sort of rotating public sector strikes where you are. But now in Germany, they're also striking at the airports. It has to do with inflation. What is happening there? How many people are stranded? Yeah, you know, not a good day to try to catch a plane in Germany. Today strikes happening because airport workers there, the baggage handlers, security personnel, are demanding a 10 and a half percent pay rise because of inflation. And inflation there just last year hit its highest ever since World War II. Now to your question, more than 2,300 flights have since been canceled.

That's just today hitting seven airports, forcing a total ground stop at Frankfurt and Munich. And it's also impacting the start of the Munich Security Conference of World Leaders and Defense Experts. And delegates now are being advised to get there by train. We could see more strikes if talks next week fail. But despite this, I was taking a look at the share price of Lufthansa Airlines. And the airline company is at a three year high this week. And that isn't because of the strikes, obviously, but because of a rebound in travelers post COVID.

And other travel related companies also reported their earnings this week too. Those stocks are soaring. We're looking at Airbnb at a nine month high, Marriott at a nine month high, TripAdvisor to five week high and Boeing at a one year high. And that's because Air India placed its biggest ever aircraft order looking ahead in the next few months. We're expecting them to be officially known as the world's most populous country, 1.4 billion people. So a lot of air passengers potentially taking to the skies.

It's such a confusing story when we talk about the economy because here people are saying, listen, it's just too much. Our groceries are too much. Our energy costs are too much. But not too much to go on vacation. It's really hard to get sort of a clear picture of how bad it really is, you know? Yeah. There are a lot of people who do save up the money or they have priorities. They say, you know what? I might skimp on new clothes, new shoes, but especially after the past, what, three years of COVID, a lot of people are willing to shell out that money to make their escape.

Yeah. Maybe in a sense, yeah. Thanks so much for breaking that down for us. Yeah, you bet.

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