Aurelia Butler

BEIJING (Reuters) -China’s cyberspace watchdog wants to build an “affectionate” relationship between internet enterprises and the government, a senior official said, the latest verbal assurance to an industry still on edge after a long and bruising regulatory crackdown.Niu Yibing, vice minister of the Cyberspace Administration of China (CAC), told a news conference on Friday the agency was supportive of the sector’s healthy development and wanted to create a “healthy, get-to-the-top, can-do entrepreneurial atmosphere”.The CAC was among Chinese regulators which in late 2020 launched an unprecedented crackdown on the country’s technology giants. The campaign upended long-held industry practices, set new rules on how the companies should do business, and roiled markets, shaving billions of dollars in market value off the firms.While regulators, facing a slowing economy, have not announced new rules this year at the pace they did last year, companies have remained cautious, with many including the likes of giants Alibaba (NYSE:BABA) Group and Tencent Holdings (OTC:TCEHY) cutting back on new investments and laying off thousands of workers.Among some of the biggest issues that have worried investors include new rules that came into effect in February for Chinese firms with data on more than 1 million users to undergo a security review before listing their shares overseas.Sun Weimin, head of the regulator’s cybersecurity coordination bureau, said the agency remained supportive of domestic firms seeking overseas listings, and that the review was to ensure that there was no data involved that could be abused by foreign governments.There is also no final word on the saga of Chinese ride-hailing giant Didi Global, which was the subject of a CAC-led probe that forced the ride-hailing leader to delist from New York within a year of its debut and made foreign investors wary about China’s tech sector.While Didi was fined $1.2 billion last month for violating data security rules, it is not clear whether or when its apps will be allowed to return to app stores, or whether or when it can resume new user registrations.Sun said that the CAC was supervising Didi’s rectification work, and that the regulator would continue to work to remove hidden security risks and punish any behaviour that endangered national security or data security.A Beijing-based tech executive, whose company has previously been fined by regulators over data security issues, told Reuters that CAC’s statement on Didi showed how regulators were still not completely satisfied with the company.”Didi is different from other Internet companies, the anti-monopoly work against other tech giants has either ended or stabilised, but clearly regulators are treating Didi differently,” the executive said, declining to be named as he is not authorised to speak to media. More

Now, with pandemic precautions falling by the wayside and brick-and-mortar shopping eyeing a revival, it’s looking like there may be a strategy for the old standby to survive amid the hordes of Amazon (NASDAQ:AMZN) delivery vans.Grocery stores.  When the Westfield Oakridge mall in San Jose, California opened the popular Asian grocery store chain 99 Ranch Market in March, its debut saw lines snaking out the door. Since then, the mall’s foot traffic has jumped, with customer visits up more than 10% in July compared to pre-pandemic levels, according to traffic analytics firm Placer.ai.In addition to grocery store staples like produce and meat, the supermarket has also attracted shoppers with its dining hall and tea bar. What’s surprising is 99 Ranch took up residence in one of the mall’s anchor spots, which had typically gone to massive chains like Target Corp. (NYSE:TGT) or Macy’s Inc. It’s the supermarket’s first location inside a megamall.At the Westfield Valley Fair mall in nearby Santa Clara, the shopping center also saw its visits rise after the June arrival of Eataly, the all-in-one Italian marketplace, restaurant and cooking school. It was already one of the better-performing malls in the US, but Eataly seemed to drive more foot traffic. Visits to the mall during the store’s opening week surpassed 20% for the first time in months, and have remained elevated compared to 2019 levels, according to Placer.ai.  Malls were already reeling before the pandemic, with shuttered stores and bankruptcies legion. They didn’t pivot fast enough in the face of Amazon, resulting in dwindling traffic, lower sales and shuttered storefronts. Once the existential threat of ecommerce became clear, owners struggled to find ways to get people out from behind their computers, with new and strange offerings and more diverse tenants.As far back in 2017, Credit Suisse was already predicting that between 20% and 25% of US malls would fail in just five years.Then Covid-19 arrived. Dozens of mall-based retailers sought court protection, including J.C. Penney Co. and J. Crew. Macy’s announced plans to close more than 125 stores at the beginning of 2020, citing too many locations in underperforming malls. Nordstrom (NYSE:JWN) and Bed Bath & Beyond (NASDAQ:BBBY) also announced widespread closures.Could fancy food destinations stop the bleeding? The test isn’t only foot traffic—it’s also about attracting other retailers. But for now, the strategy looks promising.“The result has been a rise in other tenant types that could have a waterfall effect, driving even more mall tenant diversity and new opportunities for less traditional mall tenants,” said Ethan Chernofsky, Placer.ai’s vice president of marketing. “While they are still not an indoor mall staple, there is ample reason to believe that their role within this segment will increase.”Although grocery stores have anchored strip malls for decades, traditional supermarkets and groceries haven’t been a dominant presence at indoor US malls. While roughly one in five enclosed shopping malls has a grocery store, according to data from commercial real estate analytics firm Green Street, half are Targets. The phenomenon is much more common overseas.But grocery stores have been a growing US consumer segment over the last few years. Except for so-called value outlets and “dollar” stores, grocers have had the most store openings, outpacing home improvement, electronics and superstores, according to an analysis of store openings between 2019 and 2021 from Green Street. The firm’s research shows adding a grocer can boost traffic by upwards of 20% at a shopping center.“One reason that we’re seeing grocers become a more commonplace tenant within the mall spaces is because we witnessed the resilience of grocery-anchored strip centers or open air-retail throughout the pandemic,” said Emily Arft, a retail analyst at Green Street. “That reaffirmed the importance of brick-and-mortar retail.”Much of that growth was driven by the widespread adoption of in-store pickups for online orders, which helped cement the relevancy of brick-and-mortar stores, Arft said.That said, roughly half of grocery stores at shopping malls are located in what industry experts call a “Class B” mall—not the gold-standard Class A mall that is more likely to house luxury goods. Class B malls, which are more likely to attract middle-class clientele, have struggled more than their wealthier cousins. As a result, they’ve been forced to think more creatively when it comes to finding tenants. More than 300 malls in the US are categorized as B-tier malls.“Malls that are struggling a little bit more are going to require more non-traditional tenants like grocers,” said Arft.©2022 Bloomberg L.P. More

WASHINGTON (Reuters) -A U.S. bank regulator ordered crypto exchange FTX on Friday to halt what it called “false and misleading” claims the exchange had made about whether funds at the company are insured by the government.The Federal Deposit Insurance Corporation said a July tweet by Brett Harrison, head of FTX’s U.S. operations, contained misleading claims that funds held at and stocks purchased through FTX were FDIC insured, and ordered the company to remove any misleading language from its social media accounts and websites.In the tweet, which Harrison has since deleted, he stated that direct deposits from employers to the crypto exchange are “stored in individually FDIC-insured bank accounts” and that stocks purchased via FTX US “are held in FDIC-insured” brokerage accounts. The FDIC said in its cease and desist letter to FTX US that those statements implied that FDIC insurance was available for cryptocurrency and stock holdings, and that the agency does not insure brokerage accounts.In a tweet on Friday, FTX CEO Sam Bankman-Fried emphasized FTX is not FDIC-insured, and apologized if anyone misinterpreted previous comments.The order, one of five sent to crypto firms by the FDIC on Friday, comes as regulators have ramped up efforts to police crypto firms that may be misleading investors on whether their funds enjoy a government backstop. The issue has come to a head of late, as turmoil in the crypto market has led to stress and the collapse of some high profile firms.The bank regulator issued a similar cease and desist letter to bankrupt crypto firm Voyager Digital , arguing that the company had misled customers by claiming their funds with Voyager would be covered by the FDIC. Later, the FDIC issued an advisory urging banks dealing with crypto companies to ensure that customers are aware of what types of assets are government-insured, particularly in cases where firms offer a mix of uninsured crypto products alongside insured bank deposit products. More

No one can deny that Andrew Bailey had a difficult first week as governor of the Bank of England. Appointed in December 2019, he took charge on March 16 the following year to be faced immediately with the explosion of coronavirus cases, a sterling crisis and the UK government moving towards lockdown. Taking dramatic action to quell the immediate difficulties, Bailey earned praise for steering the economy successfully through the darkest early days of Covid-19, while remaining resolute and calm. Almost two-and-a-half years on, the plaudits have turned to brickbats and the governor is taking flak for the perilous state of the UK economy. In the past 10 days, inflation has moved into double digit territory for the first time in 40 years, hitting 10.1 per cent in July, five times the BoE’s 2 per cent target for inflation. Rapid price rises are coming at a time when the UK economy has started to contract with the central bank expecting a full-blown recession to start in the autumn and last for more than a year. Real wages fell at their sharpest rate on record in the second quarter of 2022 and consumer confidence is at its lowest level in almost 50 years. Without a functioning government, the economic crisis is coming home to roost at the BoE. Tabloid newspapers have turned on the Leicester-born Bailey, 63, who held a number of more junior roles at the Bank between 1985 and 2011. He has been described as the “plank of England” and the “banker who’s running out of credit”, while politicians see a man who is down and deserves another kick.Liz Truss, the frontrunner to be the next prime minister, has called for a review of the BoE and its mandate, while her allies point the finger of blame squarely at Bailey. Kwasi Kwarteng, the business secretary and favourite to become the next chancellor if Truss wins, told the BBC this month that with inflation in double digits, “we need to look at what went wrong”. Truss’s allies have even negatively recast Bailey’s sometimes lugubrious style. While Bailey has always revelled in his “sexy tortoise” nickname, keeping a knitted tortoise that sits on his desk, her team has let it be known they think Bailey is “aloof”. With so much incoming fire, Bailey has had to state publicly that he intends to see out the remainder of his eight-year term as governor. Amid the turmoil and terrible economic data, the BoE has stayed silent. Accounts from those that have met senior officials recently say there is much frustration in Threadneedle Street, partly because circumstances are so difficult and partly because they do not feel they deserve criticism. On the economy, for example, the BoE feels it has been more honest than many central banks in laying out how bad things are likely to get over the winter. Without quite saying he wanted a UK recession to get inflation down, Bailey was clear that the country could not avoid the coming suffering that was partly due to higher borrowing costs. “I recognise the significant impact this will have, and how difficult the cost of living challenge will continue to be for many people in the United Kingdom. Inflation hits the least well off hardest. But if we don’t act now to prevent inflation becoming persistent, the consequences later will be worse and will require larger increases in interest rates,” he said.But any credit Bailey hoped to earn from straight-talking has been diluted over the past year by a series of gaffes undermining the message. This started in October last year when, despite strong hints about imminent interest rate rises, the Monetary Policy Committee did not follow through in November, earning the BoE a reputation for being all talk and no action.When it did take action on rates, Bailey told workers not to ask for pay rises, in words that appeared to absolve the BoE of responsibility for controlling inflation. Then, when speaking to MPs at a parliamentary committee hearing, he talked about “apocalyptic” food price increases (insiders say this was an aside and the governor never intended to make headlines). Most recently, he appeared out of touch when he dismissed any suggestion that the BoE might have made errors in monetary policy and inflation control.These foot-in-mouth moments contrast with reports from insiders at the central bank. They say it is working better with a more collegiate culture and a greater tolerance of dissent than under Mark Carney, Bailey’s immediate predecessor.Bailey’s staff hopes that the governor’s current troubles begin to ease as a new Conservative prime minister takes over in September and the focus for public anger at the state of the economy once again moves west across London towards Downing Street. It is the government that has responsibility for deciding whether and how to compensate people for energy bills that could rise by more than 75 per cent in October. And once inflation peaks, the BoE will find it much easier to credibly promise it will meet the 2 per cent inflation target.Bailey has faced deep political troubles before as head of the Financial Conduct Authority and pulled through, bruised but unbowed. The BoE hopes he can pull off the same trick again. [email protected] More

Do you know what a pint of milk costs? It’s a question designed to catch out out-of-touch celebrities and politicians. In these times of inflationary froth, central bankers — and therefore markets — might want to pay attention, too.Prices for milk, one of the most of basic of commodities, are surging. That matters not only for shoppers, but for those of us after a sign of how sticky inflation will be.Milk has traditionally proved stubbornly resistant to inflation. Farmers and processors need to keep margins at a minimum if they want to sell their wares to the supermarket behemoths, which are under pressure from discount retailers.These market dynamics — and the fact that we’re now drinking more dairy-free alternatives — meant that in the UK from 2008 until recently the average price of a pint had been as flat as a glass of the stuff at 42p. Over the past year, however, it’s leapt by 40 per cent to 59p. That might still sound like small change. But for a staple that the average person drinks three of a week, it’s pretty staggering for some. It’s a similar story elsewhere. In Germany, prices are up by almost a third over the past year, while the cost of a gallon in the US has risen by 15 per cent since January.So what does the soaring cost of a pint of milk tell us about the nature of inflation? And how much of the recent spurt has its origins in the supply-side shortages that emerged during the pandemic?That we’re seeing it happen in such a competitive market highlights how embedded price rises have become.The cost of two of the biggest inputs for dairy farmers — feed and fertiliser — are up 83 per cent and 179 per cent respectively over the past year, according to the UK Agriculture and Horticulture Development Board. “With farm input costs rising so significantly, dairy processors have had to pay more to ensure farmers don’t reduce milk production too much,” says Patty Clayton, the industry body’s lead dairy analyst.The war in Ukraine has exacerbated supply-side inflation. The media spotlight on Russia’s invasion has also meant the rise in costs has not only been painful, but visible — a crucial factor that has helped processors pass them on to retailers.Joanna Konings, a senior economist at Dutch bank ING, says the fact that this has happened, after years of tough negotiation with supermarkets, “shows us just how strong the current rises in input prices are”.Some input prices are now falling, however. Among them is the cost of oil, which is vital throughout the supply chain. “The milk is collected from farms all over the place in tankers so they are using fuel, then processing the milk takes energy as it involves heating it. Then there is the cost of delivering lorry loads of milk and cheese and butter by road,” says Maggie Urry, who used to cover the dairy industry for the Financial Times.Droughts across the northern hemisphere may have cut short the peak milk-producing “spring flush”, weighing on output. But, with the cost of commodities broadly down in recent months, milk price pressures might have peaked.I suspect, however, that it will be a while yet before the spillover effects work their way through the supply chain.When doing their weekly shop, people notice inflation in two ways. The first is if the cost of a staple they buy often goes up. You may or may not know what the price of milk is, but I very much doubt you’d be able to tell whether that bottle of Tabasco sauce you purchase twice a year costs more now than it did during the winter. The second is if the price of a basket of goods rises. Andrew Porteous, a consumer and retail analyst at HSBC, says: “Everybody has a few items that they know the price of, but what most of us notice is what we pay at the checkout, when we go: ‘Oh my, I’ve spent 55 quid this week rather than 50.’” Supermarkets — keen not to be outdone by the discounters that have robbed them of market share over the past decade — “want to make sure that the price of their baskets is competitive”, adds Porteous. They do that by tending to raise costs only of products bought occasionally.Milk is so ubiquitous that even Mark Carney, the former Bank of England governor who was as near to rock star status as central bankers get, knew what the price of half a gallon was. Couple that with an increase in the cost of the average shop and what we have is a very visible rise in inflation. That visibility matters a lot. It’s likely to not only influence the expectations of shoppers and businesses about where prices will be this time next year, but make demands for higher wages and increases in the cost of other products all the more credible. How can you bemoan paying a farmer more when you’ve felt the pinch yourself? The rise in the price of a pint looks to me like a portent of inflation’s stickiness. I’d caution against those market bets that monetary policymakers will soon pivot away from increasing borrowing costs. Instead Carney’s successor, Andrew Bailey, and his central banking counterparts elsewhere will have to sit tight while price pressures, from supply chain to supermarket shelf, play [email protected] More

You would have thought steep food prices would encourage higher farm productivity, relieving pressure on consumers. Instead, results from US tractor maker Deere on Friday showed how supply bottlenecks have been overriding normal market relationships.The business, capitalised at $111bn, reported robust demand for new farm equipment. But it has struggled to keep pace with orders. Incomplete tractors awaiting parts have been piling up in factories. Semiconductors and other vital components remain in short supply.Farmers with cash to invest in new equipment are having to wait for delayed deliveries of key machinery needed to plant and harvest.Higher sale prices for grain have meanwhile been offset by spiralling input costs for everything from labour to fuel and from seeds to fertiliser. One estimate from the US Department of Agriculture predicts net farm income, a broad measure of profits, will drop 4.5 per cent to $113.7bn this year. Deere’s third-quarter sales grew by a bigger than expected 22 per cent. However, net income came in below analysts’ expectations, rising just 13 per cent. The company also cut its full-year earnings guidance from a range of $7bn-$7.4bn to $7bn-$7.2bn.Price hikes on equipment will help absorb some of Deere’s higher costs. Farmers will have to pass these on or scale back investment in fertilisers and the like, reducing crop yields. Either way, consumers can expect little relief from high food prices.These have been elevated by a war in Ukraine that shows no sign of ending. Disruption to manufacturing supply chains was incubated by the pandemic but has been sustained by the conflict. For farmers, connecting factors between the two phenomena include higher energy and chemicals costs.Extreme weather conditions have meanwhile disrupted farm outputs from Europe to the mid-West and Latin America. Recent data showing a slight slowdown in US consumer price increases have helped fuel a rally in Wall Street stocks. On the evidence of Deere’s results, claims that inflation may have peaked look distinctly premature. More