Aurelia Butler

Millions of people started a “side hustle” to make some extra cash during the pandemic, but how can you judge if it’s possible to scale yours up into a fully-fledged business? On Money Clinic podcast this week, presenter Claer Barrett travels to Norwich to meet 24-year-old Evvia. She works as a full-time care assistant, but in her spare time, is a fledgling fashion designer.A year ago, she started a vintage knitwear business from her bedroom. Today, her Loupy Studio label has over 40,000 followers on Instagram, and she is receiving orders from all over the world.

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Evvia’s creations are in such hot demand, she will have to scale back her hours at work to keep up — but she wonders how this might knit together financially. Jo Ellison, editor of How to Spend It, gives her verdict on whether Evvia should increase her prices, and talks about the financial challenges facing young designers. Plus, chartered accountant Deborah Edwards from Raised Up Finance unravels important questions about tax, different company structures and how entrepreneurs like Evvia can develop a growth mindset for their businesses. To listen, click on the link above, or search for Money Clinic wherever you get your podcasts. If you would like to be a future guest on the show, please email [email protected] or follow Claer on social media @ClaerB. More

Rising protectionism is exacerbating chaos in global food markets brought on by the war in Ukraine, with governments clamping down on exports of staples including grains, cooking oil and pulses.Soaring food prices and, in some cases, the threat of social unrest have led to an increase in exporters banning overseas sales or putting in place other restrictions such as taxes or quotas. These protectionist steps have only driven up the food import bill further for countries dependent on international markets for important food commodities, hitting some of the poorest in the world.Beata Javorcik, chief economist at the European Bank for Reconstruction and Development, warned protectionism would only artificially boost prices, already at record levels, fuelling global food insecurity. “This is going to increase global poverty rates. And in extreme situations, it may induce authoritarian regimes to become more oppressive,” she said.Before the invasion of Ukraine, droughts and Covid-19 labour restrictions had driven international food prices higher. The war has led to 23 countries turning to food protectionism, according to the US think-tank International Food Policy Research Institute (IFPRI). The share of restricted products in the world food trade measured in calories was 17 per cent, the same level seen during the 2007-08 food and energy crisis, said the IFPRI. Indonesia last month became the latest country to announce an export ban, stopping overseas sales of palm oil. The commodity is the most traded vegetable oil in the world, used in everything from cakes to cosmetics. Jakarta’s decision has been another blow for consumers already struggling with a jump in cooking prices because of the invasion of Ukraine, a leading sunflower oil supplier. Supermarkets in the EU and UK have rationed cooking oil as shoppers have rushed to stockpile. The move by the leading palm oil exporter has meant that, together with Ukrainian and Russian sunflower oil, more than 40 per cent of supplies on the international vegetable oil market have become difficult to access.

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Jakarta’s first-ever blanket ban on exports of the edible oil, implemented as the country prepared for feasting at the end of Ramadan, appears to have paid off politically. After a rapid decline, approval ratings for President Joko Widodo climbed 4 percentage points to 64 per cent in the latest survey by pollster Indikator.But as the ban staved off discontent in Indonesia, it stoked chaos elsewhere. Pakistan, whose new government is already contending with an inflation crisis, soon formed an official task force to address its palm oil supplies. Islamabad has sought to reassure the public by seeking guarantees from Indonesian officials that Jakarta would resume shipments before the end of the month, according to Usman Qureshi, joint secretary in Pakistan’s commerce ministry.Although agricultural commodity traders do not expect the ban to last long, some warned that the unexpected move had affected Indonesia’s reputation as a place to do business. One palm oil trader in Singapore said: “I will diversify my exposure [away from Indonesia] a bit more going forward.”David Laborde, a senior research fellow at IFPRI, said the export restrictions had created a domino effect, reducing world supply to those who needed it. “You end up undermining the world trade system,” he said, adding that by limiting access to international markets, restrictions also reduced incentives for farmers to grow crops. “You hurt your own farming system and your own food supplies.”Traders are now focused on whether India will announce a food export ban.

One of the world’s largest wheat producers, the country’s exports rose to a record high of more than 7mn tonnes in the year ended March, helping fill the shortfall caused by the Ukraine war. But searing heat in March and April, where temperatures of up to 45C hit large parts of India’s wheat belt, have heightened concerns about the country’s domestic supply. With several more weeks of heat expected before the onset of the annual monsoon next month, the government this week downgraded its forecast for the current wheat crop by 5 per cent to 105mn tonnes for the year to June.Prices quoted on wheat markets around the world have risen over the past few days following reports that New Delhi was also considering restricting exports to protect domestic stocks from further shortfalls.But India’s food secretary Sudhanshu Pandey disputed that restrictions were an option, saying the country had enough to meet its domestic needs. “Wheat exports are on,” he told reporters on Wednesday, adding that the arrival of Argentina’s own wheat crop from June should ease pressure on Indian and global supplies.Traders said any restrictions on Indian exports would shock international markets. “The world has been relying on India for alternative supplies at a time when global inventories are historically tight and supplies remain severely restricted from the Black Sea,” said Kona Haque, head of research at ED&F Man, an agricultural commodities trading house. Any suggestion that India might move to ban exports would cause “global wheat markets to panic and prices to rise”, she warned. More

Emerging market currencies have fallen by their most since the early stages of the pandemic as a “toxic” mix of rising US interest rates and slowing Chinese growth dims the outlook for developing economies around the world.An MSCI gauge of emerging market currencies has tumbled by more than 4 per cent since early April as the Federal Reserve embarks on an aggressive tightening of monetary policy in a bid to rein in high inflation, boosting the US dollar while battering stocks and bonds. Draconian coronavirus lockdowns in China have piled on further pressure by threatening a crucial source of demand for emerging economies.The Chinese renminbi fell to its weakest level against the dollar in more than 18 months on Monday after data showed the country’s exports grew at the slowest pace in two years last month, spurring a further bout of selling across emerging market currencies.“We have had this cooling down of Chinese demand coming at a time when the Fed is hiking interest rates and inflation is still pushing higher,” said Cristian Maggio, head of emerging markets portfolio strategy at TD Securities. “As if that weren’t enough we still have the risks related to the war in Ukraine. It’s a very toxic combination.”Rising US interest rates make emerging markets relatively less attractive to investors, prompting many to pull their money out of riskier economies and shift it to the relative safety of the American financial system. Even so, currencies in the emerging world had mostly shrugged off the prospect of tighter Fed policy until a month ago, helped by rate rises from emerging market central banks facing their own inflation problems last year.Russia’s invasion of Ukraine in February, which propelled the price of goods from oil to wheat higher, also bolstered currencies of commodity-exporting countries including Brazil and South Africa.

“EM has had the tailwind of higher rates and higher commodities,” said Polina Kurdyavko, head of emerging market debt at BlueBay Asset Management. “The question was always how long that would last.”But a more aggressive Fed, which last week increased interest rates by half a percentage point for the first time since 2000, has sparked a renewed sell-off in risky assets such as stocks while sending emerging market currencies lower. Commodity-linked currencies including the Brazilian real and the South African rand have given up part of their earlier gains, while further pain has been heaped on commodity importers such as India, where the central bank was reported to be intervening in markets to support the level of the rupee on Monday.“A lot of this pressure is coming from the Fed, and it isn’t really specific to EM,” said Uday Patnaik, head of emerging market debt at Legal & General Investment Management. “But right now you have a tightening of financial conditions everywhere, and EM can’t escape that.” More

The writer is chief executive and chief investment officer of Richard Bernstein AdvisorsFormer NFL coach Bill Parcells once famously said, “You are what your record says you are.” A team’s coach might try to rationalise a losing record by highlighting good planning, unfortunate injuries, or players’ small miscues but the stark reality is a team with a losing record is a poor one.The Federal Reserve claims to be fighting inflation, but before one proclaims the central bank “hawkish”, it seems appropriate to paraphrase Parcells: you are what your real fed funds rate says you are.The real fed funds rate (ie the difference between the target rate for the central bank and inflation) has historically been a reliable gauge of the monetary policy. When the real fed funds rate is positive, interest rates are high enough to slow nominal growth. But when the real fed funds rate is negative, it suggests the Fed is trying to stoke the economy.Every US recession in the past 50 years has been preceded by a positive real fed funds rate. And the Fed correctly kept the real funds rate negative during most of the period after the financial crisis because the fall-off in bank lending made deflation a bigger risk than inflation.Despite the fact that inflation is at a 40-year high by virtually any measure, the real fed funds rate is now negative to a degree that is far beyond historic averages. Measured using the consumer price index, the real fed funds rate is negative 7.5 per cent versus the 50-year average of 1 per cent. The real funds rate was more than 10 per cent at the peak of the 1980s inflation-fighting Volcker regime.The US and global economies have meaningfully changed in 40 years and Volcker’s extraordinary monetary tightening may not be warranted today. But one should seriously question whether the current real fed funds rate will slow the economy let alone curtail inflation.Some economists defend the Fed’s timid actions by suggesting inflation will cool once current supply chain bottlenecks subside. However, supply disruptions have been the root cause of the US’s worst bouts of inflation. The oil embargoes of 1973-74 and 1979 fostered a full-blown wage and price spiral. Importantly, today’s supply disruptions have already lasted longer than the 1973-74 and 1979 oil embargoes combined and supply chains still remain snarled. It is remarkable how investors, and the Fed for that matter, are playing down one of the most significant economic events in US history. Regardless of whether supply is constrained or demand is too strong, inflation simply reflects demand greater than supply for an extended period of time. The lesson of the Volcker Fed was that the central bank has limited ability to increase the supply of goods or labour, so the only way it can stymie inflation is to raise interest rates enough to destroy demand and force a recession.Despite history, the current Fed believes it can engineer a so-called “soft landing” — ie inflation returning to more benign levels without a recession. The Fed’s optimism has spurred discussion whether a recession will occur or not.That current hard versus soft landing debate though seems a false dichotomy. A third outcome might be that the Fed does not act vigorously enough to force any cooling of the nominal economy and inflation lasts longer than the current consensus.The markets seem to be considering this third option. The three-month to 10-year yield curve is the steepest in seven years, with investors demanding more returns for holding longer-term debt. Such a steepening during a tightening of monetary policy suggest the Fed is losing, not gaining, inflation-fighting credibility.The combination of a timid Fed, substantial inflation, and investors’ general underweighting of traditional pro-inflation assets seems to present an investment opportunity.Although investors have somewhat gravitated to traditional hedges such as inflation-protected Treasuries and Real Estate Investment Trusts, investors remain broadly underweight assets that benefit the most from inflation: energy, materials, and industrial stocks, lower-quality credits, commodities and commodity-related countries, gold, and real assets such as timberland, farmland, and trusts that offer income from royalties.The Fed wants to be viewed as a conscientious inflation fighter, but the extremely negative real fed funds rate says otherwise. Despite the Fed’s jawboning, they are what their real fed funds rate says they are. More

Every January (pandemic excepted), journalists from the international media make their way by plane and train to the normally nondescript and inconveniently located Swiss Alpine town of Davos for a gathering of the global elite.They come mostly not to attend the public sessions with figureheads of business, politics and civil society but for the franker, closed-door discussions to which a select few are invited, and for the chance to collar delegates in the corridors, for a chat, coffee or, occasionally, meal.Their motivations are not unlike those of the full-price ticket-holding titans themselves, many of whose organisations pay hundreds of thousands of dollars for the privilege and swoop in by private jet, helicopter and chauffeured limousine.Peter Goodman, global economics correspondent of The New York Times, is a regular at Davos. And his experiences spark the lively onslaught of his book on the archetypal attendee at these übersummits: Davos Man.

Over 400-plus pages, he expresses righteous — and largely justified — indignation at contemporary capitalism, from price gouging, anti-competitive behaviour, and cosy corporate lobbying to the failure of trickle-down economics, the rise of international tax avoidance, growing inequality, and the pain of public sector austerity.He swipes at the aggressive investments of Stephen Schwarzman’s Blackstone private equity group, booking soaring profits on housing developments while millions struggle to pay rent or buy; or investing in private healthcare operators that spring costly additional “surprise billing” on patients and were slow, in the pandemic, to restrict fee-generating non-Covid medical tests despite the risks of infection.He attacks Larry Fink’s giant BlackRock fund management group, which berates other businesses for failing to practise responsible capitalism while resisting debt write-offs for overburdened low- and middle-income countries; and reaps commissions on green-friendly funds despite fierce debates about the ambiguous value of such environmental, social and governance filters.Then, there is Marc Benioff at Salesforce, who argues for social justice and stakeholder capitalism while minimising his corporate tax bill. And Jamie Dimon, head of JPMorgan Chase, who lobbied for tax cuts under Donald Trump while drawing pay of $31mn in 2018 — a year when Wall Street’s collective bonuses were more than triple the total earnings of every US full-time minimum-wage earner.And there is Jeff Bezos at Amazon, who, claims Goodman, undermines high street retailers and rival online sales outlets alike, imposes low wages and aggressive management practices on his staff and is paid largely in swelling stock, which he uses to help fund his carbon-consuming trips into space.Goodman rightly raises concerns over the injustice of the concentration of wealth among billionaires at the expense of the vast majority of the world’s population, and is scathing of claims that their modest philanthropy is somehow better than helping society through paying taxes channelled via democratically accountable governments.Some of his best reporting describes the pain of the underdogs, from impoverished workers in the Gulf to non-unionised warehouse staff in the US, and the unemployed victims of “sunset” manufacturing and mining companies whipped into anti-immigrant fervour by populist politicians.

But his book has two limitations. The first is his obsession with Davos as a common thread, as though the World Economic Forum had a uniquely powerful network in its own right, and was the only place where elites with shared values conduct negotiations to further their interests.He tries to weave a common Davos connection between the fallout from Brexit, the 2008 financial crisis and the coronavirus pandemic across very different countries with varied health systems, business leaders and politicians.The reality is that many of the egregious practices he describes existed in different forms long before the forum came into being half a century ago; some of the most extreme practitioners have never been to Davos; many of those who do attend have very divergent views; and much of any dealmaking that takes place is as frequent elsewhere, if not more so.Goodman takes a few shots at the management style and financial interests of WEF founder Klaus Schwab. Yet there is little reporting on backroom deals during the après-ski or evidence of initiatives, good or bad, that truly took off in and because of the Alpine gathering.The second gap in Goodman’s thesis is the limited exploration of alternatives. He touches on some interesting if familiar alternative models to Davos Man’s supposedly shared vision, such as labour co-operatives and universal basic income. But neither is analysed in sufficient detail to draw any firm conclusions.Nor is there much analysis of countries that have introduced higher-tax systems, imposed tougher regulations on companies and succeeded in fostering shared wealth creation and human wellbeing, such as in post-1945 Scandinavia. Davos may have failed to deliver a kinder form of capitalism, but its role in fostering the uglier current alternative is more modest than Goodman suggests. Davos Man: How the Billionaires Devoured the World by Peter Goodman, Custom House, £20This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment More

SINGAPORE (Reuters) – Asian shares tumbled to their lowest in nearly two years on Tuesday as investors shed riskier assets on worries about higher interest rates and their impact on economic growth, while the dollar held near 20-year highs.MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.8%, falling for a seventh straight session and extending declines to 17% so far this year.Across Asia, share indexes were a sea of red. The Nikkei lost 0.9%, Australian shares shed 2.5% and Korean stocks lost 2%.S&P 500 stock futures and Dow Jones futures both fell 0.5% and Nasdaq futures were down 0.6%.”The idea of a benign and gentle tightening cycle has evaporated,” ANZ analysts said in a report.”The reality is that the Fed cannot control the supply side of the economy in the short-run, so as long as key indicators like the labour force participation rate stay low and Chinese exports slow, the risk to inflation, and therefore interest rates, lies to the upside,” ANZ said.Central banks in the United States, Britain and Australia raised interest rates last week and investors girded for more tightening as policymakers fight soaring inflation.Overnight, U.S. stocks extended Friday’s bruising sell-off as investors rushed to protect themselves against the prospect of a weakening economy. [.N]Oil prices ticked lower on Tuesday on demand worries as coronavirus lockdowns in China, the top oil importer, continued. Brent crude slipped 0.5% to $105.4 a barrel after falling 5.7% on Monday. More