Aurelia Butler

Top Stories Today is a short-form audio digest of the day’s top headlines. Find the latest episode here.China’s president Xi Jinping has met Thomas Bach, the president of the International Olympic Committee, in a rare face-to-face encounter with an overseas official as Beijing maintains strict coronavirus prevention measures ahead of the Winter Olympics in February. The discussions on Tuesday between Bach and Xi, who has not left the country since early 2020, included the closed-loop system for the Beijing Games, which is designed to inhibit any transmission of the virus from Olympic participants to the wider population. Bach praised China’s “efficiency, determination and dynamism” and said Beijing’s measures would ensure a “safe, smooth and successful” Winter Games, according to Chinese state broadcaster CGTN.The IOC has come under intense scrutiny over its relationship with China and was criticised for its failure last year to back calls for an investigation into tennis star Peng Shuai’s allegations of sexual assault against a former top Chinese official.What are your thoughts on the Winter Olympics being held in Beijing? Tell me what you think at [email protected]. Thanks for reading FirstFT Asia. Here’s the rest of today’s news — EmilyFive more stories in the news1. West commits to keeping Nato open to new members The US and Nato told Moscow they were committed to keeping the transatlantic alliance open to new members, rebuffing a central Russian security demand in written responses that could determine the outcome of the Ukraine crisis.Related read: The European Central Bank has warned lenders with significant Russian exposure to ready themselves for the imposition of international sanctions against Moscow if it invades Ukraine.2. Fed signals March rate rise as it fights rampant inflation The Federal Reserve signalled its intention to raise interest rates in March, the first increase since 2018, underscoring the US central bank’s abrupt pivot to fighting rampant inflation as opposed to shielding the economy from the pandemic.More US news: Stephen Breyer, the 83-year-old liberal member of the US Supreme Court, plans to retire this year, according to media reports. Sign up for our Swamp Notes newsletter for the latest on the intersection of US politics, power and money. 3. Apple earns top smartphone spot in China Apple has reclaimed the top smartphone seller spot in China for the first time in six years as biting US sanctions throttled shipments from rival Huawei. The California company cornered 23 per cent of the world’s largest phone market in the fourth quarter of 2021, according to research group Counterpoint.4. Banks push back against Beijing’s overseas listing rules Asia’s top banking lobby group, which includes Goldman Sachs, Morgan Stanley and JPMorgan, have warned Beijing that an overhaul of the regime for Chinese businesses listing overseas may deter them from advising on initial public offerings, which would imperil a funding source for the country’s leading companies. 5. Amazon abandons campaign designed to attract staff Amazon has abandoned its much-maligned campaign of paying employees to share positive messages on social media, scrubbing online messages that were meant to improve the tech giant’s image to potential workers it needs to achieve continued growth.

Amazon started the social media scheme in an effort to combat growing hostility over conditions at its fulfilment centres © FT montage/Twitter

Coronavirus digestBoris Johnson on Wednesday vowed he would not quit as prime minister, as he prepared to receive a delayed report into lockdown-breaking parties in Whitehall by Sue Gray, a senior civil servant.South Korea’s consumer confidence rose this month, rebounding from a fall in December and helped by the continued economic recovery from the pandemic.Denmark has become the latest European country to lift almost all Covid curbs and stop designating it a “societally critical” disease. The IMF downgraded its 2022 global economic growth forecasts, warning that the recovery will run into “multiple challenges” including higher inflation. Catch up on Martin Wolf’s takeaways from the report. The new variant has exposed dysfunction in America’s public health institutions. “The underlying theme is inflexibility, both with resources and ideology,” says one expert.The day aheadHonduras’ first female president sworn in Xiomara Castro is to be sworn in as the nation’s first female president after winning in a high-turnout landslide in November. International Holocaust Remembrance Day Today marks the 77th anniversary of the liberation of the Nazi German concentration camp Auschwitz.Opinion: Earlier this month, FT’s Sarah Ebner reflected on her experience on receiving a European passport after Austrian citizenship was finally restored to families of Nazi victims.Earnings In a big day for earnings, companies reporting results include Apple, Deutsche Bank, easyJet, JetBlue Airways, LVMH, Mastercard, McDonald’s, Samsung Electronics, SAP and Visa. We apologise for incorrectly stating the day of Apple’s earnings in yesterday’s edition. They will be reported on Thursday in the US.Join us for the FT’s Future of Business Education: Spotlight on MBA the ultimate guide to educating global business leaders. This event offers both young professionals and seasoned executives an ideal opportunity to find out how to enhance their skill set and accelerate their careers through an MBA. Register today.What else we’re reading and watching International investors in Chinese companies face growing risks As property companies such as Evergrande teeter on the brink of collapse and the Chinese government cracks down on the tech sector, are the opportunities to make money worth the growing political risk? The FT’s global China editor James Kynge and markets editor Katie Martin discuss.

Video: International investors in Chinese companies face growing risks

When an activist investor attack is no bad thing Activist investor demands — like those at Unilever and Peloton — can spur self-satisfied executives to action, pressure boards into dealing with incompetent managers and question poorly thought out mergers and acquisitions. All of this is badly needed right now, argues Brooke Masters.South Korean crypto exchange plans ‘eco-friendly’ K-pop NFTs The head of Upbit, South Korea’s biggest cryptocurrency exchange, has promised that its non-fungible tokens featuring K-pop stars BTS will be “eco-friendly” after a backlash from environmentally conscious young fans.San Francisco is scaring away the tech crowd As a failure to tackle the epidemic of poverty continues, start-up founders, engineers and venture capitalists are leaving the city. If the city wants its tech crown back it cannot afford to just continue as normal, writes Hannah Murphy. You call that a party, Boris Johnson? It is unclear just how long the list of political casualties from the lockdown-breaching Downing Street BYOB bash may be, but those who don’t make it back are going to spend the rest of their lives asking, was it really worth it for a glass of lukewarm merlot and a bit of cheese roulade? asks Robert Shrimsley.

© Lucas Varela

Work and careers Hybrid work is polarising. But why? In this episode of the Working It podcast, Isabel Berwick talks to Camilla Cavendish and Pilita Clark about why it has become the most divisive topic in workplaces right now. More

US stock and bond prices swung lower on Wednesday afternoon after the Federal Reserve signalled that it would begin raising interest rates at its next monetary policy meeting in March.The benchmark S&P 500 index closed down 0.1 per cent for the day, reversing earlier gains after Jay Powell, Fed chair, declined to rule out raising rates at every policy meeting for the rest of the year. The index’s reversal was briefly 3.4 per cent between its high point and its nadir in late afternoon trading, the biggest downward turn since September 2020.“In my view, I do not think Fed chair Powell could have been more hawkish during his press conference than if he raised rates today,” said Tom di Galoma, managing director of rates trading at Seaport Global. “I believe all the signs are there for a hike coming at the March meeting followed by at least three more in 2022.”Markets have shifted violently in recent weeks as investors braced for the effects of an impending rate rising cycle by the US central bank as it aims to tame soaring inflation.Stocks briefly jumped after the central bank published its policy decision without announcing any big surprises, but investors reversed course as Powell spoke to journalists later in the afternoon.He stressed that the central bank would move “as appropriate” to combat rising prices, cautioning that the inflation outlook had worsened since the Fed’s last policy meeting in December and noting that supply chain issues may not be resolved by the end of 2022.Investors also sold government bonds, with the yield on the 10-year Treasury rising 0.09 percentage points to 1.87 per cent. Bond yields rise when prices fall.The technology-focused Nasdaq Composite index closed unchanged, helped by a 2.2 per cent gain for Microsoft, the index’s second-largest constituent. The tech group published an upbeat financial forecast after markets closed on Tuesday evening, providing some reassurance to investors after a weak start to earnings season by other large technology groups such as Netflix.Speculative technology stocks have been particularly badly hit by the recent speculation over rising interest rates. Higher rates make it more expensive for companies to borrow and invest, and reduce the present value of companies’ expected future earnings in investors’ valuation models.

The annual pace of US consumer price inflation reached an almost 40-year high of 7 per cent last month, with price rises broadening out from areas hit by pandemic-related supply chain bottlenecks into most categories, including food and rent. Unemployment has fallen to almost pre-pandemic levels. Labour shortages and record job openings have also spurred wage growth. Asian stocks were also volatile on Wednesday. China’s CSI 300 index skirted a technical bear market before closing 0.7 per cent higher. In Tokyo, the Nikkei 225 slipped 0.4 per cent. European markets, in contrast, enjoyed solid gains. The continent-wide Stoxx 600 index rose 1.7 per cent, while Germany’s Dax climbed 2.2 per cent. More

The UK national statistics agency is to restart publication of detailed data on inflation rates experienced by different types of households in response to claims that the headline measure underplays the impact rising prices are having on the poorest.The Office for National Statistics came under fire last week from Jack Monroe, a food blogger and poverty campaigner, who claimed on Twitter that its headline figure “grossly underestimates” the reality of inflation for people with the lowest incomes, because prices had risen faster for basic food products than for premium versions. Monroe, who has been invited to meet ONS officials, is marshalling volunteers including economists, retail analysts and ex-ONS staff to produce her own index of basic food prices. The ONS said on Wednesday that it would resume the analysis that was suspended at the start of the pandemic because prices for many items, such as meals out or flights, were temporarily unavailable.“We are committed to ensuring that our statistics are relevant and continue to meet user needs,” the agency said. “As part of this we are restarting publication of inflation broken down according to how much income you earn.”The issue of who is hit hardest by rising living costs has taken on new urgency, with average inflation at its highest rate in 30 years in December and likely to rise above 6 per cent in the coming months, even if the government takes action to limit the jump in regulated energy prices.

Rival indices are proliferating and controversy over the real rate of inflation is complicating an already fraught wage-bargaining season, as trade unions argue for pay rises to compensate workers for higher living costs. Unite plans to produce its own “bargaining index”, which it claims will better reflect real living costs and employers’ ability to pay higher wages.Mike Hardie, head of inflation statistics at the ONS, said in a blog that the agency could not yet answer the question of “what happens to the price of own-brand versus branded baked beans”, although the ONS had “radical” plans to start using data sent directly from supermarket checkouts to gather millions of prices each month, rather than the current 180,000.But Hardie said even big changes in the price of certain food items had only a small impact on the overall inflation rate, as they made up a very small part of average household spending.The debate is much wider than the price of food. Inflation has at times been higher for people on low incomes because they tend to spend a higher proportion of their income on essentials such as fuel and food, the prices of which can fluctuate sharply. Hardie said this was the case in 2008-2009, although differences had historically been small.Analysis by the Institute for Fiscal Studies think-tank, based on November data, found very little difference in the cost increases faced by households at opposite ends of the income distribution — because prices have risen fast for luxuries such as meals out and travelling, as well as for essentials. But the IFS warned that the poorest tenth of households would be hit much harder than the richest tenth from April, if energy and other prices climbed as expected, because they spend almost three times as much of their budgets on gas and electricity. This would leave them facing an overall inflation rate around 1.5 percentage points higher than the richest. More

This is the year in which the newly geopolitical EU is supposed to repurpose its long-established clout in trade policy into a tool for global strategic power. It isn’t going very well. In the first two weeks of January the EU looked pretty weak in response to an immediate test case, China’s bullying of Lithuania. Latterly, the EU’s divisions over helping Ukraine to resist Vladimir Putin’s threats are a sharp reminder that it has tried using trade as a political lever before — with rather unfortunate consequences.The immediate cause of Putin’s annexation of Crimea and proxy invasion of Donbas in eastern Ukraine in 2014 were the Maidan demonstrations in Kyiv, which began in November 2013. The protests forced out the Kremlin’s man in Kyiv, Moscow-aligned president Viktor Yanukovich. The context was the EU’s attempt, if not actually to turn Ukraine into an accession state, then to pull it into the Brussels orbit via a “deep and comprehensive free trade area” (DCFTA) embedded in a wider political association agreement.The DCFTA, which provisionally came into force in 2016, is economically a pretty good deal for Ukraine. Some optimistic souls even cited it as a possible model for the UK’s relationship with the EU after Brexit. It gives privileged access to the EU single market but doesn’t require direct jurisdiction of the European Court of Justice. Critically, it is also loaded up with political and administrative conditions intended to draw its signatory towards the EU governance model. (That is, the model before Hungary’s Viktor Orban and Poland’s Law and Justice Party started trashing it, obviously.) The idea is market access and soft power combining to create a friendly and prosperous neighbour.But the DCFTA conditions and the associated messaging reduced almost to nil any idea that Ukraine would be able to keep a firm foot both in the EU and Russian economic camps. The latter is the Eurasian Economic Union, a grouping into which Moscow has managed to entice or bully Armenia, Belarus, Kazakhstan and Kyrgyzstan, and which acts more like a protection racket than a trade agreement. Putin occasionally used to suggest tripartite talks to enable the EU, Ukraine and Russia to co-operate on trade, but Brussels — no doubt correctly — saw that as a disingenuous tactic to delay and distract.For the EU, using a politicised trade deal to turn Ukraine’s eyes firmly to the west proved a dangerous game. It also inevitably fuelled concern in Moscow about Ukraine’s aspirations to join Nato. Putin, despite signalling a commitment to norms of international governance by taking Russia into the World Trade Organization in 2012, turned publicly against the Ukraine DCFTA in 2013, and Yanukovich heeded his master’s voice.Brussels negotiators were taken aback. Karel De Gucht, then the EU’s trade commissioner, says: “We were in fact surprised that all of a sudden they were so much against it.” He adds: “How, exactly, this idea developed within the circles of the Kremlin I don’t know.”If it came as a shock to the trade negotiators, they were badly advised by the EU’s foreign ministers. It was not an issue on which so much should have been left to trade policy. Like the US in the cold war, the EU has tried to use soft power (and market access) to extend its influence eastward. Unlike the US in the cold war, it doesn’t have hundreds of thousands of troops lined up on its eastern border to back it up.Nor has the DCFTA produced spectacular results. More than five years after its preferential access began, Ukraine still sells only just over a third of its goods exports to the EU. This contrasts unfavourably with neighbouring Moldova, which has a similar DCFTA with the EU and which sends more than two-thirds of its exports there. Ukraine, a dysfunctional economy with a woeful business climate, has failed to get itself in shape to take advantage. Nor has the EU been able to provide enough aid or crisis lending to rescue it from balance of payments problems and help it to develop. The EU has largely left it to the IMF to provide emergency external financing, and EU technical assistance has fallen short of expectations. EU-oriented Ukrainian elites remain firmly committed to looking westwards, but it has to be admitted there isn’t a great demonstration effect so far for the benefits of doing so.We’re now in a place where the EU (as a collective entity rather than its individual member states), having helped to trigger Putin’s aggression, isn’t even considered to be a geopolitical actor worth inviting to summits to defuse it. Trade and soft power can be part of an effective strategic policy. But the recent history of the EU and Ukraine suggests they are not substitutes for big guns and cold [email protected] More

NEW YORK (Reuters) – Cybercriminals laundered $8.6 billion in cryptocurrencies last year, up 30% from 2020, according to a report from blockchain analysis firm Chainalysis released on Wednesday.Overall, cybercriminals have laundered more than $33 billion worth of crypto since 2017, Chainalysis estimated, with most of the total over time moving to centralized exchanges.The firm said the sharp rise in money laundering activity in 2021 was not surprising, given the significant growth of both legitimate and illegal crypto activity last year.Money laundering refers to that process of disguising the origin of illegally obtained money by transferring it to legitimate businesses.About 17% of the $8.6 billion laundered went to decentralized finance applications, Chainalysis said, referring to the sector which facilitates crypto-denominated financial transactions outside of traditional banks.That was up from 2% in 2020. Mining pools, high-risk exchanges, and mixers also saw substantial increases in value received from illicit addresses, the report said. Mixers typically combine potentially identifiable or tainted cryptocurrency funds with others, so as to conceal the trail to the fund’s original source.Wallet addresses associated with theft sent just under half of their stolen funds, or more than $750 million worth of crypto in total, to decentralized finance platforms, according to the Chainalysis report.Chainalysis also clarified that the $8.6 billion laundered last year represents funds derived from crypto-native crime such as darknet market sales or ransomware attacks in which profits are in crypto instead of fiat currencies.”It’s more difficult to measure how much fiat currency derived from off-line crime — traditional drug trafficking, for example — is converted into cryptocurrency to be laundered,” Chainalysis said in the report. “However, we know anecdotally this is happening.” More

WASHINGTON (Reuters) – The Federal Reserve is expected on Wednesday to signal plans to raise interest rates in March as it focuses on fighting inflation and sets aside, at least for now, economic risks posed by the ongoing coronavirus pandemic, a bout of market volatility, and Western fears of a Russian invasion of Ukraine.The policy decision, due to be released at 2 p.m. EST (1900 GMT) after a two-day meeting, won’t commit the U.S. central bank to a particular course of action when its rate-setting committee meets again in seven weeks.But absent a marked change in the course of the economy the Fed is likely at its March meeting to start withdrawing its pandemic-era support, banking that a combination of higher interest rates and a smaller central bank presence in financial markets will help slow the pace of price increases.Graphic: The COVID inflation surge The COVID inflation surge, https://graphics.reuters.com/USA-FED/INFLATION/akvezawxopr/chart.png The meetings before such policy actions are typically used to telegraph what’s coming.With U.S. inflation “very high” and the unemployment rate now just 3.9%, Fed Chair Jerome Powell and his colleagues “will talk up the economy without sounding apocalyptic on inflation and prepare the ground for a March liftoff” of interest rates, Cornerstone Macro economist Roberto Perli wrote in a note ahead of the decision. They are likely also to continue debating how and when to reduce the central bank’s massive holdings of Treasury bonds and mortgage-backed securities as a further way to tighten monetary policy.Powell is due to begin a news conference half an hour after the release of the statement. Fed officials will not provide updated economic and interest rate projections on Wednesday, so it will be up to Powell to elaborate on how the central bank’s views align with investors who are expecting a more vigorous fight against inflation, and who have sold off U.S. stocks and begun raising long-term interest rates this month as a result.The Fed is expected on Wednesday to keep its benchmark overnight interest rate unchanged at the near-zero level.Graphic: How fast will the Fed go?, https://graphics.reuters.com/USA-FED/gkplgbrkjvb/chart.png TRANSITORY NO MORETrading on Wall Street this week has been notably volatile, and the S&P 500 index is down about 8% this year. That, along with the rise in market rates for things like home mortgages, will force Powell to walk a line between wanting to keep the economic recovery on track while also affirming that control of inflation is currently the Fed’s first priority.”He won’t sound nervous about inflation remaining high for a long time,” Perli wrote, but will leave open the possibility of raising rates faster than anticipated, or even by more than the usual quarter-percentage-point increment, “as insurance against inflation tail risks, which are obviously substantial.”Those risks have become steadily more pronounced over the last five months. Powell in August used a high-profile speech to outline why he thought high inflation would be “transitory,” but since then economic data have shown otherwise https://graphics.reuters.com/USA-FED/INFLATION/zdpxoqkrkvx/index.html.With consumer inflation rising at 7% annually, the fastest pace since the early 1980s, the issue has been flagged by the White House as a key economic and, for President Joe Biden’s Democratic Party, political risk.New data released later this week will likely show that the resurgent pandemic both reduced the pace of economic growth at the end of 2021, and kept the inflation measures watched most closely by the Fed rising at well above its 2% target.There’s little respite in sight. If anything, international developments hold a risk of worse to come. China’s strict coronavirus lockdown policies mean global supply chains may be slower to return to normal, and a military conflict between Russia and Ukraine could add to inflation as well.”The consequences for the energy market … likely would be a further increase in prices of oil and natural gas, and therefore of energy costs more broadly for many countries in the world,” Gita Gopinath, the first deputy managing director of the International Monetary Fund, said on Tuesday after the IMF lowered its 2022 economic growth forecasts https://www.reuters.com/markets/us/imf-cuts-growth-forecasts-us-china-world-omicron-spreads-2022-01-25 for the U.S., Chinese and global economies.”So in terms of headline inflation numbers, it certainly could keep headline inflation much more elevated for longer,” she said. More