Aurelia Butler

US President Joe Biden predicted Russia would “move in” on Ukraine and warned an invasion would be a “disaster” for Vladimir Putin, as he urged the west to remain united in holding Moscow “accountable” for any aggression.At a news conference to mark his first year in office, Biden said Russia would “pay a stiff price, immediately, short-term, medium-term and long-term” in the event of an invasion of its neighbour Ukraine.But his comments were muddied by a later suggestion that a “minor incursion” into Ukraine by Russia might yield lighter retaliation, which the White House was forced to clarify.Meanwhile, there were also signs of confusion in the European response to Russia’s build up of troops on the Ukraine border as fears of conflict grow.Addressing the European parliament in Strasbourg, French President Emmanuel Macron yesterday broke ranks to call on EU states to “conduct their own dialogue” rather than engage with diplomatic efforts involving the US and Nato.EU officials later sought to reassure the US that Brussels remains committed to Washington-led negotiations with Russia to defuse the crisis.The diplomacy continues today with Antony Blinken, US secretary of state, travelling to Berlin for talks with new German Chancellor Olaf Scholz and the foreign ministers of Germany, France, and the UK. Tomorrow Blinken is due to fly to Geneva to meet his Russian counterpart Sergei Lavrov.Go deeper: What would a Ukraine conflict look like? In the latest episode of the Rachman Review podcast, our chief foreign affairs commentator talks to Samuel Charap, a political scientist at the Rand Corporation think-tank in Washington about the potential for conflict in Ukraine.Top Stories Today is a regularly updated short-form audio digest of the day’s top headlines, produced every weekday and read aloud by Microsoft Azure AI. The latest episode includes headlines on the Ukraine conflict.Thanks for reading FirstFT Americas. Here’s the rest of today’s news — GordonFive more stories in the news1. Biden backs Fed shift to monetary tightening Joe Biden backed the Federal Reserve’s shift towards tighter monetary policy to fight inflation, using his first formal press conference in months to defend his handling of the economy and reboot his presidency. Comment: Joe Biden’s three picks to join the board of the Fed, if approved, would mark the first time women outnumber men on the policy-setting Federal Open Market Committee. “A more diverse group could mitigate some of the damage caused by the hubris of earlier generations,” writes Claire Jones.2. Top Wall Street banks paid out $142bn in pay and benefits last year Wall Street’s leading banks increased pay by nearly 15 per cent last year as they fought a war for talent. JPMorgan Chase, Citigroup, Goldman Sachs, Morgan Stanley and Bank of America said they handed out $142bn in pay and benefits in 2021, up from $124bn in 2020.3. Leon Black accuses former Apollo lieutenant of attempted ‘coup’ The accusation, detailed in a motion filed in New York state court yesterday, was linked to a scandal involving the late Jeffrey Epstein and described by a spokesperson for Josh Harris as “unhinged”. The filing is part of Black’s attempt to obtain the telephone records of his former mistress Guzel Ganieva.Microsoft-Activision deal to test US antitrust enforcers’ tough line The biggest deal in Microsoft’s history is set to become a test case for the leaders of US antitrust agencies who have vowed to tackle Big Tech’s market power. The agreed $75bn acquisition will be heavily scrutinised by progressive Biden appointments, including Lina Khan at the US Federal Trade Commission and Jonathan Kanter at the US Department of Justice.5. New York attorney-general claims ‘significant evidence’ of Trump fraud Donald Trump and the Trump Organization fraudulently misrepresented the value of their assets to banks, insurers and financial institutions, according to a court filing that seeks to compel the former president and two of his children, Donald Jr and Ivanka, to testify under oath.Coronavirus digestBoris Johnson declared Omicron had peaked in the UK on a dramatic day in the House of Commons that also saw a member of the prime minister’s party defect to the opposition Labour party and one of his own MPs calling on him to quit.Hong Kongers leaving the increasingly isolated city are chartering private jets for their pets — the only way many can take their animals with them as pandemic restrictions squeeze freight space on commercial flights.A fourth Covid booster shot is ineffective in blocking Omicron infections despite boosting antibodies, an Israeli hospital study showed.Sign up for Road to Recovery, your essential newsletter on business and the economy in a world transformed by the pandemic.The day aheadNetflix earnings The video streaming service will report earnings after the market closes today. Analysts predict that Netflix added 8.39m subscribers in the December quarter, fewer than it did in the same quarter a year earlier when homebound viewers flocked to the website in search of entertainment. American Airlines also reports. Jobless claims: New applications for unemployment benefits were on pace to fall from a two-month high last week, according to economists’ forecasts. Continuing claims, which are reported on a one-week delay, probably moved higher after hitting their lowest level since 1973 on January 1.Curbing the power of Big Tech The Senate judiciary committee will begin debating a pair of bills designed to reshape technology regulation and restrain the power of Big Tech. US technology companies warn The American Innovation and Choice Online Act (AICOA) and the Open App Markets Act, if passed into law, could have dire consequences for their products and services.ECB The European Central Bank Governing Council publishes its December monetary policy meeting minutes and monthly inflation figures. Eurozone inflation rose to 5 per cent in December, setting a record high since the single currency was created more than two decades ago. What else we’re reading and watchingHow high oil prices are breathing new life into US shale In downtown Midland an electric sign alternates between showing an American flag and the words: “It’s a great day to drill an oil well”. Midland and neighbouring Odessa are in the Permian Basin, the world’s largest producing oilfield, where producers were almost killed off after prices turned negative in 2020. Now, despite political pressure, those companies are rehiring.Biden’s year of living dangerously Joe Biden made mistakes in his first year, argues Edward Luce, sketching out the challenges that lie ahead for the Democratic president. “The fate of US democracy will partly hinge on whether [this] ageing leader can instil a renewed sense of vigour into governing.”I tried to fix my wireless earbuds. It did not go well Stored in their charging boxes and laid side by side, it’s estimated that the all the earbuds sold in 2017 would stretch around the circumference of Earth. Neglected by government recycling targets, the mass of plastic, copper, circuit boards, magnets and batteries join the planet’s trove of e-waste once they die. This interactive graphic looks at the challenge of recycling the small mass-market electronics.

© AP

Collectors, players and leagues cash in on sport NFTs The market for sports NFTs [non-fungible tokens] is set to reach $2bn in 2022. Early collectors, sports stars and even the leagues stand to gain. But average consumers could lose money if the bubble bursts on this new asset class. FT Scoreboard’s Sara Germano talks to the people behind the craze to try to understand where it might lead.TravelInsomniac and FT columnist Lucy Kellaway took a trip to the Cliveden House Hotel to try out a cannabidiol oil massage called the OTO Sleep Experience. During her stay, she’s delighted by the light switches and cheese soufflé. The Tibetan bowls and CBD? They were simply not enough to remedy a sleepless night. More

Investing.com — Joe Biden admits that his economic reform agenda is stalled, but said he supports the Federal Reserve’s intentions to get inflation down. He was less clear about what he intends to do if Russia invades Ukraine for the second time in eight years, a scenario that he admitted is likely. German producer prices rose by 5% in December and 24% on the year, but ECB President Christine Lagarde still believes that the inflation dynamic in the Eurozone isn’t as threatening as in the U.S. China cut its one-year prime lending rate, and the U.S. government releases jobless claims and oil inventories data. Netflix (NASDAQ:NFLX) heads the roster of companies reporting earnings. Here’s what you need to know in financial markets on Thursday, 20th January.1. Biden acknowledges policy stalematePresident Joe Biden admitted that his attempts to pass the ‘Build Back Better’ bill, the heart of his economic agenda, have effectively stalled.In his first major news conference of the year, Biden also acknowledged that his plans to resist Republican-driven changes to state voting laws were unlikely to succeed, after two Democratic Senators refused plans to weaken the Senate’s filibuster powers. That reduces the chances of trumping new restrictions at state level with federal legislation.Biden also indicated support for the Federal Reserve’s broadly-signalled intentions to raise interest rates sharply this year in order to bring down inflation. A green flag to monetary tightening and the absence of fiscal stimulus point to a risk of policy drag on the U.S. economy this year.2. Russia seen likely to invade Ukraine; no clarity on West’s response Adding to the sense of drift emanating from the White House, Biden also gave an unclear answer when asked about possible responses to a Russian invasion of Ukraine.Biden said he expects Russia to “move in” on Ukraine but gave no clear answers as to what the U.S.’s response would be. He hinted at restricting the ability of Russian banks to process dollars, a step that has previously been considered as too much of a shock to the dollar-led global financial system.Biden repeated threats that Russia would face serious consequences, but he remained unable to say whether these would include stopping the new Russian gas pipeline to Germany from beginning operations. European leaders have also been unable to renounce the Nord Stream 2 link due to concerns about energy security.3. Stocks set to open higher; Netflix, railroad earnings eyedU.S. stock markets are set to open with a modest bounce – as they had done before the open on Wednesday too, before being overtaken by fears of inflation and higher interest rates.By 6:20 AM ET, Dow Jones futures were up 151 points, or. 0.4%, while S&P 500 futures were up 0.6% and Nasdaq 100 futures were up 0.9%.Stocks likely to be in focus later include Amazon (NASDAQ:AMZN), which announced it will open its first brick-and-mortar fashion store in California, and United Airlines, which admitted late Wednesday that it will take another year to get back to 2019 capacity levels.Netflix earnings are the highlight of the late session, while railroad operators Union Pacific (NYSE:UNP) and CSX (NASDAQ:CSX) report earlier, as do Travelers (NYSE:TRV), Baker Hughes and American Airlines (NASDAQ:AAL).4. Jobless claims to show Omicron impact. Lagarde glosses over German price surgeThe U.S. will release initial jobless claims data for last week at 8:30 AM ET, which will be of more interest than usual after last week’s report showed signs of the latest wave of Covid-19 finally hitting employers.The data calendar has already generated some shocks overseas, with German producer prices rising 5% on the month and a whopping 24.2% on the year in December thanks to surging energy prices and other supply chain disruptions. ECB President Christine Lagarde reiterated that the inflation dynamics in the Eurozone are different from those in the U.S.In China meanwhile, the central bank cut its one-year Prime Loan rate to 3.7%, as expected and promised further support in the coming months.5. Oil stalls after U.S. inventory buildCrude oil prices were little changed as the latest inventory report from the U.S. took the steam out of this week’s rally.The American Petroleum Institute reported on Wednesday that crude inventories had risen by 1.40 million barrels last week, rather than falling by 1.4 million barrels as expected. That follows two weeks of surprisingly strong builds in gasoline inventories that suggested a weakening in final demand. The government’s data are due at 10:30 AM ET.By 6:30 AM ET, U.S. crude futures were up 0.15 at $85.87 a barrel, while Brent futures were down 0.2% at $88.28 a barrel. More

The cut to the one-year and five-year loan prime rates (LPR) followed surprise cuts by China’s central bank on Monday to its short- and medium-term lending rates, and came days after the central bank’s vice governor flagged more moves ahead.With the property sector’s downturn seen persisting into 2022 and the fast-spreading Omicron variant dampening consumer activity, many analysts say those easing measures will be necessary, even as other major economies, including the United States, appear set to tighten monetary policy this year.December economic data showed further weakening in consumption and the property sector, both major growth drivers.At a monthly fixing on Thursday, China lowered its one-year loan prime rate (LPR) by 10 basis points to 3.70% from 3.80%. The five-year LPR was reduced by 5 basis points to 4.60% from 4.65%, its first cut since April 2020.China’s central bank “should hurry up, make our operations forward-looking, move ahead of the market curve, and respond to the general concerns of the market in a timely manner,” People’s Bank of China Vice Governor Liu Guoqiang said on Tuesday, heightening market expectations for more stimulus.All 43 participants in a snap Reuters poll had predicted a cut to the one-year LPR for a second straight month. Among them, 40 respondents also forecast a reduction in the five-year rate.The cut to the 5-year rate suggested that “the Chinese authorities are keen to lower the cost of credit lending, so total credit growth is expected to rebound after the Spring Festival to ease the pressure on macro economy,” said Marco Sun, chief financial analyst at MUFG.”China’s monetary policy still has some room for easing in the first half of this year, depending on the policy transmission effect and the growth target set by annual parliamentary meeting in March.”Property firms’ shares and bonds jumped on Thursday following the LPR cut, as investors hoped it and other recent government measures would help to ease a funding squeeze in the sector that has seen a growing number of developers default on their debts.Sheana Yue, China economist at Capital Economics, expects a further 20 bps cut to the one-year LPR in the first half of this year.Interest rates on medium-term lending facilities (MLF) serve as a guide to the LPR. Market participants believe moves to the LPR should mimic adjustments to MLF rates.Most new and outstanding loans in China are based on the one-year LPR. The five-year rate influences the pricing of mortgages. More

WASHINGTON (Reuters) – U.S. Federal Reserve officials, having plotted what seemed a clear battle plan against high inflation, must now contend with fresh signs the coronavirus is again slowing the economy as well as markets conspiring to tighten financial conditions faster than Fed policymakers may have hoped.The combination of economic data pulling in one direction and investors in another could make the Fed’s meeting next week unexpectedly complex as policymakers try to balance continued uncertainty over the health crisis against markets adjusting fast around projections the Fed may need to act even more aggressively against inflation.The central bank has been clear interest rates will rise this year – at its December meeting every official expected at least one rate increase and half expected three – and that it would also reduce its $9 trillion stock of assets as a second means to tighten monetary policy. Next week’s session was seen allowing them to start refining the message of a likely initial interest rate increase in March with a balance sheet reduction later in the year.But the stakes have gotten higher.Recent retail spending data https://www.reuters.com/article/usa-economy-idTRNIKBN2JO1G9 were disappointing, real-time measures of economic activity have dipped, and hiring may have eased in response to the massive wave of coronavirus infections driven by the Omicron variant. The daily pace of infections https://tmsnrt.rs/3FPZXio may now be slowing, but other risks to the recovery remain, including a decline in federal government spending that has helped support disposable income for families throughout the pandemic.Data from payroll provider UKG showed shift work decreased by 5% for the week ending Jan. 16 compared to the week before, a sign coronavirus infections may produce another disappointing employment report in January after job growth of just 199,000 https://www.reuters.com/article/usa-economy-idTRNIKBN2JH0AR in December. “The recovery weakened a bit more” at the start of the year with employment indicators below where they were before the holidays, said Oxford Economics economist Oren Klachkin, with the Omicron outbreak “dragging on employment.” The firm’s index of the recovery hit 100 in October before slipping in recent weeks.Fed officials are hopeful the pandemic’s drag on the economy eases soon, but will have to live in doubt until it’s clear the Omicron variant will decline in the United States as fast as it did in South Africa and as it appears to be doing elsewhere.The Fed is treating signs of sluggish growth “as temporary, due entirely to Omicron-related disruptions,” wrote Natixis chief economist Joseph Lavorgna. “This would be a mistake. There is going to be a historic tightening of fiscal conditions this year…The hiking of interest rates into a growth slowdown raises the risks” of Fed policy slowing growth even further and perhaps triggering a recession.MARKETS ABUZZAt next week’s two-day meeting on Tuesday and Wednesday the challenge is to acknowledge the economic risks from the virus without diminishing the commitment to fight inflation, or, conversely, of coming off as so concerned about prices that investors expect even stricter policies to come.Investors, so far, have taken the Fed’s consensus around rate hikes and run with it. Interest rate futures markets reflect strong odds for as many as five rate increases this year of a quarter percentage point each, and real-world borrowing costs for consumers looking to buy a home, corporations aiming to raise capital and even the U.S. government have shot up as a consequence. U.S. stocks have fallen sharply since the start of the year as investors worry higher rates will hit technology and growth shares. Markets are abuzz with chatter that the central bank might make history with its first half-point rate increase in more than 20 years and rife with speculation it will begin to run down its balance sheet more quickly than anticipated and tighten credit conditions by yet another notch.Even those Fed officials most concerned about inflation know there are limits to how fast the central bank can move without risking a backlash in financial markets that could slow spending and hiring more than desired. Asked about the possibility the Fed would raise rates by half a percentage point in March as a sort of shock treatment against inflation, Fed Governor Chris Waller said there was no mood for that.”We have not prepared markets for anything that dramatic,” Waller told Bloomberg TV last week. But the Fed is in a situation it has not confronted for a long time – if ever – as it tries to lower inflation in an environment when global supply chains may be in for an extended readjustment, feeding higher prices through a channel beyond the Fed’s influence.The current crop of policymakers, for a decade or more, have been concerned mostly about inflation that was too low, with virtually no experience in wrangling it lower. More

China’s economy faces new downward pressure and increased uncertainties, Li was quoted as saying.Li reiterated that China will keep its economic operations within a reasonable range. More

This is not a personal finance column; I am offering no tax advice. But if you want to avoid wealth levies in future, especially a more draconian inheritance tax regime, it is time to embrace change.The first step is to gain a good understanding of the distribution of wealth. The latest official UK data this month shows a remarkable stability in the wealth gaps between rich and poor over the 14 years since detailed figures have existed. Wealth — a person’s net worth — is much less equally distributed than income, but the spread is almost unchanged, defying predictions that inequality was set to rocket. Wealth has risen faster than incomes, however, increasing 20 per cent in real terms from £252,900 in 2006 to £302,500 in 2020 and it is that shift that sows the seeds of future trouble. Beneath the benign headlines of stable wealth inequality are undercurrents in the distribution. These are simultaneously likely to raise future wealth inequality and to make any gap between the haves and the have-nots feel less fair. It all stems from the rise in the importance of wealth to family budgets, increasing the inherent value of inheritance. With assets growing faster than incomes for many years, people’s ability to own property, enjoy the security of liquid savings or look forward to a decent retirement will depend increasingly on their parents’ efforts rather than their own. Whether the research comes from the Resolution Foundation, Bath university or the Institute for Fiscal Studies, parents’ wealth now has far more weight than it did before in whether and when their children get to own property. The importance of inheritance in lifetime living standards impedes the ability of poorer young people to level up with their richer peers. For society, the risk is simple: it will not be possible to tell people that doing well at school, working hard and getting a good job is enough to guarantee a decent living standard in the UK of the 2030s and beyond.Towards the right of the political spectrum, the wrong response is nonchalance. Ignoring access to social mobility is a recipe for backlash and populism among those unlucky enough to be born in the wrong family. Rhetorically, at least, the Conservatives understand this. The Labour party also knows that the instinctive error on the left is to reach for higher inheritance tax. This levy regularly polls as the most unpopular one because it penalises a virtuous desire to help our children, making them better educated and more stable citizens. People also feel it is a voluntary charge for the super-rich. If we want to avoid these outcomes, we need to ensure realistic paths to decent living standards for young adults without the advantages of rich parents. So we need a new bargain. On the economic side, we must redouble efforts to increase sustainable growth rates, raising the importance of income rather than family wealth in lifetime success. Lowering some of the absurd trade barriers the UK has erected with the EU would be a start. Ministers must also stiffen their backbones on planning reform against Nimbyism, so the nation can build more houses where people want to live and that they can afford. The social aspect requires further efforts to embrace diversity and broaden access to good schools, universities and jobs. This requires persistent work to diminish the entrenched advantages of the rich and well connected. Of course, it is utterly naive to suggest that this alone will be sufficient to remove the role of luck and privilege. We will still need a reasonably progressive tax and benefit system, including on inheritance, to even out some of life’s injustices. But if we want to live in a reasonably content society and minimise inheritance taxes, it is best, collectively, not to ring the tax accountant, but to embrace diversity and stop being a Nimby. [email protected] More