Aurelia Butler

The Kmart Group, one of the top revenue-contributing units of Wesfarmers, lost about a quarter of its store trading days during the first half of fiscal 2022 because of restrictions the country faced due to rising community transmission of the coronavirus, the conglomerate said.A reduction in foot traffic along with rising COVID-19 related costs impacted profitability of the merchandise retailer Kmart Group, which generated about 32% of revenue in fiscal 2021 https://sitefinity.wesfarmers.com.au/docs/default-source/reports/2021—wesfarmers-annual-report.pdf?sfvrsn=9d9111bb_2.For the fiscal half-year ended December 31, 2021, the Kmart Group’s earnings before significant items and payroll remediation costs is expected to be between A$170 million and A$180 million, sharply lower than last year https://www.wesfarmers.com.au/docs/default-source/asx-announcements/2021-half-year-report-incorporating-appendix-4d.pdf?sfvrsn=bf520fbb_0’s A$502 million.The Perth-based conglomerate, which is set to buy Australian Pharmaceutical Industries for A$763.6 million after a months long bidding war, expects COVID-19 related costs to continue to put pressure as long as new infections rise.($1 = 1.3854 Australian dollars) More

Ukraine said it had evidence that a cyber attack against 70 government websites on Friday was likely to have been carried out by Russia.The cyber attack came amid fears that Moscow may be planning military action against the country after security talks with the US and Nato failed.“At the moment we can say that all evidence points to Russia being behind the attack,” Ukraine’s digital transformation ministry said in a statement yesterday. But Kyiv said the investigation was still ongoing and had yet to formally attribute the attack to Russia.Stopping short of blaming Moscow, Jake Sullivan, national security adviser to US president Joe Biden, said: “It would not surprise me one bit if it ends up being attributed to Russia.”Separately, Ukraine’s National Security and Defense Council said over the weekend that it suspected a hacking group tied to Belarusian intelligence had perpetrated the attack — suggesting Russia could have used its ally to create plausible deniability of its own involvement.Belarus’s authoritarian government, which has spearheaded a rapprochement with Moscow after mass protests in the summer of 2020, has yet to comment on the allegations. Ukraine’s western allies have warned that cyber attacks could be a prelude to further military aggression after Moscow amassed 100,000 troops near the border in recent months.Go deeper: How serious is Vladimir Putin about invading Ukraine? Take a look at our visual explainer to find out.

Russia has moved major fighting units and sophisticated weaponry close to Ukraine’s border. © Cartography by Steven Bernard

Five more stories in the news1. JPMorgan plots ‘astonishing’ $12bn tech spend The largest lender on Wall Street said it plans to dramatically increase spending on technology and talent to fortify its competitive position. But the forecast stirred investor worries about US bank earnings in 2022. 2. FBI identifies hostage-taker at Texas synagogue The gunman who took four worshippers captive on Saturday was a 44-year-old British citizen. The revelations came a day after a “tense hostage situation” near Dallas, where an armed man interrupted a religious service that was being live-streamed on Facebook. The hostage-taker died in a shooting. 3. European sales of electric cars overtake diesel models Thanks to generous government subsidies and strict emissions regulations, the sales of electric cars in Europe hit record growth. More than 20 per cent of new cars sold across 18 European markets were powered by batteries, while diesel cars accounted for less than 19 per cent of sales.4. Supply chain constraints may have peaked in 2021 Supply chain pressures remain well above their pre-pandemic levels, but there are signs that global trade relations could start to normalise this year — even as many countries face rising cases of the Omicron coronavirus variant and persistently high inflation.5. Novak Djokovic leaves Australia after losing visa battle The unvaccinated tennis star has left the country for Dubai, after judges unanimously decided to uphold a government decision to cancel his visa. Novak Djokovic said he was “extremely disappointed” and will not be able to participate in the Australian Open, a tournament he has won nine times.Sign up for the Scoreboard newsletter for more news on the business of sport, delivered to your inbox every Saturday morning.Coronavirus digestAcross the Globe, companies struggle with how to approach worker vaccinations.Pandemic-era managers deserve our sympathy, according to the FT’s editorial board.Covid hospital admissions hit a record high in the US but some patients are seeking care for reasons unrelated to the virus.China’s zero-Covid policy risk causing greater disruption for manufacturers and supply chains than during earlier waves of the pandemic. Yet, the country’s trade surplus soared to $676bn in 2021, its highest level on record.Hong Kong has no ‘timeline’ for lifting tough restrictions on international borders this year. The city’s zero-Covid policies is threatening Hong Kong’s place in the world.

Monthly passenger arrivals at Hong Kong International Airport (million) © FT Graphics

The day aheadEconomic data China publishes its quarterly GDP data for the fourth quarter of 2021. What should we expect from China’s new economic data? Here are 5 things to watch ahead of Xi’s push for a third term. EU elections The European Parliament elects its new president, following the death of David Sassoli last week. He is likely to be succeeded by Roberta Metsola, a Maltese MEP.Australian Open The first Grand Slam tennis tournament of the year begins in Melbourne.Martin Luther King Day Financial markets are closed today in the US.What else we’re readingWashington’s Wall Street problem There is outcry inside the US Congress over investments made by public officials, which have raised questions about unfair market opportunities and prompted lawmakers to ban active investing. Who among the powerful should be allowed to trade?Afghanistan’s currency crisis leaves millions at risk of starvation The afghani has fallen almost 25% against the dollar since the Taliban seized power in August. The currency’s weakening has stoked the country’s economic meltdown and humanitarian crisis, as more than half the population faces food insecurity.Chinese food: the beginning of a new ice age? As extreme lockdowns drag on in China, parts of the country experience food shortages. Frozen products may be the best way for the government to achieve greater food security.‘What if the Bank of Japan blinks?’ Until last week, trade in the yen reflected an expectation that the Bank of Japan was unlikely to rock the boat with any significant change. But underlying inflation is creeping in the country, signalling that even Japan is not immune to the global trend.Venezuela’s environmental crisis As the economy has imploded and oil revenue has dwindled, the Maduro regime has sought cash from elsewhere. Venezuela has thus started to exploit the country’s natural resources, and an ecological disaster is now threatening parts of the Amazon.TravelWhere to find sun, sand and solitude in 2022? From Rajasthan to southern Mongolia, here are five fabulous desert escapes.

A desert tour from Suján The Serai in the Thar desert © Suján More

Hello and welcome to the working week.Political change is in the air. First, what we know will happen. There will be new leadership for the European Parliament with a vote for the president in a secret ballot on Monday. It follows the death of David Sassoli last week, although the Italian Democrat was due to step down this week under a power-sharing deal with the centre-right European People’s party. He is likely to be succeeded by Roberta Metsola, a Maltese MEP selected by the EPP as its candidate for president.We do not know for definite whether Emmanuel Macron will run in France’s presidential elections later this year. But we do know he will be addressing the European Parliament on Wednesday to give a speech to mark France’s assumption of the revolving EU presidency. He will no doubt be aware of the political capital to be gained from this appearance.Then there is the great unknown swirling around the British government’s “partygate” scandals. This could be the week that Sue Gray completes her official report, detailing what happened at certain events. It feels like the drinking puns have all but been exhausted — run dry has surely been used by someone by now — but they seem so apt for a prime minister facing an ignominious ejection from his job. Having said that, it is a brave soul that bets against Boris Johnson’s remarkable survival instinct, as this comprehensive analysis by the FT’s political team laid bare last week.Then there are the outside forces threatening to overwhelm a government. Watch out for further news from the frontline between Russia and Ukraine, where tensions will not be relieved by the latter commemorating its Day of Unity on Saturday, the day after the former commemorates the anniversary of Lenin’s death.Economic dataWhether or not you think the spikes in inflation around the world are temporary or entrenched, the story about rising living costs has a long way to run. This week’s instalment will be sustained by consumer and producer price index data from Germany, the UK, Japan, Canada and Italy plus the publication of the minutes of the European Central Bank Governing Council’s December meeting.The Bank of Japan holds its monthly meeting and is expected to upgrade its growth and inflation forecasts, but leave policy rates and other measures unchanged. The Fed goes into “purdah” ahead of the Federal Open Market Committee meeting on January 26. China will set its monthly loan prime rates while Turkey is expected to keep rates unchanged — no doubt a relief to those hit by the collapse of the lira after 500 basis points of rate cuts in quick succession.CompaniesEarnings season will be in full swing and the US markets are expecting a bumper crop of results. The pandemic has been boom time for streaming services — with the trickle down being felt by more traditional industries. Netflix arguably had its strongest-ever slate of original content in the fourth quarter, with the Squid Game craze continuing its run and the much anticipated release of Don’t Look Up.But some analysts say the streaming pioneer may still have trouble reaching the consensus expectation of 8.7m new subscribers when it reports results on Thursday — mainly due to rising competition from its peers, which have been spending significant sums on new television programmes and films. MoffettNathanson, the investment research firm, last week lowered its estimate of new subscribers at Netflix in the fourth quarter to 8.6m from 9.6m.Delivery app firms have also prospered during the pandemic — and most recently during the desire to stay in to avoid Omicron, as #techft lead writer Chris Nuttall noted in his latest newsletter. Expect this to be reflected in the trading update from Deliveroo on Thursday.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayCanada, monthly manufacturing survey and business outlookChina: Q4 GDP, monthly industrial production and retail sales figuresInternational Labour Organization report on employment trends in 2022Italy, final consumer price index (CPI) monthly inflation dataJapan, Bank of Japan’s monetary policy meeting begins in TokyoRepsol Q4 trading statementUK, Rightmove monthly house price indexTuesdayGermany, Zew financial market survey expectationsOpec monthly oil market reportUK, labour market statistics plus monthly insolvency dataResults: BNY Mellon Q4, Charles Schwab Q4, Goldman Sachs Q4WednesdayBHP Billiton operational review for the half year ended December 31 2021Burberry Q3 trading updateCanada, monthly CPI data plus wholesale trade figuresGermany, final CPI dataInternational Energy Agency monthly oil market reportRichemont Q3 trading updateUK, CPI and producer price index (PPI) figuresUS, new residential construction figuresResults: Alcoa Q4, ASML Q4, Bank of America Q4, Morgan Stanley Q4, Procter & Gamble Q2ThursdayDeliveroo Q4 trading updateEU, publication of the minutes of the European Central Bank Governing Council’s December monetary policy meeting plus monthly inflation figuresFrance, business confidence dataGermany, monthly PPI of industrial productsJapan, CPI dataUK, Royal Institution of Chartered Surveyors monthly residential market surveyUS, National Association of Realtors monthly home sales data plus Philadelphia Fed business outlookResults: Netflix Q4, Union Pacific Q4FridayCanada, monthly retail trade figuresEU, flash consumer confidence figuresJapan, Bank of Japan releases minutes of its December policy meetingUK, monthly retail sales figures plus CBI quarterly business confidence surveyResults: Schlumberger Q4World eventsFinally, here is a rundown of other events and milestones this week. MondayAustralia, the first Grand Slam tournament of the tennis year, the Australian Open, begins in MelbourneEU, election to replace European Parliament president David Sassoli, who died on January 10, plus Ecofin Council meeting of economic and finance ministersFrance, 90th Monte Carlo Rally opens at its home base in MonacoUS, Martin Luther King DayTuesdayEU Ecofin Council of economic and finance ministers meets in BrusselsUK, Winnie the Pooh Day, celebrating the birthday of its author A A MilneWednesdayBarbados, general election, called when country became a republic in late 2021EU, Emmanuel Macron addresses the European Parliament in Strasbourg as France takes the revolving presidency of the Council of the European UnionUK, Amazon will stop accepting Visa credit cards issued in BritainThursdayBulletin of the Atomic Scientists announces the location of the minute hand on the Doomsday Clock that records the perceived threat of global apocalypseUS, Sundance Film Festival begins both online and physically in Park City, UtahFridayRussia, anniversary of Lenin’s death in 1924SaturdayUkraine, Day of Unity and Liberty marking the signing of the Unification Act on 22 January 1919SundayNorthern Cyprus, parliamentary electionsHaiti, first round of voting in presidential election More

Joe Biden has, pretty much since the beginning of his administration, taken a stronger stand on competition policy than any US president in memory. He’s put antitrust advocates in place at the Federal Trade Commission, the Department of Justice and the White House. He issued an executive order tackling corporate concentration last July, containing 72 different provisions designed to curb the influence of giant companies.Much of Biden’s fight has been about elevating the position of workers in the US economy and creating a more even playing field for small and midsized innovators. But the administration has also begun making a case for the connection between inflation, currently at a 40-year high, and corporate power.In July 2021, the White House asked the Federal Maritime Commission to investigate price increases by large shipping companies. In December, it told the United States Department of Agriculture to look into whether big meatpackers were driving up food prices, creating a web portal for producers to report unfair trade practices and putting $1bn from the American Rescue Plan into helping smaller independent producers.Most recently, Senator Elizabeth Warren grilled Federal Reserve chair, Jay Powell, on the role that companies are playing when it comes to inflation. “Market concentration has allowed giant corporations to hide behind claims of increased costs to fatten their profit margins,” she said, at his second term nomination hearing last week. Biden himself took aim at the meatpacking industry, saying, “These companies can use their position as middlemen to overcharge grocery stores and, ultimately, families.”It’s an easy case to make. Meat-packing specifically, but Big Agriculture in general, has become highly concentrated in recent decades, driven by Wall Street and the USDA’s own mission to keep food prices low (a policy holdover from the Depression era). Covid has spotlighted how an industry that claims to be driven by efficiency created two separate supply chains, one for grocery stores and another for restaurants — part of the reason people lined up at shops and food prices rose even as farmers were having to throw away goods.Supply chain disruptions, not only in food but many industries, are contributing to inflation. But direct causation between corporate concentration and inflation is harder to prove. There is some good research by academics including Steven Salop and Fiona Scott Morton that shows how consolidation can lead to disruption in times of stress, causing shortages and price spikes. This is exactly what we’ve seen in the past two years. But there are plenty of other counter trends, such as the deflationary impact of Big Tech platforms such as Amazon (although you may argue, as I have, that monopoly power and lower prices can exist in tandem). I wonder if, when it points to the relationship between today’s price pressures and the influence of big corporations, the Biden administration is really looking at something more complicated than inflation dynamics — namely the way in which the past half century of globalisation is being disrupted.As TS Lombard’s chief US economist, Steven Blitz, wrote in a note last week: “One can say current goods price inflation is the unfortunate consequence of high demand meeting constrained supply, but this argument shoves aside the underlying issue that has the Fed itching to tighten — revived middle-income wage growth keeping goods prices high and, in turn, overall inflation as well.”As Blitz rightly points out, this group suffered in recent decades as a strong dollar teamed with technological investment made “possible, and profitable, offshore production of goods and services and reduced labour input for domestic production.” That has in turn resulted in government policies that support more domestic labour, greater union power and decoupling. More regionalisation, localisation and even vertical integration of supply chains in some companies is now happening.“We’ve had an anti-worker policy in the name of low inflation,” says Blitz. The problem is that changing that approach — exactly what Biden, who has a bust of the workers’ rights activist César Chavez in his office, wants — may prove somewhat inflationary in the short to midterm. Stronger wage growth, which many economists and business leaders expect in 2022, may create more demand, raising prices.Some of that inflation will abate as the Covid supply chain dislocations end. But for all sorts of reasons, from US-China decoupling to the shift to a low-carbon economy to the rise of decentralised technologies like 3D printing, we aren’t going back to the 1990s, when cheap goods were the zero-inflation offset for the rising cost of housing, as well as education and healthcare.Nobody on either side of the political spectrum wants to declare war on rising wages. So we’re likely to see more focus on prices, and on what companies are doing to inflate them.Corporate concentration and inflation may be correlated, particularly at times when demand wildly outstrips supply. It’s no accident that there are phenomenal profits being reported in some of the industries most vulnerable to chokepoints, including shipping and semiconductors.But there’s an even bigger change going on here: the end of neoliberal globalisation. Its effects on corporations, workers and inflation have only just begun to be [email protected] More

LUBBOCK, Texas (Reuters) – Phillip Howard pointed toward a stack of black ski pants piled atop a counter in his winter sports shop as evidence of the hurdles small business owners still face as the pandemic drags on.The pants were supposed to arrive by August at Troy’s Ski Lubbock shop in west Texas – well before his five-month hot season of selling that kicks off in October. Instead, they came from China the first week of January, delayed by supply-chain failures.”Late-arriving product really kills us,” Howard said this week, noting that several other items had also arrived late, missing his pre-holiday sales season. “I’ve been in this business for almost 20 years, and I’ve never encountered anything like this.”As the pandemic enters its third year, many small businesses across the United States are besieged on three fronts: deepening supply chain issues; periodic staffing shortages; and fewer customers showing up in some areas, fearing the Omicron spike in COVID-19 cases. This week the Federal Reserve released its latest collection of anecdotes about the state of the economy from businesses, labor groups and others nationwide, showing that the fast-spreading Omicron variant was exacerbating difficulties, especially for hiring and inflation.U.S. retail sales fell 1.9% in December amid the shortage of goods and surging infections, the Commerce Department said on Friday.Though federal aid and the economy’s overall recovery have kept failure and bankruptcy rates for small businesses far lower than expected, day-to-day management has become a challenge. Census surveys conducted since early in the pandemic show concerns steadily shifting from dwindling cash reserves and a hunt for financing to challenges with supply chains and rising costs. “I’m placing orders for next year now, and we’re looking at double-digit inflation,” Howard said. “It’s probably 10% across the board for almost everything that I’m having to order.” ‘UPSIDE DOWN AGAIN’ Staffing shortages forced Gage & Tollner, a 19th-century chop house in Brooklyn, New York, to close for five days in late December.Co-owner St. John Frizell estimates about 30% of the nearly 60 people working at the restaurant have had COVID-19 in the last month. Owners wanted staff to have a negative coronavirus test before returning to work, but that often meant employees spent hours waiting in lines to get swabbed.”We just need tests, lots and lot of tests,” he said.He welcomed the proposal this month by Governor Kathy Hochul that New York should permanently allow restaurants and bars to sell cocktails “to go,” an emergency provision first brought in when establishments were forbidden from seating customers inside in 2020. Just down the road at Junior’s Restaurant and Bakery – renowned for its cheesecakes – owner Alan Rosen said he had suffered with supply chain issues and staffing shortages. He has sometimes had to rope off entire sections of his restaurants when there were not enough servers to go around. “Our costs of goods are through the roof, there’s inflationary pressure, supply chains are a mess,” Rosen said.Amy Glosser shifted BYKlyn, her cycling studio, to new outdoor premises in the summer of 2020 to keep the Brooklyn business afloat. But Glosser said she and her two dozen employees agreed they could not do another winter outdoors, so she moved the business to a temporary indoor space on Dec. 1.Then the Omicron variant hit New York City hard, and about 40% of the gym’s 200 members said they wanted to cancel or pause their memberships. “People are nervous to come inside and sweat together,” Glosser said.Randy Peers, president of the Brooklyn Chamber of Commerce, said he’s worried about small businesses being evicted after New York state’s pandemic-era evictions moratorium ended on Saturday, noting that about a third of businesses in the Chamber owe back rent.Peers said optimism grew over the summer and early fall, with the city’s high vaccination rates and many restrictions lifted. That lasted through Thanksgiving.”Then Omicron just threw everything upside down again,” he said. ‘HOLDING OUR BREATH’ Small businesses in states where COVID restrictions have been far looser than New York say customers are still coming out, but other pandemic issues continue to plague them. Mark Pectol, who owns four Zesty Zzeeks Pizza & Wings shops in the Phoenix metro area, said he never dreamed his biggest nightmare as a small business owner would come in the form of supply chain issues. “I don’t know if I’m going to have pizza boxes at the end of the week,” he said. “If I don’t have pizza boxes – I’m going out of business. We’re just holding our breath.” Even if he can get pizza boxes, Pectol said he’s already getting warnings about a possible flour shortage next.That would be cruelly ironic. In the first year of the pandemic, when grocery stores could not keep flour on shelves, Pectol said he could still buy it in bulk from his supplier. While his stores were closed under pandemic restrictions, he kept money coming in by selling 140,000 pounds of flour to the public.Now, the fickleness of the supply chain failures may be turning on him. “My distributor told me they have flour for me for a month. But this week, they didn’t get any flour in at all,” he said. “If I can’t get it from a big distributor, where will I get it?” More