Aurelia Butler

US president Joe Biden is launching a crackdown on the country’s largest meat producers, including a push for tighter “Made in America” labelling rules that could fuel tensions with US trading partners. Biden’s push was announced by the White House on Monday, ahead of a planned meeting later in the day between the president and a group of independent and family-owned meat producers. The Biden administration has singled out excessive market concentration in the US meat industry as a key source of vulnerability in the country’s food supply chain, and one of the causes of high inflation. The White House on Monday said just four companies controlled 85 per cent of the beef market, 70 per cent of the pork market, and 54 per cent of the poultry market. “Even as farmers’ share of profits have dwindled, American consumers are paying more — with meat and poultry prices now the single largest contributor to the rising cost of food people consume at home,” the White House said. “And, when too few companies control such a large portion of the market, our food supply chains are susceptible to shocks,” it added. The steps announced by Biden on Monday include financial incentives, including grants, to bolster capacity among independent meat processors, and measures to facilitate credit to smaller meat producers. The White House also said it would press ahead with tighter labelling standards for “Made in America” meat products, which would hurt large producers and processors that rely on imports in their production process. This could fuel tensions with exporters of meat to the US who have often complained of barriers to access the US market. “Under current labelling rules, meat can be labelled “Product of USA” if it is only processed here — including when meat is raised overseas and then merely processed into cuts of meat here. We believe this could make it hard for American consumers to know what they are getting,” the White House said on Monday. The reforms will also include the creation of a new online portal by the US justice and agriculture departments to report competition law violations in the industry, in an effort to curb price-fixing in the sector. In November, the price index for meats rose 16 per cent compared with a year earlier, according to the Bureau of Labor Statistics, in contrast to a 6.8 per cent rise in the overall consumer price index. More

(Reuters) -Oil analysts have lowered their price forecasts for 2022 as the Omicron coronavirus variant poses headwinds to recovering fuel demand and risks a supply glut as producers pump more oil, a Reuters poll showed on Friday.A survey of 35 economists and analysts forecast Brent crude would average $73.57 a barrel in 2022, about 2% lower than $75.33 consensus in November. It is the first reduction in the 2022 price forecast since the August poll.U.S. crude is projected to average $71.38 per barrel in 2022, versus the previous month’s $73.31 consensus. [O/R]”With oil demand growth slowing, supply growth persisting, and the energy crunch easing, we see the oil market balance expanding rather than shrinking in 2022 and thus expect prices to trend lower from today’s levels,” said Julius Baer analyst Norbert Rücker. Benchmark Brent crude prices, currently trading around $80 a barrel, are on track for their biggest yearly jump since 2009 as fuel demand bounced back.However, the new Omicron variant of coronavirus is spreading faster, causing nations to tighten restrictions. If curbs continue, it could reverse the recovery in oil demand.The global reopening will improve once the current Omicron surge has passed, said Edward Moya, senior market analyst at OANDA, adding that oil prices will likely remain volatile as OPEC+ keeps traders on edge with their gradual production increases.The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, will meet on Jan. 4 to decide on their production policy after they agreed to stick to the plan of increasing output by 400,000 barrels per day per month.”On the supply side, OPEC+ strategy, U.S.-Iran nuclear talks and speed of U.S. shale recovery will all come into play but will be secondary to the demand side of the picture,” said DBS Bank analyst Suvro Sarkar.Demand was seen growing by 3.2-6.0 million barrels per day (bpd) in 2022. More

The 30.6% median forecast of 13 economists would be the highest since May 2003 – with forecasts ranging from 26.4% to 37.3%.Inflation, which was around 20% in recent months, has been driven by a lira slide to record lows after the central bank slashed its policy rate by 500 basis points since September, under pressure from President Tayyip Erdogan. The month-on-month rise in prices was seen at 9%, according to the median, with forecasts ranging from 5.5% to 14.6%.The central bank has said temporary factors were driving prices higher and forecast that inflation would follow a volatile course in the short term.The recent lira slide was reversed late on Monday last week when Erdogan announced a scheme to protect lira deposits against currency volatility and state-backed market interventions triggered a 50% surge in the currency’s value.Inflation has been in double digits and well above emerging market peers for most of the last four years, eating into Turks’ earnings and hitting support for Erdogan.According to the Turk-Is trade union confederation, food prices rose 25.75% month-on-month in December. That represented an annual rise of 55%, up from 27% in November, marking the largest rise in food inflation since 1987.The central bank’s year-end inflation forecast was 18.4% in a report published in late October. The government predicted end-2021 annual inflation of 16.2%.There could be double-digit monthly inflation in December as lira depreciation drives food, core goods and energy prices, said Gedik Yatirim economist Serkan Gonencler, adding that the lira rebound could prompt price cuts.”However raw materials purchased with higher costs, a possible New Year increase in energy prices and services inflation could limit the decline in inflation in January,” he said.”Inflation could follow a rising trend with the delayed impact of the FX rates after January.”Four economists who responded to a Reuters question forecast annual inflation would fall to 24.85% by the end of next year.The Turkish Statistical Institute is scheduled to announce December inflation data at 0700 GMT on Jan. 3. More

For the second year running the pandemic has reshaped the world — not changing everything, but accelerating many things, from population decline to digital revolution. Here is how these trends could define 2022.Baby bust: Couples had ample opportunity but apparently lacked the desire to bring kids into a shutdown world. Declining birth rates have been lowering global economic growth and fell at a faster pace during the pandemic, including a dramatic drop in China. In the long run, the baby bust will further shrink the world’s labour force. Already, 51 countries have shrinking working-age populations, up from 17 in 2000.Peak China: Slowed by the baby bust, rising debt and government meddling, China accounted for one-quarter of global GDP growth in 2021, down from one-third pre-pandemic. China’s increasingly sharp turn from trade to “self reliance” is loosening its ties to other economies. Near perfect five years ago, the correlation between GDP growth in China and other emerging countries barely registers now. China may have peaked as an engine of growth.Debt trap: Having mounted for four decades, global debt grew even faster during the pandemic, driven by government borrowing. Twenty-five countries including the US and China have total debt above 300 per cent of GDP, up from none in the mid-1990s. Money printed by central banks continues to inflate financial markets and deepen the debt trap. It is clear that societies addicted to debt find it tough to cut back for fear of bankruptcies and contagion.Not the 1970s: Fewer workers, more government spending and rising public debt all point to higher inflation — but possibly not to the double-digit levels of the 1970s, as some pundits fear. Government spending should ease in 2022 and technological changes will continue to put a lid on prices. The bigger risk is asset prices. Financial markets have grown to four times the size of the global economy, and when markets crater, deflation often follows. Greenflation: It’s well known that the fight against global warming is raising demand for green metals such as copper and aluminium; less well known is that green politics is reducing raw material supplies of all kinds. Investment in mines and oilfields has dropped sharply over the past five years. The result is “greenflation” in commodity prices, which just saw their biggest yearly increase since 1973.Productivity paradox: Hope has vanished that rapid adoption of digital services during the pandemic would end the long decline in global productivity growth. A 2020 surge was confined to the US, and petered out late last year. The evidence so far suggests staff working from home put in longer hours with lower output. The paradox of weak productivity despite accelerating technological change persists.Data localisation: The virus hit a world turning inward, with declining flows of everything (trade, money, people) except for data. Internet traffic in 2022 is likely to exceed all traffic up to 2016, with a twist. Defying hopes that the internet would evolve beyond government control, authorities are blocking data from crossing borders. The most restrictive regulations are arising in emerging countries led by China, Saudi Arabia and India.‘Bubblets’ deflate: While this has been called the era of the “everything bubble”, a few assets do show classic bubble signs, from prices doubling in a 12-month period to manic trading. These ‘bubblets’ grip cryptocurrencies, clean energy, tech companies with no earnings and Spacs. Over the past year all witnessed falls of 35 per cent or more from the peak, a line beyond which bubbles rarely recover. A silver lining: tech bubbles like these often leave behind a few potentially giant survivors.Retail cooling: Retail investors rushed into the 13th year of the global bull market and excited late arrivals often signal the party is ending. From the US to Europe, millions of people opened trading accounts for the first time, and many borrowed money to buy stock at a frenzied pace. Such manias rarely last, suggesting that even if the stock market as a whole is not at risk, the names most popular with retail investors likely are. Physical matters: Rising hype for the metaverse seemed to spell decline for the physical economy, but prices say otherwise. Digital natives need physical shelter too. Demand from millennials and Gen Z helped inflate housing markets in 2021. Future tech does not make physical resources obsolete. Electric cars consume far more copper than petrol cars. Behind every avatar is a human, and labour shortages are lifting wages even in jobs most threatened by automation, like truck driving. Requiems for the tangible are premature.The writer, Morgan Stanley Investment Management’s chief global strategist, is author of ‘The Ten Rules of Successful Nations’ More

Economists expect the European Central Bank to continue its net asset purchases for two more years — well after other major central banks begin to scale theirs back — according to a Financial Times survey.Three-quarters of the 32 economists polled by the FT said they expected the ECB to stop expanding its €4.6tn bond portfolio in 2023; only just over a quarter said they thought it would do so before that.Many central banks around the world have already started to reduce their monetary stimulus in response to sharp rises in inflation as the global economy bounces back from the shock of the coronavirus pandemic. The ECB has been slower than most; in December its president Christine Lagarde said its €1.85tn pandemic-response scheme would stop net bond purchases in March, while an older asset purchase scheme would undergo a “step-by-step” reduction until at least October. However she has not specified when net asset purchases would stop altogether.In contrast, the US Federal Reserve said last month it would accelerate the tapering of its bond purchases to finish at the end of March, while the Bank of England said after it raised interest rates last month that its net purchases would stop at the end of the year.William De Vijlder, chief economist at French bank BNP Paribas, was among those predicting the ECB would continue its net bond purchases until 2023. He said the biggest risk for the eurozone economy was that “supply disruption continues, causing inflation to remain elevated, leading to a complete reassessment of the outlook for ECB policy”.Inflation in the eurozone soared to 4.9 per cent in November, a record high since the single currency was launched more than two decades ago, driven by soaring energy prices, resurgent demand and supply chain bottlenecks.Last year the ECB agreed a new strategy, committing not to raise its deposit rate from the current low of minus 0.5 per cent until it was convinced inflation would reach its 2 per cent target within the next two years and stay there for a further year. It also requires underlying inflation, excluding energy and food prices, to be “sufficiently advanced” to achieve its target. It said asset purchases would stop shortly before it raised rates.More than half of the economists polled by the FT said they expected the ECB to start raising its deposit rate by 2023. More than a quarter thought it would not do so before 2024. Lena Komileva, chief economist at G+ Economics, predicted the ECB would halt its bond-buying this year and raise rates by late 2023. Like several others, she warned of the risk of tightening monetary policy too soon — something the ECB was criticised for doing in 2011 when it raised rates twice on the cusp of the eurozone sovereign debt crisis.“While the effects of each new pandemic wave on growth are fading and inflation likely peaked in late 2021, a policy rush towards withdrawing fiscal and monetary support for private sector capital — industry, bank and entrepreneurial — in an ongoing pandemic is by far the biggest risk to the outlook,” she said.

Almost four-fifths of economists predicted the ECB would tighten policy in the summer by making the rate less attractive on the subsidised loans it is providing to banks, known as targeted longer-term refinancing operations. These €2.2tn of loans at rates as low as minus 1 per cent give banks an easy source of profit by effectively paying them to borrow money.The economists were evenly split on whether the EU’s new €800bn recovery fund greatly reduces the chances of a eurozone bond market sell-off. The fund provides grants and loans from Brussels to member states to support their economic recovery in exchange for structural reforms.“Periphery spread levels are tight, and volatility might rise as the ECB reduces its purchases,” said Alberto Gallo, portfolio manager at Algebris Investments, referring to the spread between the borrowing cost of weaker countries on Europe’s periphery such as Italy and those of stronger ones such as Germany. “In particular, we might see volatility around French elections and potentially around Italian elections,” he warned. More

Belarus’s exports to Estonia, Latvia and Lithuania are at or close to record levels, cementing their trading relationships even as the three Baltic states take an aggressive stance on sanctions against the regime of leader Alexander Lukashenko.In the first 10 months of last year, Estonia’s imports from Belarus were more than double 2020’s total at €522m and more than a fifth higher than the previous peak in 2018. Lithuania’s imports have increased 50 per cent compared with 2020, hitting €1bn — a third higher than the previous 2015 high. Latvia’s are up two-thirds from 2020 to €407m, just 2 per cent below their 2011 peak.The sharp increases lay bare the tensions that the Baltic states face between economic opportunities and their geopolitical rhetoric, according to experts.“The Baltic states are in the process of discovering that translating strong and principled foreign policy positions into an effective sanction regime is not such a simple matter, even in the most clear-cut cases,” said Tomas Jermalavicius, head of studies at Estonia’s International Centre for Defence and Security. “There are domestic economic players — even state-owned corporate entities — that will use every possibility to find ways around them for as long as feasible.”The Baltic states have become the loudest voices in Nato for an assertive policy against both Belarus and Russia, as Minsk has in recent months used illegal immigrants to try to put pressure on neighbouring Latvia, Lithuania and Poland.But economic considerations are causing domestic political tensions. For example, Lithuania’s government almost collapsed last month after it emerged that it had continued to trade with Belarus in the face of US sanctions. Lithuania’s foreign and transport ministers submitted their resignations — which were rejected — after revelations that the country’s state-owned railway was still transporting Belarusian potash.Jermalavicius said that logistics and transport operators in all three Baltic countries would “always seize opportunities for extra earnings . . . if there is no pressure from the governments” as many had close relationships with Belarusian state-owned businesses.But Vidmantas Janulevicius, president of the Lithuanian Confederation of Industrialists, said that although the Baltic countries needed to obey sanctions, it would be “stupid” to block all imports, especially as the region was connected to China and central Asia through Belarus.“The most important thing is to stop the regime of Lukashenko, not the people of Belarus. If we [Lithuania] will not do this transit of goods, it will just move to another country,” he said.One problem is that US and EU sanctions on Belarus do not always overlap, and the American bans lack bite in the Baltics because of a lack of direct economic links to the US, despite it being their most important geopolitical ally.Jermalavicius said the situation raised “a legitimate question” about whether the Baltic states were ready to “accept the economic opportunity costs associated with their official political posture and regional security imperatives”. Estonia’s foreign ministry said the imports from Belarus were “goods in transit” and were carefully checked against sanctions lists. Lithuania’s foreign ministry noted that there was no legal basis in the EU to implement sanctions imposed by a third country. And Latvia’s foreign ministry said: “Any ongoing trade [with Belarus] is currently taking place in compliance with the sanction regimes imposed.”Imports from Belarus to the three Baltic states include wood products, fertiliser and oil.Jermalavicius said it was “a bitter lesson” for the Baltic states as the “margin of error in the current geopolitical circumstances is very narrow”. He added: “They should not waste their precious political capital and credibility accrued in Washington for the sake of a few hundred million euros that their businesses could earn each year by further dealing with Belarus.” More

HONG KONG (Reuters) – China Evergrande Group said its shares will be suspended from trading on Monday, without giving any reason.The embattled property developer has more than $300 billion in liabilities and is scrambling to raise cash by selling assets and shares to repay suppliers and creditors. More

South Korean chipmakers are ramping up their lobbying presence in Washington to navigate US-China tensions and win critical export licences to supply Chinese companies targeted by trade sanctions.Samsung, Hyundai, SK Group and LG, the country’s four biggest conglomerates, are leading the efforts as they bow to pressure from Washington to produce strategically sensitive goods such as semiconductors and electric vehicle batteries in the US.LG will open a lobbying office in Washington next year, after its battery-making unit LG Energy Solution was embroiled in a multibillion-dollar legal dispute with domestic rival SK Innovation that threatened to disrupt Ford’s electric car plans in the US. The company also had to reimburse General Motors after a costly electric vehicle recall over battery flaws.The Korean groups are seeking export licences to supply US-blacklisted Chinese companies, including technology group Huawei and chipmaker Semiconductor Manufacturing International Corp. The US commerce department had granted more than $103bn in export licences to Huawei and SMIC from November 9 2020 to April 2021.“We are trying to hire Americans with connections to Washington as we need to strengthen networking with the US government and Capitol Hill,” said an executive at LG Energy Solution.“We need to respond quickly to the changing global agenda and minimise business risks in global supply chains amid the worsening US-China relations, the changing international trade order and ESG [environmental, social and governance] requirements. We need an effective channel to deliver our stance to Washington,” the executive added.SK Hynix, the world’s second-largest memory chipmaker, set up an internal unit last month to manage its US business as it works to complete a $9bn acquisition of Intel’s Nand flash memory business. Analysts said the company was also considering building a wafer plant in the US after struggling to upgrade its Dram facility in Wuxi, China. The US has historically been opposed to exporting advanced equipment to China. Last month, Chey Tae-won, SK Group chair, said the group had no plan to build a wafer fab in the US, and was only studying preconditions. “Korean chipmakers now have to deal with the commerce department and Pentagon more often to discuss security concerns. So they need to hire more former US officials as their lobbyists,” said Kim Young-woo, an analyst at SK Securities. SK E&S, the group’s energy unit, will open a New York office headed by vice-chair Yu Jeong-joon in 2022 after taking over several US energy companies in recent years. “From semiconductors to batteries and hydrogen, US interest in Korean companies is growing sharply,” said an SK official. “We will see more executives with overseas business experience move to the US while the group hires more lobbyists for effective communication with Washington.”Samsung Electronics last month appointed a president-level executive for the first time to lead its device solutions business in the US. The move came as the company plans to build a $17bn chip plant in Taylor, Texas.

The Korean campaign has coincided with efforts by rival regional chipmakers to increase their US lobbying presence. Taiwan Semiconductor Manufacturing Company, the world’s biggest contract chipmaker, has raised its profile markedly in Washington. It is building a $12bn chip factory in Arizona and competing for $52bn in chip subsidies announced by President Joe Biden’s administration. The company hired Nicholas Montella, a former executive at the US Chamber of Commerce, as its government relations director last year and recruited Peter Cleveland, a former top lobbyist at Intel, as vice-president for global policy and legal matters in 2019.Additional reporting by Kathrin Hille in Taipei  More