Aurelia Butler

BRUSSELS (Reuters) -The European Commission unveiled on Wednesday a plan to invest 300 billion euros globally by 2027 in infrastructure, digital and climate projects as a better alternative to China’s Belt and Road Initiative.The scheme, called Global Gateway, is to strengthen Europe’s supply chains, boost EU trade and help fight climate change, focusing on digitalisation, health, climate and energy and transport sectors, as well as education and research.China launched its Belt and Road project to boost trade links with the rest of the world in 2013 and has been spending heavily on the development of infrastructure in dozens of countries around the world.But EU officials say the financing terms offered by Beijing are often unfavourable, not transparent, and make some poorer countries, especially in Africa, dependent on China through debt.”Indeed, countries … need better and different offers (to China’s initiative),” European Commission President Ursula von der Leyen told a news conference, unveiling the EU scheme, which she called “a true alternative”. EU money, in the form of grants, loans and guarantees, will come from EU institutions, governments, as well as EU financial institutions and national development banks.”The EU will offer its financing under fair and favourable terms in order to limit the risk of debt distress,” the Commission said in a statement.”Without proper transparency, good governance and high standards projects can be badly chosen or designed, left incomplete or be used to fuel corruption. This not only stunts growth and deprives local communities but it ultimately creates dependencies, which can limit countries’ ability to make decisions,” the Commission said.The Commission said the Global Gateway plan would aim to forge links with other countries without creating dependence.”It will focus on physical infrastructure – such as fibre optic cables, clean transport corridors, clean power transmission lines – to strengthen digital, transport and energy networks,” the Commission said.The Commission said that by helping other countries the EU would also promote its own interests and strengthen its supply chains, the vulnerability of which became apparent during the COVID-19 pandemic. More

The writer is a professor at the University of Chicago Booth School of BusinessUnder the benign gaze of the Draghi government, the US private equity group KKR is bidding for Telecom Italia, one of the last large firms in Italian hands. Italy, the eighth largest economy in the world, has only six companies in the Fortune Global 500, three of which are controlled by the state. This compares with seven for Spain, whose economy is ranked 14th in the world by gross domestic product, and 26 for France, which is seventh.Some blame successive Italian governments for not resisting foreign acquisitions. They point to outgoing German chancellor Angela Merkel blocking Fiat from buying Opel in 2009 and French president Emmanuel Macron delaying Fincantieri’s acquisition of STX in 2017. Others regard this latest bid as a sign of the ultimate triumph of the European single market. But I see a failure of the Italian economy to move into the 21st century. The problem is not that foreign companies acquire Italian ones. It is that Italy’s entrepreneurs seem incapable of building companies that are able to compete in the global economy. Why is this? First, Italian entrepreneurs are obsessed with control. In order to retain majority control of the companies they found, they build fragile pyramid structures, burden them with debt and ultimately do not expand much beyond Italy’s borders, since doing so would require using equity to pay for acquisitions. This obsession with control is not just a psychological matter. In Italy corporate control is highly valuable, because whoever has it can easily take advantage of minority shareholders without fear of legal retribution. Anticipating this risk, savers are reluctant to invest in the equity market and finance the expansion of Italian firms. The second reason for underperformance is the parasitic relationship between domestic big business and the Italian state. For decades, Fiat was heavily protected from Japanese competition, while in the 1990s Olivetti was granted the second mobile phone licence by a sympathetic government. This parasitic relationship reached its peak when Silvio Berlusconi was in power, first in the mid-1990s and then again in the early 2000s. The country’s telecommunications strategy was subordinated to the private interests of the billionaire prime minister. Used to making quick profits at home thanks to their political connections, Italian companies were unwilling to take the risks needed to succeed in the global marketplace.A belief that “small is beautiful” also helped to prevent Italian firms from achieving the economies of scale necessary for global success. Italy invented the pizza, for example, but still does not have a large pizza chain. The concept of the coffee bar is Italian in origin, but the country is not home to a significant coffee chain. The country is one of the world’s biggest tourist destinations, but it does not boast a large chain of hotels. And while Italy is one of the global capitals of fashion, the biggest Italian-owned fashion company is ranked only 17th in the world by market value. Finally, consider the failure to create world-class universities. The success of Montecatini and Olivetti in the 1960s was driven by technology developed in Italian universities. But who remembers the last Italian firm to have prospered on the back of technology developed by researchers at home? In the 2021 Shanghai ranking of world universities, there is no Italian institution in the top 150. Many of these problems have been decades in the making. Yet efforts to address them have been limited. Reforms to speed up civil trials are welcome, but have the unfortunate defect of shortening the statute of limitation for criminal offences, helping corrupt entrepreneurs to escape punishment for their crimes. Moreover, not only does the flood of money provided by the Next Generation EU recovery programme foster the parasitic relationship between business and government, the way that cash is disbursed entrenches the cycle of dependence. Some €11bn is earmarked for the promotion of university research, yet that is well under 1 per cent of GDP and does not even cover the annual gap in R&D between Italy and the rest of Europe. No serious attempt is being made, as far as I can see, to help Italian companies develop the economies of scale to compete in the global marketplace.To win the challenge of global competition in the 21st century, Italy must not stand in the way of the process of creative destruction. It should instead foster the development of new giants capable of taking on the world. If the Next Generation EU recovery funds are not used to aid this process, a huge opportunity for the Italian economy will have been missed. More

ISTANBUL (Reuters) – The Turkish lira fluctuated sharply near a new record low on Wednesday as the central bank said it had intervened due to “unhealthy” market prices, while President Tayyip Erdogan again doubled down on his pre-election strategy of sharp rate cuts. The volatile trade in low liquidity came after the emerging market currency logged its second-worst month ever in November, hammered by Erdogan’s endorsement of sharp monetary easing despite soaring inflation and widespread criticism. The central bank – which Erdogan has overhauled and pressured this year – said in a statement it “directly” intervened in the market “via selling transactions due to unhealthy price formations in exchange rates”. The lira, which had earlier weakened as far as 13.87 to the U.S. currency, rebounded as far as 12.42 – a rally of more than 8% on the day. However, by 1108 GMT, it was just 1.2% firmer at 13.25. The lira slumped to an all-time low 14.0 on Tuesday after Erdogan defended the economic policy and as the dollar benefited from hawkish U.S. Federal Reserve comments.Then, for the sixth time in two weeks, Erdogan affirmed his commitment to low interest rates on Wednesday, telling Turks to act with reason and avoid panic and vowing to fix inflation rapidly.”Turkey has now abandoned the monetary policy based on high interest rates that caused several developing countries to remain stagnant,” he told lawmakers from his ruling AK Party in parliament.”Instead, we have transitioned to a growth strategy aiming for investment, employment, production and exports,” he said. “Interest rates are an evil that make the rich richer and the poor poorer.” The currency has lost as much as 47% of its value this year, sinking some 30% in November alone, rapidly eroding Turks’ earnings and savings, upending household budgets and even leaving them scrambling to find some imported medicines.’NO TURNING BACK’In an interview with state broadcaster TRT on Tuesday evening, Erdogan said there was “no turning back” from the new policy, defending an easing policy which most economists have called reckless.”We will see that the interest rates will fall markedly and hence there will be an improvement in exchange rates before the elections,” he said. Polls are set for no later than mid-2023.”It’s a dangerous experiment Erdogan is trying to run and the market is trying to warn him about the consequences,” said Wisconsin-based Brian Jacobsen, senior investment strategist in multi-asset solutions at Allspring Global Investments.”Imports are likely to rise in price as the lira falls, making inflation worse. Foreign investment could be scared away, making it harder to finance growth. Credit default swaps are pricing in a higher risk of default,” he added.”Investors are getting more and more nervous. … It’s a toxic brew.”Last month’s sell-off was among the largest suffered by the lira, comparable with crises which the major emerging market economy faced in 2018, 2001 and 1994.Erdogan’s AK Party, which came to power in the wake of the 2001 crisis, is seeing its support tumble in opinion polls, which show Erdogan would lose head-to-head with the most likely presidential opponents.Since September, the central bank has cut its policy rate by 400 basis points to 15% under pressure from Erdogan, leaving real rates deeply negative, with inflation near 20%. It is widely expected to lower it again in December.The opposition has called for an immediate policy reversal and snap elections.Economists say the depreciation and accelerated inflation – which is seen reaching 30% next year due in large part to the currency devaluation – will derail Erdogan’s plan. Virtually all other central banks are raising rates or preparing to do so.November inflation data will be released on Friday and a Reuters poll forecast that it will rise to an annual 20.7%, the highest level in three years.The growing price pressures were illustrated by figures on Wednesday showing retail prices in Turkey’s largest city Istanbul jumped 4.71% month-on-month in November for an annual increase of 24.05%. More

“Indeed, countries … need better and different offers (to China’s initiative),” von der Leyen told a news conference.”It is a true alternative,” she said. More

Click here to listen to the latest news in less than three minutes. Top Stories Today is an audio news digest that gets you up to speed on the day’s headlines.Jay Powell yesterday signalled his support for a speedier withdrawal of the Federal Reserve’s massive asset purchase programme and was significantly more hawkish on inflation than in recent appearances, suggesting the Fed should drop the word “transitory” to describe the current price surge.The comments, the first to Congress since Powell was nominated for a second term as Fed chair, led to a plunge in global equity markets. The S&P 500, which was already lower following negative comments from Moderna’s chief executive about the effectiveness of vaccines to tackle the new Omicron strain, ended down 1.9 per cent. The technology-heavy Nasdaq Composite share index closed 1.6 per cent lower. Yields on shorter-dated Treasury securities, which move with interest rate expectations, rose while longer-dated Treasury yields that track economic growth and inflation expectations fell.Traders also modified their bets on how hawkish a stance they expect the Fed to take in the coming months — a U-turn on the previous few days, when investors had wagered that the emergence of the Omicron variant would prompt the central bank to take a more patient approach to raising rates. Implied rates on federal funds futures jumped, with markets pricing in just over two quarter-point rate rises by the end of next year.“The economy is very strong and inflationary pressures are high,” Powell told lawmakers. “It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases . . . perhaps a few months sooner.”Powell said he expected the Federal Open Market Committee to discuss a speedier taper at its next meeting on December 14 and 15. Equity markets in Europe and Asia have rebounded today and Wall Street is expected to open higher. Do you agree with Powell or has Omicron changed the outlook for the US economy? Email me at [email protected]. Here’s the rest of today’s news — GordonFive more stories in the news1. Microsoft shareholders rebel and back protest vote Nearly four-fifths of Microsoft shareholders yesterday voted against the software company’s management and backed a protest vote calling for more details to be released about recent sexual harassment claims. The shareholder revolt followed years of complaints from some workers that Microsoft had brushed pervasive claims of harassment under the carpet.2. New York City’s future ‘not guaranteed’ David Solomon, chief executive of Goldman Sachs, warned New York City’s leaders that they cannot take its position as a global business destination for granted and that higher taxes threaten to make it less appealing for companies and their employees.In other banking news: UBS has poached a top executive from JPMorgan Chase to be its chief financial officer.3. Executive leading Meta’s faltering digital currency project quits David Marcus, who joined the company formerly known as Facebook seven years ago from PayPal, yesterday announced he was leaving. The departure comes after the social media network suffered a string of setbacks in its attempts to launch ambitious cryptocurrency products, including a new digital token called Diem.More bad news for Meta: The UK’s competition authority has blocked the $315m acquisition of online image platform Giphy by Meta.4. Holmes defends response to Theranos reporting Prosecutors interrogated Elizabeth Holmes about her response to the investigative article that pierced her rosy image in 2015, as the Theranos founder took the stand for a fifth day of testimony in her criminal fraud trial.5. CNN suspends host Chris Cuomo CNN has suspended star news host Chris Cuomo “indefinitely” after New York’s attorney-general released transcripts showing that he was far more involved in the defence of his brother, the embattled former state governor, than had previously been known.Coronavirus digestThe Omicron coronavirus variant threatens to intensify imbalances that are slowing growth and boosting inflation, the OECD has warned in its latest economic forecast.Seth Berkley, one of the leading members of the UN-backed Covax scheme, has urged rich countries to divert jabs to the developing world.Scientists are racing to stress-test existing Covid-19 vaccines against the new Omicron variant.Experts on a US Food and Drug Administration panel voted by a narrow margin to give a green light to Merck’s antiviral pill. Meanwhile, early testing indicates mutations of Omicron may hamper the effectiveness of Regeneron’s Covid antibody drug, the company said.European populists are casting themselves increasingly as the torchbearers of vaccine scepticism and anti-lockdown libertarianism.

The day aheadUS Supreme Court to weigh challenge on abortion rights Justices will hear oral arguments in the biggest challenge to abortion rights in the US for generations. A ruling is expected in the Mississippi case by June 2022.Lawmakers take Powell and Yellen questioning into day two Federal Reserve chair Jay Powell and Treasury secretary Janet Yellen face a second day of questioning from US lawmakers. Yellen is expected to urge lawmakers to reach a deal on raising the debt limit. The Federal Reserve will also release its latest Beige Book report.Data With Americans quitting their jobs in record numbers, the latest ADP employment report will be closely watched ahead of Friday’s November non-farm payrolls and unemployment data. Exxon update The US energy supermajor is expected to release new targets on reducing greenhouse gas emissions. It will be the first capital spending update since Exxon lost board seats in a proxy battle with the activist hedge fund Engine No 1, which had argued the company was ill prepared for a lower-carbon future.FT and McKinsey Business Book of the Year The winner of the 17th annual award will be revealed at a ceremony in London. Here is the short list of titles chosen by the esteemed panel. The winner of the £15,000 Bracken Bower Prize for young authors will also be announced.Join more than 100 influential leaders and the FT’s top journalists from across America and around the world for the Global Boardroom conference as they discuss how to build resilient, sustainable, inclusive economies and businesses in a world transformed by crisis. Register for free here.What else we’re readingThe future of work WFH, presenteeism, the “Big Resignation” — Emma Jacobs reviews a new novel and two searching non-fiction books that shine a spotlight on dramatic changes in working culture. Go deeper: In the latest episode of Working It, the new FT podcast on the world of work, host Isabel Berwick explores the topic of flat hierarchies with an expert on organisational design.Lessons in ‘levelling up’ from the Basque country How are declining regions to be revitalised? This question arises wherever erstwhile bastions of heavy industry have collapsed in high-income countries. The Basque country in Spain has succeeded in regenerating. Martin Wolf examines how.Russia’s Arctic ambitions In a remote Siberian port lies the world’s first floating nuclear power plant, a sign of Vladimir Putin’s ambitions to open up a major shipping lane through the Arctic. Could it offer an alternative to the Suez Canal?

UK stock market risks becoming a global backwater Britain is falling behind as US and Chinese markets forge ahead and fund managers obsess over dividends rather than growth. London has largely failed to take part in the global rally that began in 2015, writes Paul Marshall, chair of hedge fund Marshall Wace.Food and drinkHigh-end hot chocolate can be as nuanced as coffee or wine. Single-origin specialist Cartografie makes four sustainably sourced hot chocolates that spotlight different terroirs. Its Venezuelan is soft and creamy, with notes of Earl Grey. The Tanzanian is fruitier: caramelised banana, pineapple and espresso. More

Investing.com — Global markets rebound on signs that Omicron may not be quite such a big deal. ADP releases its private payrolls survey and the Institute of Supply Management gives its latest update on the manufacturing survey as China’s factories slip backs into contraction. Salesforce is under pressure after a disappointing update and David Marcus, the crypto guru at Facebook owner Meta, is stepping down. Oil stages an impressive comeback after an even more impressive rout ahead of a keenly-awaited OPEC+ meeting. Here’s what you need to know in financial markets on Wednesday, 1st December.1. Global markets bounceGlobal markets returned, cautiously, to risk-on mode, digesting Federal Reserve Chairman Jerome Powell’s hawkish turn in Congress on Tuesday and daring to hope that the new Omicron variant of Covid-19 may yet turn out to be not the dramatic new bearish development that many fear.By 6:15 AM ET (1115 GMT), the dollar index was trading back under 96 at 95.933,  down 0.1% on the day, with its biggest losses coming against high-yielding currencies rather than against havens. The yield on the interest rate sensitive two-year Treasury bond had meanwhile settled into a range around 0.61%, still some eight basis points off last week’s peak.Israel’s Health Minister said overnight that those with three doses of the Pfizer/BioNTech vaccine appeared to have adequate immune defense against Omicron, adding to suggestions that the new strain can be coped with by existing medicine. Also conspicuous is the failure – so far – of its spread in South Africa to lead to any notable spike in deaths or serious illness.2. ADP, ISM and a Powell reprise With Fed Chair Powell being forced to acknowledge that inflation is spiking higher and lasting longer than he expected, all eyes will be on the latest barrage of U.S. economic data. Powell meanwhile, will reprise his testimony in the House of Representatives.The most important number will likely be ADP’s private payrolls survey for November, the traditional warm-up act for the government’s labor market report on Friday. Analysts expect the economy to have added another 525,000 jobs last month, down a little from 571,000 in October.Also due are the Institute of Supply Management’s purchasing managers index for November at 10 AM ET. Overnight, comparable surveys from IHSMarkit and Caixin showed Chinese manufacturing activity falling back into contraction, but a slightly better-than-expected performance in a Europe still beset by supply chain problems.3. Stocks set to open higher; Salesforce disappointsU.S. stock markets are set to open higher although, as with Monday, the bounce is not as big as the preceding drop. Powell’s comments, while widely anticipated and actively encouraged by many voices in the market, still represent a milestone in the policy response to the pandemic that accelerates the withdrawal of the market’s biggest supporting factor for the last 20 months.By 6:20 AM ET, Dow Jones futures were up 285 points, or 0.8%, while S&P 500 futures were up 1.2% and Nasdaq futures were up 1.4%. The three indices had lost 1.9%, 1.9% and 1.6% respectively on Tuesday.Stocks likely to be in focus later include Salesforce (NYSE:CRM), whose guidance for the current quarter was substantially below street forecasts when it published its results on Tuesday. Also in focus will be Facebook (NASDAQ:FB) owner Meta, after David Marcus stepped down from his role leading its virtual currency project.  Crowdstrike, Synopsis, Okta (NASDAQ:OKTA), Splunk (NASDAQ:SPLK) and PVH (NYSE:PVH) all report earnings after the close.4. Bye-bye, VIE?China is set to close the loophole that has allowed dozens of mainland Chinese companies to list in the U.S. without first listing domestically, according to a report by Bloomberg.The move has been widely predicted, as an inevitable logical conclusion to the security-related concerns flagged by the regulators in their clampdown on the country’s tech giants earlier in the year.Regulators in Beijing have already asked ride-hailing giant Didi Global to delist from the New York Stock Exchange, having defied their request that it pause the listing while a security review was completed. Bloomberg said it isn’t clear whether other companies would be forced to delist under the planned regulations, which are still being worked out. Alibaba (NYSE:BABA) and many others have used a vehicle called a Variable Interest Entity, registered outside China, to list in New York in the last couple of decades.5. Oil bounces on OPEC speculationCrude oil prices rebounded vigorously on growing speculation that OPEC and its partners (notably Russia) will pause their monthly sequence of output increases in an effort to stop the market tilting back into surplus too quickly.The ministers from the so-called OPEC+ bloc meet on Thursday to fix output levels for January. Data released by OPEC on Tuesday showed that, for the third month in a row, the cartel had failed to raise its output in line with its quota adjustment, although only by some 30,000 barrels a day.By 6:30 AM, U.S. crude futures were up 4.4% at $69.06 a barrel, recovering from heavily oversold levels, while Brent crude was up 4.6% at $72.43 a barrel. U.S. government data on crude inventories are due at 10:30 AM ET, a day after the American Petroleum Institute reported a smaller draw on stocks than analysts had expected. More