Aurelia Butler

Joe Biden’s administration is rushing to rein in inflation after official figures released yesterday showed consumer prices rose at their fastest pace in October for three decades.The consumer price index jumped to 6.2 per cent, compared to the previous year, from 5.4 per cent in September. Driving the surge was an increase in costs for energy along with shelter, food, used cars and trucks and new vehicles. The energy index rose 4.8 per cent from September, while the gasoline index increased by 6.1 per cent. On an annual basis, these sectors are up 30 per cent and 50 per cent, respectively.Speaking on a visit to Baltimore yesterday afternoon Biden acknowledged that rising prices were a concern for US households. “Everything from a gallon of gas to loaf of bread costs more,” he said.The rising prices threaten to undercut the US economic recovery, jeopardise the president’s spending plans and doom the Democratic party in next year’s midterm elections. The Federal Reserve may also be forced to tighten monetary policy quicker than previously expected. The central bank has already announced the wind-down of its $120bn-a-month asset purchase programme at a pace that signals the stimulus will cease altogether by June. Economists and market participants are increasingly of the view that the Fed will raise interest rates soon after.US government debt sold off sharply yesterday after the release of the inflation report, especially debt with short-term maturities which are more sensitive to interest rate expectations.Thanks for reading FirstFT Americas. Here’s the rest of today’s news — GordonFive more stories in the news1. Elon Musk offloads nearly $5bn in Tesla shares Elon Musk sold nearly $5bn worth of his Tesla shares in the first three days of this week. The value of the sale was estimated to be equal to about 3 per cent of his total holding in the electric carmaker and was a response to the result of a Twitter poll. 2. Wall Street banks reap GE fees General Electric has paid more than $7bn in investment banking fees since 2000, as Wall Street lenders reaped rewards from a frenzied period of dealmaking that culminated in a sinking share price and the eventual break-up of the best-known US conglomerate.3. Rivian roars ahead on stock market listing The Amazon-backed electric vehicle maker, which has yet to record any meaningful revenue, surged on its Nasdaq debut. The shares closed 30 per cent above the initial public offering price, giving it a market value of $88bn, above those of traditional vehicle makers General Motors and Ford.4. McKinsey partner accused of insider trading US prosecutors have charged a partner at consulting firm McKinsey with securities fraud for alleged insider trading ahead of Goldman Sachs’ $2.2bn acquisition of online loans provider GreenSky.5. Afghans face loss of aid support International aid agencies have warned there are only weeks left to deliver food and other life-saving assistance to mountainous provinces before winter sets in, cutting off remote regions as Afghanistan faces one of the world’s worst humanitarian crises.COP26 digest Negotiators at the UN climate conference are rushing to agree the rules governing a global market for carbon, the so called “Article 6”. The US and China made a rare and unexpected pledge to co-operate on the “existential” climate crisis.Are corporate “net zero” plans credible? Big business has been in a congratulatory mood at COP26 in Glasgow but critics say the voluntary greening steps taken by companies have not been enough and are too vague.The economics of climate change represented “the biggest capital reallocation since the Industrial Revolution”, said economist Nicholas Stern. The day aheadChina’s Singles’ Day China’s biggest online shopping festival kicks off today. But the giddiness of Alibaba’s annual sales bonanza has faded this year, as Jack Ma’s ecommerce group focuses on social welfare to please authorities in Beijing. (SCMP, Nikkei Asia)Iran negotiator in London Ali Bagheri Kani, Iran’s deputy foreign minister and lead nuclear deal negotiator, visits London ahead of talks in Vienna at the end of the month.EU growth update European Commission publishes its Autumn Economic Forecast for gross domestic product, inflation, employment and public finances today. Read more on the EU economy in our Europe Express newsletter.US Veterans Day It is a public holiday in the US today for honoring military veterans, people who have served in the United States Armed Forces. President Joe Biden will participate in a wreath-laying service and delivers remarks at Arlington National Cemetery.What else we’re readingGE may be breaking up but conglomerates will survive The obituary of the conglomerate has been written many times and, somehow, it still survives, argues Brooke Masters.Can the Vatican reform its finances? In this film, the FT investigates the Holy See’s finances and looks at how landmark proceedings linked to a controversial London property deal are seen as part of Pope Francis’s reforms in the city-state.

A history of aristocratic resilience Arcane, hereditary, all-male — and at the heart of British democracy. How can it be that, in the 21st century, a small, blue-blooded band of peers continues to cling to power in the House of Lords? George Parker explores the modern face of Britain’s centuries-old aristocracy.‘Nein Danke’ Switzerland has the lowest Covid-19 vaccination rate in western Europe: 33.6 per cent of the country’s population has not had a first dose, as resistance to jabs intersects with anti-establishment and populist politics across wealthy, German-speaking Europe.Iran’s social divisions on display at airport departures Iran’s widening social divisions are playing out at Tehran’s international airport, where pilgrims to Iraq’s holy town of Karbala stand shoulder to shoulder with tourists heading for a beach holiday in Antalya, on Turkey’s Mediterranean coast, writes Najmeh Bozorgmehr.Thanks to readers who took our poll yesterday. Twenty-one per cent said that local Covid restrictions were still too stringent.BooksWhat is your favourite book of 2021? The FT wants readers’ recommendations for the best reads of the year. Responses will be published as part of our Books of the Year series, in which FT writers and critics choose their favourites of the past 12 months. More

WASHINGTON (Reuters) – Inflation pushed more broadly through the economy in October again challenging the Federal Reserve’s outlook for only “transitory” price increases, offsetting recent wage hikes in a blow to consumers, and prompting investors to boost bets the central bank will raise interest rates sooner than expected.Yields on two-year Treasury notes, a proxy for the outlook for the overnight interest rate set by the Fed, jumped 6 basis points, the most in three weeks and among the largest daily increases in the last year and a half, to 0.485% on Wednesday after the release of data showing consumer prices rose by 6.2% in October versus the year before.That was the largest one-year jump in prices in 30 years and applied across staples like food, energy and rent, as well as to items like automobiles where the Fed has expected the pace of price increases to ease alongside pandemic-driven “bottlenecks” in global supply chains.But those “bottlenecks” remain overrun by strong U.S. consumer demand, and inflation measures meant to diminish the impact of one-time spikes in goods and services are also rising. Both a Cleveland Fed “trimmed mean” index of consumer prices and one that tracks the median level of price increases surged in a sign that price pressures were rising across a more extensive set of goods and services. (GRAPHIC: Alternate inflation measures – https://graphics.reuters.com/USA-FED/INFLATION/znpnekxmdvl/chart.png) Still, one Fed policymaker on Wednesday said the central bank should still remain patient. “We need to wait to see how this percolates through the economy,” before changing monetary policy in response to it, San Francisco Fed president Mary Daly said on Bloomberg TV. Markets had a shorter leash. Pricing in futures contracts tied to the target federal funds rate showed investors boosting odds the Fed will by September raise rates twice by a cumulative 0.50 percentage point. Expectations for a third quarter-point rate increase in December increased to nearly 50% compared to less than 30% on Tuesday.”The risks stemming from inflation have become increasingly top of mind to Federal Reserve policymakers, since excessive accommodation for too long, or essentially running the economy hot, could well hold unintended market consequences that further erode confidence and eventually impair the recovery,” said Rick Rieder, chief investment officer for global fixed income at investment giant Blackrock (NYSE:BLK). With demand, supply and wage pressures expected to continue, “near-term inflation readings may be intimidating to ‘inflation fighters’…which could press central bankers to at least discuss a faster reaction-function.”NOT ‘LINEAR’For both the Fed and the Biden administration, what was an adamant faith in transitory inflation has been tempered. “We know that the recovery from the pandemic will not be linear,” Biden’s Council of Economic Advisers said on Twitter (NYSE:TWTR) in a nod to prices rising still faster than anticipated. The CEA “will continue to monitor the data as they come in,” the office said.The price rises also have had the disconcerting effect of outpacing wage increases that the Fed and White House hoped would flow to lower-paid workers in the hotel, restaurant and other industries hardest hit during the pandemic shutdowns last year and the cautious return to in-person services since then.On a month-to-month basis inflation almost fully offset the strong wage increases seen in the leisure and hospitality industry in October, noted Nick Bunker, research director for North America at job site Indeed.Overall, real hourly wages fell 1.2% in October compared with the year before, with the nearly 5% wage gain of the past 12 months more than offset by the 6.2% rise in prices.That continues reversing what had been a steady rise in workers’ purchasing power since around 2013, with the benefits of low inflation boosting “real” wages after several years of stagnation following the 2007-2009 financial crisis and recession. (GRAPHIC: Wages vs. prices – https://graphics.reuters.com/USA-ECONOMY/INFLATION/lbpgnblmjvq/chart.png) The Fed has said it is reluctant to raise interest rates until more people have returned to jobs after being sidelined during the pandemic, even if inflation runs above its formal 2% target “for some time.” The jobs-first strategy is a change from the previous approach which tried to use higher unemployment as a way to keep prices under control – in effect imposing the cost of inflation-fighting onto those rendered jobless during economic slowdowns.The Fed still hopes inflation will ease, over time, without the need to ratchet interest rates higher to cool the economy, and risk slowing or reversing job growth in the process.But the longer inflation data run beyond expectations, the tougher that will be.”With annual inflation now topping 6%, is this sufficient to force the Fed’s hand? This long, long transitory period has to heap pressure on the Fed,” said Seema Shah, chief strategist at Principal Global Investors. More

Supply chain bottlenecks and rising energy costs threaten to constrain the EU’s recovery from the pandemic despite a recent pick-up in growth, the European Commission has warned.Economic growth in the EU and euro area would reach 5 per cent this year, the commission said in its autumn report on the economy, quicker than the 4.8 per cent pace it previously expected.But it warned of “mounting headwinds” as a result of logistics logjams, strained supply chains and shortages of raw materials, which are hitting Germany, Europe’s largest economy, and other manufacturing centres.Brussels is also worried that an acceleration in Covid-19 cases could mar the EU’s economic prospects, especially in countries where vaccination rates are low.The balance of risks to growth had “tilted to the downside”, the commission warned.“The European economy is moving from recovery to expansion but is now facing some headwinds,” said Paolo Gentiloni, the EU’s economics commissioner. “There are three key threats to this positive picture: a marked increase in Covid cases, most acute in areas where vaccinations are relatively low; rising inflation, driven largely by a spike in energy prices; and supply chain disruptions that are weighing on numerous sectors.” The EU’s powerful economic rebound follows its unprecedented decline in 2020, with post-Covid reopenings enabling higher consumer spending and freer travel. Meanwhile, public investment is on track to hit its highest levels in a decade. The revival in demand has been so strong that supply is struggling to keep up.The report singled out logistics disruptions, shortages of semiconductors, and problems sourcing a range of commodities and raw materials as key constraints for industrial recovery. EU surveys suggest that roughly 43 per cent of the manufacturing sector has been affected by “severe shortages” of material or equipment, while services companies are far less concerned.

The overall growth outlook should remain strong, with both the EU and eurozone forecast to sustain a 4.3 per cent expansion in 2022. However, the outlook was more unpredictable, the commission said. The EU’s industrial core risks being most heavily affected by shortages of components and materials. Germany’s economy is predicted to grow 2.7 per cent this year, slower than the overall EU rate, before it accelerates to 4.6 per cent in 2022. France, the EU’s second-biggest economy, will expand 6.5 per cent this year and 3.8 per cent in 2022, according to the commission. Italy will grow 6.2 per cent in 2021 and 4.3 per cent next year. Sectors where activity was surging most were beginning to experience labour shortages, the commission found. About 3.4m jobs are projected to be created in 2022 and 2023, bringing the unemployment rate in the EU down to 6.5 per cent in 2023 compared with 7.1 per cent this year. However, overall, the report did not find signs of mounting wage pressures from pay negotiations. In the second quarter of this year, negotiated wages in the euro area grew at a rate below 2 per cent, more moderately than in the period before the Covid recession, the commission said. More

So far, the COP26 climate conference in Glasgow looks to have produced only limited progress. Agreements to cut methane emissions and deforestation are welcome. India has joined the climate change conversation with its own commitments, albeit very long-term ones. The surprise announcement by the US and China that they will collaborate is tantalising. But the most up-to-date commitments that countries have made are woefully inadequate. According to a new UN tally, they put the globe on course for warming of up to 2.7C from pre-industrial levels by the end of this century.And, most importantly, little attention is given to the single most powerful tool to reduce carbon emissions. My colleagues Tim Harford and Gillian Tett have eloquently set out the case for a global carbon price. Tim explains the economics of how a carbon tax would help reduce emissions, and the same argument applies for other forms of carbon pricing. Gillian points out how a carbon price could redirect capital flows. But there will be no announcement of a globally harmonised carbon price coming out of Glasgow, let alone a sufficiently high one.Even so, there are reasons for hope. If you look beyond the glaring absence of a global agreement on carbon pricing, there are a lot of developments bubbling away that move us in the direction of having more carbon priced. Despite my despairing opening paragraph, one of those developments could be taking place at COP26 itself. One of the most intense areas of negotiation in Glasgow is Article 6 of the Paris agreement, about global carbon markets and carbon offsetting mechanisms. Much of the detail has been left undefined by previous COP meetings, so there is still no good framework for emissions trading across jurisdictions. Negotiators are working on this down to the wire, and may fail — but they could also succeed. If they do, and emissions and offset markets begin to be connected across jurisdictions, we would begin to see carbon prices appear in new places and converge between places that already have them. What markets do is set prices; with more and better connected carbon markets, more carbon will be priced.Another encouraging sign is that powerful countries and policymakers are moving towards policies that would help global carbon pricing emerge. The most important is the EU’s intention to put in place a “carbon border adjustment mechanism” (CBAM): tariffs designed to price the carbon content of imported goods the same as the carbon emitted in domestic production. Such a tariff scheme would, as a side effect, provide something like a price on carbon in the EU’s trading partners. More recently, look at how the EU-US deal on steel and aluminium tariffs hinted at a future alignment between the two blocs on using trade policy to penalise high-emissions steel production elsewhere (read China). This sounds like a sector-specific “carbon club” where parties who put in an effort to decarbonise create common trade barriers against others that do not. Like CBAM, a carbon club would also in effect spread carbon pricing to activities in economies not part of it. I am quite excited to see what comes of the early hints, since I have been arguing for a while that the EU and the US should set up a carbon club together. The idea is advocated by Nobel laureate William Nordhaus (he calls it a “climate club”), and recently adopted by Germany’s latest finance minister and likely soon-to-be-chancellor, Olaf Scholz.A third straw in the wind is how the institutions governing the global economy — to the extent it is governed at all — are rallying behind carbon pricing. For the first time, G20 leaders included it as a tool in their summit communiqué, issued on the eve of COP26, where German chancellor Angela Merkel supported it in a speech. The IMF has proposed an international carbon price floor. It has explained how this could be achieved through a mix of national approaches: carbon taxes, price-setting in other ways, or regulatory limits on emissions that could be translated into a “shadow” price. The point is that all these lead to some form of price put on emitting carbon and therefore on the reward for decarbonising, and that this price is internationally comparable. (PwC has analysed the effects of such a carbon price floor, concluding that it “could pay for itself while cutting emissions by 12 [per cent]” and be designed with redistribution to make for a just carbon transition.)It is a very good proposal. But some may think it is utopian. This year, however, an agreement was struck by almost all countries in the world on a minimum level of corporate profit taxes. If that is possible, so is a minimum carbon price. All these developments make me expect the push for global carbon pricing to accelerate. It may not always be easy to note, but progress is happening. Other readablesThe EU and Norway are locked in a mutual dependence — on consuming and producing natural gas, respectively — at odds with their carbon emissions. A meaningful commitment to blue hydrogen could be a way out of the dilemma.Decarbonisation is compatible with infinite economic growth, argues Alessio Terzi.The surging cost of paint provides the perfect illustration of the disruption to complex supply chains.Numbers newsUK economic growth picked up more than expected in September, but downward revisions for earlier months made for a worse-than-hoped-for quarter. More

SEOUL (Reuters) – South Korea demonstrated a system for controlling urban air mobility vehicles (UAM) on Thursday, which it hopes will serve as taxis between major airports and downtown Seoul as soon as 2025, cutting travel time by two-thirds.Last year, South Korea announced a roadmap to begin commercial urban air travel by 2025. The transport ministry estimates such services could cut travel time for distances between 30-50km (19-31 miles) from an hour by car to 20 minutes by air.”As UAM is expected to become one of the common means of transportation that citizens use in daily life, it is absolutely imperative that we test and try out UAM services in various environments,” Transport Minister Noh Hyeong-ouk, who attended the demonstration on Thursday, said in a statement.A pilot flew a two-seat model made by Germany’s Volocopter at Seoul’s Gimpo Airport to test and demonstrate its control and coordination. Powered by helicopter-like rotors for vertical take-offs and landings, the craft demonstrated can be piloted or operate autonomously without one.When passengers are onboard the UAMs, a pilot must man the craft to ensure safety, a transport ministry official said, adding it would also aid acceptance by the general public.South Korean designers also showed off a model of their own drone aircraft. A full-sized prototype is expected to begin test flights by next year, with the aim of developing an operational five-seat version, according to the transport ministry.Other technology demonstrated at the event included imaging equipment to detect and track the aircraft, and patented lighting systems for “vertiports” where drones land and take off. A trip from Incheon International Airport to central Seoul, is expected to cost around 110,000 won ($93) when commercial journeys start in 2025 – more expensive than premium taxis – but to drop to around 20,000 won per trip after 2035 when the market matures, the ministry said. Thursday’s test flight determined the air traffic control system that manages domestic and international flights at airports can also monitor and manage UAM aircraft, the ministry said in a statement. “This shows that the existing air traffic operations can be conducted in harmony with UAM operations,” the statement said.($1 = 1,178 won) More

HELSINKI (Reuters) – The Finnish government is planning a new law allowing workers to check what their colleagues are earning if they suspect they are being discriminated against, part of a bid to close the wage gap between men and women.The bill has been criticised by both workers’ unions, which want even more transparency, and the biggest employers’ organisation, which says it would create more conflicts in the workplace.But the centre-left five-party coalition of Prime Minister Sanna Marin is pushing ahead with the legislation to shrink the wage discrepancy. “What is central to the government’s programme is the elimination of unjustified pay gaps,” Equality Minister Thomas Blomqvist told Reuters. “They will now be addressed more rigorously.”He said he expected the bill to be passed in parliament before elections in April 2023Finnish women earned 17.2% less than men in 2020, according to a pay equality ranking by the Organisation for Economic Cooperation and Development.The survey placed Finland in 37th position, well behind peers Norway in 8th, Denmark in 9th and Sweden in 12th, even though gender equality has been high on the political agenda for decades in Finland.A 2018 report by the Finnish Equality Ombudsman showed the reasons are often similar to those in other western European nations – segregation of the job market into male- and female-dominated professions, fathers taking less parental leave than mothers, and women not being promoted as often as men.Merja Mahka, a journalist turned investor and blogger, has since 2019 published what she earns on Twitter (NYSE:TWTR) and Instagram to encourage public discussions about pay transparency.”There have been situations where I’ve found out that a man doing a similar job to me has been paid more,” said Mahka of her reasons, speaking on Tuesday as she published her taxed income of 48,522 euros ($56,111) for 2020.TAX DAYFinnish tax authorities on Wednesday published the 2020 taxable income of every Finn, a day nicknamed “tax day” in Finland, when local media pore over the records of the rich and famous.Though it is transparent, it does not give the full picture. The tax authority has estimated a person’s taxed income is on average 75-80% lower than their actual income because of deductions and tax-free dividends. With regards to the upcoming government proposal, the main employers’ organisation, the Confederation of Finnish Industries (EK), left the parliament pay transparency working group last November in protest at how quickly changes to the law were being proposed.A senior legal adviser for the group, Katja Leppanen, told Reuters EK would have liked to do more research into the wage gap and said giving information about pay should be voluntary.”Making publishing detailed information on individual salaries mandatory would lead to general curiosity and a deterioration of the work atmosphere,” she said. Workers’ unions and the equality ombudsman Jukka Maarianvaara said they think enough research has been done during the past three government tenures and that it is now time to act.”Closing the gap requires a change in attitudes and therefore it is necessary to change the law to change the culture,” added Katarina Murto, director at Akava, the Confederation of Unions for Professional and Managerial Staff.Drafting the proposed bill, part of the five-party coalition’s joint political programme, to combine the different views of the working group has been difficult and publication has been delayed. But Blomqvist told Reuters it would go ahead.”We will adhere to what we agreed on in the government programme,” he said.($1 = 0.8648 euros) More