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The World
The pace of US consumer price growth pushed higher in September, hovering at a 13-year high as inflationary pressures drove up the cost of food, energy and rent. The consumer price index rose 5.4% in September from a year ago, slightly higher than the annual increase reported for August. Analysts had expected a 5.3% increase. (Financial Times)
A stock market malaise with the shadow of ’70s-style stagflation: After coasting higher over the summer, markets are jittery over rising prices, growth snarls and a number of other threats. Price increases that grew out of pandemic-related shutdowns and supply chain disruptions have been stubbornly persistent. A key measure of inflation released Wednesday, the Consumer Price Index, climbed 5.4 percent in September compared with the prior year — more than expected in a Bloomberg survey of economists and faster than its 5.3 percent increase through August. Meanwhile, the update on the American job market on Friday almost perfectly encapsulated the confusing economic backdrop that investors face: The number of new jobs fell far short of expectations, but wage growth rocketed higher. “The rate of growth is moderating, yet the rate of inflation is increasing,” said Paul Meggyesi, a currency analyst with JPMorgan in London. “It’s an unusual decoupling.” (New York Times)
Stagflation Demystified: Investor worries over growth and inflation have revived the term stagflation—but with growth indicators historically solid, is it an accurate description? (Morgan Stanley Podcast)
Despite a pandemic, a recession and a slew of tax cuts, federal tax receipts are booming. Revenues jumped 18% in the fiscal year that just ended, analysts say — the biggest one-year increase since 1977. (Politico)
US household heating bills are forecast to jump as fuel prices surge, with the Energy Dept. saying homes using natural gas will pay 30% more this winter. (Financial Times)
The Federal Reserve says it could begin a ‘gradual tapering process’ by mid-November, according to minutes from the September meeting, The summary indicated the tapering process could see a monthly reduction of $10 billion in Treasurys and $5 billion in mortgage-backed securities. Officials at the meeting expressed concern about inflation, saying it could last longer “than they currently assumed.” (CNBC)
Europe’s trucker shortage becoming ‘extremely dangerous,’ with the dearth of drivers blamed on soaring demand, low wages and poor working conditions. The shortage of heavy goods vehicle drivers is widespread across Europe, reaching 80,000 in Germany and 400,000 across the whole EU. They warn the situation is likely to worsen owing to an aging workforce — the average age of drivers is over 50 — and difficulties recruiting young people. (Financial Times)
An unprecedented election pledge by Japan’s ruling party to double defense spending underscores the nation’s haste to acquire missiles, stealth fighters, drones and other weapons to deter China’s military in the disputed East China Sea. The Liberal Democratic Party (LDP) included a goal of spending 2% of GDP--about $100 billion--or more on the military for the first time in its policy platform ahead of a national election this month. (Asahi Shimbun)
Russian President Putin said his country is not using energy as a weapon against Europe and that Russia stands ready to help the region as its energy crisis continues. “We are not using any weapons,” Putin told CNBC in Moscow. “Even during the hardest parts of the Cold War Russia regularly has fulfilled its contractual obligations and supplies gas to Europe,” he said. Describing reports that Russia has withheld gas supplies to Europe, Putin called such accusations “politically motivated blather” and there was “nothing to support it [the idea] that we use energy as a kind of weapon.” (CNBC)
Only a third of young Russians want Putin to stay in office. (The Times)
British lawmakers issued a scathing report about the government’s early response to the coronavirus pandemic, calling the episode “one of the most important public health failures the United Kingdom has ever experienced.” In 150 pages, the report lists dozens of failures on the part of the British government that “led to many thousands of deaths which could have been avoided” — including insufficient community testing capacity, an inadequate test-and-trace system, an unwillingness to challenge scientific advice, and placing too much emphasis on avoiding lockdowns. (Washington Post, UK Report)
Russia’s daily coronavirus deaths set another all-time high as a growing list of Russian regions imposed vaccine mandates in an attempt to slow the course of the virus. The government’s coronavirus information center reported 973 fatalities over the past 24 hours. (Moscow Times)
Economy
One of the country’s busiest ports will operate around the clock in a move aimed at easing cargo bottlenecks that have led to goods shortages and higher consumer costs. By going to 24/7, the Port of Los Angeles will join the neighboring Port of Long Beach, Calif., which started doing the same thing last month. Major ports in Asia and Europe have operated around the clock for years. Expanded operations at the Port of Los Angeles, which declined to comment ahead of the announcement, would nearly double the hours that cargo can move. (Wall Street Journal)
President Biden is rushing to relieve congestion across the nation’s complex shipping supply chain as it threatens to disrupt the holiday season for millions of Americans. With just over 10 weeks until Christmas, the White House is leaning heavily on port operators, transportation companies and labor unions to work around the clock unloading ships and hauling cargo to warehouses around the country. Biden also enlisted Target, Walmart to fix bottlenecks threatening holiday sales. (Politico, Reuters)
In the UK, people are starting their Christmas shopping early amid fears of shortages despite warnings from the government not to panic-buy. Customers pre-ordering Christmas food deliveries are also buying more than last year. The combination of strong demand and supply problems means that some products are already hard to come by. (The Times)
According to the IMF, supply chain disruptions together with increasing raw material prices are also a reason for the rise of consumer prices. The IMF expected this global inflation to reach its peak at the end of 2021 and return to pre-crisis levels in many countries by the middle of 2022. The index is calculated by the IMF using the difference between the delivery time and production indices of the PMI. The higher the value, the more disturbances occur in global supply chains. (Statista)
Europeans are flying again for business, as executives hit the road and airlines add flights to key destinations. The continent, one of the world’s biggest aviation markets, was slower than the U.S. and China to return to the skies. In September, European corporate trips were 49% of the 2019 level, compared with 42% in the U.S., according to travel-analytics company ForwardKeys. The previous month, business travel in Europe had risen to 50.9% of pre-pandemic levels versus 50.7% in the U.S.—the first time since February that Europe had come out on top and the region’s sixth consecutive monthly increase. (Wall Street Journal)
Asia venture funding already nearly tops all of last year: Asia, like pretty much the rest of the world, is enjoying an investment environment not seen in quite some time. Although Asia did not see the same year-to-year gains we’ve seen in North America and Europe, it did see funding hit $42.7 billion—its biggest quarter since Q2 2018, when total funding reached $47.1 billion. (Crunchbase)
DoorDash formally launched its advertising platform, including homepage banners and sponsored listings distinct from its tiered commission offerings for merchants. Not all of its ads are new. The company says it has been doing restaurant-funded promotions for about two years now and banner ads for about a year. But sponsored listings, which it is calling “the centerpiece” of its ads offerings, were rolled out for self-service this month. Uber’s economics offer some insight into how big DoorDash’s business could become. Uber said on its second-quarter earnings call that it expects to exit this year with an ads run rate on Eats of more than $100 million and 2022 with at least $300 million, suggesting the ancillary business is popular and growing rapidly. (Wall Street Journal)
The pandemic was a disaster for commercial real estate markets. In the Seattle area, it was a boon. In 2020, U.S. office leasing activity fell 36% from the year before, according to the industry research group CBRE, as offices closed and employees were sent home to work remotely. But in the Seattle region, technology companies gobbled up more space than they had the previous year. The Seattle region became the top U.S. market in 2020 for large office spaces leased by tech firms, surpassing the San Francisco Bay Area for the first time since 2013, as well as tech hubs like Atlanta, New York, Washington and Austin, Texas. Among the 100 largest technology leases, 14 were in the Seattle area, totaling 3.4 million square feet, about 85% more space than in Manhattan, the No. 2 market on the list. (New York Times)
Technology
U.S. takes bitcoin mining crown: The US overtook China as the world’s biggest source of bitcoin mining two months after Beijing banned crypto mining this year, new data have revealed. China’s share of the global hashrate — the computational power required to create bitcoin — fell from 44% to zero between May and July. The country accounted for three-quarters of the global hashrate in 2019. The US share of the global hashrate increased from 17% in April to 35% in August, while Kazakhstan rose 10 percentage points to 18% in the same period. (Financial Times, The Information)
Coinbase has received the third-most complaints among digital wallet firms. (Coindesk)
Apple is studying ways to make AirPods into a health device, including for enhancing hearing, reading body temperature and monitoring posture. The plans further demonstrate Apple’s ambition to add health and wellness features to devices beyond the Apple Watch, where most of the company’s health functions exist today. Apple is also working on technology that aims to use iPhones to help diagnose depression and cognitive decline. (Wall Street Journal)
How newspaper closures open the door to corporate crime: A study of misbehavior among publicly traded companies illustrates the critical watchdog role that newspapers play, and the problems that arise when publications go out of business. The spikes in violations and penalties in paperless towns were economically significant, representing a roughly $30,000 increase in penalties or 1 percent of a local facility’s sales, on average. Given that the average newspaper closure affects about 41 facilities, the closure of a local newspaper increases penalties by approximately $1.2 million over three years, the research shows. The results also suggest that when firms felt they could get away with something, they went big. (Harvard Business School)
Smart Links
Super Bowl champ Joe Montana prepares for biggest venture win as GitLab hits Nasdaq. (CNBC)
Who wants to lead America’s poorest big city out of a pandemic? The fight for Cleveland. (Bloomberg)
NHL announces all but four players have been vaccinated against COVID-19. (Axios)
Neuroscientists make strides towards deciphering the human brain. (Nature)
A French company is using enzymes to recycle plastic. (MIT Technology Review)
Living near oil and gas wells increases air pollution exposure. (Stanford University)
What actually draws sports fans to games? It’s not star athletes. It’s suspense. (Harvard Business School)