SWORDPRESS
Good morning. Boris Johnson vowed to find a Brexit solution to Northern Ireland. He also suggested he’s looking at business tax cuts. Just in time for that bottle of premium Australian wine.
What’s Happening Now
The PM promised to find a solution to an impasse with the EU over Brexit provisions related to Northern Ireland. The protocol is problematic, but “we’ll fix that,” Johnson said in an interview. It was his first remark on the issue since talks with the bloc re-opened last week, and his upbeat tone may indicate a compromise is near. Other points:
He hinted at potential tax cuts for U.K. businesses. “You can take it that Rishi Sunak, as indeed am I, is a staunch, low-tax Conservative, and he believes in an enterprise economy.”
Johnson will keep the door open to Chinese investment in non-strategic parts of the economy, though he didn’t define strategic. “I’m not going to tell you that the U.K. government is going to pitchfork away every overture from China.”
The PM also said he expects the COP26 climate talks starting later this month in Glasgow will be “extremely tough.” He called for nations to harden their promises to slash emissions.
Goldman raised its forecast for benchmark European natural gas prices by 70% as tighter-than-expected supplies from Russia worsen the specter of shortages this winter. Separately, Mercuria CEO Marco Dunand said it’s “possible” Brent will hit $100 this winter.
JPMorgan and Credit Suisse were the latest to bring forward their forecasts for BOE rate hikes after more signals from Andrew Bailey on the need to curb inflation. JPMorgan sees rates going up to 0.25% next month, and hitting 0.75% by August, while Credit Suisse expects hikes to 0.5% in the key rate by the first quarter of 2022. Markets are now almost fully pricing in an increase to 0.5% this year.
Spotlight
Central banks have an unfixable problem. The global supply crunch is propelling inflation at such a fast pace central bankers may be forced to respond even if a fix is beyond their power.
The dilemma: It’s hard to tell just how much inflation is being driven by a resurgence of demand as lockdowns end, and how much by supply strains. If central banks hold back and the supply squeeze endures, that could entrench expectations of higher inflation.
The different views: The BOE’s Andrew Bailey warned the central bank will “have to act.” The Fed isn’t about to hike rates anytime soon, but is poised start tapering its asset purchases. The ECB seems set on continuing to support the recovery.
What to Watch
The IMF took a big step toward restarting a $5 billion loan to Ukraine after it convinced the fund it’s serious about reforming the economy. Financing has been frozen for more than a year. Meanwhile, people familiar said Ukraine’s President Volodymyr Zelenskiy is unhappy with central bank Governor Kyrylo Shevchenko’s performance and wants to replace him.
Turkey summoned the ambassadors of 10 countries, including the U.S., Germany and France, to demand an explanation for their joint statement calling for the release of Osman Kavala, a jailed philanthropist and businessman accused of attempting to overthrow the Turkish government.
Corporate news:
Apple gained after unveiling its new MacBook Pro, which uses its own chips rather than Intel’s. It also released new AirPods and a Siri-only music subscription.
Credit Suisse is near an agreement with the U.S. government to resolve a criminal probe regarding its role in a $2 billion Mozambique bond scandal, people familiar said.
UniCredit wants to hire as many as 50 investment bankers to capture more mid-cap business.
AmEx will let employees work from wherever they want at least four weeks a year.
Axel Springer removed the editor-in-chief of German tabloid Bild Zeitung, Julian Reichelt, over new findings of his alleged misconduct. The decision came after the NYT reported he promoted a junior employee he was having a relationship with. Reichelt was suspended earlier this year while a law firm conducted a probe into the accusations, but he was then quickly reappointed in a new executive role.
Opinion
Rich countries must do more to ensure that vaccines and treatments reach the developing world to finally end the pandemic, Bloomberg’s editors write. They need to demand more information about producers’ plans so they can direct shots more efficiently, accelerate their own donations, and speedily provide the $8 billion needed for distribution infrastructure.
The 737 Max crisis reflects systemic breakdowns in Boeing’s culture, management oversight and airplane safety regulation, Brooke Sutherland writes. The primary villain isn’t Mark Forkner, the only person to face criminal charges, who as chief technical pilot was only a mid-level employee. The DOJ’s conclusion that Boeing’s misconduct wasn’t pervasive seems dubious.
David Ryder/Getty
By the Way
China’s Silicon Valley is hiding a $30 billion real estate fortune. Shenzhen’s urban villagers have quietly amassed vast riches in ways that escape most outsiders. Today, in a place where people used to toil in rice paddies, you can stay at the Ritz or buy a $380,000 Porsche. More in the Big Take.
Britons are buying the expensive wine. Once seen as a prime market for plonk, the U.K. surpassed China to become the top destination for higher-end Australian wine, a Wine Australia report showed. Exporters are looking more to the U.K. to bolster sales as exports to China plunged 77% after trade reprisals.
Noel Celis/AFP/Getty