Inflation May Not Be Temporary, More Audience Fears

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Policymakers in Washington have repeatedly described the rise in prices as “temporary” as everything from plane tickets to used cars to fresh fruit and lumber has gotten more expensive in the last few months. This word is losing its appeal.

Inflation at 13-year high, according to the latest statistics released yesterday. As the Biden administration continues to say prices are rising temporaryMany in the White House now believe that high inflation could be with us for a year or two. Unless you’re talking about a long trip, it’s not temporary.

Fed Chairman Jay Powell is scheduled to testify in the House of Representatives today. Senate tomorrow. If he calls inflation temporary, expect a rebound. Maybe he could try to be “permanently permanent” or “permanently temporary” instead.

Company executives are preparing for a longer period of inflation. Jamie Dimon of JPMorgan Chase told analysts about the bank’s earnings call yesterday that inflation was “a little worse than the Fed thought.” At PepsiCo’s call, the company’s CFO Hugh Johnston, the food and beverage giant may raise prices soon. “Is there a little more inflationary pressure out there? “We have it,” he said. “Are we going to price it to deal with it? We certainly are.”

inflation for a long time economic villain. This view is changing. For those worried about rising inequality, inflation can actually be a balm, up to a point. one 2014 study Most advanced economies have found that income inequality tends to decrease as inflation rises. The research has found that inflation can be as high as 13 percent and still acts as a stabilizer, shifting the benefits of economic growth to low-income individuals.

Wages often rise with prices, As in recent months. What doesn’t rise with inflation is college loans and other debt. Reducing the debt burden with higher incomes can help improve the financial situation of many Americans.

Now might be a good time for slightly higher inflation, said Ken Rogoff, a Harvard economist who called for higher inflation to reset the economy after the housing bubble burst. You should think of inflation like the weather, he told DealBook. If it hasn’t rained in a long time, a big downpour is probably not a concern. A little singing in the rain is guaranteed.

Worried about inflation? If so, what are you doing about it? Notify to us dealbook@nytimes.com. Include your name and location and we can feature your response in a future newsletter.

Senate Democrats have proposed a $3.5 trillion infrastructure bill. planIt addresses issues that will have to cross the party line, such as climate change and Medicaid, that a separate $600 billion bipartisan bill has not addressed. Big question: Will Joe Manchin come aboard?

Dealers make a victory lap. Goldman Sachs and JPMorgan Chase reported big increases Second quarter consulting fees on their M.&A. (Bank of America the team followed in the results; We’ll find out how Citigroup and Wells Fargo fare today.) Some analysts worry that the pace is unsustainable, especially given the new focus on antitrust in Washington.

What happened to REvil? The Russian gang accused of two major ransomware attacks this year went offline, perhaps due to pressure on Moscow against cybercrime. However, those whose data is still held as ransom by REvil may be in a difficult position.

Streaming services are ramping up Emmy nominations. Ran neck and neck with HBO for Netflix most candidates The three most nominated shows this year – Netflix’s “The Crown” and Disney+’s “The Mandalorian” and “WandaVision” – were all on streaming platforms.

Elon Musk thinks Tesla should do more than cars. On its second day, he testified in a shareholder lawsuit regarding the company’s $2 billion takeover of SolarCity. Musk defended the deal explaining its corporate ambitions. “The goal is not to be a car company,” he said.

The SEC has brought one of the first major enforcement actions A SPAC has been targeted since the beginning of the null control boom. The agency said yesterday that it has reached a civil agreement with several parties involved in the planned merger of Momentus, a space transportation company, and SPAC Stable Road Acquisition.

The announcement follows the SEC’s statement warning this year About the “untested, speculative, misleading and even fraudulent” financial estimates released during SPAC mergers. Sounds like the SEC thinks new rules For SPACs and looking at potential conflicts in banks.

The SEC accused the takeover target of making misleading claims and the acquirer of insufficient due diligence. The SEC told investors that Momentus had successfully tested propulsion technology in space, in fact, the test failed. Stable Road repeated these statements in public filings regarding its deal. “The fact that Momentus lied to Stable Road does not exempt Stable Road for not doing adequate due diligence,” said SEC chairman Gary Gensler.

SPAC can still keep the deal, as long as the parties to the deal pay a $8 million penalty, lose certain founding shares, and allow outside investors to exit the deal before it is put to shareholder voting.

— Kevin Roose, tech columnist for The Times, Facebook’s “data wars”.

There were activist investors hoped to persuade other shareholders Pharmaceutical company Phoenixus has voted this week to cut its ties with its founder, “Pharma Bro” Martin Shkreli, of its board of directors. They failed.

Activists’ candidates were easily defeated, An average of 70 percent of the shares voted against, according to a letter sent to investors. It has always been a tough target: Shkreli owns roughly 44 percent of Phoenixus (originally known as Turing Pharmaceuticals) and is allowed to vote, despite being imprisoned for securities fraud. “It’s an incredible injustice to let Martin vote on his lost shares,” Jason Aryeh, leader of the opposition group, who thinks the current board is too close to Shkreli, told DealBook.

  • Phoenixus’ president and CEO, Averill Powers, became the only incumbent director to lose re-election—96 percent of the stock voted against him. The company did not return a request for comment.

Activists then bet that they can win. Aryeh said the group plans to call another vote when a judge in a creditor’s lawsuit against Shkreli formally appoints a buyer to buy his shares to pay off debts.

According to The Times, the European Union will try to challenge its reputation for being slow and indecisive today when officials unveil a plan to beat the rest of the world in reducing carbon emissions. Jack Ewing He writes for DealBook from Frankfurt.

The EU’s plan, “suitable for 55It urges 27 member states to reduce greenhouse gas production by 55 percent by 2030 compared to 1990 levels, setting tougher targets for virtually every industry, especially those accused of contributing the most to global warming, such as automakers and airlines. , steel manufacturers and energy companies.

The EU’s target is more aggressive than the US, which has committed to reducing emissions. 40 percent to 43 percent In the same period, but behind the UK, which made a commitment 68 percent reduction. China, the world’s largest emitter, said it only targets. peak emissions until 2030.

What’s in the plan: Automakers will face pressure to phase out combustion engines sooner; airlines will have to use synthetic fuel; steelmakers will have to pay more for emissions credits; and electricity producers will be forced to accelerate the transition to wind, solar and hydroelectric power. Most controversially, a border carbon regulation tax would impose tariffs on emissions linked to products imported from outside the EU.

Expect furious lobbying Given how many interests are at stake as the plan goes through the legislative process in Brussels and national capitals. The plan may also face resistance from major trading partners such as the United States, as it will penalize imports from countries seen as having lower environmental standards.

There will also be cash. EU governments will be able to withdraw funds worth 750 billion euros or 890 billion dollars to make the transition to cleaner energy. Ursula von der Leyen, president of the European Commission, has made the “European Green Deal” one of her top priorities and may have the support of Europeans, who are increasingly worried by bushfires, record hot summers, severe storms and other tangible evidence of loss of life. from climate change. The diplomatic price of today’s move is seen as a small price to pay.

Opportunities

  • Broadcom has reportedly ended its efforts to acquire analytics company SAS Institute. (WSJ)

  • LeBron James’ entertainment company SpringHill is said to be considering a sale with a valuation approaching $750 million. (Information)

  • Alex Rodriguez’s SPAC is reportedly in merger talks with sports collections manufacturer Panini. (Bloomberg)

Policy

  • Norwegian Cruise Line has sued Florida over the state banning companies from requiring their customers to be vaccinated. (NYT)

  • A judge blocked Maryland’s proposal to cut federal unemployment benefits two months early. (NYT)

  • “Aren’t you ashamed at all?” President Biden gave an impassioned speech yesterday on attempts to restrict voting access. (NYT)

Crime and Punishment

  • Stephen Calk, a former Chicago bank chief, was convicted of bribing former Trump campaign executive Paul Manafort in hopes of taking a role in the Trump administration. (NYT)

  • A unit of TIAA will pay $97 million to settle charges that it persuaded investors to transfer money from corporate pension plans to higher-paying plans. (NYT)

best of the rest

  • Apple has reportedly partnered with Goldman Sachs to create a “buy now, pay later” credit service. (Bloomberg)

  • Big news in the media world: Zenia Mucha, Disney’s much-feared chief brand patron, is resigning. (NYT)

  • Russell Capone, a former anti-corruption chief at the Manhattan federal attorney’s office, joins law firm Cooley as a partner. (cool)

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