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FirstFT: The transatlantic job market is ‘coming out of the boil’

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good morning. This article is an on-site version of our website FirstFT the news. Subscribe to our site AsiaAnd the Europe / Africa or Americas A version to send directly to your inbox every weekday morning

The hiring frenzy that has gripped advanced economies since the start of the pandemic Eases Employers worry about rising costs, lower demand and a bleak economic outlook.

On both sides of the Atlantic, unemployment rates remain low but data published last week suggests job vacancies have been dropping from historically high levels and companies are growing cautious about hiring employees.

This mix, if it continues, will be good news for central bankers, who are keen to cool wage growth in their battle against high inflation without causing unemployment to rise.

“In all advanced economies, we are at the height of labor market tightness” – Simon McAdam of the consulting firm Capital Economics

Central banks in the United States and Europe have engaged in the most aggressive rate-raising cycle since the early 1980s to combat rising prices. Officials worry that the rush to attract workers could lead to a 1970s-style wage-price spiral in which inflation continues for years.

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Thank you for reading FirstFT Europe/Africa. Do you have any feedback on the newsletter? Let me know in firstft@ft.com. Now, to the rest of today’s news – Jennifer

1. Putin blames Ukrainian “terror” for the Crimean Bridge explosion Vladimir Putin said he was there “No doubt” that Kyiv He was behind the explosion early Saturday that damaged the bridge linking Crimea to mainland Russia, which is dangerous military supply route To invade Ukraine and a symbol of Moscow’s prestige. Ukrainians celebrated the explosion as a blow to Russia’s control of the annexed territories.

2. German police open investigation into rail network sabotage authorities fired An investigation into the act of sabotage on the country’s rail transport network that suspended services across northern Germany on Saturday. Police said fiber-optic cables were damaged at two crime scenes, adding that political motives could not be ruled out.

  • Across the North: The Social Democrats, led by Chancellor Olaf Schulz, won the regional elections in Lower Saxony, which are seen as a referendum on energy crisis.

3. Investors flee UK real estate money pace Withdrawals from commercial real estate funds It has accelerated at a brisk pace since the government unveiled its “mini” budget last month, in a shift analysts have warned could lead to a rush to sell buildings at low rates.

4. Whistleblower accused EY of laundering suspicious deals It was EY Accused of whitewashing suspicion Money laundering and tax evasion in an investigation it conducted this year on a long-term client Leonteq. The claims center around two professions created for the cooperation of French workers and the payment of a mysterious €120,000.

5. France assures the UK of electricity flow in winter France said it should be able to Britain provides power At critical moments if electricity supplies come under pressure this winter, despite nuclear reactor problems that have forced Europe’s largest energy exporter to rely on imports.

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next day

Scottish National Party Conference Nicola Sturgeon, Scotland’s First Minister, will say in The closing speech of her party conference Independence is the only way to secure an equal partnership between the nations that make up the United Kingdom. A day later, the SNP’s plan for another referendum on the matter will be heard by the UK Supreme Court.

European Central Bank Conference on Monetary Policy European Central Bank chief economist Philip Lane will do Making opening remarks At the European Central Bank Conference on Monetary Policy in Frankfurt. In technology, Ursula von der Leyen, President of the European Commission, speaks at the Tallinn Digital Summit.

IMF and World Bank meetings The foundations begin their annual meetings in Washington, which are scheduled to run all week, as the United States and Germany invite major contributors to the World Bank to reform its business model To promote action on climate change.

Nobel prize The final award will be announced in Stockholm, Sweden, for Economics.

What else are we reading

Elon Musk lunches with the Financial Times At Musk’s favorite Mexican restaurant, Fonda San Miguel in Austin, Texas, Tesla boss talks to Financial Times editor Rola Khalaf about Moving to Mars, providing freedom of expression via Twitter And why aging is one of the “problems” that should not be solved.

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Photographed by Elon Musk
Elon Musk: ‘I obey literally a million laws and regulations and obey nearly 99.99 percent of them’ © Seb Jarnot

How global crises are reshaping agriculture Climate change and the rising costs of supplies such as fertilizers are leading to a resurgence in the so-called regenerative agriculture movement. Its goal is Making agriculture a solution to the environmental crisisrather than a major contributor, by restoring natural ecosystems.

The week of tough questions led by the Governor of the Bank of England in Washington Andrew Bailey will Face intense scrutiny As the central bank prepares to end its emergency support for government bonds on Friday, it prepares to show that market dysfunction is over and that the Bank of England has inflation under control.

Jihadist violence escalates in the Sahel With this year expected to record the highest death toll in jihadist violence in Burkina Faso and Mali since the crisis began a decade ago, analysts wonder: What can be done to fight ISIS and Al-Qaeda-linked insurgents Who controls nearly half of the nation’s territory?

Talk of Irish reunification escalates After a century of partition, talk of unity on the island of 7 million is starting to gain momentum, spurred by Brexit, changing demographics and a rush for the pro-unity Sinn Féin party to become the largest party on both sides of the border. Here’s what’s behind those calls.

Movie

Hollywood was wary of supporting a movie about African female warriors – but now woman king It was a huge success at the box office. Film critic Danny Lee sits down with director Gina Prince-Bethwood for a discussion What does it take to make a successful action movie and promoting diversity.

Lashana Lynch as Ezoji in The Woman King
Lashana Lynch as Ezoji in The Woman King © Ilze Kitshoff

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Climate chart: an explanation – Identify the most important weather data for the week. Participation over here

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Economic

UK mortgage lenders promise more support for vulnerable groups

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UK mortgage lenders have agreed to take a more consistent and supportive approach to homeowners struggling with the cost of living crisis, a measure prompted by a Treasury meeting with Chancellor Jeremy Hunt and attended by consumer champion Martin Lewis.

“We expect each lender to live up to its responsibilities and support any mortgage borrowers who are finding it difficult at this time,” Hunt said after a roundtable with executives from the country’s largest banks on Wednesday.

Meanwhile, the UK’s Financial Conduct Authority, the financial watchdog, Post the draft guidance Identify key ways to support customers, including patience programs similar to those introduced at the start of the COVID-19 pandemic.

Bankers also recommitted to offering borrowers an opportunity to move to fixed-rate mortgages, without affordability tests, once their existing deals expire if their payments are up to date.

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The chancellor is concerned that there are wide differences in how different banks deal with customers in financial difficulty, an issue that has consistently focused the spotlight on Lewis, a journalist and activist.

Hunt warned lenders to do everything they can to help vulnerable clients through the tough months ahead.

Lewis previously warned that a “perfect storm” was brewing for homeowners in the spring, as soaring energy prices, double-digit inflation and interest rates projected to exceed 4 percent next year make repayment unaffordable.

Bank of England data suggests that a third of borrowers in fixed-rate deals will have to refinance in the next two years – the equivalent of hundreds of thousands of households a month – at much higher rates. Earlier this year, it was the average price for a fixed-five-year deal more than doubled to more than 6 percent.

In addition, the Office for Budget Responsibility’s Office of Financial Oversight said last week that home prices are expected to fall 9 percent over the next two years and could remain below their current level for five years.

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In a separate statement, the FCA outlined the different ways banks can provide relief to customers. These include extending the term of the mortgage, switching to interest-only payments for a temporary period, moving customers to a different interest rate or allowing them to make reduced monthly payments.

The FCA would also allow banks to use automation to “provide forbearance at scale” and proactively identify similar groups of borrowers who might benefit from the same method of forgiveness.

The regulator said it recognized the need for “flexibility and scope to adapt its approach to meet the operational challenge of many clients who need assistance at the same time”.

“If you’re struggling to pay off your mortgage, or worried you might, you don’t have to struggle on your own. Your lender has a range of tools available to help, so Sheldon Mills, FCA’s executive director of consumer and competition, said. You should contact them as soon as possible.

Banks must respond to the proposals by December 21.

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Exclusive: Canada’s largest pension plan, CPPI, is ending the pursuit of cryptocurrency investing

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© Reuters. FILE PHOTO: A representation of bitcoin is seen in front of a stock chart in this illustration taken on May 19, 2021. REUTERS/Dado Ruvik/File Photo

Written by Divya Rajagopal

TORONTO (Reuters) – Canada’s largest pension fund, CBB Investments, has ended its efforts to study investment opportunities in the volatile cryptocurrency market, two people familiar with the matter told Reuters.

The reasons behind CPPI’s abandonment of cryptocurrency research were not immediately clear. CPPI declined to comment but said it has not made direct investments in cryptocurrency. He pointed to previous comments on cryptocurrency by its CEO, John Graham, in which he sounded cautionary.

The people added that CPPI’s Alpha Generation Lab, which studies emerging investment trends, put together a three-member team in early 2021 to research cryptocurrency and blockchain-related businesses, with a view to potential exposure.

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But sources said CPPI gave up the chase this year and redeployed the team to other regions.

CPPI’s move also comes as two of Canada’s largest pension funds have divested their investments following the collapse of cryptocurrency exchange FTX and cryptocurrency lender Celsius, which collapsed this year.

Earlier this year, CPPI CEO Graham said the pension plan, which manages C$529 billion ($388 billion) for nearly 20 million Canadians, did not want to invest in digital currencies simply for fear of missing out.

“You really want to think about the intrinsic value of some of these assets and build your portfolio accordingly,” Graham said in a June speech. “So I’d say crypto is something that we keep looking at and trying to understand, but we haven’t really invested in.”

It was not clear when CPPI dropped its plan. One source said the team was actively evaluating investment opportunities in late July this year, but the second source said the team finished its work earlier than that.

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Details of CPPI’s quest to invest in cryptocurrency and its decision to end it were not previously reported.

The sources declined to be identified because the information was not made public.

Canadian pension funds’ exposure to the cryptocurrency sector has come under scrutiny in the aftermath of the FTX debacle. While Canadian pension funds are not prohibited from buying cryptocurrencies, they are known for risk-averse investment strategies to generate steady returns for retirees.

While CPPI has avoided investments in cryptocurrencies, some of its peers have been caught up in the chaos of the sector this year. The Ontario Teachers’ Pension Fund (OTPP), which oversees approximately C$242 billion in assets, has written off its C$95 million investment in FTX. OTPP said it was “disappointed” with its investment in FTX.

Earlier this year, Canada’s second largest pension fund, Caisse de dépôt et placement du Québec (CDPQ), said it had canceled its C$150 million investment in bankrupt crypto lending firm Celsius. CDPQ has initiated legal action against Celsius in Bankruptcy Court.

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The Ontario Municipal Employees Retirement System (OMERS), which manages C$121 billion, made three allocations to crypto-related companies through the business of OMERS Ventures between 2012 and 2018, but exited all investments in 2020.

Another Canadian pension fund, OP Trust, told Reuters it has investments in the offshore digital asset fund space. She said the investment in core encryption technology.

($1 = 1.3650 Canadian dollars)

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Argentina urges the European Union to renegotiate a South American trade agreement

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Argentina’s President Alberto Fernandez has called on the European Union to renegotiate a landmark trade deal with South America, saying the agreement is unbalanced and a threat to the auto industries of Brazil and Argentina.

Fernandez told Financial Times’s Global Boardroom Conference.

Asked how long this process might take, he said, “As long as the parties want to. It’s like tango. The tango is danced by a couple, you need both of them to want to tango, otherwise it’s very difficult.”

The trade deal between the EU and the Mercosur bloc – Argentina, Brazil, Paraguay and Uruguay – was agreed in principle in 2019 after nearly two decades of haggling. But its conclusion has been shelved amid European objections to Brazil’s poor record of preserving the Amazon rainforest under far-right President Jair Bolsonaro.

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The election in October of Luiz Inacio Lula da Silva, who has pledged to preserve the Amazon, to succeed Bolsonaro, raising hopes that a long-awaited deal between the EU and Mercosur might gain final approval. Spain’s trade minister, Xiana Mendez, told the Financial Times last month that she believed he would support the agreement. “It’s very balanced,” she said. We do not support reopening negotiations.

But Fernandez told the Financial Times conference that the environment “isn’t why we don’t get the agreement, it’s an excuse”.

The real reason is that for Brazil and Argentina [as] Car producers, the only car producers in South America, this agreement is problematic because it makes things difficult for us if European competition reaches South America,” he said.

At the same time, he added, South American countries faced a “burden of hurdles” in selling their agricultural exports to Europe, with countries such as France, Ireland and Poland opposing ending agricultural subsidies and allowing competition from Argentina.

“Neither I nor Lula are against the agreement with the European Union,” Fernandez said. You have to keep in mind what this agreement is, because this agreement has problems. . . related to market imbalances.

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While the debate over the long-stalled trade agreement with Europe continues, Argentina is striking deals with China, its second largest trading partner after Brazil. Beijing last month agreed to expand a swap facility with Argentina’s central bank to $25 billion, which helps boost the South American country’s meager foreign reserves.

China has also built a space monitoring station in the Patagonian province of Neuquen, which the Center for Strategic and International Studies in Washington says is Works with little Argentinian supervision It can be used to gather military intelligence.

Fernandez rejected the argument Argentina Need to choose between the United States and China, saying that he does not wish to recreate the Cold War era. “Argentina has to do what works best for Argentina,” he said. “The US is very concerned about what China might do in Latin America but China could do . . . just like the US could do in Latin America, they could come and invest.”

Argentina is building a naval base at Ushuaia in southern Patagonia to support ships patrolling the South Atlantic and Antarctica, but Fernandez called “fictional” news reports that China was involved. He said, “There is no such thing.” “In Argentina you cannot have Chinese, American or French military bases . . . because we are a sovereign country.”

The South American country faces dire economic challenges, with inflation approaching 100 percent annually, access to international financial markets largely cut off after a default in 2020, and exchange controls that have pushed dollars on the black market to nearly double the level. the official.

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Fernandez said the Argentine economy was “strange” because, despite high inflation and “unpayable” levels of debt, the country also had record levels of foreign investment and exports in the first half of the year, unemployment was low and consumption was increasing.

“If you cling to the image of an inflated Argentina . . . of an indebted Argentina, you will say Argentina is a mess,” Fernandez said. “But there is also all this data that points to sustainable growth and huge potential.”

He said the solution to the longstanding economic problems of this South American country is to add value to its goods. “Argentina must stop being an exporter of raw materials and become an industrialized country.”

Argentina holds presidential and congressional elections next October, and opinion polls show Fernandez’s Peronist party trailing the conservative opposition. The president has said in the past that he would like to run again but that his approval ratings are low, and he told the Financial Times conference that he was “totally immersed” in governance.

His powerful vice president, Cristina Fernandez de Kirchner, said on Tuesday she would not run again Convicted of corruptiona ruling against which she plans to appeal.

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“I’m not thinking of re-election, believe me,” said President Fernandez. I think how to solve all these problems[of the country]. . . I want to finish my tenure having seeded Argentina with opportunities for the person who will succeed me.”

Additional reporting by Andy Pounds in Brussels

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