FirstFT: The world’s largest wealth fund warns that ‘permanent’ inflation will hurt returns

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The world’s largest sovereign wealth fund has warned investors will face years of low yields as rising inflation becomes a permanent feature of the global economy.

Nicolai Tangen, chief executive of Norway’s $1.3 trillion oil fund, told the Financial Times he is “the team leader for Team Permanent” in the heated debate over whether the rate hike is temporary or a permanent threat.

Consumer price inflation is at its highest level in more than two decades in the world’s major developed countries, particularly in the United States, where annual price growth hit 7 percent in December, up from just 0.1 percent in May 2020.

Tangen said the oil fund, which owns 1.5 percent of all listed companies in the world, believes inflation “could be stronger than widely expected” as the world experiences both high demand and ongoing supply chain disruptions.

“How will it turn out? It hits bonds and stocks at the same time. . . in the next few years it will affect both” — Nicolai Tangen

How has inflation affected you or the country you live in? Tell us below [email protected]. Thank you for reading FirstFT Europe/Africa. Here’s the rest of today’s news – Jennifer

1. Britain prepares sanctions against Russia Oligarchs linked to Vladimir Putin who have investments in Britain will face tough sanctions if Russia invades Ukraine, British Foreign Secretary Liz Truss will tell the House of Commons today. Across the Atlantic, the US Senate is nearing its own deal on sanctions against Moscow.

  • go deeper: The Ukraine conflict has shed a light on deepening relations between Beijing and Moscow. It also presented the new federal government with its first foreign policy challenge.

  • explainer: Will Russia be cut off from Swift, the international payments network, if it invades Ukraine? Here’s why it’s so important.

2. Portugal’s ruling Socialists win early elections The country’s centre-left ruling Socialist Party led by Prime Minister António Costa won a general election by an absolute majority on Sunday after voters punished the far-left parties that triggered the snap elections.

Costa is hugged by his wife Fernanda Tadeu in Lisbon, Portugal on Sunday after winning the general election

Costa is hugged by his wife Fernanda Tadeu in Lisbon, Portugal on Sunday after winning the general election © Pedro Nunes/Reuters

3. UK decentralized governments attack post-Brexit plan Devolved administrations have warned Boris Johnson’s plans to cut £1bn in corporate bureaucracy

  • Separately, this week the government will seek to finalize measures to help millions of low-income UK households face a looming increase in energy bills.

4. Zambia’s president vows not to favor Chinese creditors Hakainde Hichilema has promised not to favor Chinese creditors over Western bondholders as he seeks a solution to the country’s debt crisis, which is being seen as a test case for whether Beijing will take losses from a surge in lending to Africa over the past decade.

5. UK homeowners secure £800bn in windfall profits Homeowners combined added more than £800bn in added value to their homes last year as strong buyer demand and government stimulus pushed up average prices by more than 10 per cent, taking the total value of the housing stock to a record £8.4tn brought £.

Stay connected throughout the day with Top Stories Today. a short-form audio digest of the headlines. Find the latest episode here.

digest coronavirus

  • young British Studies have shown that people who lost their jobs during the pandemic are far more likely to be in precarious employment than their counterparts who remained employed.

  • Winners emerge company Americas Responding to the supply chain crisis after a wave of capacity spending and support for weaker providers.

  • Almost half US Covid-19 hospitalizations this winter could have been avoided if vaccination coverage had been achieved in leading European countries, the FT analysis has found.

  • of China Manufacturing and services activity neared a slowdown in January as the zero-Covid strategy amplified a property-driven slowdown. Hong Kong will reduce mandatory isolation for arrivals from 21 to 14 days.

  • When can the world emerge from the pandemic? Scientists and officials are locked in a debate about it “Pandemic versus endemic”.

  • Opinion: Covid has revealed the limits of the state in controlling or understanding a powerful force of nature, writes Ruchir Sharma.

The day ahead

Boris Johnson visits Eastern Europe The British Prime Minister is due to visit the region as he considers offering to send 900 more NATO troops to Estonia amid tensions in Ukraine. Johnson is also seeking talks with Vladimir Putin in the coming days.

GDP data Flash fourth-quarter gross domestic product figures are expected to show that the euro-zone’s economic growth has slowed due to Covid restrictions and supply chain disruptions, while Italy’s economy is believed to have grown more than expected. (FT, Bloomberg)

  • More economic data: Germany is to release preliminary CPI data for January as inflation hits the highest level in decades. The UK is to release government deficit estimates while Italy has no monthly unemployment figures.

corporate profits The quarterly results of the Dutch telecommunications group KPN, the Swiss bank UBS and the Irish airline Ryanair are available. British mining conglomerate Evraz issues a trading update.

What else do we read?

Is the EBRD still financing freedom? The European Bank for Reconstruction and Development, with total new investments exceeding €10 billion in 2021, is unique among multilateral development banks in placing the pursuit of multiparty democracy at the heart of its mandate. However, this principle is increasingly under pressure.

Amnesty Row tarnishes Bloody Sunday anniversary The shooting 50 years ago this weekend has gone down in history as one of the worst atrocities in Northern Ireland’s three decades of civil unrest. But London’s proposed amnesty for all Troubles-era crimes has united unionists, nationalists and politicians in opposition while victims’ families fight for prosecution.

The paradox that tempts professionals The greater a manager’s sense of professionalism, the more likely they are to accept a gift or bribe, argues Andrew Hill. Worse, high-minded professionals may be more prone to unconscious bias toward gift-givers, believing they know how to ignore their flattery.

Andrew Hill:

Andrew Hill: “Deep professionals should recognize the risk of undue influence and avoid exposure to it in the first place” © Dom Mckenzie

Air taxis: fantasy or realistic promise? Flying cars have taken a giant leap forward in the past year, with a bevy of startups raising more than double the amount of money they have raised in the previous decade with the promise of making urban air mobility a reality. But will the excitement go away?

Automation takes a toll on inequality When humans compete with machines, wages fall and jobs disappear. But in the last few decades, something in that relationship began to break down. US GDP growth has slowed and inequality has increased. Rana Foroohar investigates why.

Work & Career

When a majority of the workforce only comes into the office two or three days a week, there is a lot of wasted space. Enter the much despised hot desk with predictable results, writes Pilita Clark.

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