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19 February 2022 THEWEEKUK inflation,measuredon the consumer
pricesindex,roseto a30-yearhigh,
surgingby 5.5%in the yearto January
fuelledby risingenergyand foodprices
–and by amuchsmallerdropthanusual
in the Januarypricesof clothingand
footwear.Inflationis nowoutpacing
earningsgrowth:the ONSreportedthat
“realwages”fell by 0.8%fromayear
earlierin Q4 2021.Heinekenbecamethe
latestbig firm to warnit was puttingup
pricesfollowingUnilever,Greggsand
Tesco.USinflation roseby 7.5%,the
fastestratesince1981.FedchairmanJay
Powellcameunderpressureto clarify
the Fed’splansto combatit –some
predictedan emergencyrate rise
The prospectof war in Ukraineriled
markets.£54bnwas wipedoff the value
of FTSE350 companieson Monday,but
sharesralliedas the immediatethreat
receded.The risingpriceof Brentcrude
oil, and acuteshortagesof industrial
metalsamidfallingstockpiles,sparked
fearsof acommoditiescrunch.Surging
metalpricessaw minerBHPdeclarea
recorddividendof $7.6bn.
Moderna,the US drugmakerbehind
the mRNACovidjab, was reportedto be
closeto deal to openavaccineresearch
and manufacturinghub in Britain.
FormerGoldmanSachsbankerRoger
Ng wenton trial in NewYorkfor his
allegedrole in lootingMalaysia’s1MDB
fund.BritishAirwayssaid it would
awardbonusesworththousandsof
poundsto pilots,cabinand groundcrew
in abid to raisemorale.ArmHoldings:spookyintervention
SoftBank’splantofloatthe Cambridge-basedchipdesigner Arm, whichit acquiredin
2016 ,inNewYork, has“sparkedafurore intheUKover thenation’s inability toretain
home-grownindustry leaders”, saidtheFinancialTimes.Therearealso majorconcerns
aboutallowingsuchatechnologicallykeyassetoutofthe country.Lastweek,theformer
headofMI6,SirAlexYounger, urgedtheGovernmentto “straineverysinew” tokeep
ArminLondon. James Anderson ofBaillie Gifford’s£20.7bnScottish Mortgage
Investment Trust(aleader intechinvestment) describedthemooted $30bn-plusflotation
on Nasdaqas“ahuge potentialblow”totheCity thatwillsignificantlyreducethe
chancesofbuildingatech“ecosystem”.He’squiteright,saidAlexBrummerin theDaily
Mail.Arm isfartooimportanttolose. Moreover,“theideathat Londoncouldn’t handle
are-floatofthissizeisjust anaysayer’sfantasy”.“Armcould choose tobe abigfishin a
smallpond,” saidCatRutterPooleyintheFT. “Yetthe appealofbeingamiddling-sized
fishacross the pond maystillbegreater.”If we’re honest, “Londonhas alreadylost the
warfortrulybigtech”.But itsprowessin newareaslikefintechsuggestsit “canstill
win” thefightforthe next Arm. “Sometimesit isbetter tomove on.”
Inflation:passingiton
Colgateproductsdisappearedfrom Tesco’s shops last week, saidLauraOnita inThe
SundayTelegraph. Bothfirmsdeclinedto say why,buttherearerumoursof“arowover
pricing”. Ifso,it’s asignofthetimes.As costs rise, “atugof war isdevelopingbetween
themajorsupermarketsandsuppliers”.Havingpromisedcompetitivepricestocash-
strappedshoppers,supermarketsareusingincreasingly questionable excusestodelay
suppliercost pricerises. Accordingto aBritishChambersofCommercesurvey, “three
infour businesses”are raisingprices tocover risingrawmaterial,wageandenergycosts,
saidBBCBusiness.Size isno protection. Theconsumergoods giantUnilever, whichis
hikingpricesforasecond year running,hasnonetheless“forecastasharpdeclineinits
profitmargins”. Inanincreasinglytightenvironment,thesavinggracefor Britain’s big
supermarketsispumped up“petrolprofits”,saidSam Chambers inTheSundayTimes.
Accordingto RAC data, the bigfourmadean8.6%marginon sales ofunleadedpetrol
inJanuary–“almosttriplethe3.2%margins theymade in2019”. Recordpricesat the
pumpsaren’tsolelydowntotheelevatedoil price.
Rolls-Royce:jetzero
Rolls-Royce’sSpirit ofInnovationsingle-seaterplanesetarecord speed of387mph for
anelectricplanelastyear. Nowtheengine-maker iswideningits ambitions,saidSimon
Huntinthe LondonEveningStandard–forgingapartnership with privatejetcharterer
Luxaviationto develop“anew fleetofelectricpassenger planes”.Rolls-Roycehopes to
launchits firstelectricpassenger plane, aspartofits “P-Volt”project, by 2025 –ayear
earlier thanexpected, saidHoward Mustoe inThe Daily Telegraph. Theaimisto
achieve “distances ofupto250milesby2030”.The jetispartofRolls’ strategy“tobe
central tothe UK’spushtowardsacarbonnet-zero economy”. Ithasrecentlyannounced
“astringofprojects innuclear,hydrogenand electric technologies”,includingadeal“to
develop hydrogenenginesfor Britain’strains”.
NatWestetal:backin themoney
Whatadifferenceayear has madefor British
banks,said Jill Treanorin The SundayTimes.
Twelvemonthsago,in the grip of lockdown,
high-streetlenders–“ladenwithmultibillion
poundprovisions”for loanstheyexpectednot
to be repaid–“weregrapplingwithan order
fromthe Bankof Englandto preparefor
negativerates”.Nowtheyface the opposite
scenarioand worriesaboutbad debtshave
abated,for now.City analystsare expecting
the Big Fourto reporttotalprofitsof £34bnfor
2021,withLloydsand Barclaysnotchingup
theirhighestearningsfor decades.Share-
holderscan look forwardto payouts,bankersto
bumperbonuses–and alikelybacklashfrom
customersfacingacost of livingcrisis.“Bailedout”NatWestprovidesthe clearestillustrationof the
sector’sreversedfortunes,swingingfroma£351m loss last year
to aprojectedprofitof some£4bn.And now“a minormiracleisaboutto happen”,said Nils Pratleyin The
Observer.Fourteenyearsafterthe former
RoyalBankof Scotland’s£45bnstaterescue,
the state’sstakeis likelyto fall below50%.
“Hallelujah.”The real interestfor investors
this week,though,was CEOAlisonRose’s
“outlookstatement”.NatWest,alongwith
Lloyds,“offersagood guideto the underlying
healthof the UK economy,and the mood
maybe shifting”.Despitethe setbackof a£264mfine for anti-
moneylaunderingfailures,Rose’s“clean-up
campaign”is goingratherwell,said Ruth
Sunderlandin the DailyMail:sharesare up
47% in 12 months.Some“willneverforgive”
NatWest/RBSfor its “appallingbehaviour”
beforethe financialcrisis,and its “terribletreatmentof small
firms”.But if Rosehas her way,the “toxic”FredGoodwinera
“willfinallybe consignedto memory”.Rose:a“clean-upcampaign”Sevendaysin the
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