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US stocks and bonds rally after lower-than-forecast inflation data



US stocks and government bonds rallied on Wednesday after data showed inflation in the world’s largest economy had steadied, raising hopes that the Federal Reserve may temper its aggressive rate rises to subdue soaring prices.

The consumer price index data published on Wednesday showed that prices in the US rose 8.5 per cent year on year in July, a slower increase than in June and below economists’ forecasts of 8.7 per cent. The figures also showed that on a month-on-month basis, there was no increase in the CPI in July compared with a 1.3 per cent rise in June.

The blue-chip S&P 500 gained 1.8 per cent by afternoon trading on Wall Street, while the technology-heavy Nasdaq Composite rose 2.4 per cent.

Encouraged by the improved economic outlook, investors piled into consumer-focused stocks, with cruise companies Norwegian, Royal Caribbean and Carnival up 14, 11.6 and 11.4 per cent respectively. Facebook owner Meta and Tinder owner Match Group were among the highest risers on the Nasdaq 100, with both gaining around 6 per cent.

The S&P 500 has now climbed more than 14 per cent since mid-June, and the moves put it on track to snap four consecutive days of losses.

The Vix volatility index, which serves as a measure of expected swings in US stocks, fell below 20 for the first time since April.

“Inflation has been expected to peak over the summer for some time, so it was reassuring for markets that there are clear signs that this looks to be happening,” said Oliver Blackbourn, portfolio manager at Janus Henderson Investors.

In government bond markets, the yield on the 10-year US Treasury bond, which moves with inflation and growth expectations, dropped 0.03 percentage points to 2.77 per cent. The yield on the two-year note, which moves with interest rate expectations, shed 0.1 percentage points to 3.16 per cent.

The US dollar, a haven for investors in times of uncertainty, also fell back in reaction to the data, dropping 1.3 per cent against a basket of six currencies.

The US inflation benchmark had hit 9.1 per cent in June — the highest level in 40 years — pushing the Fed into making back-to-back interest rate increases of 0.75 percentage points over the summer.

Still, the inflation data show that prices remain well above the US central bank’s 2 per cent target.

“While peak inflation is welcome news, it’s probably not enough to allow the Fed to ease off its tightening or to put recession fears to bed,” said Mike Bell, global market strategist at JPMorgan Asset Management.

Core inflation, a measure of price growth that strips out volatile categories including energy and food, also came in below expectations, staying at the 5.9 per cent level it hit in June and well below a peak in March of 6.5 per cent.

“I think this might be a new bull market as opposed to a bear market rally. The Fed will pivot eventually, the rate of increases will have to slow,” said Patrick Spencer, vice-chair of equities at Baird.

However, others warned that inflation remains high. “It’s nice to see a report come in cooler, but we’ll leave the champagne bottles closed for now,” said Brian Nick, chief investment officer at Nuveen. “It does feel like a snap reaction, undoing the falls after the unemployment report”, which showed that the US labour market remains hot last Friday.

In Europe, the Stoxx 600 closed up 0.9 per cent and Germany’s Dax index gained 1.2 per cent after losses in the previous session.

Declines in tech stocks dragged down indices in Asia, which closed before the publication of the CPI data. Hong Kong’s Hang Seng closed down 2 per cent, China’s CSI 300 benchmark of Shanghai and Shenzhen-listed stocks fell 1.1 per cent and Japan’s Topix closed down 0.2 per cent.

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Russia’s deportations of Ukrainian children stir accusations of genocide



This article is an onsite version of our Europe Express newsletter. Sign up here to get the newsletter sent straight to your inbox every weekday and Saturday morning

Welcome back. The Bundestag, Germany’s lower house of parliament, on Wednesday recognised the Holodomor — the deaths of millions of Ukrainians in a 1932-1933 famine induced by the Soviet collectivisation of farms — as an act of genocide. Now Russia’s abductions and deportations of Ukrainian civilians, including thousands of children, raise the question of whether a new form of genocide is unfolding in Europe. I’m at

For many Ukrainians, the Holodomor is the most horrific national tragedy of a 20th century scarred by war, state violence and mass repressions. Most of this happened after the 1917 Bolshevik revolution and, in particular, under Joseph Stalin’s dictatorship.

Since Russia’s full-scale invasion of Ukraine in February, the authorities in Kyiv, along with western governments, human rights groups and the UN, have drawn attention to another ugly phenomenon: the “disappearance” of numerous Ukrainians in Russian-occupied areas and their transfer to Russia proper. I will focus on Ukrainian children who have suffered this fate. Is it a war crime? Is it genocide?

The Ukrainian government has a website, Children of War, on which it regularly updates the number of children killed, wounded, missing and deported to Russia. As of yesterday, it estimated those deported at 12,572.

To judge from some Russian reports, the number of child evacuees — a different measure, covering those supposedly moved for their own safety from war zones — may be far higher, at about 200,000.

Investigative news organisations have done some fine work on this topic. One of the best pieces, in my view, is this in-depth report by the Associated Press.

As the AP points out, officials in Moscow defend the transfer of children to Russia on the grounds that they don’t have parents or guardians. Some were moved from orphanages in the Russian-backed separatist area of Donbas, and others from war-ruined, captured cities such as Mariupol.

However, the AP’s reporters also discovered that “officials have deported Ukrainian children to Russia or Russian-held territories without consent, lied to them that they weren’t wanted by their parents, used them for propaganda and given them Russian families and citizenship”.

The UN Office of the High Commissioner for Human Rights has reached much the same conclusion. In September it reported: “There have been credible allegations of forced transfers of unaccompanied children to Russian occupied territory, or to the Russian Federation itself.

“We are concerned that the Russian authorities have adopted a simplified procedure to grant Russian citizenship to children without parental care, and that these children would be eligible for adoption by Russian families.”

Indeed, President Vladimir Putin signed a decree in May that simplified the procedure for turning Ukrainian orphans into Russian citizens. Among those who have adopted a Ukrainian teenager is none other than Maria Lvova-Belova, Putin’s commissioner for children’s rights.

In September the US Treasury placed sanctions on Lvova-Belova, saying her efforts “specifically include the forced adoption of Ukrainian children into Russian families, the so-called ‘patriotic education’ of Ukrainian children, legislative changes to expedite the provision of Russian Federation citizenship to Ukrainian children, and the deliberate removal of Ukrainian children by Russia’s forces”.

Does all this amount to genocide under international law? Timothy Snyder, an eminent American historian of eastern Europe, thinks so. He and others cite the 1948 Convention on the Prevention and Punishment of the Crime of Genocide.

Article II of this convention is unambiguous on the subject. Section (e) defines one type of genocide against a national, racial, ethnic, racial or religious group as “forcibly transferring children of the group to another group”.

But what precisely is the purpose of the Russian authorities in moving children from Ukraine and, in some cases, giving them Russian citizenship? A recent New York Times article made the point that the authorities are hardly concealing their actions. On the contrary, their actions are broadcast on state television “with patriotic fanfare”.

The aim, it appears to me, is partly to demoralise and intimidate the people of Ukraine, and partly to put on a propaganda show to the people of Russia. The message to Russians is: see, our “special military operation” is not a war at all, it’s bursting with humanitarian goodness.

All that said, it’s necessary to keep in mind that mass deportations have a long history in Russia, both in Soviet and in tsarist times.

In 2007 Sciences Po, the Paris-based university, compiled a chronology of deportations under Stalin from the mid-1930s onwards. Finns, Poles, Koreans, Balts, the peoples of the north Caucasus, Crimean Tatars, Germans, Greeks, Armenians, Moldovans — on and on the list goes.

In the tsarist era, one of the largest deportations occurred in 1864: the ethnic cleansing of Circassians in the north Caucasus.

On several occasions in the 18th and 19th centuries, Poles were deported en masse to Siberia. They suffered a similar fate, in even larger numbers, after Stalin’s invasion of Poland in 1939. The definitive study is the late British historian Keith Sword’s Deportation and Exile: Poles in the Soviet Union 1939-1948.

In our times, Russia’s 1999-2000 war in Chechnya led to the “enforced disappearance” of thousands of Chechens, according to Human Rights Watch. Similar actions against Crimean Tatars followed Putin’s annexation of Crimea in 2014.

In other words, Russia’s deportations of Ukrainians, including children, fit a well-established historical pattern of behaviour. It is another question whether the Russian authorities will ever be held to account.

What do you think? Does Russia’s treatment of Ukrainian children qualify as genocide? Vote here.

More on this topic

Vladimir Putin’s Telegram hawks — Andrey Pertsev explains on the Riddle website how a messenger app became a platform for pro-war Russian nationalists.

Notable, quotable

“This case reaffirms the strength of our democracy and the institutions that protect and preserve it, including our criminal justice system” — Matthew Graves, US attorney for the District of Columbia, speaks after Stewart Rhodes, founder of the Oath Keepers, a rightwing militia, was convicted of seditious conspiracy in connection with the January 2021 assault on the US Capitol

Tony’s picks of the week

  • Youth unemployment in China is stoking student protests against the Communist party’s zero-Covid policies, the FT’s Thomas Hale in Shanghai and Arjun Neil Alim in London report.

  • Ten years after the EU embarked on the project of a banking union to complement its single currency, the task remains unfulfilled in important respects, but there are opportunities for progress. The Brussels-based Bruegel think-tank analyses what needs to be done.

In case you missed it, for the FT’s Best Books of the Year series, I selected 10 history books which stand out from 2022 — you can read my list here, and see the rest of the annual round-up here.

Britain after Brexit — Keep up to date with the latest developments as the UK economy adjusts to life outside the EU. Sign up here

Working it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up here

Are you enjoying Europe Express? Sign up here to have it delivered straight to your inbox every workday at 7am CET and on Saturdays at noon CET. Do tell us what you think, we love to hear from you: Keep up with the latest European stories @FT Europe

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After Fanning Covid Fears, China Must Now Try to Allay Them



For nearly three years, the Chinese government deployed its considerable propaganda apparatus to fan fears about Covid to justify large-scale quarantines, frequent mass testing and the tracking of more than a billion people. As the authorities now shift their approach to the pandemic, they face the task of downplaying those fears.

Until the past week, during which there were rallies voicing extraordinary public opposition to the stringent “zero Covid” rules, government officials and state media were still emphasizing the most ominous medical news about the pandemic. There were countless stories about the high death toll suffered elsewhere — especially in the United States — and about the months of respiratory problems, cognitive impairment and other difficulties associated with long Covid.

The official newspaper of the Communist Party, People’s Daily, warned on Nov. 15 that any loosening of Covid measures would endanger the lives and health of the Chinese people: “The relaxation of prevention and control will inevitably increase the risk of infection of susceptible groups.”

Just a week and a half ago, the vice premier overseeing the government’s Covid responses, Sun Chunlan, said that “anyone who should be tested must be tested, and no one should be left behind.”

But as local governments now hurry to dismantle testing requirements and start hauling away curbside test booths, Ms. Sun changed tack on Wednesday. “China’s pandemic prevention faces a new situation and new tasks, given the weakening severity of the Omicron variant,” she said.

China faces a challenging moment in its pandemic response, experts say, in large part because of muddled messaging. The government has failed to take many proven public health measures, such as aggressive campaigns for full vaccination, leaving many citizens of the world’s most populous nation at risk.

China’s top leader, Xi Jinping, had personally affirmed that sacrifices were needed to stop the spread of Covid. “It would be better to temporarily affect a little the development of the economy than to let the people’s life, safety and health be harmed,” he said in June.

Beijing is now rapidly moving to lighten the burden of Covid restrictions. Some neighborhood committees are beginning to let residents stay home if they or their family members are infected, instead of transporting them to makeshift hospitals, vast stadiums or long rows of shipping containers, standard procedure since the early months of the pandemic. Chengdu, Guangzhou, Tianjin, Beijing, Chongqing and Shenzhen have all lifted requirements in the past several days for residents to show negative Covid tests before taking the subway or entering other public places.

Yet allaying Covid worries bordering on terror among millions of people, particularly older residents, is proving a challenge for the Communist Party and state media. Further complicating matters is that China’s leaders have a long history of not wanting to look as though they are reversing policies because of public anger.

Throughout the government’s unbending response, the country has struggled to adequately vaccinate some of its most vulnerable: Of people ages 80 and older, two-thirds have done the initial course of vaccinations, usually two doses, but only 40 percent have received a booster dose.

International scientists say that three of China’s vaccines are needed to achieve protection comparable to two mRNA vaccines in the West.

Missing from the state media’s new reporting about Covid has been any mention of the recent days’ protests. The coverage has shifted to research by Chinese scientists that the Omicron variant may not be as dangerous as earlier versions of the virus.

Southern Daily, a state-controlled newspaper in Guangzhou, published on Saturday a report emphasizing a municipal estimate that 90 percent of Omicron infections were asymptomatic. Citing interviews with seven leading Guangzhou doctors, the newspaper also reassured readers that symptomatic cases were seldom serious, except among elderly, unvaccinated residents.

Many other countries have found Omicron to be less deadly but more infectious. There have been nearly 7 million confirmed deaths of Covid worldwide, while China says that it has suffered just over 5,000 deaths.

On Thursday, Global Times, another Communist Party publication, quoted a doctor at Sun Yat-sen University in Guangzhou who questioned the existence of long Covid, a complex cluster of post-infection symptoms, sometimes debilitating, that has been chronicled extensively by U.S. government epidemiologists.

“There are no confirmed sequelae of Covid-19,” said Dr. Chong Yutian, using a medical term for lingering consequences after an infection or injury. Dr. Chong did not respond to a request for comment.

Guiding public opinion in a new direction will not be easy for China, because state media had effectively suppressed any suggestion that Covid might be manageable.

“Until recently the experts were all geared to supporting the policy against Covid,” said Dali Yang, a political scientist at the University of Chicago. “The media is suddenly going all the way in the direction that the virus has mutated and is less pathogenic.”

Better communication, including on the importance of vaccination, is essential for China to manage its emergence from Covid restrictions, said Jin Dongyan, a Hong Kong University virologist. Many in China are still so afraid of the virus that they may stay home from even grocery stores as the country begins to open up, which could cause further economic harm, he warned.

“To educate the general public is really important, and that’s what they need to strengthen, because right now the public is confused and divided,” he said.

Jiang Sigui, 60, a corn farmer in Guangxi, an impoverished region in southernmost China, said that he worried that the easing of “zero Covid” restrictions would lead to a wave of infections that could overwhelm rural villages like his, with limited health care facilities. He fears for his ability to continue raising his grandchildren if he falls ill.

“I support the fight against Covid,” he said. “Right now, I’m at home, raising children. I definitely worry about the virus — who doesn’t?”

Yet many young and middle-aged residents of China do appear to be less afraid of Covid than they are troubled by the restrictions that China has imposed to control its spread. That sentiment became apparent in the recent protests.

China has halted almost all international travel during the pandemic and wields ever stricter censorship of the internet, including an almost complete block on access to foreign websites. Many of the protests took place in coastal provinces where residents often have the internet tools to see overseas websites that show them how the rest of the world has adjusted to life with Covid.

Yet interviews with people in Lanzhou, a provincial capital in western China, indicate that a desire for a shift in Covid policy has reached China’s huge interior as well.

Zhang Zechen, a 20-year-old university student, said that she had been confined to her dorm under lockdown for much of the past semester. The university required her to have a PCR test every fourth day. When the university offered students the chance to leave a month early for Lunar New Year celebrations, to reduce the risk of transmission, she jumped at the chance.

“I felt tired of PCR testing,” Ms. Zhang said. “Everyone feels stir crazy.”

A 24-year-old migrant worker said that he was infected with Covid last September while working in Tibet, but found that the only symptoms of his illness were a few days of coughing. He was critical of policies like locking residents in their homes for weeks, sometimes corralling more than a million people, after even a handful of cases.

“A lockdown should never be expanded to a whole district, affecting people’s normal travel and work,” said the worker, who gave only his family name, Ma, in discussing his personal health.

Yet even as China adopts a more reassuring stance about the dangers of Covid, many experts urge caution. They contend that the government has not yet done enough to vaccinate the elderly, prepare hospitals and educate the public.

“If they unroll all the restrictions too quickly, it’s probably going to lead to a large number of cases and economic disruptions,” said Andy Chen, a public health analyst in the Shanghai office of Trivium China, a consulting firm.

Li You contributed research.

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How to emerge a hero from the tension of a World Cup penalty shootout



How to take a penalty, and how to save one? With the World Cup’s knockout stages starting on Saturday, these questions could decide who wins the trophy. At the 2018 tournament, four games in the knockout rounds were tied after 120 minutes and won on penalty shoot-outs. This time, some teams have prepared better than ever. Others have not.

The first thing to know is how your opponents shoot. Broadly, every kicker has to answer one question: do you wait until the keeper moves? Croatia’s Luka Modrić does. He runs up slowly, head raised, watching the keeper for the slightest indication — even a lifted heel — of which way he’ll move. At that cue, Modrić taps the ball the other way. He has converted 21 of his 24 career penalties, or 88 per cent, according to Transfermarkt. The football-wide conversion rate has dropped over the past decade from 82 per cent to about 75 per cent, probably because data analysis helps teams decrypt opposing kickers.

A keeper facing Modrić — or Poland’s Robert Lewandowski — will want to stay immobile as long as possible. That worked for Uruguay’s Sergio Rochet against Ghana on Friday: unfooled by André Ayew’s slow approach, he chose the right corner, helping send Uruguay through to the knockouts at the Ghanaians’ expense.

England’s chief penalty-taker Harry Kane requires a different method, because he doesn’t watch the keeper. His former club coach José Mourinho once said: “Harry decides . . . a few days before the game how he is going to take it and then spends three or four days before the game practising that shot and I just love that.” Kane varies the direction of his penalties well, so a keeper must pick a side more or less randomly, and dive instantly. Good luck: Kane’s conversion rate is 85 per cent.

Lesser kickers sometimes waver between Kane’s strategy and Modrić’s. One example is France’s Antoine Griezmann, who has missed five of his last seven spot-kicks.

Italy’s goalkeeper Gianluigi Donnarumma saves a penalty taken by England’s Bukayo Saka in the Euro 2020 final at Wembley © Paul ellis/AFP/Getty Images

Argentina’s Lionel Messi also has a flaw in his approach that will be apparent to analysts who study sequences rather than merely counting how many penalties are placed in which corner: he seldom repeats his last kick. Last week Messi scored to the Saudi keeper’s right, then hit a well-struck shot to the left of Poland’s Wojciech Szczęsny, who saved. The world’s best footballer has a distinctly average career penalty conversion rate of 77 per cent, according to Transfermarkt. His rival, Portugal’s Cristiano “Penaldo” Ronaldo, is six percentage points better.

But these are specialists, and in shoot-outs a team must choose five kickers. Players who never normally take penalties suddenly find themselves making the long, lonely walk to take the kick of a lifetime. Under extreme stress, few dare wait ice-cold for the keeper’s move. Instead, inexperienced kickers tend to hit the simplest penalty: a drive to their “natural side”, which for a right-footed kicker means right of the keeper. The historical conversion rate in World Cup shoot-outs is only 70.3 per cent, calculates data provider Opta.

The Dutch have nominated one of their three keepers as their designated “penalty killer”, but won’t reveal who it is. If it isn’t starter Andries Noppert, coach Louis van Gaal might bring on the specialist just before the shootout, as he did with Tim Krul at the World Cup in 2014 against Costa Rica. Krul stood towering over each opposing kicker, trash-talking him, and the Dutch won.

That was a case of a keeper’s aura intimidating opponents. One beneficiary from that in Qatar might be Switzerland’s Yann Sommer, who has graduated from average penalty-stopper to penalty-killer: since September 2019 he has saved five of the 11 he faced in all competitions.

England have suffered more penalty anguish than perhaps any country except Spain. When Gareth Southgate became their manager in 2016, they had lost five straight shoot-outs. Southgate — who himself missed England’s decisive kick in the Euro 1996 semi-final against Germany — has tried to recreate the full ambience of shoot-outs in training sessions. His men have also been taught a key statistic, writes Paul Hayward in England Football: The Biography. “Players who take a slow run-up score 80 per cent of the time, while those who run in faster convert only 60 per cent.” 

Southgate has removed some responsibility from his players by choosing England’s kickers himself. That banishes the spectacle of a manager begging exhausted, stressed players to have a go, as Spain’s coach Fernando Hierro did against Russia in 2018. Forward Diego Costa was caught by TV cameras warning not to choose Koke. Hierro insisted: “Koke is good.” After the midfielder missed and Russia won, Costa growled, “I told you.”

Managerial choice also stops incompetent penalty-takers, such as England’s Raheem Sterling, from counterproductively volunteering themselves. Southgate’s team did beat Colombia on penalties at the last World Cup. But homework cannot guarantee success: England lost the final of Euro 2020 on penalties, perhaps awed by the size and shot-stopping brilliance of Italy’s 6ft 5in goalkeeper Gianluigi Donnarumma.

Luck matters in shoot-outs. But to paraphrase the golfer Arnold Palmer, the more teams prepare, the luckier they tend to get.

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