Good morning.
Yesterday’s unhappy inflation report sealed the deal: “short and shallow” has been displaced by “high and long-term” – with higher inflation and interest rates for longer periods. Investors and business leaders better get used to it.
For their part, investors reacted quickly to the news, and it sent the market into a deep dive since June 2020. According to Greg Jensen, Bridgewater’s chief investment officer, there are worse things to do. I think the biggest mistake at the moment is to believe that we will return to the same prices as pre-Covid [era],” he said.
Business leaders face a similar adjustment. A recent paper from McKinsey says, “It could take years to reduce inflation to the federal target level.”CEO Daily got an early look) “Companies must draw on the proven playbook for success in a world of slow growth, high inflation and expensive capital.”
What does that playbook look like? The consulting firm makes four recommendations:
– Do not delay development projects. “Our research shows that growth-oriented leaders respond decisively to short-term disruptions that can be turned into opportunities.”
– Build skills wisely. Employers tend to overvalue ‘transactional’ aspects such as pay and development and undervalue ‘relevant’ elements – feeling valued by managers and the organization, feeling trusted by teammates, a sense of ownership, flexible work schedules – which employees say are most important.
–Keep the course going. “In an economically challenged environment, a cyclical perspective on sustainability can be a catalyst for companies to build resilience, reduce costs and create value.
– Rebuild your supply chain for resilience and efficiency. “We’ve found that careful assessment of supply chain vulnerabilities can reveal opportunities to reduce costs with high-risk suppliers by 40 percent or more.
Sounds pretty simple, right?
And thanks to NYU’s Alison Taylor, yesterday with members of the Fortune Impact Initiative, we discussed why corporate focus on social and environmental goals is driven by business realities, not politics, and thus continues despite political pressure.
“A very simple way to think about it is in terms of corporate valuation, we’ve seen a shift from tangible to intangible value. Earlier in the twentieth century, corporate value came from plants, buildings, machinery, and financial assets. It now comes from branding, network effects, stakeholder trust, R&D, IP. And all of this basically means that the perception of the stakeholders, the perception of the public, and the understanding of the employees are much higher than before. And that’s largely in the investor’s interest.” Social and environmental parameters.
You can learn more about the Fortune Impact Initiative here. More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
Main news
Energy markets
The German government is reportedly considering nationalizing Uniper, the country’s largest natural gas importer. Uniper still needs help to stay afloat. Meanwhile, the European Commission is currently addressing the impact of high gas prices on overall electricity prices and supports consumers to “reap the benefits of low-cost renewables” and estimates that the EU will collect more than 140 billion dollars from wind energy companies. ‘Profit. Bloomberg
Google good
The European Union’s Supreme Court has broadly upheld the mega fine imposed on Alphabet by antitrust enforcers several years ago. This is the first of a few big European losses for the company due to Google’s abuse of its position in the Android market. The court slightly reduced the record-breaking fine from $4.34 billion to $4.125 billion, because the reasoning was slightly different from that of the European Commission, but Alphabet’s only hope now is to appeal the legal issues to the EU Court of Justice. (Bonus read: South Korea hits both Google and Meta with privacy fines.) Bloomberg
Xi appeared.
Xi Jinping traveled outside China for the first time in more than two and a half years, visiting Kazakhstan, along with Uzbekistan – on the list where he will meet with Russian President Putin and other regional leaders. The diplomatic offensive comes weeks before a crucial Communist Party meeting, where he could win another five-year term as president. New York Times
Around the water cooler
Terraform Labs founder Do Kwon, behind crypto root Terra, released in connection with arrest warrant via Bloomberg
Climate change and the energy crisis are driving the return of 1970s technology installed in 40% of new American homes by David Meyer.
Michael Saylor Unveils New Bitcoin Bet – And Surprisingly, The Math Could Actually Work For Shareholders By Shawn Tully
DARPA grant inspires MIT scientists to build a bag-sized reactor that turns seawater into drinking water, by Ian Mount
Uber CEO thinks inflation could encourage more drivers to join the ride-hailing platform, as ‘life is getting more expensive’, by Nicholas Gordon
This edition of CEO Daily Edited by David Meyer.
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