Economic shocks

Supply crunches and soaring energy prices are still with us. [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( There are few signs of a new-year reset for a global economy dogged by a supply crunch, soaring energy costs and ongoing disruptions in the strange economic conditions spawned by the Covid-19 pandemic. In Europe, consumers are desperate for relief from wholesale gas prices that are up almost 300% in the past year. Sporadic outbreaks in China of the delta and omicron variants have triggered shutdowns around one of its biggest seaports in Ningbo and disruptions at computer-chip manufacturers in the locked-down city of Xi’an. Key reading: - [The Energy Price Surge Is Squeezing Europe’s Economy]( - [Chinese City’s Time Off for Omicron Tests Shows Economic Risks]( - [Can’t Find Pasta or Cat Food? Empty Store Shelves Here to Stay]( - [Central Banks, Not Covid, Will Drive Global Economies in 2022]( - [Global Supply Chains Brace for Impact as Omicron Reaches China]( In the U.S., where social media are full of photographs of empty grocery-store shelves, the head of one of its biggest supermarket chains says the situation will take weeks to improve. There’s even a fried chicken shortage in Australia that KFC blamed on a Covid-driven lack of staff at suppliers. It all complicates the global outlook for inflation that’s squeezing consumers’ wallets and will likely force central banks to respond with higher interest rates. There are already signs of political trouble ahead. Protests in Kazakhstan were initially sparked by fuel prices before being crushed by the central Asian nation’s government with help from Russian troops. As some European governments impose restrictions on unvaccinated citizens, the World Health Organization said more than half of the region’s population may be infected with omicron within weeks at current transmission rates. U.S. congressional midterm elections in November may lay bare the depth of political divisions in the nation as consumer inflation hits levels last seen under Ronald Reagan. Much depends now on whether Covid is weakening enough to allow the world a glide path out of the pandemic. If it isn’t, then the impact on our upside-down economies will only deepen this year. — [Enda Curran]( A distribution warehouse near Derby in the U.K. Photographer: Chris Ratcliffe/Bloomberg [Click here]( to follow Bloomberg Politics on Twitter and share this newsletter with others too. They can sign up [here](. Global Headlines Stress test | European Union governments will this week launch a large-scale simulation of [cyberattacks]( against multiple member states, [Alberto Nardelli]( exclusively reports. It comes amid concerns that Russia could couple any aggression toward Ukraine with cyberattacks directed at the West. - The NATO-Russia Council meets in Brussels today to discuss [Ukraine](. - European gas prices are [rising]( again as Russia continues to curb supplies via two key pipelines into Europe just as the weather turns colder and as geopolitical tensions linger. Falling flat | U.S. civil rights groups [panned]( President Joe Biden’s speech on voting rights yesterday, saying the administration left the issue on the back burner too long and now must prod the deadlocked Senate to pass legislation to ensure fair balloting rules. Their criticism is a troubling sign from a crucial constituency for Democrats less than 10 months from the midterms. - Read [here]( how the White House aims to prevent future shortages of Covid-19 tests. The rapid spread of the omicron variant saw a jump in people [missing]( work in the U.K. during the first week of January, according to an analysis of workplace attendance data carried out for Bloomberg News. It’s one of the first indications of the impact omicron is having on the economy. Gathering storm | U.K. Prime Minister Boris Johnson appears in parliament today and is expected to address [allegations]( that parties took place at his Downing Street residence in breach of his government’s lockdown rules in 2020. His spokesman confirmed that police are talking to officials about the case, while two public opinion polls showed a majority of voters think Johnson should resign. Missing plane | Taiwan found [debris]( near the area where one of its most advanced fighter jets disappeared during a training exercise, as the search for the pilot and his plane stretched into a second day. The jet was one of 64 F-16Vs Taiwan brought into service in November as part of a $3.9 billion U.S.-backed program to beef up its aging fleet. F-16V fighters during a training exercise in Chiayi County on Jan. 5. Photographer: I-Hwa Cheng/Bloomberg Best of Bloomberg Opinion - [Putin’s Kazakhstan Gambit Is for U.S. Eyes: Leonid Bershidsky]( - [Forget Covid Zero in China. It’s Now Dynamic Clearing: Shuli Ren]( - [The Davos Gang’s Risk List Is a Depressing Read: Mark Gilbert]( Zero tolerance | China sent three people to prison for up to four-plus years over [breaches]( of Covid rules that led to a virus outbreak, one of the harshest punishments for lapses in enforcing government controls. The violations at a cargo company included failing to ensure employees wore masks, avoided visiting public venues after hours, and were properly quarantined and tested, according to state media. - The Philippines [banned]( unvaccinated people from public transportation in the capital following President Rodrigo Duterte’s order to restrict their movement as new infections surge. Bloomberg TV and Radio air Balance of Power with [David Westin]( weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online [here]( or check out prior episodes and guest clips [here](. News to Note - North Korean leader Kim Jong Un personally [oversaw]( his regime’s latest hypersonic missile test, official media reported, as he pushes to develop weapons to counter U.S. defenses. - China, South Korea and the Philippines temporarily [halted]( beef imports from Canada after it discovered a case of mad cow disease, a move that could further disrupt the global meat trade. - Environmental activists in Argentina are trying to [prevent]( new oil exploration in the resource-rich South American nation, days after forcing a governor in Patagonia to reverse course on silver mining. - The U.K. government is being hit with lawsuits from environmental groups that claim its plans to [decarbonize]( the economy fall short of what’s needed to avoid catastrophic climate change. And finally ... As Covid infections soar again, EU regulators have [warned]( that frequent booster shots could adversely affect the immune system and may not be feasible. Instead of repeating inoculations every four months, countries should leave more time between boosters and tie them to the onset of the cold season in each hemisphere, following a blueprint set out for influenza vaccination strategies, the European Medicines Agency advised. People line up for boosters at St Thomas’ hospital in London. Photographer: Jason Alden/Bloomberg Like Balance of Power? [Get unlimited access to Bloomberg.com](, where you'll find trusted, data-based journalism in 120 countries around the world and expert analysis from exclusive daily newsletters. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( [Ads Powered By Liveintent]( | [Ad Choices]( Bloomberg L.P. 731 Lexington, New York, NY, 10022