GameStop Mania Reveals Power Shift On Wall Street—And The Pros Are Reeling
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    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,495,064 (-0.25%)       Melbourne $937,672 (-0.06%)       Brisbane $829,077 (+1.01%)       Adelaide $784,986 (+0.98%)       Perth $687,232 (+0.62%)       Hobart $742,247 (+0.62%)       Darwin $658,823 (-0.42%)       Canberra $913,571 (-1.30%)       National $951,937 (-0.08%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $713,690 (+0.15%)       Melbourne $474,891 (-0.09%)       Brisbane $455,596 (-0.07%)       Adelaide $373,446 (-0.09%)       Perth $378,534 (-0.83%)       Hobart $528,024 (-1.62%)       Darwin $340,851 (-0.88%)       Canberra $481,048 (+0.72%)       National $494,274 (-0.23%)   National $494,274                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 7,982 (-85)       Melbourne 11,651 (-298)       Brisbane 8,504 (-39)       Adelaide 2,544 (-39)       Perth 7,486 (-186)       Hobart 1,075 (-37)       Darwin 266 (+11)       Canberra 840 (-4)       National 40,348 (-677)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 7,376 (-100)       Melbourne 6,556 (-154)       Brisbane 1,783 (+12)       Adelaide 447 (+11)       Perth 2,139 (+3)       Hobart 173 (-1)       Darwin 393 (+1)       Canberra 540 (-29)       National 19,407 (-257)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $750 ($0)       Melbourne $550 ($0)       Brisbane $650 ($0)       Adelaide $550 ($0)       Perth $595 ($0)       Hobart $550 ($0)       Darwin $720 (+$40)       Canberra $675 ($0)       National $639 (+$6)                    UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $750 ($0)       Melbourne $550 ($0)       Brisbane $550 ($0)       Adelaide $430 ($0)       Perth $550 ($0)       Hobart $450 ($0)       Darwin $483 (-$38)       Canberra $550 ($0)       National $555 (-$4)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 5,759 (+74)       Melbourne 5,228 (-159)       Brisbane 2,940 (-7)       Adelaide 1,162 (-13)       Perth 1,879 (-7)       Hobart 468 (-15)       Darwin 81 (+6)       Canberra 707 (+10)       National 18,224 (-111)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 8,359 (+95)       Melbourne 5,185 (+60)       Brisbane 1,588 (-3)       Adelaide 335 (-30)       Perth 752 (+11)       Hobart 161 (-1)       Darwin 107 (-16)       Canberra 627 (-36)       National 17,114 (+80)   National 17,114                HOUSE ANNUAL GROSS YIELDS AND TREND       Sydney 2.61% (↑)      Melbourne 3.05% (↑)      Brisbane 4.08% (↑)        Adelaide 3.64% (↓)       Perth 4.50% (↓)     Hobart 3.85% (↑)        Darwin 5.68% (↓)     Canberra 3.84% (↑)      National 3.49% (↑)             UNIT ANNUAL GROSS YIELDS AND TREND       Sydney 5.46% (↑)      Melbourne 6.02% (↑)      Brisbane 6.28% (↑)        Adelaide 5.99% (↓)     Perth 7.56% (↑)        Hobart 4.43% (↓)       Darwin 7.36% (↓)     Canberra 5.95% (↑)        National 5.84% (↓)            HOUSE RENTAL VACANCY RATES AND TREND       Sydney 1.6% (↑)      Melbourne 1.8% (↑)      Brisbane 0.5% (↑)      Adelaide 0.5% (↑)      Perth 1.0% (↑)      Hobart 0.9% (↑)      Darwin 1.1% (↑)      Canberra 0.5% (↑)      National 1.2% (↑)             UNIT RENTAL VACANCY RATES AND TREND       Sydney 2.3% (↑)      Melbourne 2.8% (↑)      Brisbane 1.2% (↑)      Adelaide 0.7% (↑)      Perth 1.3% (↑)      Hobart 1.4% (↑)      Darwin 1.3% (↑)      Canberra 1.3% (↑)      National 2.1% (↑)             AVERAGE DAYS TO SELL HOUSES AND TREND       Sydney 30.9 (↑)      Melbourne 32.6 (↑)      Brisbane 37.7 (↑)      Adelaide 28.7 (↑)      Perth 40.1 (↑)      Hobart 37.6 (↑)        Darwin 36.1 (↓)     Canberra 33.0 (↑)      National 34.6 (↑)             AVERAGE DAYS TO SELL UNITS AND TREND       Sydney 32.5 (↑)      Melbourne 31.7 (↑)      Brisbane 35.2 (↑)      Adelaide 30.2 (↑)        Perth 42.8 (↓)     Hobart 36.9 (↑)        Darwin 39.6 (↓)     Canberra 36.7 (↑)      National 35.7 (↑)            
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GameStop Mania Reveals Power Shift On Wall Street—And The Pros Are Reeling

Internet-fueled amateurs, on platforms like Reddit and Discord, are piling into stocks, bragging about gains and banding together to intensify moves.

By Gunjan Banerji, Juliet Chung and Caitlin McCabe
Thu, Jan 28, 2021 2:14amGrey Clock 11 min

The power dynamics are shifting on Wall Street. Individual investors are winning big—at least for now—and relishing it.

An eye-popping rally in shares of companies that were once left for dead including GameStop Corp., AMC Entertainment Holdings Inc. and BlackBerry Ltd. has upended the natural order between hedge-fund investors and those trying their hand at trading from their sofas. While the individuals are rejoicing at newfound riches, the pros are reeling from their losses.

Long-held strategies such as evaluating company fundamentals have gone out the window in favour of momentum. War has broken out between professionals losing billions and the individual investors jeering at them on social media. Meanwhile, the frenzy of activity is stirring regulatory and legal concerns, as well as the attention of the Biden administration. The White House press secretary said on Wednesday that its economic team, including Treasury Secretary Janet Yellen, is monitoring the situation.

The newbie investors are gathering on platforms such as Reddit, Discord, Facebook and Twitter. They are encouraging each other to pile into stocks, bragging about their gains and, at times, intentionally banding together to intensify losses among professional traders, who protest that social-media hordes are conspiring to move stock prices.

“I didn’t realize it was this cultlike,” said short seller Andrew Left of Citron Research, who has become a particular target of some investors on social media. “It’s just a get-rich-quick scheme.”

GameStop, AMC and BlackBerry have received hundreds of thousands of mentions across social media since early January and have vaulted into the ranks of the most traded stocks in the U.S. market.

The mammoth gains have forced money managers to dump bets that the stocks would fall, magnifying the rally. Bearish investors who took short positions have lost $23.6 billion this year through the close of trading Wednesday on GameStop alone, according to financial analytics company S3 Partners, including $14.3 billion on Wednesday when the stock price jumped 135%, its largest percentage increase in history, to a record $347.51.

On Wednesday, GameStop shares hit a high of $380, briefly giving the videogame retailer a market value of $26.5 billion—more than that of Delta Air Lines Inc.

Sam Daftarian, a 44-year-old recent law school student, said he started trading during 2020’s market crash. In the movies, they portray a broker as “the guy with the red Lamborghinis, with Redbull or cocaine problems,” said Mr Daftarian, of Brisbane, Calif. “They never have in the movies some guy sitting on a hill in Brisbane sitting in his pyjamas. That’s how I’m trading. I’m trading sometimes at Safeway buying groceries. I’ve traded at a traffic light.”

Among his recent winners: the embattled movie-theatre chain AMC, which soared 301% on Tuesday to $19.90, recording its biggest one-day move in history.

After buying more than $1000 worth of the shares last year—as the stock price hovered around $4—he was recently on track to more than double a small options bet on the company, which has been fighting to ward off bankruptcy.

He said if he had realised how lucrative trading could be, he wouldn’t have sprung for his online law or undergraduate degree. “Please tell the wolf of Wall Street that the pigeon of San Francisco is gonna eat your lunch,” he said.

Noah Williams, a 36-year-old Atlanta resident, said he has earned close to $150,000 in cash from his GameStop options positions over the past two weeks, allowing him to pay off more than $43,500 of outstanding student loan debt. He currently holds about 1100 shares of GameStop, he said, after starting to buy shares at $16 in the autumn. He has continued purchasing shares in the months since with profits from his GameStop trades.

“I think the big takeaway is, fundamentals do not apply to retail traders,” said Mr Williams. “It’s all about sentiment. The only reason why Tesla is worth what it is is because people believe in that company.”

Mr Williams recently updated his LinkedIn profile to include a job as a “Short Squeeze Astronaut,” a reference to Reddit’s popular WallStreetBets forum, where traders regularly boast that stocks such as GameStop are going “to the moon,” alongside rocket ship emojis. He said he doesn’t plan to sell his shares until GameStop’s share price hits $1,000.

Individual investors racing to buy shares have encountered disruptions and technical glitches at online brokerages including Fidelity Investments and Vanguard Group this week. Some brokerages, including Charles Schwab & Co., TD Ameritrade Holding Corp. and Robinhood Markets Inc. have also been increasing margin requirements—or the amount that investors can borrow to execute trades—for GameStop and AMC, a move typically done when volatility or risk for a security changes.

The sharp run-up in GameStop and AMC shares comes amid a period of relative calm in the broader stock market. The S&P 500 has slipped about 2.4% this week, leaving it with a small loss for the year. That compares with week-to-date gains of 435% for GameStop and 467% for AMC. Both companies didn’t respond to requests for comment Wednesday.

AMC has been the most actively traded stock in the entire market in recent sessions, replacing Apple Inc., a behemoth more than 350 times its size. Speculative options trading on GameStop and AMC has grown to the highest level ever, leaving traders ogling at the dramatic price moves on their screens.

Pinpointing the origins of the GameStop frenzy is difficult, but signs of individual investor interest began to emerge in earnest in 2019 on Reddit forums. At the time, some users began posting screenshots of bullish options positions and debating why the stock could rise.

That same year, one Reddit user posted in March that the company was a “deep value play.” Another Reddit user noted at the time that Michael Burry, the investor who famously bet against mortgage securities before the late-2000s financial crisis, had built a stake in the company through his investment firm Scion Asset Management LLC.

Mr Burry “is trying to start an epic short squeeze,” one user posted on an investing Reddit forum in August 2019, a reference to a phenomenon that occurs when a stock’s price begins rising, forcing bearish investors to buy back shares that they had bet would later fall to curb their losses.

By 2020, chatter about a possible short squeeze had moved beyond being a working theory among a few users. Post after post noted the elevated short interest in GameStop stock, with one user in April 2020 predicting it would be the “biggest short squeeze of your entire life.” Even more, many users predicted, new consoles including the PlayStation 5 were coming in late 2020. That alone, they thought, could help lift the share price of the struggling videogame retailer that had already begun closing stores around the globe.

By early January, GameStop had moved from a stock recommendation to a phenomenon. GameStop was no longer only an opportunity for a big payday or a way to back a struggling company. Buying GameStop for some users had turned into a way to confront institutional money. Users encouraged others to hold the line: “Do not sell.”

Big losses

The soaring stock prices of heavily shorted stocks have ensnared some of Wall Street’s best traders. Top-performing hedge fund Melvin Capital Management, which managed $12.5 billion at the start of the year, had lost nearly 30% for the year through Friday due largely to its array of bets against companies including GameStop, said people familiar with the fund.

With losses mounting, Melvin founder Gabe Plotkin orchestrated an emergency deal Monday in which Citadel LLC, its partners and Point72 Asset Management would immediately invest $2.75 billion into Melvin’s fund to help stabilize it. As part of the deal, they got non-controlling revenue shares in Melvin for three years. The move effectively reduced Melvin’s reliance on borrowed money and, therefore, the likelihood of margin calls from Melvin’s prime brokers.

Melvin’s put options against GameStop—bearish contracts that typically profit as stocks fall—expired in mid-January and it was completely out of GameStop Tuesday. “Melvin Capital has repositioned our portfolio over the past few days,” a spokesman said in a written statement. He declined to comment on how much of Melvin’s losses came from GameStop.

Maplelane Capital LLC, a New York hedge fund that started the year with about $3.5 billion, was down roughly 30% for the year through Wednesday, with its bearish GameStop position a significant driver of losses, said people familiar with the firm. One of the people said the fund has adjusted its portfolio over the past two weeks to preserve capital.

The steep loss is rare for Maplelane, started in 2010 by former Galleon Group trader Leon Shaulov. Maplelane has returned an average 29.4% a year since its inception, according to an investor document.

Some traders said they had been covering short bets on other stocks such as Palantir Technologies Inc. and Stitch Fix Inc. because they worry those companies could be the next GameStop. Others have been forced out as stocks like GameStop and AMC soar, triggering their firms’ limits on the amount of risk a portfolio manager can take. Hedge funds reduced their exposure to stocks, by trimming their bullish positions and covering bearish ones, on Monday at the sharpest clip since August 2019, according to Goldman Sachs Group Inc.

Meanwhile, chatter about “Melvin” has been dominant on Reddit, according to an analysis by Meltwater, a global media intelligence company, with more than 40,000 posts tied to the firm circulating over the past month. One post gloated: “We are better at being irrational than Melvin is at being solvent.”

Individual investors are aware of their growing clout, and know when to deploy it.

On Jan. 19, a Twitter account identifying itself as moderators for WallStreetBets posted that the forum had long been dismissed, but “we are also now a powerful force to be taken seriously.” Some users have expressed concern that the Securities and Exchange Commission would act if users appeared organised. On Discord, in a chat room linked to WallStreetBets, a user on Tuesday posted, “Guys, we need to pump $GME. Everyone buy 1000 shares in exactly 60 seconds.”

Some on WallStreetBets have targeted Mr. Left of Citron Research, who made his bearish position on the company public. He said he has been trolled by throngs of people on the internet, including many who he said harassed family members, including his children. Many people ridiculed him as a “boomer,” he said.

His announcement served as a cue for hordes of other investors to pile into the stock.

“When Citron got involved, that’s when I think I wanted more involvement,” said Danny Faiella, a 33-year-old house painter in Hilo, Hawaii, who trades between jobs and has poured about $3,500 into GameStop stocks and options. He has been buying calls tied to GameStop since November—positions that rapidly jumped in value as the stock soared—and ramped up the trade after Mr. Left revealed his position. “I find value in the stocks that he now shorts.”

On Wednesday, Mr. Left said in a video that he closed most of his short position.

Although investors betting on and against stocks had one of their best years in more than a decade last year, they have been buffeted in recent years by monetary stimulus by central banks around the world and by the rise of passive and quantitative investing. Stock pickers say all of these forces have distorted equity markets.

Social media, they say, may be the next force with which to reckon.

The extraordinary moves in individual stocks come as trading activity among individual investors has surged during the coronavirus pandemic, drawing investors young and old, inexperienced and seasoned. In 2020 alone, it is estimated that more than 10 million new trading accounts were created, according to JMP Securities.

To market observers, the companies that individual investors favour don’t always make sense. In recent months, they have sent soaring shares of Hertz Global Holdings Inc., the car-rental service that filed for bankruptcy protection last year, and Eastman Kodak Co., the struggling photography company. Hertz was ultimately delisted from the New York Stock Exchange and trades on the over-the-counter market, while Kodak has fallen more than 60% from its 2020 high.

That has many Wall Street traders convinced that rallies like GameStop’s could ultimately fizzle, too.

Short sellers’ interest in GameStop remains high, even as the borrowing cost, or the fee that bearish investors must pay a broker to borrow shares in order to short them, has skyrocketed. The median borrow cost for stocks in the S&P 500 is 0.3%.

As of Wednesday afternoon, the borrow fee for GameStop stock was around 38% for existing shorts, according to S3 Partners. The borrow fee on new short sellers has climbed as high as between 150% to 200%.

Inflicting pain

The record run for stocks like GameStop comes as access to options bets has grown easier than ever, allowing investors to supersize their bullish bets and, in some cases, inflict additional pain on short sellers.

Options give investors the right to buy or sell shares at specific prices, later in time. They can be used as trading tools to wager on the direction of stocks, or to hedge portfolios. Lately, many investors have been using them to rapidly double, triple or even quadruple their money, since they can put down a relatively small sum in exchange for a giant return, albeit risking a giant loss. They have been snapping up options on GameStop that would expire within days.

The volume of trading and the high number of outstanding, short-dated call options in GameStop has astonished Wall Street veterans. More than 2 million options contracts tied to GameStop changed hands Friday, the most on record. Options volumes for AMC hit a high on Monday.

As shares rise, dealers who have sold the calls have to buy shares to hedge their positions. These call options multiplied in value as GameStop shares surged, forcing dealers to buy more of the company’s shares to hedge their positions.

And the surging share price lured even more traders into the fray, spurring demand for the shares, creating a snowball effect. Meanwhile, systematic funds started to get involved in the stocks, helping push the stocks higher.

Options volumes this year are accelerating after a record 2020. Four of the five largest volume days for call options dating back to 1973 have happened in the first few weeks of 2021, according to Trade Alert data. On Jan. 27, more than 39 million bullish calls changed hands, making it the most active day for such bets in history.

The momentum surrounding the stock could ease and these bullish bets could quickly reverse. And all the options trading on the way up could exacerbate a downward spiral in the stock, traders said.


The mob-like mentality on WallStreetBets has some professional investors calling foul.

Mr. Burry, who drew some of the early attention to GameStop, on Tuesday posted in a now-deleted tweet: “If I put $GME on your radar, and you did well, I’m genuinely happy for you. However, what is going on now—there should be legal and regulatory repercussions. This is unnatural, insane, and dangerous.”

Many traders have been questioning whether users who have been posting about the company and urging others to buy shares and calls could be considered a “group” by the SEC’s definition. That designation could require regulatory disclosures for investors acting together on a particular stock and at certain thresholds restrict trading and require a return of some short-term profits.

Hedge funds and their clients also have been asking whether the activity could be considered market manipulation.

SEC staff is likely looking into the trading activity and messages on Reddit, said Brad Bennett, a former enforcement chief at the Financial Industry Regulatory Authority. Proving any type of fraud, such as market manipulation, would require showing that traders conveyed false or misleading information to goose the stock price, he said. An SEC spokesman declined to comment.

“If it is just folks whipping each other into a frenzy on the internet, it is hard to find a violation,” Mr. Bennett said. “But if you have people putting information out on a website, and these are stock pickers selling into the frenzy and they are not disclosing that, it can be fraud.”

Moderators on Reddit investing and trading forums have disputed in posts the notion that the forum manipulates markets, and in replies to users have said they are strict on enforcing group rules, which “relate to promotions and pump and dumps,” one moderator said in a forum this month.

“There is NO organized effort by those [of] us who moderate this community to promote, advise or recommend any stock,” another recent post on WallStreetBets said. “It is against our policy to do so and we feel it is crucial to allow members to be able to share their ideas amongst each other with autonomy.”

Some individual investors have also questioned to what extent retail traders are driving the massive share-price increases.

“We control the sentiment, but we don’t have the money to control this kind of volatility or the price,” said Mr. Williams, the Atlanta-based individual investor. “There’s definitely big money, market makers and hedge funds that are essentially bankrolling our feelings.”

Securities and regulatory lawyers say neither market manipulation nor group cases, particularly in the context of anonymous internet posters, are easy to make. The former raises the question of whether the SEC has the will to go after individual investors or require a short seller to file suit and open up its own books for discovery, they say.

Jordan Laws, a 40-year-old video producer who worked for Bernie Sanders’s presidential campaign last year, said he considers WallStreetBets to be an equalizing force among professionals and amateurs.

“The hedge funds have been doing it forever. It isn’t like they haven’t taken their guys and gone on CNBC,” said Mr. Laws, adding that their comments can move markets.

He bought bullish call options tied to AMC after seeing the run-up in GameStop shares and tracking the incessant chatter on Reddit and Discord. They have ticked up in value, but he thinks there’s more room to run.

“I’m waiting for the cavalry to arrive,” he said.

—Sabrina Siddiqui and Dave Michaels contributed to this article.


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LONDON—Fresh out of an energy crisis, Europeans are facing a food-price explosion that is changing diets and forcing consumers across the region to tighten their belts—literally.

This is happening even though inflation as a whole is falling thanks to lower energy prices, presenting a new policy challenge for governments that deployed billions in aid last year to keep businesses and households afloat through the worst energy crisis in decades.

New data on Wednesday showed inflation in the U.K. fell sharply in April as energy prices cooled, following a similar pattern around Europe and in the U.S. But food prices were 19.3% higher than a year earlier.

The continued surge in food prices has caught central bankers off guard and pressured governments that are still reeling from the cost of last year’s emergency support to come to the rescue. And it is pressuring household budgets that are also under strain from rising borrowing costs.

In France, households have cut their food purchases by more than 10% since the invasion of Ukraine, while their purchases of energy have fallen by 4.8%.

In Germany, sales of food fell 1.1% in March from the previous month, and were down 10.3% from a year earlier, the largest drop since records began in 1994. According to the Federal Information Centre for Agriculture, meat consumption was lower in 2022 than at any time since records began in 1989, although it said that might partly reflect a continuing shift toward more plant-based diets.

Food retailers’ profit margins have contracted because they can’t pass on the entire price increases from their suppliers to their customers. Markus Mosa, chief executive of the Edeka supermarket chain, told German media that the company had stopped ordering products from several large suppliers because of rocketing prices.

A survey by the U.K.’s statistics agency earlier this month found that almost three-fifths of the poorest 20% of households were cutting back on food purchases.

“This is an access problem,” said Ludovic Subran, chief economist at insurer Allianz, who previously worked at the United Nations World Food Program. “Total food production has not plummeted. This is an entitlement crisis.”

Food accounts for a much larger share of consumer spending than energy, so a smaller rise in prices has a greater impact on budgets. The U.K.’s Resolution Foundation estimates that by the summer, the cumulative rise in food bills since 2020 will have amounted to 28 billion pounds, equivalent to $34.76 billion, outstripping the rise in energy bills, estimated at £25 billion.

“The cost of living crisis isn’t ending, it is just entering a new phase,” Torsten Bell, the research group’s chief executive, wrote in a recent report.

Food isn’t the only driver of inflation. In the U.K., the core rate of inflation—which excludes food and energy—rose to 6.8% in April from 6.2% in March, its highest level since 1992. Core inflation was close to its record high in the eurozone during the same month.

Still, Bank of England Gov. Andrew Bailey told lawmakers Tuesday that food prices now constitute a “fourth shock” to inflation after the bottlenecks that jammed supply chains during the Covid-19 pandemic, the rise in energy prices that accompanied Russia’s invasion of Ukraine, and surprisingly tight labor markets.

Europe’s governments spent heavily on supporting households as energy prices soared. Now they have less room to borrow given the surge in debt since the pandemic struck in 2020.

Some governments—including those of Italy, Spain and Portugal—have cut sales taxes on food products to ease the burden on consumers. Others are leaning on food retailers to keep their prices in check. In March, the French government negotiated an agreement with leading retailers to refrain from price rises if it is possible to do so.

Retailers have also come under scrutiny in Ireland and a number of other European countries. In the U.K., lawmakers have launched an investigation into the entire food supply chain “from farm to fork.”

“Yesterday I had the food producers into Downing Street, and we’ve also been talking to the supermarkets, to the farmers, looking at every element of the supply chain and what we can do to pass on some of the reduction in costs that are coming through to consumers as fast as possible,” U.K. Treasury Chief Jeremy Hunt said during The Wall Street Journal’s CEO Council Summit in London.

The government’s Competition and Markets Authority last week said it would take a closer look at retailers.

“Given ongoing concerns about high prices, we are stepping up our work in the grocery sector to help ensure competition is working well,” said Sarah Cardell, who heads the CMA.

Some economists expect that added scrutiny to yield concrete results, assuming retailers won’t want to tarnish their image and will lean on their suppliers to keep prices down.

“With supermarkets now more heavily under the political spotlight, we think it more likely that price momentum in the food basket slows,” said Sanjay Raja, an economist at Deutsche Bank.

It isn’t entirely clear why food prices have risen so fast for so long. In world commodity markets, which set the prices received by farmers, food prices have been falling since April 2022. But raw commodity costs are just one part of the final price. Consumers are also paying for processing, packaging, transport and distribution, and the size of the gap between the farm and the dining table is unusually wide.

The BOE’s Bailey thinks one reason for the bank having misjudged food prices is that food producers entered into longer-term but relatively expensive contracts with fertilizer, energy and other suppliers around the time of Russia’s invasion of Ukraine in their eagerness to guarantee availability at a time of uncertainty.

But as the pressures being placed on retailers suggest, some policy makers suspect that an increase in profit margins may also have played a role. Speaking to lawmakers, Bailey was wary of placing any blame on food suppliers.

“It’s a story about rebuilding margins that were squeezed in the early part of last year,” he said.


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