Inflating like it's 1982

Plus: Boardroom ethics | Wednesday, January 12, 2022

Open in app View in browser     Axios Closer By Hope King and Nathan Bomey ·Jan 12, 2022 Hello! Hope and Nathan here. We pledge never to be involved in a crypto scam (see No. 5). Today's newsletter is 708 words, a 2½-minute read. ⚡️ Situational awareness: Republican Sen. Josh Hawley plans to introduce a rival bill to ban stock trading in Congress, potentially complicating passage, Axios has learned. Go deeper. 🔔 The dashboard: The S&P 500 closed up 0.3%, down 1.5% from its record high last week. Biggest gainer? Energy company Coterra Energy (+6.1%). The company was picked by an analyst as a favorite bet in the sector. Biggest decliner? Clinical laboratory company Quest Diagnostics (-6.8%). The company reported a decline in COVID testing volumes in the fourth quarter compared to last year.     1 big thing: Inflation portion control Illustration: Aïda Amer/Axios   The four-decade high in inflation is leading companies to look for alternatives to price increases to avoid scaring off customers, Nathan writes. Why it matters: With annualized inflation registering at 7% in December, businesses are turning to a mix of price increases and "shrinkflation" — cutting the amount you get, not the price you pay. Driving the news: Less than 24 hours before the Consumer Price Index reported its highest reading since 1982, Domino's Pizza CEO Ritch Allison said the chain plans to reduce the number of chicken wings in its $7.99 deal from 10 to eight. Facing food-cost increases of 8%–10%, Domino's also plans to eliminate its $7.99 pizza deal for call-in orders, making it online only amid labor shortages. "The company is optimistic these changes will improve franchise profitability through online upsell opportunities and provide labor savings" as orders move online, Cowen stock analyst Andrew Charles wrote Wednesday. By the numbers: In November and December, companies mentioned "inflation" or "inflationary" pressure in 2,509 corporate transcripts, up from 643 during the same period of 2020, according to financial research firm Sentieo. "Inflation is persisting because of labor shortages," Columbia Business School finance professor Laura Veldkamp tells Axios. "Scarce labor makes labor and goods more expensive, and this will last as long as COVID lasts." Also key: supply chain breakdowns. Reality check: Sometimes shrinkflation's not enough, and price increases are unavoidable. 52% of U.S. businesses "expect prices of their products to continue rising in 2022," while only 3% expect them to decline, according to an S&P Global Market Intelligence poll released Tuesday.     2. Charted: Boardroom confessional Data: EY Global Integrity Report 2022; Chart: Jacque Schrag/Axios Hope writes: More people are willing to do what it takes to get themselves ahead — especially if they're higher up the corporate ladder, a report from EY out today shows. Why it matters: Business leaders appear to have grown more tolerant of unethical behavior during the pandemic, particularly their own actions, according to the study. By the numbers: 18% of over 400 board members surveyed between June and September last year said they would mislead auditors or regulators to improve their pay or career — up from 14% in 2020. 15% now say they would falsify financial records, up from 12% 14% say they would offer or accept a bribe, up from 12% The big picture: An increasing number of people say companies often tolerate senior leaders or "high performers" acting unethically — 42% in the latest survey, up from 34%.     3. What's happening 🪧 Kroger saw around 8,400 union workers at 77 King Soopers stores in Denver go on strike over wages, benefits and workplace safety. (WSJ) ⚾️ Apple is seeking to add Major League Baseball games to its Apple TV+ lineup. (CNBC)     A message from Axios Axios Pro: Deals is here to streamline your mornings     News comes at you fast. Axios Pro: Deals is just a little bit faster. What's new: Axios Pro is written by pros, for pros. It's a more focused look at VC, PE, and M&A, delivering breaking news alongside deeper analysis you won't find anywhere else. Start your 14-day free trial.     4. Worker sentiment shifts workplace rankings Illustration: Aïda Amer/Axios   Zoom fatigue may be setting in with Zoom employees too, Hope writes. The company's ranking on Glassdoor's 100 Best Places to Work has fallen 78 spots from 22 in 2021. Atop this year's list with a tied 4.6 employee rating:  NVIDIA  HubSpot  Bain & Company  eXp Realty  Box Why it matters: Companies have tried much harder than in the past to put employee well-being front and center since the onset of the pandemic.   Share Axios and earn rewards If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. Be a good friend and share   5. Kaught up in crypto Kim Kardashian in the East Room of the White House, June 13, 2019. Photo: Saul Loeb/AFP via Getty Images   Kim Kardashian has been accused of taking part in a "pump and dump" crypto scheme, Hope writes. Catch up quick: In a class-action lawsuit, a group of investors claims that Kardashian, Floyd Mayweather, NBA star Paul Pierce and others hyped EthereumMax tokens on social media to lure new buyers. The filing alleges the "improper promotional activities" created the kind of demand that enabled the defendants named in the suit to sell their tokens for "substantial profits." Within a month of Kardashian's Instagram post on June 14, 2021, specifically, the token's price fell 98%, the lawsuit says. Representatives for Kardashian, Mayweather, Pierce and the company did not immediately respond to requests for comment. The big picture: Celebrities have rushed to endorse or invest in crypto as interest has exploded. About $30 billion flooded into the digital asset category last year — almost four times the previous record of $8 billion in 2018.     6. What they're saying "[W]hen you uplift a Black woman, she will in turn use her power to uplift everyone around her." — Bernice A. King, CEO of the King Center, which just entered a new partnership with Goldman Sachs' One Million Black Women initiative.     A message from Axios Axios Pro: Deals is here to streamline your mornings     News comes at you fast. Axios Pro: Deals is just a little bit faster. What's new: Axios Pro is written by pros, for pros. It's a more focused look at VC, PE, and M&A, delivering breaking news alongside deeper analysis you won't find anywhere else. Start your 14-day free trial.   Like this email style and format? Bring the strength of Smart Brevity® to your team — more effective communications, powered by Axios HQ.   Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here. Sponsorship has no influence on editorial content. Axios, 3100 Clarendon B‌lvd, Suite 1300, Arlington VA 22201   You received this email because you signed up for newsletters from Axios. 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