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The Supreme Court voted to overturn President Joe Biden’s student debt relief plan 6-3.
The pause on student loan payments was already set to expire at the end of August, and Biden’s ability to extend the pause was foreclosed through debt ceiling negotiations. But the court’s decision on Thursday hurts about 43 million people who were expected to see some relief from the burden of America’s crippling student debt regime.
Estimates show that 87 percent of the relief from Biden’s plan was to go to individuals earning less than $75,000 a year, while none would have gone to those earning more than $125,000. Ninety-five percent of the total benefits was set for households making less than $150,000.
It remains unclear what the administration now plans to do to remain committed to its promises to these millions of people, but there still are options. One potential pathway proposed by the People’s Policy Project involves using the Higher Education Act to instate already authorized income-driven repayment programs that could potentially have debtors save even more than in his original plan.
This is a developing story.
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Banking & Finance
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- One of the big questions for retailers is: What will happen when shoppers' holiday bills come due?
- Retailers are paying closer attention to factors that influence consumers' debt load, including rising interest rates and the resumption of student loan payments.
- Credit card delinquencies have ticked up, though they are not as high as during the Great Recession.
Shoppers are springing for holiday gifts and decorations, but bustling mall traffic, full shopping bags and large hauls under the Christmas tree could hide a challenge for retailers: rising credit card balances and what that may mean when the bills come due.
This holiday season, shoppers who ring up purchases on credit cards will pay more interest if they carry balances from month to month after the Federal Reserve's string of rate hikes. The cost of borrowing has climbed as credit card delinquencies — the number of people not making payments toward their balance — have ticked up, though the metric remains below the highs of the Great Recession. In addition, student loan payments have resumed after more than three years of a pandemic-related pause, adding to the debt that many Americans are trying to pay off.
Shoppers making their holiday purchases on credit will do so at a time when consumers are taking on more debt — and face bigger risks from carrying a balance. Retailers will not have a clear idea of how those factors will play out until January or February, said Aditya Bhave, senior U.S. economist for Bank of America.
"In the first quarter, the big question will be how much will delinquencies rise," he said.
But Bhave said the American consumer has defied "doom and gloom" before and could do that once again. Consumers have kept shelling out, fueled by post-Covid revenge spending and a hunger for experiences, such as tickets to Taylor Swift concerts. They most recently surprised Wall Street with stronger-than-expected September retail sales.
Already, investors and retailers have paid closer attention to credit card payments — and some have cited them as a concern. Macy's Chief Financial Officer and Chief Operating Officer Adrian Mitchell said on a late August earnings call that the department store operator expected credit card delinquencies to tick up in a more typical environment, but they have risen "faster than planned." The company, which has its own branded credit cards, has seen lower revenues from those cards because of costs associated with bad debt and related write-offs.
Mitchell said student debt, auto loans and mortgages have all become bigger burdens in a high interest rate environment.
On Walmart's August earnings call, CEO Doug McMillon also said the retailer faced debt-related challenges. He mentioned student loan payments and higher borrowing costs among factors pressuring households, even as the job market, wages and disinflation help mitigate those factors.
Tim Quinlan, an economist for Wells Fargo, said he thinks people using credit cards "are not yet fully awake" to the rising interest rates and may not realize how they will be affected until they see a bigger balance.
Average interest rates on U.S. credit cards hover at about 21% for the most recently reported quarter, which ended in August, compared with about 16% in the year-ago period, according to the U.S. Federal Reserve Board. For retailer-issued cards, the average interest rate is nearly 30%, a record high, according to data from Bankrate.
"That's a huge tax on the capacity of those households to spend," Quinlan said.
So far this season, holiday forecasts and surveys of shoppers have painted a picture of a U.S. consumer who wants to celebrate and buy gifts but is also mindful of the budget.
Consumers plan to spend $875 on average on gifts, decorations, food and other seasonal purchases this holiday season, according to a survey of roughly 8,100 people conducted in early October by Prosper Insights & Analytics for the National Retail Federation, a large industry trade group. That's $42 more than consumers said they planned to spend in the year-ago period and about the same as the average holiday budget over the past five years.
Other surveys predicted a pullback in holiday spending among a larger chunk of consumers. Nearly a third of U.S. adults said they plan to spend less on the holidays this year, compared with 20% who said they plan to spend more, according to a September Morning Consult survey of about 2,200 people.
Jaime Toplin, financial services analyst at Morning Consult, said the firm has seen the percentage of U.S. adults applying for new credit cards, and the percentage reporting that they or someone in their household have credit card debt, remain pretty stable month after month.
Yet she said it's unclear if shoppers may make riskier moves during the peak holiday season, such as racking up higher credit card balances than they can afford or borrowing in other ways, such as through buy now, pay later. Those plans, through companies such as Klarna and Affirm, break up payments into installments but can come with fees if not paid on time.
About 36% of U.S. adults said they are considering buy now, pay later for holiday purchases this year — up from 28% last year, according to the Morning Consult survey.
Toplin said stretched customers can wind up mixing borrowing methods, with balances that get harder to pay down because of interest. About 36% of buy now, pay later users paid for their plans with a credit card in September. A shopper could do so to boost their credit card reward points — or the move could be a potential sign of financial distress, she said.
Bhave, the Bank of America economist, said credit card delinquencies, not debt, are a better measure of consumer health. Inflation has lifted total spending, but shoppers have also felt more comfortable spending, with higher wages and stable jobs. Those factors contributed to total credit card debt hitting a new high of over $1 trillion for the first time earlier this year, according to the Federal Reserve Bank of New York.
"It's the labor market, the labor market, the labor market," he said. "That's by far the most important thing when it comes to consumer spending."
He said a solid labor market makes him feel generally optimistic about the holiday outlook and the odds of a "soft landing," an economic slowdown that tames inflation but does not cause a recession.
Even so, some holiday shoppers are proceeding with caution. Jolene Victoria, 42, of New York, said she plans to spend about $250 on gifts this holiday season, about the same amount she spent last year. Yet she's looked for ways to save.
She bought her first Christmas gifts in August and September, since she spotted deals such as headphones that were on sale. She snagged a cheaper Amtrak ticket to visit her dad in Virginia for Thanksgiving. But she decided to stay local for Christmas instead of flying to Florida like she did last year.
Early this year, after seeing the effect of rising interest rates, she said, she focused on paying off a small amount of debt on her credit card.
"You see how much interest you're paying and you think, 'Oh no,'" she said.
Instead, this holiday season, she's stuck to paying in cash or with a debit card to limit herself to the money she has on hand.
— CNBC's Gabriel Cortes contributed to this report.
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Consumer & Retail
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Laws and regulations for digital assets tend to arrive either too early or too late. Too early when they include details that turn out to be awkward or irrelevant when technology moves in a different direction. Too late when they wait for certainty and meanwhile leave important areas unregulated and vulnerable to fraud.
The English Law Commission, in its final report on digital assets, proposes to solve this riddle with a new approach that might make the U.K. a jurisdiction of choice for DeFi and other digital asset structures.
A lack of clarity in how they are treated by the courts prevents DeFi and the digital asset economy from developing more widely.
As a holder of NFTs or a participant in DeFi, you might think that legal uncertainty does not affect you — cryptoassets exist independently of any legal system and do not need to be controlled by regulations. But a lack of clarity in how they are treated by the courts prevents DeFi and the digital asset economy from developing more widely. Here are a few examples:
- If you hold your cryptoassets via an exchange, you might not actually hold any cryptoassets at all. This is what cryptoasset exchanges themselves have argued in a series of recent English cases. Victims of fraud attempted to freeze cryptoassets held in exchanges or obtain remedies against exchanges through which their cryptoassets had passed. They were largely unsuccessful. In many circumstances, all that an exchange customer will have is a contractual right against the exchange, enforceable by the courts. Legal uncertainty means it might not be clear whether they actually own a cryptoasset.
- If you post cryptocurrency collateral as part of a DeFi transaction and there is some problem with the structure — error or fraud — and some cryptocurrency is lost, perhaps from a different account that is part of the same structure, you might not be able to get your cryptocurrency back. This will depend on whether, in legal terms, you have transferred your cryptocurrency to somebody else or merely shared control over it. Again, legal uncertainty makes it impossible to gauge this risk and thereby inhibits growth in DeFi. And a myriad of custody and private key management possibilities make it hard to come up with clear legal rules that will apply in all situations.
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Crypto Trading & Speculation
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Sex sells, but does it when the price of almost everything has gone up?
Sex worker Jenna Love is a Sydney, Australia-based escort, and she’s currently watching her industry adapt to these strained financial times.
When you are a sex worker, you are relying on people having a disposable income, so Ms. Love saw the cost of living crisis coming from a mile away.
“We feel the pinch with this stuff quite early on,” she said.
There’s no denying that plenty of people are financially strapped at the moment.
The US also continues to grapple with inflation, with the rate currently at nearly 3%.
People are cutting back on expenses, with a recent CNBC and Morning Consult Poll finding that 92% of US consumers are spending less.
So where does that leave sex workers?
If people can’t justify mince, can they justify paying for intimacy? The answer is complicated.
Ms. Love’s unique job gives her insight into the general vibe of wealth in Australia. For instance, she flagged when the building industry was drying up way before anyone was writing about construction companies collapsing.
She simply noticed she was booking less appointments with tradies paying in cash.
She also flagged early the trend of Gen Z staying at home longer after chatting with her younger clients.
“People in their twenties, they don’t see how they could move out.”
Given Ms Love makes a living by dealing with people — and often people at their most vulnerable — she’s very aware of how the cost of living is impacting her clients, and therefore her and the sex industry in Australia.
Across the broader sex industry, Ms Love knows from speaking with other sex workers that times are tough, and people aren’t making the money they used to.
“People are pretty worried.
“If you have regulars, you will get through, but if you aren’t established, it’s a real struggle,” she told news.com.au.
The nature of sex work is to make yourself seem desirable and in-demand.
It’s basic marketing, but it means you are never going to see an escort reveal she’s having trouble getting enough private bookings to make rent, and that means even when things are tough, the sex industry looks misleadingly glamorous.
“Lots of people in my industry are struggling at the moment, I speak to women who are getting only one booking a month,” she said.
“You aren’t going to put on your marketing that you are doing really poorly. We have got to put out this image that we are really successful.”
For every OnlyFans success story, Ms Love knows plenty of sex workers who are currently “barely making rent.”
A spokesman from Scarlet Alliance, the Australian Sex Workers Association Sex workers, confirmed that sex workers are feeling the “pinch” during the cost of living crisis.
“We face the same inflationary pressures as all other workers – including increasing costs for food, mortgages or rents, electricity, and so on.”
The spokesman said sex workers are in a more vulnerable position than other Aussie workers.
“Due to stigma, discrimination, and criminalization in some states and territories, sex workers may find it harder to access government and other supports. We saw this during the COVID-19 response, and we encourage any sex worker doing it tough to get in touch with their local sex worker organization for support and appropriate referrals.”
Ms Love explains she’s in a “lucky” position in the industry because she’s an established sex worker and has regulars, but even she’s noticed a shift in her demand and bookings.
Yes, she has her regulars, but some have cut back from coming once a week to once a month or fortnight.
“There’s been a reduction,” she tells news.com.au.
“I used to be heavily booked and have a waitlist, and I’m not in that position these days. But I do still have enough bookings.”
A single hour spent with Ms Love will set you back $600 ($420 USD), but she’s not planning to lower her rates.
Remember the price of tomatoes?
While she understands if clients can’t afford to keep visiting her, she’s not prepared to lower her costs at a time when all her personal bills are going up.
She does offer a “cuddles and chat” option, which is only $250 ($165 USD) per hour, but that service involves no sex.
It was an idea that stemmed from the pandemic when she realised how many people were just starved of touch, and something she’s kept on as the cost of living pressures increase.
“It was also in my mind because things were starting to get tough for us all, well, most of us besides the 1 per cent.”
So does she think sex work is drying up? Well, no.
Ms Love thinks there will always be a demand for “intimacy” and “human connection,” but the bigger question is will Aussies keep being able to pay for it?
Sex sells, but you have to be able to afford it.
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Inflation
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Saudi Arabia Eyes Stake In $30 Billion Indian Cricket League
Saudi Arabia has expressed interest in buying a multibillion-dollar stake in the Indian Premier League, international cricket’s most lucrative event, following a string of investments that have upended professional sports including football and golf.
(Bloomberg) --
Saudi Arabia has expressed interest in buying a multibillion-dollar stake in the Indian Premier League, international cricket’s most lucrative event, following a string of investments that have upended professional sports including football and golf.
Crown Prince Mohammed bin Salman’s advisers have sounded out Indian government officials about moving the IPL into a holding company valued at as much as $30 billion, in which Saudi Arabia would then take a significant stake, people familiar with the matter said. The talks were held when the kingdom’s defacto ruler visited India in September, the people said, asking not to be named as the information is not public.
Under plans discussed at the time, the kingdom proposed investing as much as $5 billion into the league and help lead an expansion into other countries, similar to the English Premier League or the European Champions League, the people said.
While the Saudi government is keen to press on with a deal, the Indian government and the country’s powerful but opaque cricket regulator — BCCI — are likely to take a call on the proposal after next year’s federal elections, the people said. The BCCI is led by Jay Shah, the son of India’s Home Minister Amit Shah — a close ally of Premier Narendra Modi.
Saudi Arabia’s powerful sovereign wealth fund, which has anchored many of the kingdom’s previous sports investments, could ultimately be the vehicle used to do a deal with the BCCI if an agreement is reached. No final decisions have yet been made.
Read More: How Saudi Wealth Fund Aims to Build a Post-Oil Future
Representatives for the BCCI and the Saudi government’s Center for International Communication didn’t respond to requests for comment. The Public Investment Fund declined to comment.
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Since its inception in 2008, the IPL has married American-style marketing with the glitz of Bollywood and the energy of India’s vast population. The IPL’s central strategic move was to discard cricket’s traditional format for broadcast-friendly three or four hour games that encourage big, risky swings and frequent “sixes,” cricket’s equivalent of a home run.
The league has drawn a plethora of sponsors, including Aramco and the Saudi tourism authority. And despite a season that runs for just eight weeks each spring, bidders last year paid $6.2 billion for the right to broadcast IPL games through 2027. That works out to $15.1 million per match, more than the EPL and just behind the $17 million networks pay for each game in the National Football League in the US.
Read More: India’s Professional Cricket League Is a $6.2 Billion Juggernaut
Any Saudi investment into the IPL or changes to the league’s format will likely mean those agreements for media rights will need to be reworked, according to people familiar with the matter.
Global Cricketing Destination
Over the past few years, Saudi Arabia has splashed out billions of dollars on sports and the chairman of the sport’s governing body in the kingdom has said he wants to turn the nation into a global cricketing destination.
“You can’t compete with money, especially the money that Saudi Arabia is throwing around to certain people,” England cricket captain and one of the world’s top players, Ben Stokes, said in an interview this year.
Meanwhile, other attempts to replicate the IPL formula overseas are underway. Major League Cricket, a US upstart part-funded by Satya Nadella and Shantanu Narayen — the chief executive officers of Microsoft Corp. and Adobe Inc. respectively — concluded its first season in July.
That league, and others in South Africa, the United Arab Emirates and elsewhere, haven’t dented the IPL’s commercial dominance.
For Saudi Arabia, any investment in cricket would come after significant spending on sports, primarily golf and football. The PIF backed the LIV Golf tour, which this year agreed to a shock merger with the PGA Tour.
Read More: PGA Golf Merger Is Saudi Arabia’s Biggest Soft Power Win Yet
Saudi Arabia has also led a group that bought English Premier League football club Newcastle United FC, and is now on the brink of hosting the 2034 FIFA World Cup. As part of its push into the world’s most popular sport, the kingdom has spent millions on the likes of Brazil’s Neymar, France’s Karim Benzema and Portuguese superstar Cristiano Ronaldo.
That spending has opened up the Saudi government to claims of “sportswashing” its image and human rights record, though the kingdom’s crown prince has emphasized the deals are primarily intended to boost the country’s economy.
--With assistance from Matthew Martin.
©2023 Bloomberg L.P.
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Asia Business & Economics
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Local FMCG Players Make A Comeback As Giants Combat Inflation, Rural Stress
Small manufacturers are driving the value and volume growth, particularly in non-food categories.
Big brands in the burgeoning $110-billion fast-moving consumer goods market are facing a competitive wake-up call as they lose ground to smaller, more local peers who are growing in strength and gaining share.
The local brands—operating within a single market—are growing faster in all categories from noodles to dishwash bars and are grabbing market share from powerhouse brands of multinationals like Hindustan Unilever Ltd. and Nestle India Ltd. They are able to do it by keeping prices low and acing the tasting test, data from marketing data and analytics firm Kantar showed.
Dishwash brands like Reflect in Maharashtra and Supremo 51 in Madhya Pradesh as well as Karnataka's 1 to 3 Noodles brand have doubled their growth over the 12-month period ended April 2023, according to the data.
Karnataka-based Teju Masala grew 65%, while Balaji Gippi noodles in Gujarat saw a growth of 58%. The intense competition from the local peers has hurt brands like Rin and Wheel from HUL's stable, Nestle's Maggi, MTR Foods Pvt.'s spices and Marico Ltd.'s Parachute as well as Dabur's hair oil, the report showed.
"Any local brand coming back is a pressure for a national brand," K Ramakrishnan, managing director at Kantar Worldpanel, told BQ Prime. "They are aggressively competing for the shelf space as well as the mind space of a consumer who is still grappling with high prices of everyday essentials."
The volume growth of local brands has grown 12.7% over the 12-month period ended April, while that of national brands have increased at a slower pace of 8.5%, Kantar data showed. In terms of volume share, these local brands are also catching up with the big players, which are present in more than eight cities. For the 12 months ending April, the national brands had a volume share of 36% versus the local brand's 27%.
Another market researcher, NielsenIQ, also gives credence to the trend stating that small manufacturers are driving the value and volume growth, led by rural areas. It is particularly rampant in non-food categories.
"At this stage, it is important to focus on the right assortment and pack sizes of products," Roosevelt D'Souza, lead, customer success, NIQ India, said. "The reduction in input costs, if continued to being passed on to consumers, will increase consumption, benefiting all manufacturers."
During the first-quarter earnings call, the FMCG giants like HUL and Britannia Industries Ltd. have highlighted renewed aggression from smaller and regional players, who were severely impacted and some of those even went out of business during the peak of inflationary pressure.
HUL, the country's largest consumer goods maker, said it lost some market share in certain pockets of the portfolio, primarily in the mass segment. Britannia said it had taken price cuts to stay ahead of the growing competition.
Demand trends remain tepid during the April–June period, with slower-than-anticipated volume recovery and an increase in competitive intensity.
Most companies expect volume growth to improve although confidence on pick-up remains mixed, with Dabur India Ltd. being the most optimistic, followed by Marico Ltd., Britannia Industries Ltd. and Tata Consumer Products Ltd. Commentary by HUL seemed more cautious as monsoon remains a monitorable for rural recovery.
Revenue growth should slow down further as pricing growth dips, according to the companies. The soap-to-staple makers are expecting to further ramp up advertising spends, taking a hit on margin. Advertising spends have jumped sharply on a quarter-on-quarter basis. Most companies are reinvesting gains from gross margin on ad spends to drive volume as competition from local players intensifies. While gross margin recovery should continue, the companies expect higher ad spends would cap near-term margin upside.
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Consumer & Retail
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- Zodia Custody, a subsidiary of Standard Chartered, has expanded its presence in Singapore for the first time, the company told CNBC exclusively.
- The development makes Zodia the first entity that's owned by and partnered with banks to provide crypto custody services for financial institutions in Singapore, the firm said.
- Singapore is "getting to that next level of maturity" when it comes to crypto regulation and development of central bank digital currencies, Zodia CEO Julian Sawyer told CNBC.
Zodia Custody, a company that helps large institutions store their crypto, launched in Singapore on Tuesday in a bid to tap into the country's rapidly growing digital asset market.
The development makes Zodia the first entity that is owned by and partnered with banks to provide digital asset custody services for financial institutions in Singapore, Zodia said in a news release.
Zodia is a subsidiary of Standard Chartered, the British bank with a presence largely in emerging markets, such as Asia, Africa and the Middle East. StanChart launched Zodia in 2021 alongside Northern Trust, in a move that highlighted curiosity from big institutions in interacting with digital currencies. Zodia is also part-owned by SBI Digital Asset Holdings, the crypto division of Japanese bank SBI. As part of that deal, SBI also agreed to launch its custody business in Japan.
Zodia said it wants to expand across Asia-Pacific to cater to growing demand from institutions for bank-grade custody of digital assets, as well as demand from existing clients in the region, the company said.
Singapore is "getting to that next level of maturity" in terms of forming rules for cryptoassets and the development of central bank digital currencies, Zodia CEO Julian Sawyer told CNBC in a phone call. Sawyer was previously a co-founder of Starling Bank.
"Singapore is a market that has been no stranger to the crypto world for a long time," Sawyer said. "We want to be part of it. We think that the market of a bank owned custodian is actually what the market is wanting."
Zodia works with clients ranging from hedge funds and high frequency traders to prime brokers, exchanges, and asset managers.
Standard Chartered has a "fantastic brand" in Singapore, Sawyer said, adding that the backing of such a large institution has helped boost its conversations with major financial firms. "Being part of Standard Chartered comes up in every single conversation," he told CNBC. "It's absolutely critical."
"We adopt their risk their compliance frameworks, information security, resilience, [and] people managing," he added.
Singapore has seen rapid growth when it comes to digital asset adoption. The city-state's crypto ownership rate stands at 19%, according to market research firm Statista, higher than the global average of 15%.
Funding for crypto companies in Singapore has also remained strong despite a bear market the industry endured in the wake of the collapse of FTX, Three Arrows Capital, Terra, and various other previously prominent names.
Crypto or blockchain was the top area of fintech investment in Singapore in 2022, pulling in $1.2 billion of funding in 2022, according to KPMG's Pulse of Fintech report for the second half of 2022. Crypto-related funding did still fall by 21%, however. Globally, crypto startups raised $23.1 billion in 2022, down 23% year-over-year.
Zodia's move into Singapore comes on the heels of an expansion into Abu Dhabi. The company secured in-principle regulatory approval in Abu Dhabi earlier this month in a bid to take advantage of the United Arab Emirates capital's crypto-friendly regulatory environment and status as a financial center.
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Crypto Trading & Speculation
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Tech Mahindra's Comviva Penalised Rs 1 lakh For CSR Delay For PM Relief Fund
There was delay due to technical reasons in the transfer of unspent CSR amount for FY21.
IT company Tech Mahindra Group firm Comviva has been penalised Rs 1 lakh for delay in transferring unspent corporate social responsibility obligation to the Prime Minister's National Relief Fund, as per a regulatory filing.
The Ministry of Corporate Affairs' Regional Director for the Northern Region has ruled against an appeal filed by Comviva, against the order of the Registrar of Companies, which imposed a penalty of Rs 1 lakh on the company for the delay.
According to the filing, there was an inadvertent delay due to technical reasons in the transfer of the amount unspent in relation to the Corporate Social Responsibility obligation for FY21, to the Prime Minister's National Relief Fund within the prescribed period of six months of the expiry of the financial year, as per the Companies Act, 2013.
"Penalty of Rs 1,00,000 has been imposed on Comviva Technologies Limited (Comviva) in connection with the appeal filed by Comviva before Hon'ble Regional Director, Northern Region, against the adjudication order of the Registrar of Companies, NCT Delhi and Haryana dated May 17, 2023," Tech Mahindra Ltd. said in a filing on Saturday.
Comviva is in the process of depositing the penalty amount with the Ministry of Corporate Affairs, the filing said.
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Nonprofit, Charities, & Fundraising
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It’s not just grocery staples like eggs, milk, bread and coffee that are going through the roof — it’s also the hit from basic monthly payments like heat, electricity, car insurance and child care.
While housing costs and car payments continue to dog consumers amid stubbornly stiff interest rates, new figures from the US Energy Information Administration reveal that homeowners and renters alike are getting no relief from their associated monthly bills.
Those include electricity, which has climbed 25% since January 2020, the year before President Joe Biden took office and began touting his Bidenomics agenda.
California residents have experienced among the fastest-climbing electricity bills, which have popped a stunning 59% from the start of January through October 2023, per EIA.
Maine also experienced one of the steepest surges in electric costs, at 42%, while New Yorkers faced a roughly 38% pop in the same three-plus-year time period.
It’s part of the cold reality looming for most US voters who believe the odds of achieving the so-called “American Dream” are stacked against them.
For consumers faced with heating their homes this winter, the price of natural gas is also up 29% since January 2020, according to EIA figures that were earlier reported on by Bloomberg.
The figures contradict the latest Consumer Price Index, which reported that the energy index fell 2.5% on a monthly basis in October as gasoline tumbled 5% — figures Biden spun as good news for Bidenomics, which popped a historic $2 trillion hole in the federal budget last month.
Car insurance costs are following the same trend as Americans face monthly payments that are 33% higher than they were at the start of 2020.
The advance is faster than the previous three years, from 2016 to 2019 combined, when monthly car insurance payments ticked 21% higher, according to Bloomberg.
The cost of the car itself has also revved to a record-breaking $736 per month for a new vehicle, according to automotive company Edmunds.
In another grim all-time high, Edmunds found that 17.5% of Americans’ monthly car payment exceeds $1,000.
Healthcare plans also became more costly.
The average employer-sponsored health insurance premium for US families reached almost $24,000 this year, according to an annual KFF survey of more than 2,000 American companies — up a punishing 7% compared with a 1% increase a year earlier
Premiums for individual employer coverage rose at the same rate.
And as of 2022, the average annual cost of child care nationally was $10,853 — or roughly 10% of the average married couple’s median income — according to Bloomberg, citing data from Child Care Aware of America.
However, costs varied by region. States in the Northeast charge the most for child care, CCAoA found, running parents $30,514 for two children.
For reference, CCAoA’s annual survey found that housing costs in the area average $25,557 and the average child care professional earns an average of $28,520 per year.
In 41 states plus the District of Columbia, the average annual price of child care for two children exceeds average annual mortgage payments by anywhere from 1% to 53% — and rent payments by a staggering 100% — per the CCAoA.
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Inflation
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Perhaps due to Britain’s dire financial situation, induced in party by Liz Truss’s dire cameo as prime minister, the Tories have resorted to relying on protest, rather than policy.
Ministers now hold press conferences to share updates, rather than actual announcements, and Government documents are longer, but the substance of them has rarely been so thin.
Even the decisions that are made are being delayed, budget cuts deferred to after the next election, pay rises for the public sector coming from existing budgets. It’s not Rishi Sunak’s problem, let someone else sort it.
To an extent, it’s worked, most obviously in the seat of Uxbridge and South Ruislip, retained at Thursday’s by-election, despite a 7 per cent swing to Labour, and a 21 point drop in Tory support across the country. Mr Sunak suggested the result showed it was time to “double down” on existing policies, which prompts the obvious question – ‘what existing policies?’.
Voters refusing to support Labour did so because of Sadiq Khan’s ULEZ scheme, not because there was an overwhelming desire to ‘stop the boats’. People didn’t want to pay more to drive in a cost-of-living crisis, they were not endorsing a Government whose own transgender guidance in schools was deemed unlawful.
The Conservatives won because they opposed, not because they offered to deliver, a situation that is fast becoming the norm in British politics.
At PMQs, the Prime Minister demands Sir Keir answers his questions, rather than the other way round, and the energy debate sees Labour blamed for not building more nuclear power stations in the ‘90s, rather than what politicians in Government have done since 2010.
During the rail strikes, ministers went out of their way to demand Sir Keir Starmer tell “his friends in the unions” to call them off. Maybe they’d missed that Mick Lynch, the secretary-general of the National Union of Rail, Maritime and Transport Workers, spends his time denouncing Sir Keir, or simply forgot there is a Tory minister in charge of transport.
It’s the same with “Just Stop Oil”, an organisation that irritates everyone by trying to save the planet, and one the Labour leader has urged to cease disrupting events, calling them “arrogant”.
When Sir Keir arranged to meet with them to get them to stop, the home secretary accused him of working with Just Stop Oil. When activists did an estimated £3,000-£4,000 worth of damage to the department of Energy Security and Net Zero, Grant Shapps demanded the Labour leader pay for it, naturally in an open letter.
Being accountable for your donors is already a slippery slope for the Tories to get on, but it’s also deeply embarrassing. These are grown-ups, adults, intelligent, educated politicians who know Sir Keir does not support Just Stop Oil, and that they in Government are the ones responsible for policy and managing protestors. Instead, they blame Labour, pretending it’s all somebody else’s fault.
In Uxbridge it worked, turning a by-election into a referendum on one issue, but to win again, the Government might need to remember they are, despite appearances/legislation/interest, the actual Government.
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United Kingdom Business & Economics
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Russia has finally made concrete steps towards introducing a long-discussed central bank digital currency (CBDC) – the digital ruble – that is expected to enter into circulation in 2025.
Earlier in July, the State Duma, the lower chamber of the Russian Parliament, adopted a law introducing the digital ruble. Before enactment, the law has to be also approved by the Federation Council, the upper house, and signed by the president. Still, no trouble is expected at this stage, and the adoption of the digital ruble legislation is set to create a legal base for Russia's CBDC.
In accordance with the legislation, the Central Bank of Russia obtains the status of the digital ruble platform's operator. The regulator will also be responsible for the security of digital rubles in circulation, as well as for the organisation and round-the-clock operation of the platform.
The platform will be used for digital ruble emission, while commercial banks will operate as intermediaries between the central bank, on the one hand, and private individuals and companies, on the other hand. Banks will open wallets on the digital ruble platform for their clients and execute transactions on the platform. In the future, digital wallets are expected to be able to also operate offline, and the central bank promised to create its own technology to facilitate that type of transaction.
Meanwhile, the digital ruble will be more traceable than the existing non-cash payment solutions, and it will be easy to track any chain of payments and determine all the participants in any specific deal.
Cheaper and faster transactions
The central bank says that the digital ruble will operate primarily as a means of payments and transfers. Therefore, it wouldn't be possible to open a deposit in digital rubles or take a loan in the Russian digital currency. Similarly, no interest will accrue on assets held in wallets on the digital ruble platform. In the future, the regulator says, the digital ruble could also be used for crossborder payments.
The specifics of the digital ruble platform's operation are yet to be finalised by the central bank's board. However, it's already been announced that private individuals will pay no fees on payments or transfers in digital rubles, while companies will pay a fee of 0.3%.
The digital ruble will be fully controlled by the central bank, and commercial banks won't be able to open accounts in the new digital currency.
The law comes into effect as of August 1, 2023, but the digital ruble is expected to be launched no earlier than 2025, while in 2023 and 2024 pilot projects are to be run for a limited number of customers and for limited types of operations.
In 2025, a roadmap for the digital ruble is expected to be completed, while full-fledged deployment of Russia's CBDC is likely to take place two to three years from now, Olga Skorobogatova, deputy chair of the central bank, was quoted as saying by the Russian edition of Forbes.
"I think, all citizens will get an opportunity to open digital wallets, receive and use digital rubles around 2025-2027," she said. "But this will also depend upon banks, which we will be connecting to the platform gradually."
Long preparations
Discussion of the digital ruble began a few years ago, and it took much longer than expected for something concrete to come out of it. Back in October 2020, Elvira Nabiullina, governor of the central bank, for the first time mentioned a hypothetical possibility of launching a CBDC.
In March 2021, the central bank first revealed plans to launch a prototype version of a digital ruble platform before the end of that year, according to the regulator's unnamed senior officials.
A year later, plans to run "pilot transactions" in 2023 were announced, while Nabiullina said that a prototype had already been built and tests with several banks were in progress.
Meanwhile, a few other countries have launched or are preparing to launch CBDCs. In China, the digital yuan was rolled out in January 2022, but, as of today, it only accounts for 0.16% of China's total monetary supply.
Crypto remains banned (so far)
Incidentally, preparations for the launch of the digital ruble have apparently had little impact on Russia's stance on crypto, which remains banned for payments or trading.
A draft law 'On Crypto Currencies' has been discussed for a long time, and, according to a report by the Russian business daily Vedomosti, the most recent version still contains a ban on payment in crypto currencies.
However, the overall political and economic situation is apparently having an impact on the legislators, and the new version of the draft stipulates the use of cryptocurrencies for foreign payments – a step apparently aiming to help in a situation when Russian banks face restrictions on international payments in the wake of the aggression against Ukraine.
In accordance with the draft, quoted by Vedomosti, Russian companies and individual entrepreneurs could be allowed to use crypto for foreign trade transactions. All crypto transactions would be run by Russian banks, and only customers passing authentication would be allowed to make transactions of that kind.
For the last few years, Russia's central bank has remained an ardent opponent of crypto. The regulator's suggestions regarding the law on crypto include a complete ban on crypto mining (which is currently legal in Russia) and owning crypto (the existing legislation hardly addresses this at all).
Who is set to benefit from the digital ruble?
At this point, it's not yet clear if and how private individuals could benefit from the adoption of the digital ruble. However, tech-savvy companies may be able to use the CBDC to their advantage.
Incidentally, CBDCs are not cryptocurrencies, but they use crypto's underlying distributed ledger technology and smart contracts. Thanks to smart contracts, payments in digital rubles could be done automatically, in a more efficient, transparent and cheaper way.
The main advantage would be cheaper transactions for companies currently accepting plastic cards and paying substantial acquiring fees. Currently, a fee for accepting plastic cards at POS terminals could be as high as 3.2%. A cheaper alternative is the central bank's fast payment system, which charges a fee of roughly 0.7%. The digital ruble, in addition to a fee of only 0.3%, will also offer higher payment limits.
According to Yegor Krivosheya, head of research at the centre for financial technology and digital economy research at Skolkovo university, only a company that already knows how to work with distributed ledger technology can afford to build a customised solution based on the digital ruble, while the rest will have to stick to very basic functionalities.
He was quoted by Vedomosti as saying that companies with a higher level of digitalisation and expertise with distributed ledgers can receive real advantages from the digital ruble.
Still, some industry players are sceptical about the prospects of the digital ruble. Holding substantial amounts in digital rubles could be insecure, as there will be ways to counterfeit the digital currency, Alexei Skorodumov, chairman of the board of the Derzhava bank, told Vedomosti.
"Smart contracts are already used for non-cash payments," added Artyom Sokolov, president of the Association of Online Trade Companies. "I don't yet understand how the new non-cash payment system will be different from the existing one."
Vladimir Kozlov has covered Central and Eastern Europe for more than 20 years. He is currently based in Istanbul, Turkey.
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Banking & Finance
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In the aftermath of the financial crisis, Threadneedle Street slashed borrowing costs to 300-year lows – knocking five percentage points off interest rates in the space of just a year.
Many experts believed that borrowing costs would be permanently lower.
This conviction is still widespread. Economists – including at the Bank of England and the International Monetary Fund – still argue that after this bout of high inflation, rates will eventually return to post-financial crisis lows.
But as the battle to cool the economy drags on, voices of dissent are growing louder.
Megan Greene, an economist who is joining the Bank of England’s rate-setter panel, earlier this week warned that ultra-low rates were by no means guaranteed.
It would be “a mistake for central bankers to take comfort in the notion that inflation and rates will automatically go back to the low levels we saw before the pandemic,” she warned.
The implications of who is right are immense for the economy.
Permanently higher interest rates would push up the cost of borrowing for governments bloated with debt after the pandemic and make mortgages much more expensive to service.
A percentage point increase in borrowing costs wipes out £20bn of spending power for the Treasury annually, according to the Office for Budget Responsibility.
To put this into perspective, Chancellor Jeremy Hunt has left himself only a wafer-thin fiscal buffer of £6.5bn by 2028.
In the US, rate-setters at the Federal Reserve have started raising their expectations of where borrowing costs will settle in the long run, barring any major shocks.
All of these factors depend on at what level central banks can set interest rates without them either stoking or restricting demand.
One of the most prominent economists arguing that this level is moving higher is Charles Goodhart, a former member of the Bank’s Monetary Policy Committee.
Growing protectionism amid US-China tensions and shrinking labour forces as populations age are among the key factors that will raise prices and thereby interest rates, he says.
He believes that in the longer term interest rates will hover around 4.5pc – only slightly below the current level of 5pc, which is the highest borrowing costs have been since the financial crisis.
“If you want to understand the future, you have to understand the past,” he says.
Interest rates had been falling fairly steadily since the 1990s until Covid hit.
Many economists believe that this has happened because of ageing populations fuelling a growth in savings for retirement and slowing productivity gains.
Andrew Bailey, the Governor of the Bank of England, made this argument in a speech back in March.
Households who are effectively lending money to banks by depositing their savings with them will do to a much greater degree.
The remuneration – meaning the interest savers receive – will therefore fall.
Others, such as Goodhart whose interpretation of the past differs from Bailey’s, argue that the ratio of workers to inactive people will fall. Some economists also highlight that older people tend to spend a greater portion of their income on services as they are mortgage-free.
“The last three decades from about 1990 to about 2020 were extraordinarily historically unusual,” Goodhart says.
Favourable geopolitical developments such as the collapse of the USSR, the rise of China and growing labour forces led to “much lower increases in prices and wages than would normally happen”, he says.
“Rather than sort of continuing the norm of the last 30 years, we’re going to go into an opposite situation where labour is going to be much tighter, much more difficult,” he adds.
Other trends such as higher spending on defence and the vast investment required to fund the net zero transition will also add to inflationary pressures, he says.
The Government is ramping up spending on defence by £11bn over the next five years, a decision that followed Russia’s invasion of Ukraine.
Meanwhile, ministers are under pressure to unveil a British response to the US’s $369bn (£290bn) Inflation Reduction Act and the EU’s Green Deal – both funnelling vast amounts of borrowing into the net zero transition.
Labour recently rowed back on its plans to borrow £28bn a year for the same purpose amid rising borrowing costs.
Kallum Pickering, of Berenberg, says: “We are greening our economies much faster than the relative price of green technology would if the market was to be left to its own devices, and hence, this is inflationary.”
Pickering expects the Bank of England’s base rate to settle at around 3pc to 4pc in the longer term – well above the average over the past 15 years.
While technological advancements such as the rapid rise of artificial intelligence have the potential to kickstart sluggish productivity, it also has implications for interest rates.
“Technological development has disinflationary effects in the sector that it affects,” says Pickering. “But if those technological developments are large enough to significantly improve living standards, what one often finds is that the confidence effect adds to demand by more than the technology adds to supply.
“Therefore, weirdly enough, industrial revolutions in the past have tended to be inflationary rather than disinflationary.”
Analysts at BNP Paribas recently warned that while they still believe that interest rates will trend downwards over the coming decades because of higher retirement savings, in the more immediate future they are likely to move higher.
They argued that the surprising resilience of economies like the UK, the US and the eurozone in the face of soaring rates suggests that the level at which interest rates neither restrict nor stoke demand may have shifted upwards.
“It suggests limited scope for rate cuts without providing excessive stimulus to the economy, raising the risk that inflation will reaccelerate once central banks ease off the brakes,” they said.
“In that regard, it would support our long-held view that bringing inflation sustainably back to 2pc may be challenging.”
Economists who believe interest rates will remain high permanently are still in the minority.
But if they are right it poses an uncomfortable looming problem.
“We’ve already got very high debt ratios and they’re going to get higher. That is going to be a fiscal problem, which hasn’t really yet been faced at all,” Goodhart says.
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Interest Rates
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Related Content
Press Release
Congressional Campaign Treasurer Pleads Guilty to Conspiring With a Congressional Candidate to Defraud
CENTRAL ISLIP, NY – A 23-count superseding indictment was filed today in the United States District Court for the Eastern District of New York, charging George Anthony Devolder Santos, better known as “George Santos,” the United States Representative for the Third District of New York, with one count of conspiracy to commit offenses against the United States, two counts of wire fraud, two counts of making materially false statements to the Federal Election Commission (FEC), two counts of falsifying records submitted to obstruct the FEC, two counts of aggravated identity theft, and one count of access device fraud, in addition to the seven counts of wire fraud, three counts of money laundering, one count of theft of public funds, and two counts of making materially false statements to the United States House of Representatives that were charged in the original indictment. Santos is due back in federal court in Central Islip on October 27, 2023.
Breon Peace, United States Attorney for the Eastern District of New York, Nicole M. Argentieri, Acting Assistant Attorney General of the Justice Department’s Criminal Division, and James Smith, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Anne T. Donnelly, Nassau County District Attorney, announced the superseding indictment.
“As alleged, Santos is charged with stealing people’s identities and making charges on his own donors’ credit cards without their authorization, lying to the FEC and, by extension, the public about the financial state of his campaign. Santos falsely inflated the campaign’s reported receipts with non-existent loans and contributions that were either fabricated or stolen” stated United States Attorney Peace. “This Office will relentlessly pursue criminal charges against anyone who uses the electoral process as an opportunity to defraud the public and our government institutions.”
“Santos allegedly led multiple additional fraudulent criminal schemes, lying to the American public in the process. The FBI is committed to upholding the laws of our electoral process. Anyone who attempts to violate the law as part of a political campaign will face punishment in the criminal justice system,” stated FBI Assistant Director-in-Charge Smith.
“The defendant - a Congressman - allegedly stole the identities of family members and used the credit card information of political contributors to fraudulently inflate his campaign coffers,” stated District Attorney Donnelly. “We thank our partners in the US Attorney’s Office and the FBI as we work together to root out public corruption on Long Island.”
As alleged in the superseding indictment, Santos, who was elected to Congress last November and sworn in as the U.S. Representative for New York’s Third Congressional District on January 7, 2023, engaged in two fraudulent schemes, in addition to the multiple fraudulent schemes alleged in the original indictment.
The Party Program Scheme
During the 2022 election cycle, Santos was a candidate for the United States House of Representatives in New York’s Third Congressional District. Nancy Marks, who pleaded guilty on October 5, 2023 to related conduct, was the treasurer for his principal congressional campaign committee, Devolder-Santos for Congress. During this election cycle, Santos and Marks conspired with one another to devise and execute a fraudulent scheme to obtain money for the campaign by submitting materially false reports to the FEC on behalf of the campaign, in which they inflated the campaign’s fundraising numbers for the purpose of misleading the FEC, a national party committee, and the public.
Specifically, the purpose of the scheme was to ensure that Santos and his campaign qualified for a program administered by the national party committee, pursuant to which the national party committee would provide financial and logistical support to Santos’s campaign. To qualify for the program, Santos had to demonstrate, among other things, that his congressional campaign had raised at least $250,000 from third-party contributors in a single quarter.
To create the public appearance that his campaign had met that financial benchmark and was otherwise financially viable, Santos and Marks agreed to falsely report to the FEC that at least 10 family members of Santos and Marks had made significant financial contributions to the campaign, when Santos and Marks both knew that these individuals had neither made the reported contributions nor given authorization for their personal information to be included in such false public reports. In addition, understanding that the national party committee relied on FEC fundraising data to evaluate candidates’ qualification for the program, Santos and Marks agreed to falsely report to the FEC that Santos had loaned the campaign significant sums of money, when, in fact, Santos had not made the reported loans and, at the time the loans were reported, did not have the funds necessary to make such loans. These false reported loans included a $500,000 loan, when Santos had less than $8,000 in his personal and business bank accounts.
Through the execution of this scheme, Santos and Marks ensured that Santos met the necessary financial benchmarks to qualify for the program administered by the national party committee. As a result of qualifying for the program, the congressional campaign received financial support.
The Credit Card Fraud Scheme
In addition, between approximately December 2021 and August 2022, Santos devised and executed a fraudulent scheme to steal the personal identity and financial information of contributors to his campaign. He then charged contributors’ credit cards repeatedly, without their authorization. Because of these unauthorized transactions, funds were transferred to Santos’s campaign, to the campaigns of other candidates for elected office, and to his own bank account. To conceal the true source of these funds and to circumvent campaign contribution limits, Santos falsely represented that some of the campaign contributions were made by other persons, such as his relatives or associates, rather than the true cardholders. Santos did not have authorization to use their names in this way.
For example, in December 2021, one contributor (the “Contributor”) texted Santos and others to make a contribution to his campaign, providing billing information for two credit cards. In the days after he received the billing information, Santos used the credit card information to make numerous contributions to his campaign and affiliated political committees in amounts exceeding applicable contribution limits, without the Contributor’s knowledge or authorization. To mask the true source of these contributions and thereby circumvent the applicable campaign contribution limits, Santos falsely identified the contributor for one of the charges as one of his relatives. In the following months, Santos repeatedly charged the Contributor’s credit card without the Contributor’s knowledge or authorization, attempting to make at least $44,800 in charges and repeatedly concealing the true source of funds by falsely listing the source of funds as Santos himself, his relatives and other contributors. On one occasion, Santos charged $12,000 to the Contributor’s credit card, ultimately transferring the vast majority of that money into his personal bank account.
The charges in the superseding indictment are allegations, and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The government’s case is being handled by the Office’s Public Integrity Section, the Long Island Criminal Division, and the Justice Department Criminal Division’s Public Integrity Section. Assistant United States Attorneys Ryan Harris, Anthony Bagnuola, and Laura Zuckerwise, along with Trial Attorneys Jacob Steiner and John Taddei, are in charge of the prosecution with assistance from Paralegal Specialist Rachel Friedman. Former Trial Attorney Jolee Porter of the Criminal Division’s Public Integrity Section also provided substantial contributions to the prosecution.
The
Age: 35
Washington
E.D.N.Y. Docket No. 23-CR-197 (JS)
John Marzulli
Danielle Blustein Hass
United States Attorney's Office
(718) 254-6323
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Nonprofit, Charities, & Fundraising
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Chicago Mayor Brandon Johnson said he wants to open city-owned grocery stores to serve neighborhoods that have become “food deserts” after four Walmart stores and a Whole Foods closed.
Mayor Johnson announced last week that his administration would partner with the nonprofit advocacy group Economic Security Project to serve areas of the city that were left behind after Walmart closed four of its Windy City locations earlier this year, citing a lack of profit.
Four other Chicago Walmarts are still open, which the chain said in a statement “continue to face the same business difficulties, but we think this decision gives us the best chance to help keep them open and serving the community.”
When The Post reached out to Walmart for comment, a company spokesperson pointed to the April press release, which said “that collectively our Chicago stores have not been profitable since we opened the first one nearly 17 years ago.”
Last November, Whole Foods closed in Englewood after six years in the South Side lot — one year before Whole Foods’ seven-year lease was up with its landlord, DL3 Realty.
The location boasted very affordable prices for the grocer’s infamously-overpriced organic goods.
However, as the years went on, items at the Englewood Whole Foods became too expensive for the neighborhood’s residents, and the store was often empty at peak shopping times, like Saturdays, according to local outlet Block Chicago.
Whole Foods’ lot has sat empty for nearly one year. Low-priced grocery store Save A Lot is reportedly next in line to fill the space, though it likely won’t open until Whole Foods’ lease is up, and Englewood residents are concerned that it won’t offer the same types of healthy options.
The Post has sought comment from Whole Foods.
Only time will tell if a government-owned grocery store would fill the vacant lot instead, though Johnson’s administration still reportedly needs to conduct a feasibility study before providing a timeline of actually opening these stores.
“In the coming weeks, we will be taking a much closer look at the challenges we face, and how we will address those challenges reasonably and responsibly, and not on the backs of workers and working families,” Johnson said in a press release on Wednesday.
Representatives for the Chicago Mayor and the Economic Security Project did not immediately respond to The Post’s request for comment.
Neither Walmart nor Whole Foods disclosed exactly why they suffered continued losses over the years.
One explanation could be the shoplifting epidemic taking over America, which has seen retailers struggling to cope with the consequence-less pilfering, stripping them of revenue that’s also led to the closure of a “landmark” grocery store in Baltimore that shut its doors after nearly 25 years.
Experts have blamed the surge on lax policies — including the passage of Prop 47 in California, which reduced theft from a potential felony to a misdemeanor — as well as calls to defund the police in 2020 following the murder of George Floyd, which resulted in a mass exodus of cops nationwide.
The atmosphere has made retail-laden cities like New York, San Francisco and Chicago a “shoplifter’s paradise.”
According to the Chicago Police Department, thefts are up 25% to-date year over year. Robberies are up 11%.
There’s no nationwide policy on how to deal with shoplifting, though many employers have encouraged staffers to do nothing at all in an effort to keep them out of harm’s way.
Just this month 49-year-old Michael Jacobs, a CVS operations manager in Mesa, Ariz., was killed on the job by Jared Sevey, 39, who was suspected of shoplifting, police say.
And in April, a 26-year-old Home Depot employee was fatally shot after confronting a woman attempting to steal from the home improvement retailer’s Pleasanton store, located in the San Francisco Bay Area.
Just days earlier, a pregnant shoplifter at a Walgreens in Nashville was shot by a staffer following a confrontation over stolen merchandise that resulted in an exchange of Mace and bullets.
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Consumer & Retail
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NPS Likely To Get Systematic Withdrawal Option By October: PFRDA Chairman
PFRDA is targeting 13 lakh enrollments into National Pension Scheme from the private sector In FY24.
Systematic withdrawal option under the National Pension Scheme should be available to subscribers by October, according to Deepak Mohanty, chairperson, Pension Fund Regulatory and Development Authority.
Mohanty expects the overall corpus of the fund to surpass Rs 11 lakh crore in FY24.
“As NPS has given good returns, we were getting the demand to bring the systematic withdrawal system plan. The subscriber can specify whether they want it on a monthly, quarterly or half-yearly basis and draw the 60% balance; then, they can defer the equity at the age of 75 ... By October, the plan should be available in a systematic way to the subscribers,” Mohanty told BQ Prime.
All-India enrollment under the Atal Pension Yojana increased by 1.19 crore during FY23, taking the gross enrollment to 5.20 crore, he said. “The pension numbers are driven by APY. Last year, we did almost 1.2 crore. This year, we have put a modest enrollment target with 1.3 crore,” he said.
APY is the guaranteed pension scheme of the Government of India, providing monthly pension of Rs 1,000-Rs 5,000 to self and spouse, with the return of accumulated corpus to surviving nominees.
Government sector employees are automatically mandated to come into NPS. “With respect to private enrollment—through the corporate channel, and individuals—we crossed a landmark of 10 lakh last year and this year, we have put a target of 13 lakh,” said Mohanty.
The overall corpus of PFRDA is at around Rs 9.8 lakh crore. “The market is doing well and the accumulated corpus is almost touching Rs 10 lakh crore which it should, depending on the market conditions.”
For this current financial year, the regulatory authority is expecting overall corpus or assets under management to touch Rs 11 lakh crore.
Pension fund managers have also been encouraged to invest in Sovereign Green Bonds from the next tranche issue, he said.
Mohanty has written to the sponsors of the Regional Rural Banks to offer NPS, he said. “RRBs are doing well in terms of APY. So, why not NPS? There has also been demand from the rural side to increase the APY limit in terms of the amount ... In that context, have written to the CEOs of the sponsor of RRBs.”
The enablement, however, will take time based on the system in place, according to Mohanty. “I am confident that should get activated during the course of this financial year.”
In another major initiative, the pension fund regulator is also taking a look at regulations to modernise them. PFRDA has an external advisory committee chaired by Dr MS Sahoo, former IBBI Chairman.
“We are reviewing the regulations to modernise them and also to see that compliance burden on the regulatory entities are less. Following this, we will do public consultation,” said Mohanty.
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Banking & Finance
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Target said Tuesday it is shuttering nine stores in four states because mountingat those locations is jeopardizing the safety of workers and customers.
The closings, which take effect on Oct. 21, include four stores in San Francisco, three stores in Portland, Oregon, and two in Seattle. Target said that it still will have a combined 150 stores after the closures.
"[W]e cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance," Target said in a statement. "We know that our stores serve an important role in their communities, but we can only be successful if the working and shopping environment is safe for all."
Target also said it had added security guards and taken other measures in a bid to prevent thefts at the affected stores, but to no avail. "Despite our efforts, unfortunately, we continue to face fundamental challenges to operating these stores safely and successfully," the company said.
The rise in shoplifting and other incidents at Target locations comes as other retailers say a rise in crime is hurting their business. Whole Foods in Aprilone of its flagship stores in San Francisco, citing concerns that crime in the area endangered employees. And retailers including Dick's Sporting Goods and Ulta Beauty have also pointed to rising theft as a factor in shrinking profits.
During the pandemic, a rise in so-calledimpacted retailers across the U.S., with organized theft rings targeting major chains.
Target CEO Brian Cornellthat assaults on Target store workers increased 120% over the first five months of the year compared with the year-ago period.
"Our team continues to face an unacceptable amount of retail theft and organized retail crime," he said at the time. "Unfortunately, safety incidents associated with theft are moving in the wrong direction."
A recent survey by the National Retail Federation found that stores reported $112 billion in total inventory losses last year, with internal and external thefts accounting for roughly two-thirds of that figure, up from nearly $94 billion in 2021. The group also noted that more retailers reported a rise in violent incidents.
"While theft has an undeniable impact on retailer margins and profitability, retailers are highly concerned about the heightened levels of violence and threat of violence associated with theft and crime," NRF said.
—The Associated Press contributed to this report.
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Consumer & Retail
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Ten months after former chancellor Kwasi Kwarteng’s disastrous mini-budget, the public has for the first time been given the chance to see the Office for Budget Responsibility’s autumn 2022 forecast on the state of the economy.
The Government spending watchdog’s pre-budget report was handed to Kwarteng on 5 September, days before he gave MPs details of his growth package, one of the worst-received Treasury measures in recent history.
In a break with tradition, the chancellor refused to publish the OBR forecast, but it was finally made public on Wednesday thanks to a freedom of information request. It reveals that Kwarteng went ahead with a package of tax cuts despite being told by the OBR that the economy was on course for a yearlong recession and that higher interest rates were pushing up the cost of servicing the UK’s debts.
The decision to withhold the OBR forecast contributed to the financial market jitters before an event that subsequently led to a run on the pound, sharply higher borrowing costs and a crisis in the UK pensions industry. Kwarteng was sacked by the prime minister, Liz Truss, three weeks after the mini-budget and after only 38 days as chancellor.
“The economic outlook has worsened significantly since we last produced a forecast in March,” the note says. “Historically high gas prices have already driven inflation to its highest level in 40 years and we expect inflation to rise even further over the next few months.”
Based on the assumption that there were no tax cuts or spending increases, the OBR report, obtained after the SNP MP Stuart McDonald put in a freedom of information request, predicted the sharpest fall in living standards in modern times. “The resulting sharp drop in real consumer spending in this forecast pushes the economy into a yearlong recession, with GDP falling from the fourth quarter of 2022 until the third quarter of 2023.”
The report also said borrowing in the five years from 2022-23 to 2026-27 was on course to be cumulatively £109bn higher than the OBR had predicted at the time of the March 2022 budget.
In a letter to McDonald, the OBR’s director, Richard Hughes, said the note was produced 18 days before Kwarteng’s growth plan, hailed by the then chancellor as the biggest package of tax cuts in generations. The economic and fiscal forecasts did not reflect any of the measures in Kwarteng’s statement or from Truss’s energy support package.
The OBR made its forecasts before the sharp fall in wholesale gas prices, on a lower peak for interest rates, and before the increase in taxes announced by Kwarteng’s successor Jeremy Hunt in November last year. “So, relative to what has transpired, the draft forecasts described in the note are conditioned on more challenging wholesale gas prices, more favourable market interest rates, and less supportive near-term fiscal policy,” Hughes said in his letter to the MP.
In the six months following Kwarteng’s mini-budget, the OBR has produced two separate economic and fiscal assessments for Kwarteng’s successor, Jeremy Hunt, in which it has become less gloomy about the state of the economy. Its report in November 2022 predicted a 1.4% growth contraction in 2023, and by March it was forecasting a fall in output of 0.2%.
A Treasury spokesperson said: “The document published reflects the OBR’s preparatory work sent to the then chancellor on his first day in office. The draft forecast did not include any policies ultimately announced in the growth plan.”
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Interest Rates
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Barclays Could Slash 2,000 Jobs In $1.3 Billion Cost Cut, Reuters Says
The proposals are being reviewed by top managers including Chief Executive Officer C.S. Venkatakrishnan, Reuters said.
(Bloomberg) -- Barclays Plc is working on plans to reduce costs by as much as £1 billion ($1.3 billion) over several years, which could involve slashing as many as 2,000 jobs, according to Reuters.
Any cuts would be primarily at Barclays Execution Services, the unit that encompasses the group’s back office, Reuters said, citing a person it didn’t name. The moves to boost profitability could see 1,500 to 2,000 jobs shed if implemented in full, or about 2% of the bank’s workforce.
The proposals are being reviewed by top managers including Chief Executive Officer C.S. Venkatakrishnan, Reuters said, noting discussions are ongoing and the lender could ultimately prioritize layoffs in other areas. Barclays had total operating expenses of £16.7 billion last year.
A spokesperson for Barclays declined to comment.
The bank said last month that it’s “evaluating actions to reduce structural costs to help drive future returns, which may result in material additional charges” in the fourth quarter. It said it would also provide an investor update alongside full-year results in February, where it is expected to unveil a fresh strategy.
Barclays shares are down 11.5% this year. Earlier this year, Venkatakrishnan turned to strategy advisers to hash out a plan to boost the bank’s lagging share price.
The lender reported disappointing third-quarter earnings last month that prompted a fresh slide in the bank’s share price. In the UK, the tailwind from higher interest rates is slowing while Barclays’ traders couldn’t keep pace with US peers.
Read More: Barclays Plans Cost Cuts After Trading Miss, Lower Guidance
Barclays Execution Services Ltd., or BX, had 22,334 full-time staff at the end of 2022, according to a UK regulatory filing. It provides technology, operations and functional services to businesses across the group, according to its website.
(Updates with details throughout.)
©2023 Bloomberg L.P.
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Banking & Finance
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Wilko shoppers are being urged to avoid being scammed by a raft of fake websites that have been set up after the retailer fell into administration.
Several fake sites are supposedly offering hefty discounts on Wilko goods.
However, Wilko has stopped selling goods online, and is also no longer offering home delivery or click and collect services.
One fake site had a sofa for £25 and an adult's electric bike also for £25.
Wilko announced earlier this month that it was going into administration, putting 12,500 jobs and its 400 stores at risk.
PwC was appointed as the company's administrator, tasked with trying to find a buyer for the business.
However, it is now trying to close at least 10 fake websites.
"We have been made aware of a number of fake Wilko websites which are offering Wilko products at heavily discounted prices," a PwC spokesperson said.
"These websites are not genuine and have been set up to scam users, the only legitimate Wilko website is www.wilko.com.
"We are in the process of working with the relevant authorities to have these websites removed. We would like to remind our customers that all Wilko sales are now in-store and you are unable to purchase items online."
Lisa Webb, consumer law expert at Which?, said: "Criminals are always on the lookout for new ways to part people from their hard-earned cash and these dodgy websites offering heavily discounted Wilko goods are no exception.
"If you are keen to get a bargain from Wilko, you can only buy in-store at the moment so anything online should be taken with a pinch of salt. If you or a loved one do fall victim to a scam then contact your bank immediately and report it to Action Fraud or Police Scotland."
How to avoid copycat websites
- Make sure that the website address (URL) is correct and matches the site you intended to visit. Copycat websites often have similar URLs to the legitimate sites, but with small differences such as spelling errors or a different domain extension
- Check for the padlock icon in the address bar which indicates the connection is secure. However, don't rely on the padlock icon alone
- Legitimate websites usually have contact information such as a phone number, email address, or physical address. But some copycat websites might have contact details, so don't rely on them alone either
- Be wary of websites that have poor grammar, spelling errors or low-quality images
- Check for reviews of the website. These can give you an idea of other people's experiences with the site and whether it is trustworthy
- Don't rush: Take your time to research the website and make sure it is legitimate before making any transactions or providing personal information.
Source: Trading Standards
Last week, the GMB union said there were "genuine grounds for hope" that at least parts of Wilko will be taken over.
The union's boss, Andy Prendergast, said he had met PwC and confirmed there had been expressions of interest in the business, although talks with potential buyers were "still at an early stage".
It is not clear as yet which companies are bidding for Wilko, although there has been speculation that rival chains such as B&M, Poundland, The Range and Home Bargains could be those interested.
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Consumer & Retail
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Nick Ferrari 7am - 10am
Exclusive
'No one got hurt': UK’s reaction to Liz Truss’ premiership was 'a bit hysterical', former Bank of England governor says
13 June 2023, 19:10 | Updated: 14 June 2023, 02:17
Lord Mervyn King, says the economic consequences of Liz Truss' premiership 'weren't that bad'
The UK's reaction to Liz Truss and Kwasi Kwarteng's mini-budget was 'a bit hysterical', the former Bank of England Governor Mervyn King has told LBC.
Ms Truss was forced to sack Mr Kwarteng - before resigning to become the shortest serving prime minister of all time - after their mini-budget sent markets around the world into turmoil.
The mini-budget, which was introduced in September last year, included £45bn of unfunded tax cuts, and was followed by a fall in the value of the pound and rising mortgage rates.
Asked by LBC's Andrew Marr whether the public got hysterical during their time in office, Mr King said: "I do think we got a bit hysterical.
"I can understand to some extent why and that the government appeared to be hell bent on cutting taxes without any proper analysis or framework jettisoning the way government was being organised.
"I understand that, but I don't think the economic consequences were that bad. And frankly, they've gone away, they've disappeared now.
"What we should boast about as a country is that we had a government that we didn't think was doing very well, it lasted 44 days, we got rid of it, and no one got hurt."
Halving inflation 'not a bad thing to claim credit for'
Lord Mervyn King says it's 'convenient' for Rishi Sunak to say high energy and food prices will drop
In a wide-ranging interview with Mr King, who served as the Governor of the Bank of England from 2003 to 2013, Andrew also asked about the UK's current level of inflation.
Mr King told LBC that the "stickier that inflation seems to be", central banks - including the Bank of England - may be forced into taking "tougher action" to bring it back down.
As for how Rishi Sunak, who has promised to halve inflation in his five pledges, can take credit for falling inflation, Mr King said "it's convenient" but "not a bad thing to claim credit for" if there is confidence it will drop.
"I think it's going to be probably not wise to do so," Mr King told Andrew.
"If you think that the high energy and food prices of last year are going to drop out of the measure of inflation...it's convenient - it's something that happens.
"But if you are confident it will happen, it's not a bad thing to claim credit for when it's actually got nothing to do with you at all."
Handling of Brexit has 'been a shambles since 2016'
Lord Mervyn King tells Andrew Marr Britain should have been more 'pro-Europe' in wake of Brexit
As for Brexit, Mr King says it has been a "shambles" since 2016 due to a failure to negotiate properly and an unwillingness to make the "pro-European case for Brexit".
Mr King continued: "We could have said, after Brexit, all EU residents in the UK will automatically have rights of residence.
"We didn't have to wait make it part of a negotiation; we just do it. We say to people from Europe, we're going to get all the machines in Heathrow Airport to work properly. You just come in, put your passport through and walk through."
He added that the UK government should have done more to ensure the country retained access to education and research opportunities in Europe.
"The atmosphere that was created in negotiations with Europe turned out to be very bad, there was no need for the atmosphere to be that bad. It clearly was going to be difficult," he said.
"There's an awful lot of work to be done in repairing relationships.
"But I think you can see in what Rishi Sunak has already done that a calm approach to this can pay dividends and I'm sure that any future government after the next election, whichever party it is, it'll be a somewhat calmer relationship."
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United Kingdom Business & Economics
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Shoppers' trust in supermarkets has fallen to its lowest level since the 2013 horsemeat scandal, according to a new survey.
Consumer group Which? found that less than half of consumers - 48% - said they trusted the sector to act in their best interest, while 18% said they did not trust it at all.
It comes as many households struggle with high inflation, with figures on Tuesday suggesting food prices are still rising faster than wages.
Which?'s monthly consumer insight tracker gave the sector a "trust score" of 30, out of its scale of -100 to 100.
That is the lowest since a score of 24 was recorded after it was revealed in February 2013 that horse DNA had been discovered in frozen beef burgers and lasagne sold in some shops.
Some 85% of the 2,000 people surveyed also said they were worried about food costs.
Executives from the country's biggest supermarket chains, including Tesco, Sainsbury's, Asda and Morrisons, have strongly denied accusations they have exploited inflation by hiking prices more than necessary to boost their profits.
A review by regulator the Competition and Markets Authority also cleared food shops of profiteering last month, but found some retailers have been failing to display prices as clearly as they should.
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Katie Alpin, head of strategic insight at Which?, said: "Month after month of soaring food prices has seen trust in supermarkets plummet to a 10-year low - comparable to the dark days of the horsemeat scandal.
"The cost of the weekly shop is now on a par with energy bills as the biggest worry for millions of households.
"Supermarkets have the power to ease the huge pressure faced by shoppers, especially families and those on low incomes, by putting low-cost budget range items in hundreds of more expensive convenience stores.
"Which? research has found that these stores rarely, if ever, stock the cheapest products."
The survey also found 78% of consumers had changed their shopping habits in response to higher food prices, with 54% buying cheaper products - while 24% said they had gone without some foods.
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Consumer & Retail
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TCS Shares Declines As It Trades Ex-Buyback
The tech company will buy back 4.09 crore shares representing 1.12% of the total paid-up equity share capital for Rs 17,000 crore.
Shares of Tata Consultancy Ltd. fell after it turned ex-buyback on Friday.
The IT company will buy back 4.09 crore shares, representing 1.12% of the total paid-up equity share capital for Rs 17,000 crore on Saturday.
The buyback price is set at Rs 4,150 apiece. The offer price represents a premium of 20.45% and 20.26% to the volume weighted average market price of the equity share on BSE and NSE respectively, during the three months preceding the date of intimation of the buyback, according to the shareholder report.
TCS' stock fell as much as 0.67% to Rs 3,484.84 apiece during the day on the NSE. It pared losses to trade 0.47% lower at Rs 3,491.65 apiece, compared to a 0.05% advance in the benchmark Nifty.
It has risen 9.34% on a year-to-date basis. The relative strength index was at 55.24.
Twenty-three out of the 45 analysts tracking TCS maintain a 'buy' rating on the stock, 13 recommend a 'hold' and seven suggest a 'sell,' according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 6%.
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Stocks Trading & Speculation
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Stock Market Today: All You Need To Know Going Into Trade On Nov. 15
Stocks in the news, big brokerage calls of the day, complete trade setup and much more!
U.S. stocks pared losses after posting big gains this month, with traders awaiting the latest inflation data, remarks from Federal Reserve speakers, and results from giant retailers, Bloomberg reported.
The S&P 500 Index and Nasdaq 100 fell by 0.21% and 0.25%, respectively, as of 11:18 a.m. New York time on Monday. The Dow Jones Industrial Average rose by 0.01%.
Brent crude was trading 1.03% higher at $82.27 a barrel. Gold was up by 0.13% to $1,942.68 an ounce.
The S&P BSE Sensex closed 326 points down, or 0.50%, at 64,933.87, while the NSE Nifty 50 ended 82 points, or 0.42%, lower at 19,443.55.
The Nifty 50 ended below 19,500, and the Sensex was below the 65,000 mark.
Overseas investors remained net sellers of Indian equities for the 14th day in a row on Monday. While foreign portfolio investors offloaded stocks worth Rs 1,244.4 crore, domestic institutional investors mopped up equities worth Rs 830.4 crore, the NSE data showed.
The Indian currency closed flat at 83.33 against the U.S. dollar on Monday.
Earnings Post Market Hours
Grasim Industries Q2 FY24 (Consolidated, YoY)
Revenue up 10% at Rs 30,221 crore vs Rs 27,486 crore.
Ebitda up 31.8% at Rs 6,053 crore vs Rs 4,591 crore.
Margin at 20.02% vs 16.7%.
Net profit up 34.1% at Rs 2,024 crore vs Rs 1,509 crore.
Manappuram Finance Q2 FY24 (Standalone, YoY)
Total income up 17% at Rs 1,456 crore vs Rs 1,245 crore.
Interest income up 13.4% at Rs 1,405 crore.
Net profit up 20.3% at Rs 420 crore vs Rs 349 crore (Bloomberg estimate: Rs 386.9 crore).
NRB Bearings Q2 FY24 (Consolidated, YoY)
Revenue up 8.3% at Rs 2,790 crore vs Rs 2,575 crore.
Ebitda up 48.4% at Rs 455.2 crore vs Rs 306.7 crore.
Margin at 16.31% vs 11.9%.
Net profit up 85.6% at Rs 246.3 crore vs Rs 132.7 crore.
Narayana Hrudayalaya Q2 FY24 (Consolidated, YoY)
Revenue up 14.3% at Rs 1,305.2 crore vs Rs 1,141.6 crore (Bloomberg estimate: Rs 1,293.1 crore).
Ebitda up 26.4% at Rs 308.1 crore vs Rs 243.7 crore (Bloomberg estimate: Rs 288.5 crore).
Margin at 23.6% vs 21.34% (Bloomberg estimate: 22.30%).
Net profit up 34.2% at Rs 226.7 crore vs Rs 168.9 crore (Bloomberg estimate: Rs 178.8 crore).
Stocks To Watch
Asian Paints: The company's original installed production capacity of the Khandala plant has been increased to 4,00,000 KL per annum from 3,00,000 KL per annum in order to meet the medium-term capacity requirements of the company for Rs 385 crore.
Wipro: Designit Tokyo Co., a step-down subsidiary of Wipro Limited, has been voluntarily liquidated with effect from Nov. 13, 2023. The revenue contribution from such units is 0.004% as of March 2023.
Adani Energy Solutions: The distribution arm of Adani Energy Solutions Ltd., Adani Electricity Mumbai Ltd., announced a tender offer to buyback up to $120 million of its outstanding 3.949% $1,000 million senior secured notes due 2030. The tender offer is being fully funded through its cash surplus and internal accruals.
RVNL: The company received a Rs 311 crore LoA from Central Railways for the construction of tunnels and bridges in Madhya Pradesh. The time period by which the order is to be executed is 18 months.
PTC Industries: India-based PTC Industries and Safran Aircraft Engines, the French global leader in aero engine design, development, and manufacturing, announced a multi-year contract to develop industrial cooperation for LEAP engine casting parts. Under the terms of the contract, PTC Industries will produce titanium-casting parts for Safran aircraft engines.
Biocon: Biocon Biologics, a subsidiary of Biocon, has announced that MHRA, the Medicines and Healthcare Products Regulatory Agency in the U.K., has granted marketing authorization for YESAFILI, a biosimilar of Aflibercept. In September, YESAFILI received marketing authorization approval from the European Commission for the European Union.
Indian Overseas Bank: The bank decided to increase the base rate by 35 bps w.e.f. Nov. 15, 2023. The effective base rate will be 9.45%.
IDFC First Bank: The company received a PFRDA nod for the merger of IDFC and IDFC Financial Holding Co. with IDFC First Bank. The company also received BSE and NSE's nods for the merger of IDFC and IDFC Financial Holding Co. with itself.
GMM Pfaudler: Promoters to buy 4.5 lakh shares, or a 1% stake, from Pfaudler Inc. at Rs 1,700 per share. Acquisition costs are at a premium of 1.4% to the stock's previous close of Rs 1,676.05 on the NSE.
Knowledge Marine & Engineering Works: The company bagged a project from the Mumbai Port Authority for the hiring of two dock tugs for a period of 7 years for an amount of Rs. 34.49 crore.
Electronics Mart India: Commercial operations of the company’s one of the stores in Hyderabad were temporarily disrupted due to a fire accident during the intervening nights of Nov. 12 and 13, 2023. The estimated amount of loss suffered by the company is yet to be ascertained.
Pfizer: Milind Patil has resigned as a Director on the Board of Directors of the company with effect from the close of business on Nov. 13, 2023, consequent to the expiry of his five-year term as Executive Director.
New Listing
ASK Automotive: The shares will debut on the stock exchanges on Wednesday at an issue price of Rs 282. The Rs 834-crore-IPO was subscribed 51.14 times on the final day. Bids were led by institutional investors (142.41 times), non-institutional investors (35.47 times) and retail investors (5.70 times).
Bulk Deals
Swan Energy: Jainam Broking bought 23.7 lakh shares (0.89%) at Rs 430.21 apiece, while 2I Capital PCC sold 20 lakh shares (0.75%) at Rs 427.81 apiece, Montego Realty sold 23.38 lakh shares (0.88%) at Rs 432.06 apiece, and Kasturi Vintage sold 32.84 lakh shares (1.24%) at Rs 428.21 apiece.
MSPL: SBI sold 19.29 lakh shares (0.5%) at Rs 18.53 apiece.
Nuvama: The Pabrai Investment Fund sold 1.8 lakh shares (0.51%) at Rs 2,785.17 apiece.
Insider Trades
Bajaj Finserve: Promoters Rishab Family Trust Rajivnayan Bajaj and Rajivnayan Bajaj sold 13 lakh and 2.55 lakh shares, respectively, while promoters Madhur Securities, Rupa Equities, Rahul Securities, and Shekhar Holdings bought 3.89 lakh shares each on Nov. 8.
Pledged Share Details
Inox wind: Promoter Inox Wind Energy released a pledge of 79.5 lakh shares on Nov. 9.
Trading Tweaks
Price band revised from 5% to 2%: Usha Martin
Ex/record date Interim dividend: Emami, PDS, SAT industries, Steelcast, Chambal Fertilizers and Chemicals, Indraprastha Gas.
Move into short-term ASM framework: Antony Waste handling cell, BMW Industries, Carysil, Swan Energy.
Move out of short-term ASM framework: Vodafone Idea.
Who's Meeting Whom
NMDC: To meet analysts and investors on Nov. 17.
Endurance Technologies: To meet analysts and investors on Nov. 15.
MCX: To meet analysts and investors on Nov. 17.
Punjab Chemicals and Crop Protection: To meet analysts and investors on Nov. 17.
Kotak Mahindra Bank: To meet analysts and investors on Nov. 22.
BASF India: To meet analysts and investors on Nov. 17.
F&O Cues
Nifty November futures fell 0.26% at 19,488, at a premium of 4.5 points.
Nifty November futures open interest rose by 0.39% by 874 shares.
Nifty Bank November futures fell 0.11% to 44,005, at a premium of 114 points.
Nifty Bank November futures open interest fell by 7.35% by 13,116 shares.
Nifty Options Nov. 16 Expiry: Maximum call open interest at 19,500 and maximum put open interest at 19,400.
Nifty Bank Options Nov. 15 Expiry: Maximum call open interest at 44,000 and maximum put open interest at 43,000.
Securities in the ban period: Chambal Fertilisers and Chemicals, Delta Corp, Hindustan Copper, India bulls housing finance, Sail, Manappuram Finance, Zee Entertainment.
Money Market Update
The Indian currency closed flat at 83.33 against the U.S dollar on Monday.
Disclaimer: AMG Media Networks Ltd. (AMNL) currently owns 49% stake in Quintillion Business Media Ltd. (QBML), the owner of BQ Prime Brand. AMNL has entered into an MOU to acquire the balance 51% stake in QBML. Post acquisition, QBML will become a wholly owned subsidiary of AMNL.
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Stocks Trading & Speculation
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Cash-strapped Americans turn to discounted food as inflation bites
Americans are spending less on food than a year ago, and that’s a troubling sign for an economy that’s supposedly past peak inflation.
According to NielsenIQ data, a consumer research company, grocery store food sales fell by 2.3% in the 52 weeks ending Oct. 7. But there’s a catch. Discounted food sales jumped by 5.3% over the same period—the biggest increase since 2019.
In other words, Americans are increasingly looking for food deals—an indication that they still haven’t fully absorbed the inflation shock of the past two years.
By NielsenIQ estimates, shoppers are paying one-third more on groceries than they did in 2019. Unfortunately, affordability isn’t expected to improve anytime soon.
Food prices continue to creep higher
With food sales on track to decline for a second consecutive year, government economists are warning that things could get worse in the near term.
According to the Department of Agriculture, “food prices are expected to continue to decelerate but not decline in 2024.” The federal agency forecasts food-at-home prices to increase by 2.2% next year.
Goldman Sachs expects real incomes (adjusted for inflation) to grow by 3% in 2024. In theory, that means consumers should be able to absorb higher food prices.
The problem? Real incomes actually declined last year, so the growth rate would merely make up lost ground.
The other problem? Households are spending more on credit cards, auto loans, and student loan payments than they did a year ago.
With less money to go around, consumers are more likely to cook their meals from scratch, go through their pantries, and eat leftovers, according to Sean Connolly, chief executive at consumer packaged foods company Conagra.
“When consumers are flush, they throw their leftovers in the garbage,” he said, according to The Wall Street Journal. “When they’re stretched, they keep their leftovers and they try to avoid spending money on the next meal.”
Getting used to the sticker shock
Instead of reassuring consumers that food prices will come down, food conglomerates say Americans will get used to higher prices.
“Right now, it’s still a little bit of sticker shock,” said Steve Cahillane, CEO of Kellanova, a global food company. Cahillane told the Journal he’s confident food sales will improve as wages increase.
He isn’t alone in his assessment.
Roughly one-half of packaged goods companies surveyed by Advantage Solutions said they planned to increase prices in 2023. Data for 2024 isn't in yet, but the numbers probably aren’t that far off.
“People have been conditioned to go out there and buy what’s right in front of them,” said Harvard Business School professor Alexander MacKay.
MacKay was part of a research study that examined consumers’ responses to higher prices between 2006 and 2019.
The research found that consumers did get used to higher prices and kept buying the same brands despite ever-increasing prices.
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Inflation
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Brits woke up to yet more grim news on inflation Tuesday, with new data showing prices in UK stores are rising at a record pace. It’s the latest sign of a seemingly intractable cost-of-living crisis that has Prime Minster Rishi Sunak considering drastic measures, including price controls, to keep inflation in check.
The cost of store items, known as shop price inflation, rose 9% through the year to May, a fresh high for an index that dates back to 2005, according to the British Retail Consortium. Food inflation dipped slightly to 15.4% in May, but that’s still the second-highest rate on record.
Lower energy and commodity costs helped reduce prices of some staples, including butter, milk, fruit and fish. But chocolate and coffee prices are rising as global commodity prices soar, British Retail Consortium CEO Helen Dickinson said.
The slight drop in food prices will give cold comfort to consumers, and piles the pressure on Sunak, who has promised to halve inflation this year as one of his five pledges to voters.
The British public “are still wincing when their total comes up at the checkout… a weekly shop that cost £100 last year is now clocking in at £115,” Laura Suter, head of personal finance at stockbroker AJ Bell wrote in a note.
Poor households are being hit the hardest because they spend more of their disposable income on food. More people are using food banks in the United Kingdom than ever before, eclipsing even the peak of the pandemic.
The Trussell Trust, the UK’s biggest food bank network, handed out close to 3 million emergency food parcels over the 12 months to March 2023 — a 37% increase on the previous year.
Even the Bank of England, tasked with keeping inflation at 2%, has been caught off guard by stubbornly high food prices, which seem to have barely responded to 12 successive interest rate hikes.
Food prices have contributed to keeping inflation “higher than we expected it to be,” Bank of England Governor Andrew Bailey told a Treasury committee hearing last week. “We have a lot to learn about operating monetary policy in a world of big shocks,” he admitted.
Price controls anyone?
The United Kingdom’s inflation problem is now so dire that Sunak is considering asking retailers to cap the price of essential food items, in a throwback to the 1970s. Back then, governments in the United States and United Kingdom imposed wage and price controls to tame inflation, although the policies weren’t very effective at bringing inflation down and were later dropped.
Economists say that capping prices encourages companies to produce less of a product, while making it more attractive to consumers. Supply goes down, and demand goes up, with shortages being the inevitable result.
Price controls distort markets and should only be used “in extreme circumstances,” Neal Shearing, group chief economist at Capital Economics, wrote in a note Tuesday. “The current food price shock does not warrant such an intervention,” he added.
The Sunday Telegraph was first to report the government’s proposal, which was quickly rejected by retailers.
Andrew Opie, director of food and sustainability at the British Retail Consortium said controls would not make a “jot of difference” to high food prices, which are the result of soaring energy, transport and labor costs.
“As commodity prices drop, many of the costs keeping inflation high are now arising from the muddle of new regulation coming from government,” Opie added in a statement. These include tighter rules on recycling and full border controls on food imports from the European Union, due to be implemented by the end of this year.
According to a government spokesperson, any price caps would not be mandatory. “Any scheme to help bring down food prices for consumers would be voluntary and at retailers’ discretion,” the spokesperson said in a statement shared with CNN.
Sunak and Finance Minister Jeremy Hunt “have been meeting with the food sector to see what more can be done,” the spokesperson added.
For Sunak, the pressure is on — particularly ahead of a general election widely expected to be held next year. Inflation was hovering above 10% when he made the promise to halve it in January. It dropped back to 8.7% in April, still well above his target. The Bank of England expects it to fall to “around 5%” by the end of this year, leaving little margin for error.
The Brexit effect
According to Opie of the British Retail Consortium, the government should focus on “cutting red tape” rather than “recreating 1970s-style price controls.”
At the top of the list of burdensome regulations are those introduced as a result of the country’s exit from the European Union, which is its main source of food imports.
Brexit is responsible for about a third of UK food price inflation since 2019, according to researchers at the London School of Economics.
New regulatory checks and other border controls added nearly £7 billion ($8.7 billion) to Britain’s domestic grocery bill between December 2019 and March 2023, or £250 ($310) per household, economists at the LSE’s Centre for Economic Performance wrote in a recent paper.
Food prices rose by almost 25 percentage points over this period. “Our analysis suggests that in the absence of Brexit this figure would be 8 percentage points (30%) lower,” the researchers wrote.
Imports of meat and cheese from the European Union were now subject to high “non-tariff barriers.”
— Mark Thompson contributed reporting.
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Inflation
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Sunak Set To Fight UK Election Against A Bleak Economic Backdrop
Rishi Sunak has a decent chance of delivering his promise to halve UK inflation this year, according to the Bank of England. But that is about as good as the latest central bank forecasts get for the prime minister, who was hoping to fight a 2024 general election with a much-improved economy.
(Bloomberg) -- Rishi Sunak has a decent chance of delivering his promise to halve UK inflation this year, according to the Bank of England. But that is about as good as the latest central bank forecasts get for the prime minister, who was hoping to fight a 2024 general election with a much-improved economy.
Instead, the bank’s models show Sunak risks going to the polls with households still feeling the effects of 14 consecutive interest-rate increases to tame the highest inflation in decades. The Bank of England delivered the latest hike Thursday with a warning that borrowing costs, which have fueled an historic cost-of-living crunch, could stay elevated through at least next year and perhaps longer.
A general election must be held no later than January 2025, and Sunak is said to prefer November next year to allow the economy time to recover as he tries to overturn the opposition Labour Party’s formidable lead in opinion polls.
In power for 13 years already, the Conservatives are likely to fail on the core question of whether voters feel better off than in 2010. That leaves Sunak trying to show he can be trusted to turn things around. A healthier economy is likely to be key, but the following charts show what he may be up against.
Inflation Relief
First the good news for Sunak, who made halving the rate of inflation by the end of 2023 one of five key tests he wants voters to judge him on. The BOE expects inflation to fall to 4.9% in the fourth quarter from 10.7% a year earlier, so he meets his target with a little room to spare. “People can see light at the end of the tunnel” on inflation, Sunak said this week before the BOE rate hike.
Setting an economic target and then meeting it is central to the image Sunak has tried to put to voters since taking over from the chaotic administration of Liz Truss last year. Yet the political upside could be limited because having endured double-digit inflation for so long, slowing the pace of price rises is not going to leave Britons feeling that the squeeze on living standards is over.
Recession Risk
Given the scale of the inflation shock, consumers have proved surprisingly resilient. The BOE now expects the economy to fully recover its pre-pandemic size in the current quarter — earlier than estimated three months ago.
After that, though, the bank sees the UK avoiding a recession by only the narrowest of margins, and officials concede the risks of one are significant. The economy, which Chancellor of the Exchequer Jeremy Hunt told Sky News is in a “low-growth trap,” is expected to expand in only one quarter next year.
That is far from ideal for Sunak. If he goes ahead with a November vote, knocking on doors as winter nears — with a moribund economy souring the public mood — is not a prospect Tory activists are likely to relish. Hunt said he will use a fiscal statement this autumn to kickstart growth.
More Rate Pain
The message from the BOE is that interest rates may stay higher for longer than expected. While borrowing costs may be close to peaking — markets are pricing in two more quarter-point increases — the inflation battle is not over.
Read More: Bailey Says ‘Last Mile’ of UK’s Inflation Fight Will Take Time
“It’s the last mile which obviously is where policy is really doing the work, and we’re going to have to see policy stay restrictive,” Governor Andrew Bailey told Bloomberg TV. “It’s going to have to remain restrictive to have this effect of bringing inflation down, and particularly next year.”
That means little relief for homeowners with a mortgage, with millions facing a severe shock as they are forced to refinance cheap fixed-rate deals at significantly higher rates. Money markets see the BOE raising rates to a 16-year high of 5.75% by November, with little prospect of a cut until a year later.
Job Prospects
A strong labor market, falling energy prices and an extension of government support for gas and electricity bills has supported after-tax incomes, which the BOE expects to grow by around 1.25% this year after adjusting for inflation.
But the next two years are a different story, with officials sharply downgrading their forecasts to show living standards effectively flatlining over the period.
The red-hot labor market is also showing signs of cooling, and the bank now expects the unemployment rate to climb to 4.5% by the end of 2024. In that scenario, an extra 200,000 people will be looking for work by the time of the election. Sunak won’t even be able to point to upcoming improvement — joblessness is expected to climb further in 2025 and approach 5% in 2026.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Inflation
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According to a new report by The Wall Street Journal, mobile carriers including Verizon, AT&T and T-Mobile are all requiring customers to switch to a debit card or bank account withdrawal in order to receive an autopay discount on their plan. Verizon has included this requirement for years, but in the past few months the other two carriers have quietly added it too. The Verge reports: The new rule goes into effect for AT&T customers on October 2nd, and as a gesture of goodwill, the company will only reduce your discount if you continue to pay with a credit card. Those who register for autopay with a bank or debit card will receive $10 off; a credit card will only get you $5. T-Mobile's change went into effect in July, also eliminating Apple Pay and Google Pay as methods eligible for the $5 discount. Oh, and technically, you can qualify for Verizon's autopay discount with a credit card -- it just has to be a Verizon Visa card.
AT&T and T-Mobile aren't just making this a requirement for new customers -- the change is being applied to all postpaid accounts. Even if you've been receiving the discount for years with a credit card, you'll have to make the switch in order to keep your discount. And it adds up -- the discounts are applied for each line on your plan, so if your whole family is on the same plan, it's a significant amount of money.
AT&T and T-Mobile aren't just making this a requirement for new customers -- the change is being applied to all postpaid accounts. Even if you've been receiving the discount for years with a credit card, you'll have to make the switch in order to keep your discount. And it adds up -- the discounts are applied for each line on your plan, so if your whole family is on the same plan, it's a significant amount of money.
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Consumer & Retail
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Jasmine Johnson thought she was planning ahead when she rang her local nursery at 20 weeks pregnant to arrange a place for her baby - only to be told it was full until September 2025.
Her baby will be almost two years old before a place becomes available - and Jasmine will miss out on the first year's worth of funded childcare for which she is eligible.
Experts are warning nurseries and childminder places are becoming even harder to find for parents because of the plan to expand government-funded childcare hours for working parents in England over the next two years.
BBC News analysis estimates demand is likely to rise by about 15% - equivalent to more than 100,000 additional children in full-time care.
Jasmine, a primary-school teacher from a village with just one nursery, hoped to return to work in September 2024 but says she now has "no other choice" but to ask her parents for help and apply for reduced hours at work.
If her application for flexible working is refused, she will have to resign from her job.
"When the announcement [of the increase in funded hours] happened, I thought, 'This is brilliant timing for me and will help me get back to work,'" Jasmine says. But the situation now is making her "anxious even thinking about it".
Parents of three- and four-year-olds are currently entitled to 30 hours per week of funded childcare for 38 weeks of the year (during school term time).
By September 2025, that offer, sometimes known as "free" hours, will be extended to all pre-school children aged nine months to two years.
The Department for Education (DfE) says childminders and nurseries have "time to prepare", because the increase in funded hours is being rolled out in stages.
Thousands of parents are anxiously awaiting the expansion of funded hours, so they can increase the hours they work, according to Pregnant Then Screwed founder Joeli Brearley.
But she now fears what had seemed like a positive development for parents will result in "incredibly long waiting lists and even more uncertainty".
How much will demand increase?
A 15% increase in childcare usage in England works out at more than four million hours a week, BBC News analysis estimates, the equivalent of more than 100,000 extra children in childcare for 40 hours a week.
And this is before any parents not currently working find a job - one of the main reasons the government is taking on the cost of funding childcare.
Gillian Paull, from Frontier Economics, says the increase is likely to be "challenging", as providers face financial strains and difficulty recruiting staff, "but not infeasible".
"Even if there is unmet demand for places, many working parents will see substantial financial benefits from lower childcare costs," she says. "And if the expansion encourages more mothers with young children to work, it would be another small step towards greater gender equality."
At Eagley School House Nurseries, in Bolton, many parents who will be eligible for the additional funded hours are already putting requests in for extra days. But with a waiting list until March 2025, the nursery is having to say no to anyone asking for additional hours - even its own staff.
Sophie Eckersley, 31, who works at the nursery part-time and is taking her final university exams this year, was hoping to increase her two-year-old daughter's hours in April.
Having some government-funded childcare will help a lot "especially moneywise", Sophie says, but her boss, nursery owner Julie Robinson, is finding it challenging trying to fulfil parents' requests for extra hours.
"We just don't have the places," Julie says.
Neil Leitch, from the Early Years Alliance, says the BBC News analysis shows the expansion is set to be "wholly undeliverable in practice".
Some providers will have to limit the funded places they are able to offer and others will "opt out" completely, unless there is "adequate support, and crucially, increased funding".
For the sector to expand, it also needs to overcome its biggest challenge - staffing.
There were 9,800 fewer people working in childcare in 2022 than in 2019, with the number of childminders down by more than a fifth.
Nursery provider Busy Bees, which looks after 40,000 children, is already training 1,300 apprentices but will need more.
"We need to recruit an additional 1,500 people to meet that demand in two years' time," European Chief Executive Chris McCandless says.
He welcomes the investment the government is putting forward to help parents but says it "needs to cover the cost of childcare". And parents should put their names down fast, as places "will be hard to come by in the future".
Earlier this year, the charity Coram found a drop in childcare availability across England, with only half of local areas having enough available spaces for children under the age of two.
Councils are in charge of monitoring whether there is enough childcare provision across their borough, as well as distributing the funding to nurseries and childminders on behalf of the government.
Louise Gittins, who chairs the Local Government Association's (LGA) Children and Young People Board, says provision is already insufficient , particularly "in deprived areas and in rural areas", and is concerned "there is a relatively short amount of time" to get everything ready before the rollout.
"We can't control new providers coming into areas that already have sufficient provision," she says. "And then other areas not having enough provision will create a system of inequality - and parents will be disappointed."
Some fear it could also put extra pressure on parents of children with special educational needs and disabilities (SEND) finding suitable places, which is already difficult.
"Historically, each time such a change has been made, it has led to a decrease in provision for children with SEND," Dingley's Promise chief executive Catherine McLeod says.
A DfE official said the department was delivering "the single biggest investment in childcare in England's history... backed by £8bn a year once fully rolled out".
The government said it was "already investing hundreds of millions of pounds to increase hourly funding rates" and would allocate £100m in capital funding for more early-years and wraparound places and spaces, with a nationwide recruitment campaign "in the new year".
About the data
BBC News used data from the government's Family Resources Survey to work out eligibility based on the age of the children and whether their parents were already working and earning the equivalent of at least 16 hours a week at the national minimum wage.
Then, we used the government's own estimates of take-up to estimate how many more hours a week parents were likely to use once funded childcare expanded.
By using the survey data, we were able to estimate usage on a child-by-child basis.
We calculated the increase based on hours used, rather than the number of places, because different families will use a different amount of childcare.
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Consumer & Retail
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Astra has been thrown a critical lifeline in the form of new debt financing, which provides the company with a little more time to find funding to stave off catastrophe.
The company said on Monday that it had closed $13.4 million in initial debt financing with JMCM Holdings LLC and Sherpa Venture Funds II, connected to a non-binding term sheet Astra filed with the U.S. Securities Exchange Commission in October. Per that document, Astra said it was working with the investors, including JMCM and Sherpa Venture, to raise $15 to $25 million.
The new investors also agreed to provide Astra with a $3.05 million loan that will come due on November 17. Sherpa Venture Funds II is associated with Scott Stanford and his firm Acme. Stanford was an early investor in Astra and sits on its board of directors.
The new debt financing replaces an earlier agreement that Astra had with investment group High Trail Capital from August – an agreement that Astra defaulted on last week. These new investors agreed to purchase the remainder of that outstanding loan and waive a key requirement that Astra have at least $10.5 million of cash and cash equivalents on hand.
Critically, that earlier agreement was secured by first priority interests in all of Astra’s assets – which is to say, the debtor would have first priority access to Astra’s machinery, equipment and other assets in case of default – and this new agreement is secured by that same collateral.
The financing is “to provide Astra with time to raise additional liquidity through various capital raising and cost cutting initiatives and strategic transactions,” the company said in a statement on the news. Astra has been seeking strategic capital to stay afloat for weeks, including searching for “strategic investments” in its spacecraft engine business it acquired in 2021.
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Banking & Finance
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Gary Wang agreed to cooperate with prosecutors in his first meeting with them.
He told jurors at Sam Bankman-Fried's trial that he knew what they did at FTX was wrong.
"I thought I was likely to be charged and I wanted to get a shorter prison sentence," he testified Friday.
Gary Wang and Sam Bankman-Fried had known each other for years. The two met at a math camp in their high school years and later lived together while attending MIT before co-founding FTX, the cryptocurrency exchange.
It took only six days after FTX's bankruptcy for Wang to tell federal prosecutors he wanted to cooperate with their criminal investigation into his friend.
"I thought I was likely to be charged and I wanted to get a shorter prison sentence," Wang, FTX's chief technology officer at the time of its implosion, testified in Manhattan federal court on Friday in Bankman-Fried's criminal trial.
On the witness stand, the 30-year-old Wang detailed his experience working with Bankman-Fried at FTX and explained how deeply its funds were commingled with Alameda Research.
FTX collapsed after it was revealed that Alameda — a cryptocurrency hedge fund that Bankman-Fried also controlled — had taken enormous losses on risky bets with funds from ordinary FTX customers. Prosecutors accused Bankman-Fried of fraud, money laundering, and conspiracy.
The cryptocurrency exchange declared bankruptcy on November 10, 2022, and its servers were shut down the next morning. Wang testified that he spent November 11 and 12 dealing with regulators in the Bahamas, where FTX was based, and working with US-based lawyers to identify assets in different accounts that could be restored to customers and any other creditors.
Wang returned to the US from the Bahamas on November 13, meeting with the FBI and prosecutors on November 17. At the very first meeting, he said he would cooperate with the prosecutors' criminal investigation, he testified. He met with investigators more than a dozen times in the past year, he said.
In December 2022, he pleaded guilty to conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, and conspiracy to commit securities fraud.
One of his co-conspirators, he said on the witness stand Friday, was his FTX co-founder Bankman-Fried.
A few days after Wang's plea, Bankman-Fried was extradited from the Bahamas to the US, where he pleaded not guilty to the charges against him.
On Friday, Wang said he wanted to cooperate with prosecutors because he knew what he did at FTX was wrong. FTX had lied to customers when it told them their deposits were safe, he said. In reality, those funds were used by Alameda Research.
"Customers did not agree for us to use their funds," Wang said.
Wang testified that on the same day in the summer of 2019 when Bankman-Fried publically claimed that Alameda Research, a cryptocurrency trading firm, got the same treatment as any other FTX customer, FTX actually rolled out a new coding feature that allowed Alameda an unlimited line of credit of $65 billion. Few other customers had a line of credit with FTX at all, and none of them had unlimited credit.
Wang faces a maximum sentence of 50 years in prison. His cooperation agreement doesn't include a guarantee of a lower sentence, which will ultimately be determined by a judge. He said he hoped he'd get a sentence of zero years behind bars.
Read the original article on Business Insider
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Crypto Trading & Speculation
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Rishi Sunak has admitted that a list of transport projects he said would receive funding from the scrapped northern leg of the HS2 rail link were actually just “illustrative” and not meant as pledges.
In a speech to the Conservative party conference in Manchester last week, the Prime Minister promised the £36 billion of savings from axing the HS2 line would instead be used for other transport schemes in the North, the Midlands and across the country.
Downing Street said improvements to rail, road and bus schemes, dubbed “Network North”, would include £19.8 billion invested in the north of England, with the funding to be spent in the same 2029-40 period as planned for HS2.
Among these “promised” schemes was a £2.5 billion investment to deliver a new tram system in Leeds - a means of transport that has been long awaited in the city.
No 10 also said it would invest £2 billion for a new station at Bradford and a new connection to Manchester, £3 billion for upgraded and electrified lines between Manchester and Sheffield; Sheffield and Leeds; Sheffield and Hull; and Hull and Leeds, and nearly £4 billion more funding for local transport in city regions, among other schemes.
But now Sunak has admitted that the list of transport projects was only intended to be “illustrative” and not necessarily the projects that would receive funding.
Several projects which were quickly deleted from the list after the announcement, including £100m for a mass transit system in Bristol, and reopening the Leamside line in County Durham, while some already exist, including an extension of the Metrolink tram to Manchester airport which was completed in 2014.
While speaking to BBC Radio 4’s Jeremy Vine show, Sunak told the BBC that the list had not been misleading and said these projects were just examples of the sort of plans that might be included.
Asked if it was a mistake to suggest the money could instead be used to extend the Metrolink tram network to Manchester Airport, when that has already opened, he said: “No. Well, look, there’s a range of illustrative projects that could be funded. But ultimately it’s going to be local leaders are in charge.
“Rather than Westminster politicians dictating to areas what they should do, lots of money is going to be given to local areas for them to decide on their priorities.”
Asked later about the suggestion that trains between Sheffield and Leeds could be quadrupled to 20 trains an hour, the PM said “I’m not sure I recognise the numbers”, and insisted journey times are being improved across the North.
He was then pressed as to why specific alternative projects were announced, to which he replied: “We didn’t. Those were illustrative projects to give people a sense of things that people have asked for in the area.
“There's a mix of things, some things central government is in charge of where we're going to say we're going to do this significant road - the A5 between Hinkley and Tamworth, something like that, or the A1.
“Or there's going to be money that goes to local areas to fund local projects. So in city regions, local councils - whether it's bus routes, road maintenance, bus fares.
“There's a mix of things that central government is responsible for and other areas where money will be given to local leaders, for example mayors across the country who will then have that money to spend on their priorities.
“Taking a step back here, the question is, do you think £36billion is better spent extending HS2 beyond Birmingham. Or do you think £36billion is better spent on hundreds of alternative projects around the country.
“I've made a decision that I think the latter is better for the country and I think that's the thing that people should take away; that I'm willing to do things differently because I think that's better for the country.”
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Real Estate & Housing
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The prime minister denied that today's net zero intervention was about politics.
He insisted it was in no way an attempt to turn net zero into a wedge issue to win votes from those struggling to afford heating and transport costs.
But looking at the details of what Rishi Sunak actually announced, it's difficult to see it any other way.
Take the main premise of his statement: that current targets were "forcing" families to spend thousands of pounds upgrading homes or buying more expensive electric cars.
This would indeed be unfair, and impossible to deliver.
But targets don't deliver net zero, policies do.
It's why bodies like the Committee on Climate Change (which makes recommendations to governments on how to deliver their net zero targets) have been saying for years, in a series of increasingly desperate reports, that credible and detailed policies need to be developed to meet these targets in a fair way.
Policies, for example, that can spread the cost of upgrading a home's insulation or heat pump installation across the future life of the home either via a mortgage, bond or stamp duty adjustment that would pass the costs (offset by savings) on to future owners.
But so far, we haven't seen any policies put forward that would deliver on these targets fairly, or rapidly enough.
He also stressed how there had been a lack of "consent" from the British people.
The suggestion is that net zero has somehow been imposed on us all.
However, the Climate Change Act was passed in 2008 with cross-party support, as was the 2050 net zero target (2019) and an interim target of 57% cuts by 2030 (passed in 2021).
A period in which there have been four general elections.
Building consensus on expensive, disruptive policies that involved remodelling homes and getting new cars probably needs more than just parliamentary support, however.
Click to subscribe to the Sky News Daily wherever you get your podcasts
It's why the Committee on Climate Change and the review of net zero commissioned by Liz Truss last year, recommended "citizens assemblies" to help grow consensus and learn what unintended consequences net zero policies might have.
But none of those suggestions were mentioned today. Merely that "change" was necessary.
And that change appears to be effectively what had been leaked to the press. A rowing back on a few key net zero targets.
The implications of that for businesses, which were investing based on those targets, were immediately pointed out today by the likes of like Ford, eON and Stellantis.
The economic benefits of net zero for jobs and growth were explained by my Sky colleague Ed Conway.
And it's been well established that delaying net zero ambition now, will only make it much more expensive in five, 10, or 25 years' time.
Not to mention the increasing, and increasingly volatile, costs to consumers of remaining dependent on oil, gas, petrol and diesel.
Read more:
How will PM's changes affect me?
The more Sunak wavers on net zero, the higher the costs will be
Braverman: 'Bankrupting Britons won't save planet'
The prime minister made it very clear that he remains committed to hitting the long-term target of net zero by 2050.
But it seems reasonable to conclude his intervention wasn't really about getting there.
If the plan is to politicise net zero in the run-up to a general election, it could help force a long overdue public discussion about the fairest way of building a low-carbon economy.
Alternatively, it risks polarising opinion and delaying any progress on carbon reductions for years.
In a year which is currently on course to be the warmest in human history, that's a pretty big risk to take.
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Renewable Energy
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Coal India - Operating Performance Continues To Improve: ICICI Securities
Plenty of positives remain; maintain 'Buy'
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
In our view, Coal India Ltd. is likely to benefit from both volume uptick and firm e-auction prices. Taking cognisance of eight months-FY24 performance, we believe there is no risk to our volume estimate of 751 million tonne for FY24E.
Besides, e-auction prices have started increasing again due to uptick in Indonesian coal price.
We believe there is headroom of at least 20% upward revision in consensus estimates.
We maintain 'Buy' on Coal India with an unchanged target price of Rs 395 based on eight times FY25E earnings per share.
Our recommendation is also based on dividend yield of 8-10% through to FY25.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
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Energy & Natural Resources
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Jack Smith gear floods online stores as Trump pleads not guilty
Online sellers are smitten with Jack Smith, creating and potentially cashing in on everything from mugs to baby bibs inspired by the special counsel who indicted former President Trump.
Smith’s glaring face is front and center on plenty of products that have popped up since he was appointed in November to investigate Trump’s handling of classified documents, as well as his actions in the wake of the 2020 election and surrounding the Jan. 6, 2021, Capitol riot.
Now, as Trump pleaded not guilty Tuesday to 37 federal charges, sellers say demand is even higher for Smith-related souvenirs.
Scott Horner hawks a dozen items that double as odes to Smith on his website, classifiedshirts.com. His best-selling swag, Horner told ITK, is a play on the classic 1939 Jimmy Stewart film “Mr. Smith Goes to Washington.” Instead of Stewart’s grinning likeness, the $25 T-shirt features the special counsel’s stern-looking image.
Horner said his “Jack Smith Fan Club” merchandise is also proving to be among the site’s top sellers. Another tee with Smith’s face includes the all-caps message, “Somebody’s gonna get Jacked up!”
The inspiration for the products, Horner said, came “from seeing the excitement of people who are following this case when they started learning about the credentials of Jack Smith.”
“I think people respect that Smith is not about politics, but a prosecutor that seek justice regardless of who the person is,” Horner said.
The Orlando-based merchant said he saw a boost following Trump’s latest indictment, selling about 1,600 Smith items since the special counsel’s appointment last year.
On Etsy, the shop LemonGoats is selling shirts bearing the words “Karma is Jack Smith.”
The seller, located in Alabama, told ITK that after listing the $27 tee — which is a play on Taylor Swift’s song “Karma,” on Friday, they “had the first sale within an hour.” Since then, sales have increased each day.
Other sites also peddle an assortment of Smith fan art. A “You don’t know Jack” design with Smith’s photo can be plastered on everything from $20 aprons to $31 baby blankets on Zazzle. “Jack Smith for President” shirts are for sale for $20 on RedBubble, along with a $3 “Jack Smith Democracy Defender” sticker that features a hand-drawn picture of the Department of Justice attorney.
“Meet Jack, Jack Smith. He knows what he’s doing,” a description for the sticker reads. “He knows what everyone has been doing. Justice is coming.”
The online Smith-selling craze harkens to 2017, when another otherwise obscure Department of Justice figure was quickly thrust into the spotlight. Robert Mueller, the special counsel who investigated Trump’s ties to Russia, became the “it” guy in the online marketplace and a favorite among the 45th president’s fiercest critics.
Mueller’s image appeared on countless products declaring everything from “It’s Mueller time” to “Merry Mueller holidays.”
But after the 2019 release of Mueller’s report following a two-year investigation, the demand for merch with the 78-year-old former FBI director’s face on it seemingly died down. Now much of the Mueller merch is being offered at steep discounts, with several Etsy and Zazzle sellers unloading the products for 20 percent off.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Consumer & Retail
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It’s no secret that consumers are feeling the pinch these days, with price increases hitting streaming services, airline fares, and grocery stores alike. Fortunately, a Walmart+ membership gives you a chance to fight back on all three fronts with impressive perks that lead to significant savings.
But don’t just take our word for it. Find out for yourself and see why signing up for a Walmart+ membership is more than worth it.
No more delivery fees
The convenience of ordering your groceries online often outweighs the nuisance of having to pay a delivery fee — but those fees can add up quickly.
With a Walmart+ membership, you can expect to save hundreds of dollars a year with free grocery deliveries on any order of $35 or more, letting you take advantage of the same low in-store prices from the comfort of your home.
And if you forget to buy that roll of paper towels or a box of dishwasher detergent, fret not. Walmart+ offers free shipping on all Walmart.com purchases with no order minimums.
Take your savings to the airport
If you’re a budget-minded traveler, then you’ve likely found it more challenging to make each dollar go further lately.
Walmart recently introduced Walmart+ Travel for Walmart+ members, which gives you the opportunity to earn 5% Walmart Cash on hotel bookings and car rentals, and 2% Walmart Cash on airfare. Powered by Expedia, Walmart+ members can easily access over 900,000 properties and over 500 airlines by simply logging into their benefits hub.
Enjoy more shows and fewer bills
With a seemingly endless variety of different content offerings and pricing plans, choosing which streaming services to add and which to drop can be a tricky proposition, especially when trying to keep costs under control.
With Walmart+, you’ll have one fewer decision to make with complimentary access to a Paramount+ Essentials subscription that includes thousands of shows and movies, live news with CBS News, and even NFL on CBS Live.
Whether you prefer to order your groceries online, binge-watch your favorite shows, or love making spontaneous travel plans, a Walmart+ membership is a must-have. Priced at $98 a year, the annual membership represents a great value that gives your wallet a much-needed break.
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Consumer & Retail
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“I can’t stop kicking myself,” Rose* says.
The 51-year-old has just lost $10,000 to scammers – a life-changing amount for the mother of three.
Rose lives off jobseeker and a small wage from the hotline business she runs in the evenings. She struggles to pay the $500-a-week rent for her home near the Gold Coast she shares with her daughters, aged 12 and 16. Often she has to juggle eating with paying for petrol.
When she was contacted by someone describing themselves as a recruitment officer over WhatsApp who offered $950 a week to write fake reviews for high-profile hotel chains, and other sites selling products online, she thought the job would give her life stability and help lift her family out of poverty.
“You had to buy things [online]. You’re reviewing them as though you had bought them, the first one they paid for, and then you had to pay for them yourself,” Rose says.
“Or you’re doing reviews on hotels – you went on to Google, on to the review section, but you hadn’t stayed in them.”
Everything seemed easy – at the start, the scammers paid more for “pre-paid tasks”, where Rose put in money and was paid back extra. She made $400 in two days. The scammers instructed Rose to put in larger and larger amounts – until they stopped paying her back.
“The first one is $200 and you get basically $54 back for that, which isn’t much. Then you go to $800, then it’s $1,200, then it’s $10,000.
“They basically bleed you dry, until they’ve got all your money. The $10,000 that I lost, it was actually part of my business money.”
Last year, Australians lost more than $8.7m to recruitment scams and the Australian Competition and Consumer Commission warns that scammers are increasingly targeting the job market.
Antipoverty Centre spokesperson and Disability Support Pension recipient Kristin O’Connell says the government’s welfare policies mean those on jobseeker are vulnerable to scammers.
“The reason the poorest people in the community are particularly vulnerable to these scams isn’t because they’re not suspicious of them, it’s because the inadequacy of our welfare system leaves us desperate,” O’Connell says.
“People can feel forced to participate in recruitment scams through fear of having their jobseeker payment stopped. People on jobseeker are generally not allowed to turn down paid work. The rules are so punitive that some don’t have the confidence to question whether they can be forced to take these sorts of ‘jobs’.”
A spokesperson for IDcare, the chair that helps scam victims, says they have seen an increase recruitment scams, where job seekers are often asked for payment in exchange for guaranteed income.
“We have seen criminals leverage the changing employment market and increased preference for employment that facilitates working from home,” the spokesperson says.
“Welfare recipients are certainly impacted by this scam type. We see employment scams targeted at any individual seeking employment opportunities, particularly those able to be undertaken working from home and with minimal experience.”
Like a lot of scam victims, Rose has focused on all the other things she could have done with that money. Next year’s school uniforms, a car for her daughter, and investment in her business so she can get off welfare.
Rose is still in the group and is hoping there will be a way to get the money back. The scammers are encouraging her to sell her car, or get a loan to keep going – saying she’ll get her money back then.
“They’re really pushy … they’re still hassling me.”
But mainly, she is embarrassed and angry. She says the scammers preyed on her most vulnerable emotion – hope.
“It means everything I’ve worked for the last year is gone,” Rose says. “I’ve rung the banks, I’ve tried to get them to get it back. It’s no hope.”
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Consumer & Retail
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Legalized sports gambling on sports will be available in Maine starting Friday, following months of discussion about how to roll it out.
Maine joins more than 30 states in allowing sports gambling. A law making it legal went into effect in August 2022, but authorities in the state favored a slow rollout that required gamblers to wait months before placing their first wagers.
That wait is almost over. Sports gambling goes live on Friday, said Maine State Police spokesperson Shannon Moss.
Starting Wednesday, "licensed operators and their management service providers and suppliers will be able to start pre-launch advertising to accept registrations and account deposits up to the go-live date," Moss said.
Legalized sports gambling is able to go live because the Maine Department of Public Safety's Gambling Control Unit has adopted the rules for sports wagering, Moss said. Milton Champion, the unit's executive director, is thankful to state authorities as well as "the sports wagering industry for their input and patience in the rulemaking process," Moss said.
Gamblers must be 21. Mobile and online wagering, which have grown significantly across the country in recent years, are expected to account for the majority of the sports betting market in Maine.
The U.S. Supreme Court cleared the way for legalized sports betting about five years ago. Recently, some states have sought to step up programs for problem gamblers as the market grows.
In Maine, mobile and online wagering are also expected to provide revenue to the state's Native American tribes. The tribes were given control of the online sports betting market.
Each tribe can select its own vendor, meaning there could be up to four licenses for the Penobscot Nation, Passamaquoddy tribes at Indian Township and Pleasant Point, Houlton Band of Maliseets, and Mi’kmaq.
Casinos in the state are also among the businesses that can request licenses.
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Consumer & Retail
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A rebound in corporate profit margins over the next year could prevent inflation falling as quickly as the Bank of England is expecting. That’s not the conclusion of a leftist thinktank or trade union. It’s a clear message from the central bank itself, or more precisely from a group of its in-house economists, whose published research examines how a wide spectrum of businesses plan to cope over the next few months and into 2024.
The data is stark. According to the research, 45% of companies surveyed say they plan to increase their profit margins in the coming 12 months. Almost a third (32%) expect “no material change” to margins and only 23% expect to suffer a fall.
The economists found the top 10% of profitable businesses had successfully driven their margins to approaching 30%, and will make further progress towards this target over the next year. This led the researchers to conclude: “Margin rebuilding could make some contribution to inflation persistence.”
Questions about profits have formed part of the researchers’ questionnaire only since May this year but, impressively, they have also examined the respondents’ annual accounts as far back as 2005.
This revealed that the average profit margin of the top 10% of firms was below 20% in 2005 and had grown in the intervening years to about 27%. Next year the average for this group of firms will be 28% – a full 10 percentage points higher than what they enjoyed in 2005.
Not all businesses are flourishing. The survey found the weakest firms had survived on profit margins at or below zero for much of the last decade. Some might ask how they managed to survive if their margins were negative, but that is not made clear in the research.
What is clear is that whatever position they are in today – profit margins low or high – UK businesses are looking to improve that over the next year. On average, the survey found firms were on course to increase margins to their highest ever level, to just shy of 10%.
This means that most British companies, whatever their size, are signalling that though they will benefit from falling costs – for energy in particular – they will not pass that benefit on in the form of price cuts.
Until now, the Bank has brushed off concerns that profiteering by companies has played a big part in the inflation saga. Governor Andrew Bailey has urged workers on many occasions to forgo wage rises to help prevent inflationary pressures building on companies. He expects to see a mechanical reaction, almost as if he is talking about physics and not economics, from wage rises feeding directly into prices.
Yet 21st-century capitalism is anything but mechanical. Firms set prices based on what they can get away with in markets where there is restricted competition and where brands have leverage with consumers.
As Paul Donovan, chief economist for UBS Wealth Management, says: “Profit-led inflation is rarely, if ever, an economy-wide measure, but instead is focused towards the end of the supply chain at a retail level, or with big-name consumer brands who have marketing power.”
There is always a danger when looking for causation, especially when data points to a strong conclusion. In this case, the small sample size used by the Bank’s survey is notable: it covers 2,500 of the UK’s 5m-plus companies. This may be a small sample, but the Bank believes it can provide significant information about firms in relation to many other subjects, so why not this one?
And the conclusion must be that those companies which were most able to boost their profit margins before and after the pandemic inflation shock are about to do it again.
The International Monetary Fund and the European Central Bank have discussed the impact of excessive profits on several occasions. So it’s good to see that at least some inside the Bank appear to acknowledge the same.
Unite’s general secretary, Sharon Graham, who has accused Bailey of ignoring the impact of profiteering in his TV appearances and speeches, says the Bank’s research supports the union’s own detailed critique.
Unite has shown how the big supermarkets have rebuilt their margins since the years of intense competition before the pandemic, and also illustrated how other large companies, including Nestlé and Procter & Gamble, have sailed through the cost of living crisis almost untouched.
After two years of being ignored by policymakers, she can have the last word. “Ever since the greedflation crisis began,” she says, “the Bank of England has been attacking workers’ wages while downplaying corporate profiteering.
“Now the central bank’s own analysis supports what Unite has argued all along about inflation. Companies are raising prices simply to boost their own profit margins.”
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Inflation
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- There are more opportunities to tip for a wider range of services than ever before.
- Between the high cost of living and uncertain economy, cash-strapped consumers are starting to tip less.
- Two-thirds of Americans have a negative view about tipping, according to Bankrate, particularly when it comes to contactless and digital payment prompts with pre-determined options.
From self-service fast-food restaurant kiosks to smartphone delivery apps, there are more opportunities to tip for a wider range of services than ever before.
Fewer consumers now say they "always" tip when dining out compared with last year, according to a new report by Bankrate, or for other services, such as ride-shares, haircuts, food delivery, housekeeping and home repairs.
"Inflation and general economic unease seem to be making Americans stingier with their tipping habits, yet we're confronted with more invitations to tip than ever," said Ted Rossman, Bankrate's senior industry analyst.
Many feel the pressure to tip has increased over the last year, NerdWallet's consumer budgeting report also found.
However, two-thirds of Americans have a negative view about tipping, according to Bankrate, particularly when it comes to contactless and digital payment prompts with pre-determined options that can range between 15% and 35% for each transaction.
"Now you have to go out of your way to not tip and that's what a lot of people resent," Rossman said.
Tipping 20% at a sit-down restaurant is still the standard, etiquette experts say. But there's less consensus about gratuity for a carryout coffee or other transactions that didn't involve a tip at all in the past.
While tipping at full-service restaurants has held steady, tips at quick-service restaurants by guests fell to a five-year low of 16.7% in the first quarter of 2023, according to Toast's most recent restaurant trends report.
"Part of it is tip fatigue," said Eric Plam, founder and CEO of San Francisco-based startup Uptip, which aims to facilitate cashless tipping.
"During Covid, everyone was shell shocked and feeling generous," Plam said.
"The problem is that it reached a new standard that we all couldn't really live with," he added, particularly when it comes to tipping prompts at a wider range of establishments, a trend also referred to as "tip creep."
"Now we are inventing new scenarios where tipping should occur."
Yet, since transactions are increasingly cashless, having a method to tip workers in the service industry earning minimum or less than minimum wage is critical, Plam added.
In fact, the average wage for fast-food and counter workers is $14.34 an hour for full-time staff and $12.14 for part-time employees, including tips, according to the most recent data from the U.S. Bureau of Labor Statistics.
"People should know that the livelihood of that person is largely based on how much tipping happens," Plam said.
In other cases where workers don't rely on gratuity for income, "we, as consumers, should use our own judgment."
That doesn't mean consumers need to necessarily tip less, Plam added, but "think about whether that person improved your experience."
"It's time to take a stand," he said.
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Consumer & Retail
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CEO of Hachette Book Group will step down at end of the year
The head of Hachette Book Group, Michael Pietsch, is retiring as CEO and will be succeeded by Hachette UK CEO David Shelley
NEW YORK -- The head of Hachette Book Group, Michael Pietsch, is retiring as CEO and will be succeeded by Hachette UK CEO David Shelley. Pietsch, who has worked with authors ranging from Keith Richards to Donna Tartt, will serve as chairman of the U.S. publisher starting Jan. 1 of next year.
“I’m proud of everything that all of us at Hachette Book Group have accomplished in the past decade, in close partnership with our authors — thriving, growing, and reinventing ourselves through complex and challenging times," Pietsch, 67, said in a statement Tuesday.
Shelley, who will also remain as UK CEO, said in a statement that “Hachette Book Group publishes some of my favorite authors of all time and it’s hugely exciting to be able to get to know them and work on their books with the talented team in the U.S. I’d like to pay special tribute to Michael as he has been a key figure for me over the years.”
Richard Kitson, deputy CEO of Hachette UK, will also take on the same role for Hachette Book Group. The announcements were made by parent company Hachette Livre.
Pietsch, who previously served as publisher of the Hachette division Little, Brown and Company, presided over an era of expansion, including the acquisition of such companies as Workman Publishing and Hyperion Books. Along with publishing Richards' “Life,” Tartt's “The Goldfinch” and James Patterson's many blockbusters, Pietsch also was involved with a book Hachette didn't release.
In 2020, Hachette announced it would publish Woody Allen's “Apropos of Nothing.” It soon dropped it after protests by everyone from Hachette employees to Hachette author Ronan Farrow, Allen's estranged son and among those who have alleged Allen sexually assaulted his daughter Dylan Farrow. Allen, who has denied the allegations, later sold his memoir to Skyhorse Publishing.
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Consumer & Retail
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JOHANNESBURG (AP) — Russia and China will look to gain more political and economic ground in the developing world at a summit in South Africa this week, when an expected joint dose of anti-West grumbling from them may take on a sharper edge with a formal move to bring Saudi Arabia closer.
Leaders from the BRICS economic bloc of Brazil, Russia, India, China and South Africa will hold three days of meetings in Johannesburg’s financial district of Sandton, with Chinese premier Xi Jinping’s attendance underlining the diplomatic capital his country has invested in the bloc over the last decade-and-a-bit as an avenue for its ambitions.
Russian President Vladimir Putin will appear on a video link after his travel to South Africa was complicated by an International Criminal Court arrest warrant against him over the war in Ukraine. Brazilian President Luiz Inácio Lula da Silva, Indian Prime Minister Narendra Modi and South African President Cyril Ramaphosa will be at the summit alongside Xi.
READ MORE: International Criminal Court issues arrest warrant for Putin over Ukraine war crimes
The main summit on Wednesday — and sideline meetings Tuesday and Thursday — are expected to produce general calls for more cooperation among countries in the Global South amid their rising discontent over perceived Western dominance of global institutions.
That’s a sentiment that Russia and China are more than happy to lean into. Leaders or representatives of dozens more developing countries are set to attend the sideline meetings in Africa’s wealthiest city to give Xi and Russian Foreign Minister Sergey Lavrov, who will represent Putin in South Africa, a sizeable audience.
One specific policy point with more direct implications will be discussed and possibly decided on – the proposed expansion of the BRICS bloc, which was formed in 2009 by the emerging market countries of Brazil, Russia, India and China, and added South Africa the following year.
Saudi Arabia is one of more than 20 countries to have formally applied to join BRICS in another possible expansion, South African officials say. Any move toward the inclusion of the world’s second-biggest oil producer in an economic bloc with Russia and China would clearly draw attention from the United States and its allies in an extra-frosty geopolitical climate, and amid a recent move by Beijing to exert some influence in the Persian Gulf.
“If Saudi Arabia were to enter BRICS, it will bring extraordinary importance to this grouping,” said Talmiz Ahmad, India’s former ambassador to Saudi Arabia.
Even an agreement on the principle of expanding BRICS, which already consists of a large chunk of the developing world’s biggest economies, is a moral victory for the Russian and Chinese vision for the bloc as a counterbalance to the G-7, analysts say.
Both favor adding more countries to bolster a kind of coalition — even if it’s only symbolic — amid China’s economic friction with the U.S. and Russia’s Cold War-like standoff with the West because of the war in Ukraine.
Nations ranging from Argentina to Algeria, Egypt, Iran, Indonesia and United Arab Emirates have all formally applied to join alongside the Saudis, and are also possible new members.
If a number of them are brought in, “then you end up with a bigger economic bloc, and from that a sense of power,” said Prof. Alexis Habiyaremye of the College of Business and Economics at the University of Johannesburg.
While Brazil, India and South Africa are less keen on expansion and seeing their influence diluted in what’s currently an exclusive developing world club, there is momentum for it. Nothing has been decided, though, and the five countries must first agree on the criteria new members need to meet. That’s on the agenda in Johannesburg amid Beijing’s push.
“BRICS expansion has become the top trending issue at the moment,” said Chen Xiaodong, China’s ambassador to South Africa. “Expansion is key to enhancing (the) BRICS mechanism’s vitality. I believe that this year’s summit will witness a new and solid step on this front.”
The U.S. has stressed its bilateral ties with South Africa, Brazil and India in an attempt to offset any outsized Russian and Chinese influence emanating from BRICS. In the buildup to the summit, the State Department said that the U.S. was “deeply engaged with many of the leading members of the BRICS association.”
The European Union also will closely follow happenings in Johannesburg, but with almost sole focus on the war in Ukraine and the bloc’s continued effort to draw united condemnation for Russia’s invasion from the developing world, which has largely failed so far.
With Xi, Lula, Modi and Ramaphosa coming together, European Commission spokesman Peter Stano said the EU was calling on them to use the moment to uphold international law.
“We look forward to their contribution to make Putin stop his illegal, destabilizing behavior,” Stano said.
READ MORE: China’s defense minister promises to boost cooperation with Russian ally Belarus
If a BRICS foreign ministers meeting in Cape Town in June, the precursor to the main summit, is anything to go by, there will be no public criticism of Russia or Putin over the war. A planned protest by the Amnesty International rights group and the Ukrainian Association of South Africa outside the Sandton Convention Centre will likely be the only condemnation heard.
If anything, Russia might see the summit as an opportunity to leverage some favor.
Having halted a deal allowing the passage of grain out of Ukraine last month, Putin might use the BRICS gathering to announce more free Russian grain shipments to developing countries, as he has already done for several African nations, said Maria Snegovaya, senior fellow at the Europe, Russia, and Eurasia Program at the Washington-based Center for Strategic and International Studies.
It would allow Putin to demonstrate “goodwill” to the developing world, Snegovaya said, while cutting Ukraine out of the process.
Kremlin spokesman Dmitry Peskov said Putin would have “full fledged participation” in the summit despite appearing on a video link and would make a speech.
What’s also likely to be aired regularly over the three days in Johannesburg is the developing world’s gripes over current global financial systems. That has streamlined in the months and weeks leading up to the summit into a criticism of the dominance of the U.S. dollar as the world’s currency for international trade.
BRICS experts are generally united in pointing out the difficulties the bloc has in implementing policy due to the five countries’ differing economic and political priorities, and the tensions and rivalry between China and India.
But a focus on more trade in local currencies is something all of them can get behind, said Cobus van Staden, an analyst at the China Global South Project, which tracks Chinese engagement across the developing world.
He sees BRICS pushing a move away from the dollar in regional trade in some parts of the world in the same way he sees this summit as a whole.
“None of this is the big sword that’s going to slay the dollar. That’s not the play,” said van Staden. “It’s not one big sword wound, it’s a lot of paper cuts. It won’t kill the dollar, but it’s definitely making the world a more complicated place.”
“They don’t need to defeat the dollar … and they don’t need to defeat the G-7. All they particularly want to do is raise an alternative to it. It’s this much longer play.”
AP Diplomatic Writer Matthew Lee in Washington and AP writers Ashok Sharma in New Delhi, Lorne Cook in Brussels, Jim Heintz in Talinn, Estonia, and Jon Gambrell in Dubai, United Arab Emirates, contributed to this report.
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Woodland Banks On Retail Expansion, Plans To Spend Rs 50-60 Crore In FY24
Woodland plans to open 25-30 outlets in the ongoing fiscal year, as shopping in stores is back and thriving.
Footwear maker Woodland, owned by Aero Club, plans to open 25–30 outlets in the ongoing fiscal year, as shopping in stores is back and thriving.
The homegrown company, which sells its footwear mostly in the premium athleisure range for outdoors, had shut down 55–60 stores and raced to meet the pandemic-driven online demand. However, the company is now reviewing its physical expansion strategy as offline demand has made a trendy comeback, helping Woodland surpass the pre-Covid sales figure.
"Our sales were hugely impacted—from a revenue of Rs 1,200 crore in FY20, we were down to Rs 700 crore in FY21 and Rs 900 crore in FY22," according to Managing Director Harkirat Singh. "However, we have crossed the pre-pandemic topline figure in the March-ended quarter."
Singh attributed the sales recovery to a surge in travel, several marriages taking place, and the fact that offices resumed. "Holidays seem to be at the top of consumers’ spending lists, thanks to pent-up demand, and this trend is also fueling demand for our shoes," he said, adding that the company is looking to invest in store additions to meet the growing demand.
"We are looking to spend Rs 50–60 crore towards capacity expansion and store additions, roughly the 30-odd that we plan this fiscal," said Singh.
Investments towards own retail network are critical to running a very efficient retail model and driving scale in the premium footwear market, according to Motilal Oswal. "Over one-third of the market is composed of high average selling prices for footwear products, primarily catered by branded players, where investment in exclusive brand outlets is the key," it said, adding it creates a sticky customer base and superlative store economics.
Currently, Woodland has 475 exclusive outlets and 4,000 multi-brand outlets.
Buoyed by the surge in demand, Woodland is also looking to boost its product line-up in a big way for the first time since the pandemic.
"We were not very optimistic earlier, and our sales expectations were not really high because how soon demand would bounce back was always a big question," said Singh. "This is the first season in many months when the company is bullish on expansion and plans big for the season," he added.
Still, Singh remains cautious on inventory management and "doesn't plan to go overboard", fearing that instances of rising Covid cases could impact consumer spending. He, however, isn't overtly worried about inflationary pressures on demand, as Woodland, being a premium brand, has remained insulated, defying the general slowdown that is mostly hurting mass brands.
The Rs 96,000 crore footwear market in India is among the most organised, with a 30% share, according to Nuvama Institutional Equities. Initially positioned as a value purchase, shoes are now becoming a lifestyle purchase. Analysts say that demand for sports and athleisure categories is driving market growth and gradually consolidating market share.
"Athleisure has been the fastest-growing segment in footwear in India, driven by a combination of an increasing casualisation trend and a focus on fitness," said analysts at Nuvama. "Even as athleisure was a megatrend before Covid-19, the pandemic further blurred the dividing lines between work and free time, thereby making way for rising acceptance of comfortable wear in previously more formal contexts," the brokerage said.
The retail market is loosely defined around formal/dress, casual, sports and athleisure, and outdoor segments. Woodland's Singh believes that the sports segment is growing fast, but the outdoor segment is also picking up.
Woodland will continue to concentrate on metros and mini-metros when opening the new stores. "Because we don’t currently have a market in tier-3 or tier-4, we do not intend to expand to those cities. We go to the places where our dealers and distributors are already established," Singh said.
Currently, the company has the capacity to produce five million pairs of shoes a year. Additionally, it outsources its goods to other factories.
"We are not running at full capacity at the moment. Our factories are gradually going back to normal," Singh said.
The company is also doubling down on its relatively new apparel business.
"People buy more garments than they buy shoes, so there is a lot of opportunity here," said Singh. "It's an important category, and we'd like to be seen as a lifestyle brand with apparel contributing half of our sales."
Currently, footwear contributes 55% of sales, while 25% comes from apparel and the remainder from accessories.
Woodland has 18 factories located in Punjab, Noida, Uttarakhand, and other parts of the northern region. Ten of these are dedicated to footwear manufacturing, while the remaining are focused on manufacturing apparel and accessories, including backpacks, pens, wallets, socks, and more.
"We are expecting to grow our topline by 10% this fiscal," Singh said.
Despite its offline strategy, Singh said footwear as a category is suited to online shopping given the standardisation of sizes. It also makes it an attractive channel for both brands, given the reasonably higher gross margins and much lower returns. "Online helped us grow the business during the pandemic, and it continues to be an important channel for us," said Singh.
E-commerce channels used to contribute around 10% of the apparel-to-shoe brand's overall sales before the Covid-19 pandemic. Today, they contribute around 30% of total sales, said Singh. A major chunk of our online sales come from marketplaces like Amazon, Flipkart, and Myntra.
"Going forward, we expect the share of online to increase to 40%," he said.
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Consumer & Retail
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Please note: This is not a public comment – only the Guardian can see your message. Our writers will monitor these messages and respond to some in this live blog, but unfortunately they will not be able to respond to every message.
Mon 9 Oct 2023 08.14 EDTFirst published on Mon 9 Oct 2023 03.12 EDT
Reeves says Labour would increase stamp duty for foreigners buying homes in UK
Reeves says Labour would increase stamp duty for people from overseas buying property.
She says it would use the revenue to fund housebuilding.
UPDATE:Reeves said:
It is not right that, while so many people are struggling, many homes are bought by overseas buyers, who may own a property but leave it vacant; driving up prices, while families and young people are desperate to get on to the housing ladder.
So because, one year ago, Keir Starmer set out the ambition for the next Labour government to make 70 percent of British households homeowners; because a house should be a home not an asset; and because, conference, it is time we built the homes our young people need; we will raise the stamp duty surcharge on overseas buyers to get Britain building.
Labour’s task is to restore hope to our politics. The hope that lets us face the future with confidence, with a new era of economic security because there is no hope without security.
You cannot dream big if you cannot sleep in peace at night. The peace that comes from knowing you have enough to put aside for a rainy day and the knowledge that, when you need them, strong public services will be there for you and your family.
The strength that allows a society to withstand global shocks because it is from those strong foundations of security, that hope can spring.
The choice at the election is this. Five more years of the Tory chaos and uncertainty, which has left working people worse off or a changed Labour party ready to strengthen Britain’s foundations, so working people are better off.
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Real Estate & Housing
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A group of 30 people could be paid £1,600 a month without any obligation as part of the first trial of a universal basic income in England.
Researchers from think tank Autonomy are seeking financial backing for a two-year pilot programme to see how it would change the lives of 30 people.
Supporters say schemes can simplify the welfare system and tackle poverty.
Participants will be drawn from central Jarrow, in north-east England, and East Finchley, in north London.
The concept of a universal basic income sees government pays all individuals a set salary regardless of their means.
Critics of universal basic income say it would be extremely costly, would divert funding away from public services, and not necessarily help to alleviate poverty.
Autonomy, said it hopes its proposed pilot will "make the case for a national basic income and more comprehensive trials to fully understand the potential of a basic income in the UK".
"No one should ever be facing poverty, having to choose between heating and eating, in one of the wealthiest countries in the world," said Cleo Goodman, co-founder of Basic Income Conversation, a programme run by the work-focused think tank.
Will Stronge, director of research at Autonomy, said: "All the evidence shows that [a UBI] would directly alleviate poverty and boost millions of people's wellbeing: the potential benefits are just too large to ignore."
Autonomy's trial is being supported by charity Big Local and Northumbria University.
Two years of community consultation has taken place in central Jarrow and East Finchley.
Anyone from the areas is able to put themselves forward to take part and can remain anonymous. While participants will be drawn randomly, the organisers plan for it to be a representative group and to be made up of 20% of people with disabilities.
On top of the £1.15m budget for the basic income payments over two years, there would be further costs for the project's evaluation activities, admin, and community support teams.
There have been previous calls for a universal basic income to be used to alleviate financial hardships experienced in the wake of the Covid-19 pandemic.
And last year, the Welsh Labour government announced a £20m experiment offering a universal basic income to young people leaving care.
The plan would give £1,600 a month before tax to 500 care leavers, a sum roughly in line with the living wage. The scheme is ongoing, and the Welsh government said the results would be "thoroughly evaluated".
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Inflation
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- The retail industry has made organized theft a top priority, as more companies from Target to Foot Locker say stealing is cutting into their profits.
- Retail theft is real and causes major issues for businesses, but companies are not required to report data on how it is affecting them and it is nearly impossible to verify their claims.
- Any number of issues, from employee theft to lost or damaged goods, could be causing retailers to lose inventory.
This is part one of a three-part series on organized retail crime. The stories will examine the claims retailers make about how theft is affecting their business and the actions companies and policymakers are taking in response to the issue. Be sure to check out parts two and three later this week.
Retailers have zeroed in on organized retail theft as a top priority, as more and more companies blame crime for lower profits.
But it is difficult for companies to tally just how much stolen goods affect their bottom lines — and even tougher to confirm their claims.
More than a dozen retailers, including Target, Dollar General, Foot Locker and Ulta, called out shrink, or more specifically retail theft, as a reason they cut their profit outlook or reported lower margins when they released earnings in May and June. Those mentions could flare up again as a flurry of retail companies will report financial results starting next week.
Many of them described organized theft as an industrywide problem that's largely out of their control. Some retailers lumped it in with heavy discounting, soft sales and macroeconomic conditions as other factors that cut into their margins.
While organized theft is a real concern, it is nearly impossible to verify the claims retailers make about it. Companies are not required to disclose their losses from stolen goods, and it's a difficult metric to accurately count, leaving the industry, investors and policymakers few choices but to rely on their word.
The surge in references to organized retail crime, and the dearth of transparency surrounding the issue, come as the companies' claims take on a new weight. Retailers and trade associations are increasingly using their positions to influence lawmakers to pass new legislation that benefits them, hurts competitors and could disproportionally affect marginalized people, according to policy experts.
Shrink is a retail industry term that refers to lost inventory. It can come from a variety of factors, including shoplifting and vendor fraud, which can be difficult to control. Shrink can also be caused by employee theft, administrative error and inventory damage, which retailers have more power to curb.
Retailers have repeatedly said organized theft drove shrink in recent quarters. But they rarely, if ever, break down how much of the inventory loss is due to crime and how much of a role other causes played.
They also don't disclose their total losses from shrink and how they have changed over time. That makes it impossible to verify whether the issue has gotten worse and just how much of a bite it has taken from their bottom lines.
Multibillion-dollar companies commonly withhold information that can appear unflattering on earnings calls and press releases. That information can often be found in documents submitted to the U.S. Securities and Exchange Commission, such as quarterly 10-Q reports or annual 10-K filings.
However, companies are not required to disclose losses from shrink unless they're "exceptionally large" and could be considered material to investors, according to Raphael Duguay, an assistant professor of accounting at Yale University School of Management.
Alongside discounts, promotions and returns, losses from shrink are buried into the "cost of goods sold" and only show up in a retailer's gross margin, said Duguay.
Retailers are loath to reveal their shrink numbers because they're often based on estimates and they would have to be "presumptive in their presentation of the numbers," said Mark Cohen, a professor and director of retail studies at Columbia Business School.
"And they never will be [disclosed] if retailers have their way because they don't want to have to report that," said Cohen, who previously served as the CEO of Sears Canada, Bradlees and Lazarus Department Stores. "Retailers will never want to record it unless they were absolutely forced to because it's a black mark … It makes them look stupid."
When industry executives say that organized theft is rising, many are relying on a study released by the National Retail Federation in September. It found losses from shrink increased to $94.5 billion in 2021 from $90.8 billion in 2020.
In 2021, the largest chunk of losses – 37% – came from external theft, according to the survey.
There is no conclusive data about inventory losses in recent years, including from the first half of this year when multiple companies named it as a growing problem.
The NRF's study is the best guess the industry can make about how shrink affects companies. But the data, which is anonymized, gathered on the honor system and largely based on estimates, isn't as clear cut as it appears
Survey respondents were asked to disclose their inventory shrink as a percentage of sales. On average, that number stood at 1.4% in 2021, which is lower than the five-year average of 1.5%, the study says.
The NRF arrived at the $94.5 billion in losses by applying that 1.4% average shrink to the total retail sales reported to the U.S. Census Bureau in 2021, according to the study.
However, as retail sales jumped 17.1% from 2020 to 2021, the total hit companies took from shrink would naturally increase as well. Further, the census data used for the study were preliminary at the time it was released. The final retail sales figure was lower, making estimated shrink losses about $600 million less than what the NRF originally reported.
The actual amount that American retailers lost to shrink in 2021 – and how that number has changed over time – isn't known.
National crime data from the FBI shows the rate of larceny offenses steadily declined between 1985 and 2020, and such crimes overwhelmingly occur in homes rather than stores. However, the FBI's statistics don't include data from all law enforcement agencies, and many theft incidents, especially those that happen at retail locations, go unreported.
Retailers have always had to contend with shrink, but they have long relied on estimates and educated guesses to determine how an item was lost.
Retailers use sales patterns, inventory trends, historical data and, when available, evidence such as surveillance footage to estimate how merchandise is lost.
"We know what we've run up at the register, we know what we put on the shelf. When the anomaly occurs, we can estimate or infer that it represents theft," Cohen, the Columbia Business School professor, told CNBC.
Target, one of the few retailers to say how much its lost from unaccounted inventory, made headlines in May when it said it was on track to lose more than $1 billion from shrink this year, up from $763 million the previous fiscal year. Target has repeatedly said organized retail theft is fueling its inventory losses. But at the same time, the retailer acknowledged it's difficult to calculate theft and shrink overall — which raises questions about how accurately it can estimate the effect stolen goods has on its profits.
Between 2019 and 2022, the total retail value of the merchandise Target lost to shrink increased by "nearly 100 percent," the company told CNBC.
"This correlates with a dramatic increase in organized retail crime in our stores and online over that same time period," Target said.
The trend has worsened so far this year, the company said. It declined to break down all the sources of its shrink, but acknowledged other factors, such as damage and administrative error, have contributed.
To explain how it decided organized retail crime in its stores has worsened, Target pointed to vague trends and data points that don't conclusively prove the acts are fueling its losses.
The company said it determined retail theft is driving shrink through a number of "signals," including recent criminal justice reforms, news reports about crime increasing, commentary from other retailers who said they were seeing higher rates of theft and documented upticks in violence and fraud.
For example, acts that Target associates with organized retail crime rings — such as gift card and return fraud — increased by about 50% in its stores between 2021 and 2022, the company said.
Target has also clocked a "marked increase" in theft involving violence or threats over the same time period and in 2023, the company said. In the first five months of 2023, stores have seen a nearly 120% increase in those incidents, the company said.
Sonia Lapinsky, a partner and managing director with AlixPartners' retail practice, said shrink is an "incredibly complex thing to track and measure" because it can come from many sources at all points in the supply chain, from the factory to the store.
"Not that many retailers are sophisticated enough to track it at all the different points," said Lapinsky.
Those that have the right systems and technology in place have a better grasp on where their shrink is coming from, but overall the industry is "lagging" behind in those investments, she said.
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Consumer & Retail
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Two-thirds of women with childcare responsibilities believe they have missed out on career progression as a direct result, business leaders have warned, amid growing pressure on the government to boost support for parents.
Ahead of next week’s budget, the British Chambers of Commerce (BCC) said tackling barriers to work posed by soaring childcare costs and a lack of support for elderly or disabled relatives was vital for equality and the economy.
In a landmark survey of more than 4,000 women, it found as many as 67% felt childcare duties in the past decade had cost them progress at work – including pay rises, promotions, or career development. Almost 90% believed that additional support was needed.
In the study, released to coincide with International Women’s Day, BCC, which represents thousands of companies across the UK, also found that three-quarters of women said there was not sufficient support for those going through menopause.
Shevaun Haviland, the BCC’s director general, said urgent action was required from the government and employers to break down barriers and ensure women had the same opportunities as men.
“Tackling these issues is integral not only to the wellbeing of our women and workplaces, it is crucial to the functioning of any strong economy,” she said.
The intervention adds to pressure on the chancellor, Jeremy Hunt, to use his upcoming budget to provide more support for parents to work, amid warnings from economists that sky-high childcare costs are among the reasons why thousands of people have quit the jobs market.
Hunt is widely expected to place growing workforce participation at the heart of his statement, but is thought to be unlikely to announce major new funding for childcare amid government concerns over the public finances.
However, charities, trade unions, and business groups argue that supporting more people to work could benefit the economy in the longer term.
New analysis by the Centre for Local Economic Strategies and the Women’s Budget Group, published on Wednesday, finds the barriers to paid work faced by women mean almost £90bn of gross value added is lost to the economy in England, Scotland and Wales each year – equivalent to the entire contribution of the financial services industry.
Meanwhile, the Trades Union Congress has calculated that almost 1.5 million women are kept out of the labour market because of their caring responsibilities, compared with 230,000 men, making them seven times as likely to stand outside the workforce.
In analysis published as the annual TUC women’s conference starts in London on Wednesday, the unions’ umbrella group said this showed ministers had to act now to keep women in work, make sure they are paid fairly, and to properly address the gender pay gap.
Paul Nowak, the TUC general secretary, said: “We desperately need funded high-quality childcare for all families, free at the point of use, so women can stay in work once they have kids.
“Ministers must change the law so that every single job is advertised with the possible flexible options stated, and all workers must have the legal right to work flexibly from their first day in a job.”
Separate analysis by the jobs website Adzuna shows that less than 3% out of job adverts online mention support for women. It called on employers to rethink the benefits they offer to help women stay in work and thrive, while highlighting that more job adverts mention free gym membership or unlimited holidays than menopause support.
Highlighting gender gaps despite progress made in recent years, the Institute for Fiscal Studies warned in its own report that inequalities between men and women for income from private pensions were set to persist for decades.
It said the difference between men’s and women’s average state pension incomes, for those born in the 1950s, had closed to essentially zero over the past decade. However, women still had private pension incomes about 45% lower than men.
The IFS said this was almost entirely driven by differences in labour market patterns – employment rates, hours worked and hourly wages – which particularly open up after the birth of children.
Laurence O’Brien, research economist at IFS, said the divisions persisted even for younger age groups: “As these generations will not retire for many decades, we can expect a gender gap in pension incomes to remain for a long time yet.”
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Workforce / Labor
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Inflation rate drops to 5.2% in February — but grocery prices are still up
Rate previously slowed to 5.9 per cent in January
Canada's inflation rate cooled to 5.2 per cent in February, the largest deceleration since April 2020, according to Statistics Canada.
The agency said its consumer price index had a year-over-year deceleration from February 2022, when the inflation rate was 5.7 per cent.
The reading compared with an annual inflation rate of 5.9 per cent in January and was the lowest reading since January 2022, when it was 5.1 per cent.
Statistics Canada noted that the decline was due to a steep monthly increase in prices in February 2022, when the global economy was significantly affected by the Russian invasion of Ukraine.
Groceries outpacing overall inflation
Despite the overall cooling, grocery prices remained elevated and outpaced overall inflation.
Prices for food purchased from stores in February were up 10.6 per cent compared with a year ago, the seventh consecutive month of double-digit increases.
Supply constraints and bad weather in food growing regions continue to put upward pressure on prices. Fruit juice in particular was up 15.7 per cent — the cost of orange juice, for example, has increased due to the prevalence of fruit-killing citrus greening disease and climate-related disasters like Hurricane Ian.
Cereal products, sugar, and fish, seafood and other marine products continued to see accelerated price growth. On the other end of the spectrum, price growth for non-alcoholic beverages, meat, vegetables and veggie preparations, and bakery products slowed.
Meanwhile, energy prices were down 0.6 per cent year over year as gasoline prices fell 4.7 per cent compared with a year ago, when prices began to rise. It was the first yearly decline for gasoline prices since January 2021.
Excluding food and energy, Statistics Canada said prices in February were up 4.8 per cent compared with a year ago, following a 4.9 per cent year-over-year gain in January.
The annual inflation rate peaked at 8.1 per cent in June 2022, but has been declining.
Putting food on the table during Ramadan
Shahid A. Khan, the executive director of Muslim Welfare Canada, which runs several food banks serving the Muslim community in southern Ontario, said that most of their food donations arrive during the holy month of Ramadan.
Ramadan, which starts on Wednesday and ends on April 22, is marked by a month-long fast that begins every day at sunrise and ends after sunset. The end of the fast is marked by a daily meal called Iftar.
"People really like to enjoy the month of Ramadan. But these days, it's very tough," said Khan. "There's lots of people [who have] lost their jobs, and a large refugee community is coming."
Monsurat Olawumni, a first-time client at the organization's Scarborough, Ont., food bank, heard about its services through her friends.
"It has been crazy, hasn't it? Lots of things are very, very expensive here now," she said, later pointing to the cost of chicken and rice. "It is very, very difficult to live, to get food for your family or your children."
Muslim Welfare Canada is aiming to serve about 7,000 families this month, but demand is rising simultaneously with the cost of groceries. The price of cooking oil alone has almost doubled, Khan said.
"I remember I used to buy $1.99 for two litres. Now it's about $4.99," he said. Prices for rice, sugar and flour have also gone up, he noted.
"This is a very tough Ramadan for some people, but our duty is to help the community."
Interest rate hikes on pause for now
The Bank of Canada, which is working to bring overall inflation back to its target of two per cent, left its key interest rate target unchanged earlier this month at 4.5 per cent.
It was the first time the central bank kept its key policy rate on hold since it began raising it last year in an effort to cool rising prices.
The average of the three core measures of inflation that are closely watched by the Bank of Canada eased to 5.37 per cent in February compared with 5.57 per cent in January.
With files from CBC News
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Inflation
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(Bloomberg) -- The US Treasury is set this week to begin a ramp-up in issuance of longer-dated securities that’s likely to stretch into next year, forced by a rapidly deteriorating budget deficit and soaring interest rates.
Most Read from Bloomberg
For the first time since early 2021, the Treasury will boost its so-called quarterly refunding of longer-term Treasuries, to $102 billion from $96 billion, the consensus among dealers suggests. While down from the record levels hit during the Covid-19 crisis, that’s well above pre-pandemic levels.
Wednesday’s announcement will likely also see debt managers hoist regular auction sizes for securities across the yield curve — with potential exceptions or smaller bumps for notes less in demand. Dealers will be on watch separately for an update on a coming program to buy back older Treasuries.
Public borrowing needs are on the rise thanks in part to Federal Reserve rate hikes that have taken its policy benchmark to a 22-year high — in turn driving up yields on government debt, making it more costly. The Fed is also shrinking its holdings of Treasuries, obligating bigger government sales of them to other buyers. It all raises the risk of bigger volatility swings when the government auctions its securities.
“There’s just a lot of supply coming,” said Mark Cabana, head of US interest-rate strategy at Bank of America Corp. “We’ve been surprised by the deficit numbers, which are sobering.”
Larger amounts of debt issuance haven’t translated directly into lower prices and higher yields, as the swelling in US debt alongside historically low yields attests over the past two decades. But bigger auction sizes contribute to the potential for short-term volatility, at a time when banks have diminished appetites for market making. That was on display in a seven-year auction on Thursday that saw buyers demand a bigger discount to absorb the securities.
What has sent yields higher is Fed rate hikes and inflation, a key dynamic widening the budget deficit. The cost of servicing US government debt jumped by 25% in the first nine months of the fiscal year, reaching $652 billion — part of a global phenomenon propelling public borrowing.
Read more: US Racks Up $652 Billion in Debt Costs as Rates Hit 11-Year High
Cabana and his team forecast the Treasury will bump up sales of coupon-bearing debt — as notes that pay interest are known — not only this month, but again in the November and February debt-management policy announcements.
The consensus of dealers’ projections shows the following for the upcoming refunding auctions:
$42 billion of 3-year notes on Aug. 8
$37 billion of 10-year notes on Aug. 9
$23 billion of 30-year bonds on Aug. 10
Beyond those sales, most dealers see a lift in issuance across most maturities at a clip of $2 billion each, with many seeing smaller increases for 7- and 20-year Treasuries, which have seen bouts of poor demand.
Some dealers predict the 20-year bond will be singled out for no change in size. That security has been plagued by weak pricing and liquidity since the Treasury relaunched it in 2020.
“There should be well-distributed auction increases across the curve,” besides slightly smaller ones for the 7- and 20-year debt, said Subadra Rajappa, head of US interest rates strategy at Societe Generale SA. “It’s a one-way trajectory now for the deficit over the next 10 years, with them getting larger. Treasury wants to makes sure they are well funded for the next several years.”
The federal deficit hit $1.39 trillion for the first nine months of the current fiscal year, up some 170% from the same period the year before, showcasing the Treasury’s burgeoning funding needs. On Monday, the department boosted its forecast for borrowing in the July-to-September quarter to $1 trillion, from the $733 billion it penciled in in early May.
Read More: US Treasury Boosts Quarterly Borrowing Estimate to $1 Trillion
What Bloomberg Intelligence Says...
“Coupon Treasury issuance may be slowly increased over the next six months.
“Coupon auctions could climb by $1 billion across the curve in August, with monthly auctions rising an additional $1 billion each month through January.”
— Ira F. Jersey and Will Hoffman, BI strategists
Click here to read the full report
Meantime, the Fed is shrinking its holdings of Treasuries by up to $60 billion a month, by letting securities mature without replacing them. Fed Chair Jerome Powell last week also signaled that the portfolio runoff could continue at some pace even after policymakers had begun cutting interest rates, suggesting a longer period than many had thought for the so-called quantitative tightening program.
Another dynamic for Treasury’s managers to consider is the share of bills, which mature in short-term spans of up to a year, in overall debt outstanding. The Treasury Borrowing Advisory Committee, a panel of market participants including buyers and dealers, has long advised a 15% to 20% range for that ratio.
The Treasury lately has been selling a barrage of bills as it sought to rebuild its cash balance in the wake of running it down to dangerously low levels during the partisan battle over the debt limit earlier this year.
Citigroup Inc.’s team said the targeted T-bill share of debt will be among the things they’re looking for this week.
Bills, Buybacks
“Treasury needs to materially increase auction sizes at the November and February refunding,” Citigroup’s Jabaz Mathai, head of Group of 10 rates strategy also said in a note to clients. The later-quarter increases are set to be at “a quicker pace than the post-Covid issuance cycle,” he added.
Another item to watch will be any update to the Treasury’s plans for buybacks, which they first unveiled in May after months of consideration. One of the aims of buying back older securities and issuing more of the current benchmarks is to help bolster patchy liquidity in the Treasuries market. Another is to smooth out volatility in its issuance of T-bills.
The program is set to start next year, but dealers see the Treasury as still working out the details. The department queried them about again in their pre-refunding survey questions.
Read More: Treasury Asks Dealers About Auction Size Growth, Buyback Design
--With assistance from Viktoria Dendrinou, Alex Tanzi and Elizabeth Stanton.
(Updates with quarterly borrowing estimate, in first paragraph after second chart.)
Most Read from Bloomberg Businessweek
©2023 Bloomberg L.P.
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Bonds Trading & Speculation
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The same federal agency that once helped bring down the biggest crypto-based dark web drug marketplace Silk Road got swindled by one of the oldest tricks in the crypto scammer playbook. The U.S. Drug Enforcement Administration reportedly handed a fraudster a little more than $55,000 in confiscated crypto funds after it was duped by a classic airdrop phishing scam.
Forbes first reported on a warrant put out by the FBI investigating the scam. Those funds were stored in a Trezor crypto wallet, a more secure kind of crypto storage than an exchange-based wallet. The funds were further secured inside a “secure facility.” However, since all transactions are public on the blockchain, a scammer noticed when the DEA sent a test amount of $45.36 in Tether to a wallet owned by the U.S. Marshals.
The alleged scammer then performed what’s known as an airdrop scam. Essentially, the fraudster created a new address with the first five and last four digits of the Marshals’ account. Each crypto wallet has a unique address that’s about 30 characters long. Then, the fraudster sent, or “airdropped” some Tether into the DEA’s account, which shows up as looking like it came from the marshal’s address.
This works because the two accounts seem similar, so any layperson who only looks at the first few and last few characters to confirm will simply copy and paste the whole address rather than type it out. Trezor actively warns its users against airdrop scams, though in most cases, fraudsters want to access the wallet’s entire balance through a website link. These scams usually work against users investing in a new coin drop, but eagle-eyed fraudsters looking at crypto addresses might get lucky with a quick phishing attack, as they did here.
Amid the confusion, the DEA ended up sending funds to the fake marshal’s address, and by the time the two separate Department of Justice agencies realized what had happened, the funds had already been moved out of the scammer’s account.
Gizmodo reached out to the DEA, but we did not immediately hear back. The FBI declined to comment on the investigation.
The $55,000 sent to the fraudulent account was supposedly from a pool of $500,000 worth of Tether, a so-called stablecoin pegged on a 1-to-1 ratio with the U.S. dollar. Feds seized the crypto from two Binance accounts suspected of funneling money from drug sales back in May, according to the report.
According to Forbes, the FBI reportedly determined that the alleged scammer converted the funds into both ether and bitcoin and transferred them to a new wallet. Those accounts were connected to two crypto wallets on Binance. The FBI is apparently trying to track down more information about two Gmail accounts linked to those wallets. Forbes reported that the supposed scammers’ wallet IDs have been rapidly moving money between multiple different accounts.
The DEA has made other arrests surrounding drugs and crypto in recent months, though the agency does have one or two black spots when it comes to past crypto investigations. Former DEA agent Carl Force pled guilty back in 2015 for trying to extort the founder of Silk Road, Ross Ulbricht, into paying $50,000 for information into the agency’s investigation of the dark web platform.
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Crypto Trading & Speculation
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Rishi Sunak has been accused of allowing the UK to tip towards a recession after the Government ruled out easing the Bank of England’s “arbitrary” 2 per cent inflation target.
Chancellor Jeremy Hunt is not considering changing the Government’s mandate for the central bank which requires it to aim for 2 per cent inflation, i understands.
It comes despite concerns that the current cycle of interest rate hikes to tackle rampant inflation is too “harsh” and could see the UK economy enter an unnecessary recession – defined as two consecutive period of economic contraction.
Economists and analysts told i that efforts to slim down inflation from its current rate of 7.9 per cent to 2 per cent could be achieved over “four or five years”, but that plans to do so any faster would see “mortgage rates soar” and people across Britain suffer.
Stephen Yiu, lead manager of the Blue Whale Growth Fund, suggested that ministers have not yet levelled with the public that frantic efforts to reduce inflation before the next general election would require entering a “deep recession”.
“We will eventually be able to get back to 2 per cent, but in the next two years, if we are to do that, we may need to go into a deep recession, with interest rates going up incredibly high. What is the point of doing that?” he told i.
“If we asked the public what they wanted I’m not sure anybody would want the second scenario which sees inflation get down to per cent sooner, but employment is very high, mortgage rates soar and more.”
Mr Yiu said Mr Sunak’s decision to make tackling inflation his number one priority at the expense of other economic measures could have a major impact on the lives of people across Britain.
“Politicians need to be honest, they are the ones that set the 2 per cent target, but at the moment they haven’t laid out the two scenarios to the public,” he said, adding that the slower option “may still have a downturn but it’ll be nowhere near as harsh’.
“Instead, politicians are acting like there is one focus – getting inflation down. That is not the case, it’s balancing different things. They need to be real with the public and I think it’s clear what the public would choose,” he said.
It comes as the Bank of England is expected to raise interest rates a further 25 per centage points on Thursday to 5.25 per cent, in a move that would mark the 14th consecutive rate rise by the central bank.
Mr Hunt’s own expert advisers on the Economic Advisory Council to the Treasury are understood to have warned that the current cycle of interest rate hikes is too rapid, and urged the Chancellor to explore other options.
The Government sets the inflation target for price stability, which is currently 2 per cent based on the Consumer Price Index.
This target is the same for most central banks of advanced economies, including the US Federal Reserve, the European Central Bank and the Bank of Japan. But unlike in the UK, the Bank of England’s three closest peers set their own inflation targets.
The last time the Government changed the inflation target was in December 2003 when it replaced a 2.5 per cent target based on the retail price index.
Richard Murphy, professor of accounting practice at Sheffield University, told i that the current 2 per cent target “was always entirely arbitrary” as he urged the Chancellor to be more “flexible’ in light of current economic circumstances.
“No one has ever been able to offer a justification as to why 2 per cent is the right number. Nor can they explain why a growing economy does not need a rate of 3 per cent or even 4 per cent to keep growth moving,” he said.
Mr Murphy said that to pretend that the Bank’s goal should be “2 per cent or bust is absurd unless the real goal is to create a recession, come what may”.
He suggested Threadneedle Street could instead pursue an inflation target of as high as 4 per cent, in an attempt to deter governor Andrew Bailey from doggedly raising interest rates.
“To be flexible would be even more sensible when the government cannot realistically ever predict what inflation is going to be – as has been proved over many years by it missing the target almost continually and going both over and under,” he said.
“A wise government would say it will manage inflation in the light of current economic circumstances and not make itself a hostage to fortune.”
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Inflation
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Gujarat State Petronet Q2 Results Review - Higher Tariff Fueled Growth: Systematix
New tariff order for its high pressure pipleline is still over due & thus we reverse our stance of a sharp fall in tariff in FY24E
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Systematix Research Report
Gujarat State Petronet Ltd.’s Ebitda/profit after tax was 13%/26% ahead of our expectations on the back of better than better-than-expected implied tariff, partially offset by lower-than-expected volume.
Total transmission volume increased marginally 2.8% QoQ to 30.2 million metric standard cubic metre per day led by sharp offtake from the power sector which grew to 5.1 mmscmd from 1.7 mmscmd.
Though offtake from the refinery sector decline 39% to 5.5 mmscmd, fertiliser and other sector saw a marginal uptick in offtake during the quarter. Implied tariff rose 11% QoQ to Rs 1.6/standard cubic metre which led to a strong 22% QoQ growth at Ebitda to Rs 4.1 billion.
Further, other income increased sharply to Rs 2.7 billion in Q2 FY24 versus Rs 1 billion YoY due to higher dividends from Gujarat Gas owing to the new dividend policy by the Gujarat government.
Also, lower effective tax rate led to a 132% QoQ (69% YoY) growth at PAT to Rs 5.3 billion. We raised our target price upwards on better tariff and higher dividend income which led to an increase in our target price to Rs 316 from Rs 306.
Due to the 16% upside from the current level, we upgrade the stock to 'Buy' from 'Hold'.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
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Energy & Natural Resources
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Infra Sector Check - NHAI Project Awarding Subdued, Hurts Order Inflows: Motilal Oswal
The muted awarding by NHAI has hit FY24 order inflows for several road construction companies.
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
Project awarding by National Highway Authority of India stands at 310 km and construction stands at 1,990 km in FY24 year-to-date. The muted awarding by NHAI has hit FY24 order inflows for several road construction companies.
Some companies also reduced their order inflow targets for FY24 due to the slow pace of awarding.
Toll collections have been improving, with FASTag-based toll collections at Rs 419 billion during April-November 2023 and a daily run rate of ~Rs 1.7 billion. In Nov-23, daily average toll collections stood at ~Rs 1.8 billion.
NHAI’s primary focus is on asset monetization as a means to generate funds beyond budgetary allocations. NHAI awarded two toll-operate-transfer bundles, 11 and 12, totaling 400 km, at a cost of Rs 66 billion in Oct-23. For FY24, NHAI aims to achieve a total monetization target of up to Rs 450 billion.
Dedicated Freight Corridor Corporation of India Ltd. revised the timelines for Dedicated Freight Corridor projects, and these projects are now expected to be completed by Dec-24.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
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Real Estate & Housing
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An investigation into high food prices has not yet found evidence of “weak competition” among supermarkets, the Chancellor has told MPs worried about price gouging.
Jeremy Hunt said the Competition and Markets Authority (CMA) would continue to investigate food price rises, as he heard concerns about companies making “bonanza” profits while families suffered.
Food prices continue to rise, but increases have fallen to single digits for the first time in 16 months, according to data from analysts Kantar.
Prices across grocers were 9.7% higher than a year ago over the four weeks to October 29, down from the previous month’s 11%.
It is the eighth consecutive decline in the rate of price rises since the figure peaked at 17.5% in March, and the first time the figure has fallen below 10% since July last year.
In the Commons, SNP MP Alison Thewliss drew attention to the high price of baby formula.
The Glasgow Central MP said: “Between March 2021 and April 2023, the cost of first infant formulas increased by an average of 24%, with the cheapest infant formula on the market increasing by 45%, an absolute catastrophe for families who rely on infant formula, but a bonanza for the formula companies who are making significant profits out of this.
“Can he tell me, why does he believe that it is right for companies to profit while families struggle to feed their babies?”
The Chancellor replied: “She is absolutely right to draw attention to the pressures on families caused by very high food inflation in a number of areas, but I can tell her that the Competition and Markets Authority undertook a review earlier this year of the groceries sector.
“They have not yet found evidence that high food price inflation is being driven by weak competition, but they are continuing their review, they are looking at the supply chain and we all wait to hear what they say.”
Mr Hunt continued to face pressure from the SNP about food inflation, with Glasgow North MP Patrick Grady calling on the Government to “commit to ensuring that the Department for Work and Pensions has enough resource to raise benefits at least in line with September’s inflation rate”.
The Chancellor replied: “The Secretary of State for Work and Pensions (Mel Stride) is doing his review at the moment to decide the correct amount by which to uprate benefits.”
Mr Hunt later insisted it was right that the CMA carried out its work on supermarket pricing “at arm’s length from politicians”, after SNP economy spokesman Drew Hendry quoted consumer rights organisation Which?, who claimed some supermarkets had committed “dodgy practices over food prices and loyalty schemes”.
The senior Cabinet minister said: “I can tell him that we had the supermarkets in over the summer to make sure that they were doing everything they could to bear down on food price inflation.
“However, the correct way for politicians to look at this is at arm’s length. We have the independent Competition and Markets Authority, which does a rigorous job and often does things that politicians disagree with, and it is looking at the issue right now.”
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Inflation
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If you have $1 million in a 401(k) and collect a pension, you may be in a position to delay Social Security until age 70. Doing so can boost your monthly benefit by up to 24%. However, delaying Social Security will mean you’ll have to rely more heavily on your savings for several years and potentially take a large bite out of your nest egg. So is the tradeoff worth it? A financial advisor can review income sources and expenses and help you budget for a comfortable retirement.
Basics of Paying for Retirement
Funding retirement is about having enough income to cover your expenses. You may be ready to retire when your retirement income matches or exceeds your anticipated expenses.
For most people, the secure lifetime benefits from Social Security represent a critical source of retirement income. Additional income may come from pensions, retirement accounts like 401(k)s and IRAs, rental income from investment properties and part-time work.
On the expense side, essentials include housing, food and healthcare. Most people also have discretionary expenditures like transportation, entertainment, recreation, education and travel.
People with enough savings can afford to delay Social Security and use their nest egg to cover living expenses and discretionary spending. While delaying Social Security can increase your eventual benefits, it also means depleting savings faster. Making this decision will require you to consider all of your sources of income as well as factors like taxes, market fluctuations and inflation.
Delaying Social Security: The 8% Annual Boost
Your benefit grows by about 8% annually each year you delay Social Security beyond your full retirement age – up until age 70. So, waiting provides a significantly higher income later. On the flip side, if you claim your benefits before reaching full retirement age, you’ll get less.
For instance, if your benefit is $2,000 per month at full retirement age, claiming at 62 would cut it by 30%, leaving you with just $1,400 per month. Waiting until age 70, on the other hand, would boost your monthly check to around $2,480 per month – a 24% increase.
Financial advisors say it likely makes sense for many retirees to similarly delay taking Social Security if they have other income sources.
"The longer you can defer Social Security, the better because your benefit will grow by 8% annually," said Jeremy Suschak, a certified financial planner (CFP) and head of business development at DBR & Co. in Pittsburgh. "Delaying also makes sense if expenses are low, debts are paid and assets can reasonably cover expenses."
In addition, there are multiple benefits to having assets in diversified retirement accounts, says Hao Dang, an accredited investment fiduciary (AIF) and investment strategist with Consilio Wealth Advisors in Seattle.
"The location of assets is important for tax, legal and diversification reasons," Dang said.
"While most distributions from these accounts qualify as taxable income, the eligible age of penalty-free distributions may be different. The rule of 55 for 401(k)s allows for penalty-free withdrawals if you are no longer at your job. IRAs are limited to 59 ½ or older."
Talk to a financial advisor today to make a plan for retirement.
Example: $1 Million Saver Who Delays Social Security for 8 Years
While claiming later increases Social Security significantly, deciding whether or not to delay claiming requires figuring out how you'll pay your bills in the meantime. Consider a 62-year-old with anticipated retirement expenses of $5,000 per month. Like you, he has $1 million in retirement savings earning a 5% annual return.
He also has a pension that provides $700 monthly, or $8,400 annually. This is approximately the average pension benefit, according to a 2022 Census Bureau analysis of older household income sources.
If he takes Social Security at 62, his $1,400 monthly benefit plus his $700 in monthly pension income will add up to $2,100. With $5,000 in expenses every month, he'll need to withdraw $2,900 a month from his retirement account. And with inflation, that withdrawal will increase over time to maintain the same lifestyle. With this route, he loses roughly $25,000 of his savings to waiting for Social Security – money that could have otherwise been generating investment returns for the long-term.
But if he delays Social Security until 70, he’ll need to withdraw $4,300 from his 401(k) for eight years, which would lower his balance to just over $800,000 by the time he turns 70. At that point, he’ll start collecting Social Security.
A financial advisor can help you understand the pros and cons of your options.
Limitations: Inflation, Market Returns and Longevity
Deciding when to claim Social Security involves contemplating uncertainty. One big risk is that your investment returns may fall short of your assumptions, which means you’ll either have to withdraw less or accept that your money won’t last as long as you anticipated.
Another possibility: Inflation could outpace long-term projections, requiring you to spend more money to maintain your standard of living. Living longer than expected meanwhile, carries its own set of risks. A longer lifespan means more years of retirement to fund.
Making the Call on Delaying Social Security
If you have substantial retirement savings and a pension, delaying Social Security can pay off. But first, make sure you can afford to fund expenses from savings. Create a retirement budget accounting for all income sources. See if you can meet spending needs on savings alone for several years.
Next, calculate your increased Social Security benefit from delaying. Weigh if the boost is worth shrinking savings for a few years. Finally, consider other factors like spousal benefits, taxes and unknowns like inflation, market volatility and longevity. To make a plan to minimize your taxes and protect your estate, talk to a financial advisor today.
Social Security Planning Tips
If you’re unsure when the right time is to claim Social Security, start by estimating how much your benefits would be at different ages. SmartAsset’s Social Security calculator can help you project your benefits based on your income and age at which you plan to start collecting.
A financial advisor can help you plan for Social Security. Finding a financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.
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Personal Finance & Financial Education
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Housebuilding needs to almost treble to keep pace with the demand generated by soaring immigration, a study warns today.
Research by the Centre for Policy Studies (CPS) suggests at least 515,000 new homes would have been required in England last year to meet the needs of a growing population.
The figure is far in excess of the Government target of building 300,000 homes a year and almost treble the 178,000 homes actually completed in England in 2022.
Karl Williams, deputy research director at the CPS, said the surge in net migration, which jumped to a record 745,000 last year, had left the Government's targets hopelessly out of date.
The CPS report found that over the past decade, the number of homes built fell short of the number needed by 1.34million, fuelling a growing housing crisis.
'These figures highlight the historic rise in net migration and the failure of successive governments in tackling the housing crisis,' said Mr Williams.
'Not only are we not building enough homes to meet demand from people already living in the UK, we are not even properly taking into account the needs of new arrivals.
'The Government needs to get a grip on the immigration system to deliver the control it promised at the last election and do more to encourage housebuilding – greenfield and brownfield, urban and rural, North and South – otherwise a growing portion of the population will find themselves locked out of home ownership by our cavernous housing deficit.'
The Tories promised to meet the 300,000 homes-a-year target by the middle of this decade. Labour said it will also push to deliver 300,000 homes annually if it wins power.
But the research suggests the target, devised in 2016 and based on net migration to England averaging 170,000 a year, has been overtaken by events.
The CPS said calculating the formula using the latest migration figures would raise the target to 515,000 a year.
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Real Estate & Housing
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Grocery CEOs set to face tough questions from MPs about high grocery prices
Heads of Loblaw, Metro and Empire foods set to appear in parliamentary committee probing food inflation
The heads of Canada's biggest grocery chains are set to appear at a parliamentary committee in Ottawa today to answer a question that has been vexing Canadians for months: Why are grocery prices going up at their fastest pace in decades?
The CEOs of Metro, Empire Foods and Loblaw have been summoned to testify at the Standing Committee on Agriculture and Agri-Food this afternoon, to face parliamentarians from all parties seeking answers to the question above and others.
- Have a question or something to say? Email: ask@cbc.ca or join us live in the comments now.
After plunging along with everything else in the early days of the pandemic, food prices started to escalate quickly starting in late 2021, and are currently increasing at their fastest annual pace in decades.
Official data from Statistics Canada shows that the price of food purchased at stores went up by more than 11 per cent in the year up to January, even as the overall inflation rate slowed to 5.9 per cent.
'Greedflation' alleged
Many factors have been blamed for the increase, from frail supply chains, to sharply higher prices for commodities like wheat and oil, largely brought about by Russia's invasion of Ukraine in early 2022.
But as the impact of those factors has ebbed, the major food companies have found themselves under increased scrutiny as their profits have skyrocketed. Collectively, the three aforementioned food giants took in more than $2 billion in profit in their most recently completed fiscal year.
WATCH | Why Ottawa is probing what's going on with your grocery bill:
But executives at those chains say accusations of profiteering are unfounded, and claim that while their overall sales are indeed higher, their profit margins — or the amount they make on every purchase — are about where they have always been, in the low single digits.
Wednesday's committee hearing will be a chance for members of parliament to question the executives directly on the veracity of those claims.
Earlier this week, the committee heard from food suppliers, who say their costs are being squeezed to the point where they have no choice but to pass those on.
"Canada's processors are getting squeezed from both sides and it's not sustainable," said James Donaldson, the CEO of B.C. Food & Beverage, an industry group that represents food suppliers in the province. "The average processor does not have the luxury of rejecting price increases ... or to charge them fees and levies with no backup or prior notice."
That's a reference to a campaign that market leader Loblaw launched in the fall, promising to freeze the price of thousands of items under its in-house No Name brand through the holiday season — a move that many consumers and marketing experts dismissed as a publicity stunt.
'Really hard right now for food processors'
J. P. Gervais, an economist with Farm Credit Canada who studies all the links in Canada's food supply chain, says that food suppliers have seen their costs skyrocket this year, but they haven't been able to fully pass those increases on to the grocery chains they sell to.
"It's really hard right now for food processors to pass on some of the higher costs," he told CBC News in an interview. "We've seen in 2022, the profit margins of food producers and food processors actually come down relative to 2021."
Today's testimony is slated to begin at 4:30 p.m. ET with Michael Medline, president and CEO of Empire Company, which owns Sobey's, FreshCo, Farm Boy, Foodland and other chains.
He'll be followed by Galen Weston, the head of Loblaw, which owns No Frills, Zehrs, Valu-Mart, Provigo, and its eponymous namesake grocery brand.
Last on the list will be Eric La Flèche, president and CEO of Metro, which owns Food Basics and other chains.
After their opening statements, the three CEOs will answer questions from parliamentarians for about two hours.
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Inflation
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Lottery dreamers are setting their sights on the growing Mega Millions jackpot drawing on Friday after a ticket worth more than $1 billion was sold for the Powerball lottery. Here’s a look at how this drawing compares to other jackpots and why these winnings have become so high.
HOW DOES THIS LATEST MEGA MILLIONS JACKPOT STACK UP?
The new jackpot for the Mega Millions drawing has reached an estimated $720 million, making it the game's fifth highest. It hasn't yet broken into the top 10 highest lottery jackpots in U.S. history, though.
If someone picks all five numbers, plus the gold Mega Ball, they will have the option of taking the prize in yearly increments paid over 29 years or a $369.6 million lump sum before taxes. The last time a Mega Millions player hit the top prize was April 18. The jackpot will continue growing until someone wins.
POWERBALL WINNING TICKET
Most of the attention had been on Powerball until a winning ticket was drawn this week. Sold at a tiny neighborhood store in downtown Los Angeles, it is worth an estimated $1.08 billion, the sixth largest in U.S. history and the third largest in the history of the game. The winning numbers for Wednesday night’s drawing were: white balls 7, 10, 11, 13, 24 and red Powerball 24.
WHY ARE LOTTERY JACKPOTS SO LARGE THESE DAYS?
That’s how the games have been designed. The credit for such big jackpots comes down to math and more difficult odds. In 2015, the Powerball lottery lengthened the odds of winning from 1 in 175.2 million to 1 in 292.2 million. Mega Millions followed two years later by lengthening the odds of winning the top prize from 1 in 258.9 million to 1 in 302.6 million. The largest lottery jackpots in the U.S. have come since those changes were made.
WHAT ARE THE BIGGEST JACKPOTS EVER WON IN AMERICA?
The largest — a whopping $2.04 billion — was a Powerball jackpot that hit on Nov. 8, 2022, with the winning ticket sold in California. The next largest jackpot also was a Powerball prize of $1.586 billion on Jan. 13, 2016. But that prize was split among three winning tickets sold in California, Florida and Tennessee. The third, fourth and fifth largest were each Mega Millions prizes, with $1.537 billion going to a single winner in South Carolina on Oct. 23, 2018; $1.35 billion won in Maine on Jan. 13 earlier this year; and $1.337 billion won in Illinois on July 29, 2022.
WHAT ARE THE CONCERNS?
Experts have long cautioned the lottery acts as regressive tax on the poor, with those least able to afford to lose money buying the most tickets. Many of the ticket buyers don't even consider the lottery as gambling, said Lia Nower, a professor and the director of the Center for Gambling Studies at Rutgers University.
“People buy them for little kids," she said. "So it’s sort of the gateway drug for introduction into gambling. And yet there’s, you know, there’s no responsible gambling program for lottery tickets. There isn’t self-exclusion in states that allow you to purchase them online or limits betting or any of the different strategies that are employed in online casinos or sports wagering.”
WHERE IS MEGA MILLIONS PLAYED?
Mega Millions is played in 45 states as well as Washington, D.C., and the U.S. Virgin Islands.
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Nicholas Ingram contributed from Kansas City, Missouri.
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Consumer & Retail
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- Macy's slashed its full-year earnings and sales outlook.
- The department store operator beat first-quarter earnings estimates but missed on revenue.
- Shares dropped more than 10% in premarket trading.
Macy's shares fell on Thursday, as the retailer slashed its full-year outlook and said it saw sales significantly weaken in late March.
The company's stock dropped as much as 10% in premarket trading even as it beat first-quarter earnings expectations.
related investing news
The department store operator said it now expects sales of $22.8 billion to $23.2 billion for the year, down from a previous range of $23.7 billion to $24.2 billion. Macy's anticipates comparable owned-plus-licensed sales will fall 6% to 7.5% during the period, worse than its previous outlook of a 2% to 4% decline.
For the year, it expects adjusted earnings per share of $2.70 to $3.20 — a major reduction from the previous $3.67 to $4.11 a share guidance.
In an interview with CNBC, CEO Jeff Gennette said the retailer took a conservative stance for the rest of the year after seeing a spring pullback. He said the company has marked down seasonal merchandise and cut orders as it prepares for the coming quarters.
Weaker sales cut across Macy's brands, including higher-end Bloomingdale's and beauty chain Bluemercury, he said.
Here's how Macy's did for the three-month period that ended April 29 compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:
- Earnings per share: 56 cents adjusted vs. 45 cents expected
- Revenue: $4.98 billion vs. $5.04 billion expected
First-quarter net income for Macy's was $155 million, or 56 cents per share, compared with $286 million, or 98 cents per share, a year earlier.
Revenue fell about 7% to $4.98 billion from $5.35 billion in the year-ago period. Sales missed analysts' forecast.
Comparable sales on an owned-plus-licensed basis dropped 7.2% for the quarter, worse than the 4.7% drop expected by analysts surveyed by Refinitiv.
The Macy's brand saw the steepest year over year declines. Its comparable sales declined 7.9% on an owned-plus-licensed basis. At Bloomingdale's, comparable sales on an owned-plus-licensed basis fell 4.3%. Bluemercury's comparable sales grew 4.3% year over year, but growth was slower than the double-digit or high single-digit increases it has put up in other quarters.
Gennette said Macy's sales have gotten hit as customers' budgets are squeezed. About half of customers for Macy's namesake brand have a household income of $75,000 or less.
"They clearly are under pressure, and particularly in our discretionary categories," he said.
At Bloomingdale's, he said, the "aspirational customer" who shopped more luxury brands during the pandemic when they had stimulus money has dropped off, too.
Cooler weather also hurt sales, as shoppers held off on buying seasonal items, he added.
But Gennette said the company did see "signs of life in the month of May" as the weather turned warmer. He said spring apparel sales saw an uptick, especially at Bloomingdale's. The higher-end department store's sales are ahead of last May, he said.
Beauty has been among the company's strongest cateogories. Some of the popular pandemic items, such as textiles and housewares, are starting to bounce back, too.
As Macy's braces for a potentially tougher year, Gennette said it has a new reason for customers to visit in the fall and over the holidays. Starting in October, Nike will return to its stores and website. Macy's got its last delivery from Nike in December 2021, as the athletic footwear company cut back on wholesale orders and emphasized direct-to-consumer sales.
Macy's has carried some Nike shoes through a partnership with Finish Line, but it will start to get a fuller assortment.
"We took a pause in our partnership, and we're now back in it," he said.
Shares of Macy's closed Wednesday at $13.59, bringing the company's market value to $3.69 billion. So far this year, the company's stock is down 34%. That lags behind the nearly 9% gains of the S&P 500 and approximately 6% loss of the retail-focused XRT during the same period.
This is breaking news. Please check back for updates.
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Consumer & Retail
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The Silicon Valley Bank collapse is hitting moms and other small business owners who sell online on Etsy.
The Brooklyn-based commerce site notified shop owners that the deposits they were expecting Friday would be delayed “because of the recent developments regarding Silicon Valley Bank, who Etsy uses to facilitate disbursements to some sellers.”
The news led some shop owners to “freak out” and others to contemplate putting their storefronts on pause.
“They’re saying they’re going to try to pay us on Monday, but they’re not sure. So they’re just holding our funds and not paying us and that’s a little scary. Like I’m freaking out,” one Etsy seller vented on TikTok.
“I’m a mom of three. I run a small business.”
The woman named Amber, who sells stickers, drinkware and T-shirts under the name Little Miss Lovely Creations, added, “Those funds feed my family and pay my bills.”
Another woman on TikTok with the user name amgeee1 said she had been an Etsy seller since 2015 and the delay could be devastating to her finances.
“I have to pay my mortgage in a few days, and I can’t because they have my money on hold,” she said.
Nina Bissett, a Washington, DC, resident with an Etsy shop named “Nina Loves Fun,” told The Post she was expecting $700 Friday.
She sells disco balls and vintage accessories.
“It’s my only source of income right now,” said Bissett, 32.
“Obviously I use that money to pay my bills as well as buy the materials that are necessary to stock the things that are in my shop.”
Friday’s sudden bank collapse — the second largest in US history — also devastated New York City-based retailer Camp, which has stores in Manhattan and Brooklyn.
It sent an email to customers Friday offering a 40% discount on merchandise to spur sales and stay afloat.
Etsy did not immediately return a request seeking comment.
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Banking & Finance
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Oprah Winfrey and Dwayne Johnson have committed $10 million to make direct payments to people on Maui who are unable to return to their homes because of the wildfires, through a new fund they announced Thursday.
The People's Fund of Maui will give $1,200 a month to adults who are not able to return to their primary residences because of the recent wildfires, including people who owned and rented their homes, according to the fund's website. The fund will also seek donations to extend the length of time it can provide the support.
“How do we help?" the “Young Rock” star said he and Winfrey asked each other during the wildfires, saying in a video released along with the announcement that they grappled with how to best direct their efforts. “You want to take care of the greatest need of the people, and that's giving them money."
They are looking forward to the help of “every person who called me and said, ‘What can I do?’” Winfrey said in the video. “This is what you can do.”
The pair were inspired by a similar fund set up by Dolly Parton after wildfires swept through Gatlinburg, Tennessee in December 2016, killing 14 people and destroying 2,400 structures.
Jeff Conyers, president of The Dollywood Foundation, said he consulted with Winfrey's team multiple times in the past weeks to share the lessons that they'd learned from administrating the fund, which eventually granted $11 million to families who had lost their homes.
“Dolly’s idea was that, ‘Hey, look, these are my people and I want to take care of them and we trust them to know what recovery looks like for themselves and their families in the days and weeks following this immediate catastrophe here,’” Conyers said.
Parton's fund, called My People Fund, worked with first responders and a local utility company and asked residents to help them determine which structures were destroyed and who lived in those homes, Conyers said. Around 1,000 families eventually received assistance from the fund, according to an evaluation from the University of Tennessee Knoxville College of Social Work. That included a final $5,000 lump sum transfer at the end of six months.
To qualify for the People's Fund of Maui, applicants must show a government ID and a utility bill in their name for a lost or uninhabitable residence, the fund’s website said.
Winfrey, who lives on Maui part-time, visited an emergency shelter on Maui in the days after the wildfire hit and worried about effectively getting resources to residents. At least 115 people were killed in the fires, though an unknown number are still missing. The fire that ripped through the historic town of Lahaina on Aug. 8 was the deadliest in the U.S. in more than a century.
Forecasters warned Wednesday that gusty winds and low humidity increased the risk that fires could spread rapidly in the western parts of each Hawaiian island, though they were not as powerful as the winds that helped fuel the deadly blaze three weeks ago.
In the announcement, Winfrey and Johnson said they consulted with “community elders, leaders and residents including Hōkūlani Holt-Padilla, Keali’i Reichel, Archie Kalepa, Ekolu Lindsey, Kimo Falconer, Tiare Lawrence, Kaimana Brummel, Kaleikoa Ka’eo, Brian Keaulana, Kaimi Kaneholani, Henohea Kāne, Paele Kiakona, Ed Suwanjindar, Shep Gordon and Jason Momoa.”
The Entertainment Industry Fund, a Los Angeles-based nonprofit that helps celebrities administer their charitable work, is sponsoring the fund, the announcement said.
Johnson and Winfrey hope the fund will continue to make transfers to qualifying residents for at least six months, but Winfrey said it would be up to the American public to determine how long the fund extends, based on their support and donations.
When setting up a direct cash transfer program, it’s important to define the objective, said Holly Welcome Radice, the regional representative for the Americas at CALP Network, a collective of organizations that studies and implements cash assistance programs. In this case, $1,200 should correspond to the price of housing or the living costs for an adult in the area or whatever the need is the fund is seeking to meet, she said.
“The objective will be difficult to meet if your transfer value is not connected to the reality of the people,” she said, adding the fund should consider if the local economy can respond to the influx of money and map out what other services people may need.
“If it’s feasible and appropriate, then cash is a very direct way for people to benefit and have agency,” Welcome Radice said.
The fund should also spend time communicating the parameters of the program clearly, she said, "so people understand who qualifies and why they qualify and making sure that there is some type of feedback mechanism where people can place grievances.”
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Associated Press coverage of philanthropy and nonprofits receives support through the AP’s collaboration with The Conversation US, with funding from Lilly Endowment Inc. The AP is solely responsible for this content. For all of AP’s philanthropy coverage, visit https://apnews.com/hub/philanthropy.
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Nonprofit, Charities, & Fundraising
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Welcome to Startups Weekly. Sign up here to get it in your inbox every Friday afternoon.
This week, I’ve been doing a lot of thinking about the implications of artificial intelligence. One of the most fragile parts of the puzzle is the training data. We already know that you can see if your images were used to train the datasets and that a lot of the training datasets out there are . . . spurious at best. Some startups are trying to build datasets trained exclusively on licensed data, and human artists are pretty grumpy when big-name studios use AI to generate art.
An interesting curveball is realizing that even evaluating training data may be challenging, as researchers discover that Mechanical Turk workers — who are, in theory, human workers doing tasks that machines can’t do — are reportedly using AI tools themselves. That’s fine for some tasks, but not great if the text they are generating is meant to be used as the rubric that AI-generating text tools are measured against. The old computing adage of “garbage in, garbage out” still stands. If you can’t trust the training data, you can’t trust the output (TC+).
Seen through the lens of startups, AI is continuing to go gangbusters — and Amazon’s AWS is throwing its not inconsiderable weight behind the burgeoning trend, with a $100 million program to fund generative AI initiatives.
The highest highs and deepest lows of transportation
It’s a bad week when a submersible goes missing, followed by a series of reports showing that perhaps the company didn’t have the most solid safety track record. The sub imploded under the ocean’s crushing pressure, killing its five passengers and raising new questions about the role of whistleblowers in startup land. The OceanGate underwater vessel used a carbon fiber hull that “wasn’t rated for Titanic depths,” claimed the operations-director-turned-whistleblower. It goes to show that, while startups famously “move fast and break stuff,” perhaps that tenet doesn’t quite extend to life-or-death critical equipment.
A highlight for transportation this week is a breakthrough in battery manufacturing. It turns out that up to half the energy required to make a lithium-ion cell is used in the process of drying certain components of the battery cell. Volkswagen just came up with a new process (TC+) that does away with that requirement, drastically reducing the cost and time it takes to create the batteries that power our electric vehicles.
- Sure, that seems . . . useful?: In what has to be one of the biggest headscratchers of the decade, Mercedes is adding ChatGPT to its infotainment system, Devin reports.
- Give us those sleek Tesla plugs: Last week, GM and Ford announced they would be using Tesla’s North American Charging Standard (NACS) very soon. Tim predicted that the company’s Supercharger network will strain as a result. This week, Rivian announced it will adopt the charging standard as well.
- More NACS tailwinds: First GM and Ford, then Rivian, and now Texas weighs in, saying state-funded EV chargers must include Tesla plugs.
- Bring on the challenger brands: Abu Dhabi pours $740 million into the Chinese EV brand Nio.
Hackers gonna hack
Both in startup land and beyond, we are seeing a tremendous amount of movement in security news over the past couple of weeks. We’ve had a ton of coverage of Reddit slowly imploding over the new API charges the social media giant introduced a little while back. But one story I particularly wanted to highlight is that hackers are threatening to release confidential data stolen from Reddit unless the company pays a ransom demand — and reverses its controversial API price hikes. It seems pretty curious for hackers to demand both policy changes and cash. If they were given one or the other, I wonder which they would choose — and what that says about the power of hack-tivism.
Malicious hacking has long been in the news, but I find it particularly interesting that we are seeing more and more startups trying to help tackle the problem, whether that’s hardening API security, data security at source or Internet of Things devices. As hackers get more sophisticated, and as computer security exploit exploration becomes more prevalent (just last week, a ransomware gang listed its first victims of MOVEit mass-hacks, which included U.S. banks and universities), opportunities for startups also increase. And yet, as Alex explored recently, it seems like a miss that VCs aren’t queuing around the block (TC+) to fund the current generation of cybersecurity companies.
- That seems bad. That’s bad, right? Yeah, that’s bad: A simple bug exposed access to thousands of smart security alarm systems.
- LockBit goes Pharma: LockBit claims ransomware attack on pharma giant Granules India.
- The feds close in: The feds in the U.S. caught another LockBit hacker.
You’re so money and you don’t even know it
Fintech, what are we going to do with you? Even in an industry that’s all about money, the vertical just continues exploding with investment. Paro raised $25 million to match independent financial experts with firms, open banking fintech company Volt just raised a huge round at a valuation north of $350 million, and Majority, a digital bank for U.S. migrants, closed almost $10 million as it expands operations in Texas.
Sexy it ain’t, but investors know that fintech — once the company gets a soupçon of traction and a fistful of customers — is interesting for two reasons: Money never goes out of fashion, and there are M&A-hungry multinational giants who are standing by to snap up a company that’s on the upswing. At startup scale, the most recent example was that Robinhood just acquired credit card startup X1 for $95 million. At a very different scale indeed, Nasdaq announced it is planning to acquire financial services software company Adenza for $10.5 billion.
There’s money in them money trees, it appears.
- Wait, who am I paying?: Catherine reports that Notarize launches Proof and doubles down on ensuring safe(r) online transactions.
- That’s it, no more fraud for you: Mary Ann reports that Plaid unveils a new collaboration network aimed at sharing fraud intelligence.
Top reads on TechCrunch this week
If you’re struggling to raise money, there’s probably one of three reasons why investors keep giving you the cold shoulder: The market might be too small, the team isn’t good enough, or your plans simply don’t make sense. In my latest on TechCrunch+, I break down how VCs evaluate those things, and how you can push back.
If you can’t beat ’em with a tablet…: You can think outside the box. Brian reviews the new Google Pixel Tablet and concludes that it’s all about the dock. It’s going to have its work cut out against Apple’s iPad Pro-looking, entry-level iPads.
Welcome to Streamberry: The Netflix doppelgänger is customized to your worst nightmares. Lauren reports that Netflix launches a website based on the fictional streaming service from “Black Mirror.” On that note, don’t miss the piece I wrote about how technology unlocked Netflix’s business model (TC+).
Get your TechCrunch fix IRL. Join us at Disrupt 2023 in San Francisco this September to immerse yourself in all things startup. From headline interviews to intimate roundtables to a jam-packed startup expo floor, there’s something for everyone at Disrupt. Save up to $600 when you buy your pass now through August 11, and save 15% on top of that with promo code STARTUPS. Learn more.
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Banking & Finance
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dcblogs writes: The U.S. Supreme Court declined to hear a challenge against the Optional Practical Training (OPT) program, which allows STEM graduates to work in the U.S. for up to three years on a student F-1 visa. John Miano, the attorney representing WashTech, the labor group that brought the appeal, called the decision "staggering." He said it "strips Congress of the ability to control nonimmigrant programs," such as OPT, the H-1B program, and other programs designed to provide temporary guest workers. In the most extreme example of what the decision may allow, Miano said it theoretically enables the White House to let people on tourist visas work. The decision "gives more authority to the federal government to do what it wants," he said.
The OPT program permits STEM (Science, Technology, Engineering, and Math) graduates to work for up to three years under a student F-1 visa. Critics of the program said it brought unfair competition to the U.S. labor market. Ron Hira, an associate professor of Public Policy at Howard University, said the U.S. administration of the OPT program is so poor that "the program has effectively no controls, accountability, or worker protections."
A group of Senate Republicans, including U.S. Sen. Ted Cruz, argued in briefs filed with the court that the federal government was using the OPT program to sidestep the annual H-1B visa cap. More than 30 Republican House members also filed a brief in support.
The OPT program permits STEM (Science, Technology, Engineering, and Math) graduates to work for up to three years under a student F-1 visa. Critics of the program said it brought unfair competition to the U.S. labor market. Ron Hira, an associate professor of Public Policy at Howard University, said the U.S. administration of the OPT program is so poor that "the program has effectively no controls, accountability, or worker protections."
A group of Senate Republicans, including U.S. Sen. Ted Cruz, argued in briefs filed with the court that the federal government was using the OPT program to sidestep the annual H-1B visa cap. More than 30 Republican House members also filed a brief in support.
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Workforce / Labor
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Sam Bankman-Fried Lied About ‘Big Things, Little Things,’ Prosecutor Says
Sam Bankman-Fried “lied about big things and he lied about little things” during his time on the witness stand, a prosecutor said during closing statements Wednesday, capping a historic month-long trial over the collapse of the FTX crypto exchange.
(Bloomberg) -- Sam Bankman-Fried “lied about big things and he lied about little things” during his time on the witness stand, a prosecutor said during closing statements Wednesday, capping a historic month-long trial over the collapse of the FTX crypto exchange.
Assistant US Attorney Nicolas Roos contrasted Bankman-Fried’s “perfect memory” under questioning by his own lawyer with his inability to remember even simple details once cross-examination began.
“He came up with a tale that was conveniently put together to exclude himself from the fraud” at his FTX crypto exchange, Assistant US Attorney Nicolas Roos told jurors Wednesday morning. “Over three days he took the stand and he lied.”
“It was uncomfortable to watch.”
Much of the case revolves around the relationship between companies Bankman-Fried founded, FTX and its sister hedge fund, Alameda Research. Both entities went bankrupt in November 2022, allegedly exposing a multi-billion dollar theft of funds at one of the world’s largest cryptocurrency exchanges.
Bankman-Fried made the risky decision to testify to counter incriminating testimony by Caroline Ellison, his former girlfriend and the chief executive officer of Alameda, plus two other members of his inner circle. He faces decades in prison if convicted.
Roos told the jurors that about $10 billion in customer funds “went missing” before FTX and Alameda filed for bankruptcy. Bankman-Fried set up a secret system that allowed Alameda to take billions “out the back door” of FTX and into the hedge fund, using the money for speculative investments, political donations, and the purchase of luxury real estate.
FTX co-founder Gary Wang, who was also the company’s former chief technology officer, testified that Bankman-Fried directed him to create a program that allowed Alameda to tap a $65 billion line of credit from FTX customer funds, Roos told jurors.
Ellison, Wang and former FTX head of engineering Nishad Singh all pleaded guilty to crimes and testified against Bankman-Fried in hopes of leniency when they’re sentenced.
US prosecutor Danielle Sassoon subjected Bankman-Fried to a relentless cross examination, over two days ending Tuesday morning, during which he was frequently vague and evasive. Bankman-Fried responded to scores of her questions that he could not recall or was unsure.
In his closing, Roos walked jurors through a series of turning points, where Bankman-Fried had the choice to “come clean” and face consequences, or “double down” and spend more customer money. Each time, Roos told the jury, Bankman-Fried knowingly chose to spend money that wasn’t his to spend.
These included when Bankman-Fried decided to buy FTX stock back from rival exchange Binance in 2021, when he knew that Alameda was already borrowing customer money from FTX, Roos said. The second was his decision in fall 2021 to push forward with a plan to spend $3 billion in investments, despite the risk to Alameda.
Another turning point came in June 2022 when Alameda repaid $6.5 billion to its lenders using $4.5 billion taken from FTX customers’ accounts, Roos said.
“It was Sam’s decision,” Ellison testified, Roos reminded the jury.
Roos showed jurors the seven alternate balance sheets Ellison testified she prepared for Bankman-Fried to choose from in that month to present to lenders. Bankman-Fried chose Alt. 7, which hid almost $10 billion in borrowing from FTX customer money and $4.5 billion in related-party loans, Roos told the jurors.
Before the lunch break, Roos showed jurors Bankman-Fried’s false attempt to reassure customers in November 2022 when, with FTX under increasing pressure from a high volume of withdrawal demands he tweeted: “FTX is fine. Assets are fine.” His former FTX colleagues testified that he knew that was untrue.
Super Selfish
Roos told jurors that Bankman-Fried made a confession to Singh, as FTX fell apart in November 2022, in a chat on the messaging app Signal. Singh wrote “this is wildly selfish of me, but they may need to know that it wasnt a ton of people orchestrating it,” referring to the fraud, Roos said.
Bankman-Fried replied, “fwiw I don’t think that’s super” selfish, “I think that’s probably correct.”
Bankman-Fried’s team will begin their closing argument Wednesday afternoon. The jury could begin deliberating as soon as Thursday.
(Adds additional comments from closing argument)
©2023 Bloomberg L.P.
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Crypto Trading & Speculation
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ST. SIMONS ISLAND, Georgia -- Once it reaches an agreement with Saudi Arabia's Public Investment Fund or U.S.-based investment partners -- or perhaps even both -- the PGA Tour will offer its members direct ownership in the newly formed corporation, PGA Tour commissioner Jay Monahan said in a memo sent to players Tuesday.
The memo comes on the heels of Monday's marathon meeting at PGA Tour headquarters in Ponte Vedra Beach, Florida, in which policy board members, including Tiger Woods, were apprised of potential investment partners.
"Tour management has designed a program that would align the interests of our members with the commercial business of the Tour via direct equity ownership in PGA Tour Enterprises," Monahan's memo said.
"At the point we secure outside investment, this would be a unique offering in professional sports, as no other league grants its players/members direct equity ownership in the league's business. We recognize -- as do all of the prospective minority investors who are in dialogue with us -- that the PGA Tour will be stronger with our players more closely aligned with the commercial success of the business."
The PGA Tour reached a surprising framework agreement with the Public Investment Fund (PIF) and the DP World Tour on June 6. The framework agreement is set to expire Dec. 31, although sources have told ESPN that the deadline can be extended.
For the past few months, the PGA Tour has been weighing bids from several U.S. based entities, including Fenway Sports Group, which owns the Boston Red Sox, Pittsburgh Penguins and Liverpool FC. Fenway Sports Group has emerged as one of the strongest potential partners, sources told ESPN. Last week, Fenway Sports Group chairman Tom Werner confirmed to CNBC that the company had conversations with the PGA Tour but declined to provide further details.
Golfweek, citing sources, reported Nov. 4 that the PGA Tour had trimmed its list of potential financial partners to five companies: Fenway Sports Group, Liberty Strategic Capital, Acorn Growth Company, Eldridge Industries and Friends of Golf, a consortium of influential Wall Street investors and other individuals who have a fondness for the game.
Liberty Strategic Capital is operated by Steve Mnuchin, the U.S. Secretary of Treasury under former U.S. President Donald Trump. Eldridge Capital is led by Todd Boehly, owner of Chelsea FCA and a minority owner of the Los Angeles Dodgers, Lakers and Sparks.
"Many of those prospects moved forward to a diligence review -- with Tour management and Allen & Company working together with the potential minority investors' representatives -- and we then received significant, formal proposals that demonstrate the power of the PGA Tour brand, its players and our commercial opportunity," Monahan wrote in the memo.
Monahan wrote that investment bank Allen & Company, the Raine Group and PGA Tour management "thoroughly reviewed all bids and agreed, in concert, to recommend select parties advance to the next round based on various criteria, including financial value proposition, minority investment rights and strategic value-add."
"This is an important part of the process, allowing us to focus on the most attractive bids and the long-term value creation for you and the Tour," Monahan wrote in the memo. "In the Policy Board meeting, we reviewed these remaining bids with the Independent Directors and Player Directors -- with input from Allen & Co. and The Raine Group -- and agreed to continue the negotiation process in order to select the final minority investor(s) in a timely manner."
Endeavor Group, parent company of WWE and UFC, had submitted a bid to the PGA Tour but was turned down, COO Mark Shapiro confirmed Oct. 23.
"It's been quite quiet lately, I haven't heard anything," Open Championship winner Brian Harman said. "I trust our leadership. I think Tiger coming on board has been really positive for all the players, we've all got his back. I think our goal is just transparency from here on out and just to make the best decision for the entire membership.
"I haven't read the memo, so I don't know what happened yesterday, but I'm sure I'll hear some more today. I feel good about the direction things are going. I'm not on the policy board, I'm not in any of the meetings, but I do trust guys that are there, and I think they'll make the right decisions."
Sources have told ESPN that talks with PIF governor Yasir Al-Rumayyan and other PIF officials have slowed down tremendously since the initial framework agreement was reached more than five months ago. Sources said the proposed deal is far from getting done for a variety of reasons, including PIF officials wanting more control of the new for-profit enterprise. Sources said the Saudis are also digging in their heels on incorporating team golf into the sport's future global ecosystem.
There are also concerns that a Saudi-only deal might not be approved by the U.S. Department of Justice's Antitrust Division, which has already opened an investigation of the PGA Tour's business practices and expanded it once the framework agreement was reached with the Saudis. Adding U.S.-based investors to the deal -- it could potentially be more than one, according to Monahan's memo -- might grease the wheels for government approval.
"I don't think it will ever happen," a source previously briefed regularly on the state of negotiations with the Saudis previously told ESPN. "I don't think the Department of Justice would ever approve a merger with the PGA Tour. And I don't think the Saudis are pleased with how little influence they'd get in a merged entity. For those reasons, I don't think the merger is ever going to happen."
The tour also announced that Joseph W. "Joe" Gorder, executive chairman of Valero Energy Corporation, has been unanimously approved to replace former independent director Randall Stephenson on the policy board.
Stephenson, a former AT&T chairman, resigned in protest over the PIF deal.
"I am honored to be joining the PGA Tour Policy Board," Gorder said in a statement. "I've truly enjoyed my engagement with the PGA TOUR through the Valero Texas Open, and I am excited to step into this role for the PGA TOUR and its members, as we continue to cultivate growth and success for this proud organization, its passionate fanbase and its engaged communities."
Information from ESPN's Don Van Natta was included in this report.
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Banking & Finance
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- GoCardless CEO Hiroki Takeuchi said that his firm was "very open minded" about the prospect of mergers and acquisitions after acquiring the Latvian open banking startup Nordigen last year.
- Takeuchi said he expects a barrage of consolidation to take place in the payments market as some companies struggle to survive challenging macroeconomic conditions.
- "We've seen market conditions change over the last 18 to 24 months," Takeuchi said, adding that fundraising is becoming more difficult for startups.
GoCardless, the British fintech company backed by Alphabet's venture capital fund GV, is considering more mergers and acquisitions as it looks to grow market share in the highly competitive online payments space.
"We're constantly reviewing the market for opportunities that will accelerate our growth, add value to our core payment platform or strengthen our open banking proposition," Hiroki Takeuchi, GoCardless' CEO and co-founder, told CNBC in an exclusive interview.
Last year, GoCardless acquired the Latvian open banking startup Nordigen in its first major acquisition. Financial information was not disclosed. The deal was aimed at expanding access to bank account information for GoCardless' 85,000 customers globally.
"Will we do more of that? We're very open minded, not just for us but in general," Takeuchi said.
"In this space I expect there's going to be a lot of opportunities for consolidation and M&A [mergers and acquisitions], especially in the context that some companies in this space are going to be well positioned to survive these challenging conditions and grow stronger."
GoCardless is one of the darlings of the British fintech industry. Co-founded by Takeuchi, a former Monzo co-founder, in 2011, the business processes more than $30 billion of payments across over 30 countries in a single year.
The U.K. fintech industry attracted $2.9 billion in the first six months of 2023. That was down 37% from last year, as investors turned their backs on loss-making, high-growth startups in response to the worsening macroeconomic situation.
Britain is, nevertheless, among the standout countries globally when it comes to the might of its fintech industry. According to CNBC analysis of data from Statista, the country is the second-largest market for so-called fintech "unicorns," or firms that command a valuation of $1 billion or more.
Takeuchi pointed to Visa's $2.2 billion acquisition of Swedish open banking fintech Tink in 2021 as an example of the kinds of deals to watch out for in the coming months. In August, London-based fintech Rapyd acquired PayU GPO, a huge slice of the payments business PayU that focuses on emerging markets, from Dutch tech investment firm Prosus for $610 million.
"We've seen market conditions change over the last 18 to 24 months," he said. "What we've been really focused on is making sure that core offering we're bringing to merchants is as good as it can be and that we're staying more focused on a few key set of things and getting them right to continue to drive the growth of the business. Open banking is one thing and definitely something we think is really important."
GoCardless made revenues of £70.4 million ($85.9 million) in the 2022 fiscal year ended 2022, up 3.5% year-over-year. However, it recorded a loss of £62.7 million for the year, marking a 38% increase from its £46.8 million loss in 2021.
GoCardless' technology allows firms to collect direct debit payments from consumers. These payments are typically for subscriptions — think of your gym memberships, news subscriptions, and monthly meal kit orders.
Without naming any acquisition targets of interest, Takeuchi suggested that the frailty of some players in the payments industry would leave them exposed to corporate takeovers.
"Some companies, they're not going to be set up for the longer term. The ability to fundraise in this environment is much harder," Takeuchi said. "One of the things that is important in this space to achieve is you have to get to significant scale. I know how much it costs to get to that scale because we've invested for 10 years."
He added, "There will be opportunities for us. We're open minded. The important thing is that we're very disciplined on it being aligned to that strategy we have."
Takeuchi said that the integration with Nordigen was "going very well" and that the company had invested a lot of time investing in the smooth combination of Nordigen's teams with GoCardless.
GoCardless plans to use Nordigen's technology to offer variable recurring payments, a type of payment similar to direct debit that gives third-party firms the ability to carry out a series of payments at variable amounts and intervals on behalf of bank users.
Previously, it was only possible for third-party payment providers to initiate single, one-off payments or a series of recurring transactions with the same amount and frequency, known as standing orders.
Open banking is a set of nascent technology standards that allows third-party technology companies to obtain access to account information from large incumbent banks and use that data to offer new services.
It has enabled fintech firms like Coinbase and Robinhood to seamlessly connect to customers' bank accounts to allow them to top up their accounts and make payments.
That can include money management apps that give consumers more visibility over their spending, or lending products that determine a user's creditworthiness based on their past spending decisions rather than going through the established credit reference agencies.
Takeuchi said that GoCardless has also received interest from payment service providers (PSPs) about plugging into its technology to add the option of direct debit capabilities. That's as businesses are beginning to become more selective about which providers they use for their payment needs due to tighter macroeconomic conditions.
Half of businesses use three or more PSPs for their payment needs, according to GoCardless' own data, while one in 10 firms use a minimum of five providers. Cost reduction is the top priority for businesses with two thirds of companies surveyed by GoCardless looking to reduce the number of PSPs they use and 34% planning to do so in the next 12 months.
Takeuchi declined to comment on which payment service providers the firm was in contact with, but cited Stripe and Adyen as examples of the kinds of companies that would fall under the umbrella of PSPs.
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Banking & Finance
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Tupperware might be the latest meme stock after more than tripling in value within a week.
The troubled food storage brand is battling sliding sales and a $700 million debt mountain.
But redditors on popular trading groups are bigging up the stock and boasting about their stakes.
Tupperware is in trouble. Mired in debt, fighting sliding sales, and a share price in freefall, the brand established by Earl Tupper in 1946 looks to be on its last legs.
However, it seems a few investors didn't get the memo.
Shares in the embattled food container maker more than tripled since July 20 to just over $3, leaving many to wonder whether it might be the latest "meme stock."
According to data from Marketwatch, 27% of Tupperware shares that are available to trade have been "shorted" by investors.
But some speculators who borrowed shares expecting them to fall further have now been caught out by the surge. That's forced some to buy more shares to reduce their losses, sending the price even higher.
The amount of short interest in Tupperware has indeed fallen more than a quarter this year amid apparent interest from retail investors.
There were rumblings last week that Tupperware might be attracting more interest from retail investors, after its stock initially began moving following a report in the Orlando Business Journal about an investment from BlackRock.
On July 21, when Tupperware shares were worth 90 cents, a member of the subreddit r/pennystocks, which has 1.9 million members, argued in favor of the stock's "incredible upside potential."
The user, who claimed to own 2,000 shares in Tupperware, said that in a high inflationary environment, households were likely to buy more food storage containers as a means of reducing their spending.
'Irrational sentiment'
In recent years, "short squeezes" for low-value stocks have rarely been driven by the company's actual financial performance, which is usually why they're close to worthless in the first place.
Indeed, Neil Saunders, managing director of retail for the GlobalData consultancy, told Insider the surge was "not based on anything rational or certain." He added that the report in the Orlando Business Journal didn't seem to be based on new information.
"However, as we know from companies like Bed Bath & Beyond, share prices can sometimes be based on irrational sentiment or unfounded rumors," Saunders said.
"The point remains that none of Tupperware's difficulties have disappeared and the company is still in a very challenging position."
That "challenging position" would refer to an 18% fall in sales last year, and debt of more than $700 million that dwarfs even its newly inflated valuation of $137 million. Shares have sunk by 91% over the past five years.
Still, it appears some retail investors are believing the Tupperware hype.
On r/pennystocks, members were boasting about their apparent stakes in the company and the potential profits they hope to bank.
One user wrote: "I've made $1500 profits in one hour with this crap with only $2500 invested. Swing trade is the best option for this one!"
On r/WallStreetBets, the birthplace of the meme stock craze, members were giddily comparing the stock to Bed Bath & Beyond, the now-bankrupt homeware chain that had captivated certain investors since 2021.
Whether Tupperware goes the same way as Bed Bath and Beyond, which soared in value before giving up those gains very quickly, is unclear. But the playbook now appears very familiar.
Read the original article on Business Insider
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Stocks Trading & Speculation
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Pubs will not be allowed to sell takeaway pints from the end of next month as rules which were introduced during the pandemic will be allowed to expire by the government.
Takeaway alcohol was first introduced in 2020 to help pubs during lockdowns and other safety restrictions amid the spread of COVID-19.
Pubs with an on-site alcohol licence developed the option as another revenue stream, serving many pints through hatches when they were forced to close their premises.
But the government has refused to extend the rules allowing for takeaway pints after a consultation attracted just 174 responses - a decision which has been branded "disappointing" by the British Beer and Pub Association.
Pubs will need to apply for permission from their local council if they want to continue selling takeaway alcohol when the current rules end on 30 September.
The Home Office said councils, drinks retailers and residents' groups had preferred a return to pre-COVID rules.
But industry groups representing pubs and landlords said the decision would create more "unnecessary regulation" with no guarantee councils will approve applications for licence changes for individual premises.
Last week, Prime Minister Rishi Sunak, who is teetotal, was heckled at the Great British Beer Festival in London when he claimed alcohol duty reforms are "backing British pubs".
His visit came on the day of an alcohol duty increase.
Read more:
'Running a pub is worse now than during COVID'
Over 150 pubs close in first three months of the year
A new system taxing all alcohol based on its strength has seen taxes rise for some types of drink.
A publican who heckled Mr Sunak criticised the Tory leader for having the "audacity" to visit the festival.
Click to subscribe to the Sky News Daily wherever you get your podcasts
Rudi Keyser, who runs a pub in Wimbledon, said: "The amount of breweries that have shut down in the last year has been phenomenal.
"They are raising alcohol duty across the board significantly.
"And he has the audacity to come and pull a pint for PR."
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Consumer & Retail
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Crypto lender Genesis Global on Tuesday sued partner Gemini Trust, seeking to recover more than $689 million that customers of the companies withdrew during a “run on the bank” that caused Genesis to collapse into bankruptcy.
Genesis in the lawsuit said up to 230,000 users in the two companies’ “Earn” investing program withdrew more than half of billion dollars from the crypto lending platform in the 90 days before it filed for bankruptcy in January.
US bankruptcy law allows those withdrawals to be clawed back so Genesis can make a fairer redistribution among all of its creditors, according to the lawsuit, which was filed in federal bankruptcy court in New York.
Gemini said Wednesday Genesis should fully repay customers, rather than attempting to claw back funds from users who made withdrawals.
“This attack on Earn Users is a new low, even for Genesis,” Gemini said in a statement.
Under the companies’ operating agreements, Genesis borrowed crypto assets from Earn customers, re-invested the assets and paid interest to customers. Gemini acted as custodian, processing deposits and withdrawals and taking a cut from payments by Genesis to Earn users.
Genesis has faced outside scrutiny from the US securities regulators and internal divisions among participants in the “Earn” program since filing for bankruptcy.
Genesis is moving ahead with a bankruptcy liquidation that would return some cryptocurrency to customers without fully resolving those competing legal claims.
The Securities and Exchange Commission sued Genesis, its parent company Digital Currency Group and Gemini in January. New York Attorney General Letitia James in October filed a lawsuit alleging the three companies defrauded investors out of more than $1 billion.
Gemini, run by the Winklevoss twins best known for their legal battle against Meta Platforms CEO Mark Zuckerberg, had previously sued DCG over the failure of the companies’ crypto lending partnership and sued Genesis for failing to return shares in a bitcoin trust that it had pledged as collateral on the Gemini Earn loans.
Genesis has also sued DCG over $600 million in unpaid loans made to the parent company.
Genesis Global filed for bankruptcy in January after the collapse of key counterparties including FTX caused it to freeze customer redemptions in November 2022.
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Crypto Trading & Speculation
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FTSE Exodus As Finance Chiefs Retire Or Move To Private Equity
Pressure has been growing on CFOs, with rate hikes meaning debt-laden companies are faced with higher interest payments.
(Bloomberg) -- More than a quarter of FTSE 100 finance chiefs have left their jobs so far in 2023, the highest rate in five years and almost double the same period in 2022.
Depressed bonuses, the broadening role of chief financial officers and the temptation of working in a private equity owned business were all cited as reasons for the churn by executive search firm Russell Reynolds Associates.
Pressure has been growing on CFOs, with rate hikes meaning debt-laden companies are faced with higher interest payments.
“Coupled with the most challenging economic environment in decades and a rising tide of regulation, many CFOs are increasingly considering their current positions,” said Ben Jones, co-head of the financial officers practice in EMEA for Russell Reynolds, in a statement.
Russell Reynolds said the value of long-term incentive plans for CFOs had failed to recover after the pandemic, playing a factor in the decision to retire. So far this year, 61% of departing CFOs retired, at the average age of 56. That compares with 46% in 2022.
Globally, 200 CFOs of large listed companies left their jobs in the first three quarters of 2023, compared with 196 last year.
Read More: CFO Is Hottest Job in the Market as Era of Easy Money Ends
The research showed that 39% of the FTSE 100 CFOs appointed so far this year were women.
©2023 Bloomberg L.P.
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Banking & Finance
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PORTLAND, Maine -- Most Maine workers will get up to 12 weeks of paid time off for family or medical reasons as part of a supplemental budget Democratic Gov. Janet Mills signed into law on Tuesday.
The spending bill included $25 million in startup costs for the state program which allows workers — starting in 2026 — to receive paid leave to deal with illness, to care for a relative, or for the birth of a child.
Maine joins a dozen other states that have paid family and medical leave programs. The focus of legislation has been at the state level after failure to gain traction in Congress.
The program caught the attention of the White House, where press secretary Karine Jean-Pierre applauded the state’s action.
“Paid family and medical leave improves the lives of working families and strengthens our workforce and economy,” she said, adding that the Biden administration has worked to make the federal government a model by supporting federal workers in accessing needed leave.
Putting it in personal terms, Mills said that she deeply understood the need for the program — having dealt with the loss of a husband following a debilitating stroke, the realities of raising fives stepdaughters on her own and caring for her own aging parents, all while working full time.
“I know firsthand the challenges of providing care to loved ones while trying to manage all the unexpected ups and downs that are simply facts of life," she previously wrote in a newspaper op-ed.
The Democratic-led Legislature already approved a nearly $10 billion essential services budget that went into effect on July 1. That budget was approved along party lines in March, Democrats said, to prevent any late partisan attempt to use a government shutdown as a bargaining tactic.
The budgetary addendum, about $445 million dealing with extras, likely won't go into effect until late October because it failed to muster a two-thirds majority in the Legislature to go into effect immediately.
It includes language to start the paid leave program that will funded through a payroll tax split between workers and employers and capped at 1% of wages. Qualifying conditions include the birth or adoption of a child, a serious illness, care for a sick relative or transition from military deployment.
Key to support were several tax-related proposals including one that raised the amount of pension income that’s exempt from state income taxes from $30,000 to $35,000.
Lawmakers also included money to double the pay of childcare workers, as well as funding for the governor’s proposed Dirigo Business Tax Incentive Plan, which would replace the existing Pine Tree Development Zones.
The governor initially balked at the paid leave proposal, which was opposed by the Maine State Chamber of Commerce and others in the business community, but the bill was tweaked to win her support.
“I am over the moon,” said state Sen. Mattie Daughtry, D-Brunswick, after taking a congratulatory call from the White House and attending the signing ceremony. She sponsored the bill with Rep. Kristen Cloutier, D-Lewiston.
The essential services budget and supplemental budget takes spending to historic levels — about $10.3 billion — but it remains balanced and the state's rainy day fund remains at a record-high level, said Kirsten Figueroa, commissioner for the Department of Administrative and Financial Services.
___
Associated Press writer Zeke Miller in Washington, D.C., contributed to this report.
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Workforce / Labor
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BRICS Raging Against The Dollar Is An Exercise In Futility
(Bloomberg Opinion) -- The exorbitant privilege the US enjoys from the dollar being unambiguously the world's reserve currency is under attack again. The emerging market BRICS countries of Brazil, Russia, India, China and South Africa are trying to attract hangers-on by whipping up talk of a rival to dethrone King Dollar. It's going to fail for all the usual reasons. As the King himself, Elvis Presley, sang: A little less conversation, a little more action, please.
Last week, BRICS foreign ministers gathered in Cape Town, South Africa along with representatives from other countries such as Saudi Arabia, the United Arab Emirates and Kazakhstan. It was the warm-up act for the main event, with heads of state scheduled to meet in late August in Johannesburg, though the location may be switched to allow Russian President Vladimir Putin to attend without risking arrest under a warrant from the International Criminal Court. There’s not much moral high ground in sight, which defines the nature of the gatherings — an ill-disguised attempt to overthrow the post-World War II rules-based world order.
Following its invasion of Ukraine, $300 billion worth of Russian foreign exchange and gold reserves were frozen by the US and Europe, raising the possibility that the overseas assets of countries acting contrary to western interests could similarly be withheld. There is a point here about potential overreach, as western sanctions on bad state actors have mushroomed in recent years. The US government cannot ignore the fallout from its retaliatory action against Putin, and enlightened self interest suggests it should deliver more clarity on what it will and won't do in the future. The irony is that de-dollarization is rearing its head just as the US settles its debt-ceiling fracas.
The influence of the BRICS coalition could be substantial, given the group has 42% of the world's population. But economically, it delivers just 23% of total global output and only 18% of trade. According to the Society for Worldwide Interbank Financial Transactions, the dollar is used for 42% of currency transactions. The euro’s share is 32% but it doesn't have anything like the same influence outside Europe and parts of North Africa. The Chinese yuan contributes about 2%, as its non-domestic usage does not extend significantly even within Asia, or outside of trade-linked finance.
The defining element for a reserve currency is where it is the second-most used currency for domestic transactions. The dollar is pretty much the most-utilized method of exchange across the world after each nation's own currency — sometimes even surpassing domestic currencies. Almost every commodity, including oil and gold, trades in dollars. Even crypto-currencies are paired almost exclusively with the greenback. What is also vital for a reserve currency is its use as a store of value. The International Monetary Fund estimates 59% of global central bank reserves are in dollars, with euros at 20%, and the yuan just 5%.
As many as 19 other countries are interested in joining the federation, Bloomberg News reported, with 13 nations already formally invited. But an ever bigger set of contradictory interests will only make the concept even less manageable. A common currency is on the agenda. One Russian idea is to make it part-backed by gold — although moving gold bars around is no simple matter. Despite a mutual dislike of the extended reach of the US Treasury's Office of Foreign Assets Control, the grouping's fundamental differences are too wide for it to make headway. Cheap Russian oil may currently be highly attractive for hydrocarbon-importing nations but it is not a long-term foundation for world trade.
South African Reserve Bank Governor Lesetja Kganyago highlighted last month that any legal BRICS-backed tender would require a single central bank. As with its belt-and-road initiative across Asia into Europe, it is impossible to imagine that China would not dominate any wider BRICS forum, making Shanghai the most likely location for a BRICS central bank. That is unlikely to sit easily with India, which frequently has border skirmishes with China. Replacing a liberal democracy-backed currency with a concept dominated by a totalitarian state with capital controls won’t float.
If the Organization of the Petroleum Exporting Countries cannot come up with a petro-currency, what chance does a random bunch of geographically disparate nations have? A South American trade currency concept called the "sur" is struggling because smaller countries’ interests will just be smothered by the much larger economy of Brazil.
Some BRICS countries are resource-rich, most resource-poor. None, either alone or combined, can magic up an alternative currency. Substantive progress on nuts-and-bolts commerce among the group has to come first. The dollar's dominance might be irksome but there is no alternative that is anywhere near critical mass. Rage against the dollar machine all you want — but it isn’t listening.
More From Bloomberg Opinion:
- Mighty Dollar Can Fight Off the Digital Upstarts: Andy Mukherjee
- What Xi Jinping Wants in Latin America: Eduardo Porter
- The Dollar May Decline, Gradually Not Suddenly: Niall Ferguson
(Corrects date of BRICS meeting in second paragraph.)
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. Previously, he was chief markets strategist for Haitong Securities in London.
More stories like this are available on bloomberg.com/opinion
©2023 Bloomberg L.P.
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Forex Trading & Speculation
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FIRST ON FOX: The House Judiciary Committee's select subcommittee on government weaponization says the IRS rolled back unannounced visits to U.S. taxpayers after pressure from the panel.
"The Committee’s and Select Subcommittee’s oversight revealed, and led to the swift end of, the IRS’s weaponization of unannounced field visits to harass, intimidate, and target taxpayers," the Republican-led report said.
"Taxpayers can now rest assured the IRS will not come knocking without providing prior notice—something that should have been the IRS’s practice all along."
The 22-page document focuses on two instances in which the IRS is accused of abusing its policy, including one in which a tax agent is accused of entering someone’s home under false pretenses.
An IRS agent purportedly introduced himself as "Bill Haus" to a woman only identified as a "Marion County, Ohio taxpayer" when coming to her home in April this year. After allowing him inside, he allegedly told her that she owed a substantial amount of money on an estate she owned.
"Prior to the visit, however, the taxpayer had not received any notice from the IRS of an outstanding balance on the estate," the report said.
After the taxpayer showed documents disputing that she owed any money, the report said, "Agent ‘Haus’ conceded that the true purpose of his visit was not due to any issue with the decedent’s estate, rather Agent ‘Haus’ was at the taxpayer’s home because the decedent allegedly had several delinquent tax return filings."
A footnote on the report stated that the agent’s supervisor confirmed the taxpayer had nothing due and just one delinquent filing from 2016.
The woman called her lawyer after being asked to fill out sensitive tax documents, upon which her attorney "immediately and repeatedly told Agent ‘Haus’ to leave the taxpayer’s home since the taxpayer had not received any prior notice from the IRS of any issue with the decedent’s estate or delinquent tax returns."
"Agent ‘Haus’ responded aggressively, insisting, ‘I am an IRS agent, I can be at and go into anyone’s house at any time I want to be.’ At the end of his unannounced visit, Agent ‘Haus’ told the taxpayer he would mail her paperwork for her to execute and threatened that she would have exactly one week to satisfy the remaining balance or he would freeze all her assets and put a lien on her house," the report said.
The woman contacted police after the visit, who later found that the agent did work for the IRS — but that "Bill Haus" was not his real name. His supervisor apologized to her the following May, the report said.
The other incident mentioned is involves journalist Matt Taibbi, whose home received a surprise IRS visit while he was in Washington, D.C. testifying about social media censorship uncovered by the "Twitter Files."
"The IRS's dossier on Mr. Taibbi included information such as Mr. Taibbi's voter registration records, whether he possessed a hunting or fishing license, and whether he had a concealed weapons permit. The revenue officer also examined and saved Mr. Taibbi's Wikipedia page, which contained extensive details about Mr. Taibbi's work on the Twitter Files," the report said.
"Instead of reinitiating contact with Mr. Taibbi by less intrusive means after several years had passed since he filed his 2018 return, the revenue officer scheduled its field visit for March 9, 2023-the day Mr. Taibbi was to testify before Congress."
The IRS announced in late July that it "will end most unannounced visits…to reduce public confusion and enhance overall safety measures for taxpayers and employees."
But the GOP report heaped doubt on that explanation for reducing the practice.
"The IRS’s attempt to justify its decision as being in the best interest of the safety of its revenue officers lacks concrete evidence. To the extent this data does exist, the IRS has not made it publicly available or supplied it to the Committee or Select Subcommittee," it said.
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Banking & Finance
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Home sellers will have to confess to having bad phone signal and say if their neighbours are planning an extension as part of new rules to stop property deals falling through.
National Trading Standards has told estate agents more details need to be included in property listings and disclosed upfront at viewings in order to avoid buyers discovering “nasty surprises” midway through transactions, which can collapse deal chains.
It is hoped the changes will also save would-be buyers losing money on wasted home-buyer surveys and legal fees.
If disclosures are not made, this could breach the law – which states it is an offence to omit information which could impact the decision of the average consumer. Failing to comply could also trigger a complaint against the agent, and lead to them having to pay out redress.
Listings will also need to include any known planning permission or proposals for development in the property’s “immediate locality” – the watchdog uses the example of where a green field opposite a property is planned to be developed.
Other disclosure requirements include more information on the energy supply, flooding risks, sewerage arrangements and the exact material makeup of the property.
Listings should also include “an accurate description or statement as to the nature of the mobile signal and coverage available at the property, including any known issues or restrictions”, the guidance says.
If a building has unsafe cladding, estate agents have been told to warn prospective buyers that there may be “considerable costs” of repair or remediation, which can sometimes be in the “thousands or tens of thousands of pounds”.
The proportion of property sales falling through hit one of the highest rates since the financial crisis last year – jumping to a high of 25.4pc in November 2022.
In the weeks after the mini-Budget, when mortgage rates shot up, fall-throughs surged as nervous buyers pulled out of transactions. Fall-through volumes have since recovered to pre-pandemic levels.
James Munro, of National Trading Standards, said the new guidance was intended to “create consistency and raise standards across the board”.
He added: “Too many consumers suffer emotionally and financially because important information crops up late in the process and the transaction falls through.
“I am confident the process of change will be smooth and that the benefits – faster transactions, fewer complaints and fall-throughs and ultimately, greater consumer trust – will be quickly felt.”
Mr Munro said his team will be monitoring property portals such as Right Move, Zoopla and On The Market over the next 12 months to see if the guidance is taken onboard.
Michael Lawson, of Hive Estates in Newcastle, said as an unregulated industry some agents have been able to get away with bad pictures and vague descriptions of properties listed for sale.
He said: “This will do what it says on the tin – raise standards. It’s very easy to win an instruction and put a property on the market. But we need to be getting these details from the client when we first meet them too.”
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Real Estate & Housing
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Critiquing policies put forward by the leadership of the Labour Party has become something of a no-go area for members.
Party conferences are stage-managed, local branches are emasculated, policy development groups are anonymous, submission to committees disappear into a black hole and 30-second questions at Parliamentary Labour Party (PLP) meetings result in soundbites rather than any rigorous dialogue.
Any member raising their head above the parapet risks deselection, withdrawal of the whip and expulsion. Policies seem to be developed in an echo-chamber populated by a select few and do not easily withstand scrutiny.
A few examples help to illustrate the problems.
For some time, Labour had promised to make £28 billion of green capital investment a year until 2030. This would have funded factories to build batteries for electric vehicles, the hydrogen industry, offshore wind turbines, and everyday infrastructure such as home insulation, cycle paths, tree planting and flood defences. This investment was also to develop Great British Energy and deliver “100% clean power by 2030”.
This policy is central to ‘A New Business Model for Britain‘, a policy document published last month after three years of deliberations. In addition, Labour is committed to long-term tax breaks for business, cutting business rates and providing food subsidies for an unspecified amount.
How will these policies be funded? Labour’s leadership has deliberately limited its choice to neoclassical borrowing and/or taxes to raise revenues.
It has closed-off the borrowing route by saying that, under a Labour government, “debt will fall as a share of GDP and that day-to-day spending must be sustainably funded”. That leaves tax revenues as the main route for additional investment.
Labour’s promised reform of the non-dom tax perk may generate up to £3.2 billion of extra annual revenues and it is earmarked to fund “breakfast clubs in schools and more NHS staff”. By closing the “carried interest” tax perk available to private equity mangers, Labour hopes to raise £440 million a year. There is a promise to levy VAT on private school fees and remove the charitable status of private schools that are not special schools. This may raise £1.75 billion a year.
These measures cannot provide the resources for green investment and NHS staff funding, far less address chronic problem of low investment and productivity, primarily due to the state being side-lined.
The Labour leadership has ruled out other potential sources of tax revenues. For example, the promise of “fair” taxes seems to rule out any increase in the basic rate of income tax and national insurance. It has ruled out an increase in the 25% rate of corporate tax.
Currently, capital gains are taxed at rates of 10-28% while wages are taxed at 20-45%. By aligning the capital gains and income tax rates, and ensuring that recipients of capital gains pay national insurance, Labour could raise up to £25 billion a year, but the leadership has promised not to reform taxation of capital gains.
Labour can generate additional tax revenues, not only by adjusting the tax rates but also by broadening the tax base. The richest 50 families have more wealth than the bottom 50% the population, and a 4% wealth tax would generate up to £18.66 billion but the Labour leadership will not broaden the tax base by levying a wealth tax.
This is by no means a comprehensive list of the leadership’s statements on taxation. But it shows the general direction of travel.
At the first breeze of public scrutiny, the leadership backtracked on its £28 billion investment promise. It will now take place in the second half of the next Parliament if Labour wins the 2024 General Election. In practice, it means that Labour cannot meet its target of 100% clean energy by 2030, additional jobs, new industries and rejuvenation of the former industrial heartlands.
In 2020, Labour Leader Sir Keir Starmer promised to abolish university tuition fees. This policy has now gone. By scrapping tuition fees, Labour would have enhanced the spending power of the masses by around £9.5 billion a year, a vital stimulus for rebuilding the economy.
Labour has also backtracked on its policy of providing universal free childcare for children over nine months, something that would have enabled many parents to enter the labour market and relieve dire labour shortages.
A common thread to backtracking is that Labour wants to be seen as a party of fiscal responsibility i.e. it won’t fund day-to-day spending by borrowing. That signals a continuation of Tory austerity and real wage cuts for public sector workers. Are workers not part of any long-term investment?
The reversal of the tuition fees policy shows that Labour is content for austerity-stricken households to take on more debt and deplete their spending power even though economic risks are better managed through public investment.
And yet, no questions are asked about the composition and quality of the public debt, which currently stands at around £2.5 trillion or 99.2% of GDP. Last August, Jacob Rees-Mogg said that “if you exclude quantitative easing, which is ‘money owed by the government to the government’, we’re under a 60% of debt to GDP ratio”. So why is Labour willing to stifle investment?
Shortly after the Second World War, public debt was around 270% of GDP and enabled the Atlee Government to rebuild the economy – a process that ushered in prosperity, the NHS and welfare state. It is hard to recall previous generations fretting about it as the proceeds of prosperity eventually reduced the debt to 49% of GDP in 1976.
The state became entrepreneurial and invested in shipping, steel, railways, mining and many other industries. It laid the foundations of biotechnology, information technology, aerospace and other industries as private capital was unwilling to take the risks.
Since the 1980s, the state has been restructured and has become a guarantor of private profits as exemplified by the private finance initiative (PFI), outsourcing and relentless privatisations. It subsidises private businesses, such as railways, steel, oil, gas, nuclear power and information technology, just to name a few.
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With the downgrading of the role of the state as a societal investor, the UK is starved of investment in productive assets and is ranked 27th on business investment among the 30 OECD countries. The era of low inflation, interest rates, corporate taxes and negative real wage growth has not stimulated business investment.
In the absence of a restructuring of the state, how will Labour boost investment into productive assets?
With self-imposed strait-jackets on borrowing, taxes and public investment, and a continuation of Tory austerity, how will Labour rejuvenate the economy? Such questions will become critical during at the next election, and any backtracking and incoherence could be damaging.
A Starmer-led government may be tempted to emulate the 1997 Labour administration and accept the constraints of the Tory financial plans for the early years of the government. That would be catastrophic.
People have seen their living standards erode. The average real wage today is unchanged since 2005 and the hospital waiting list in England stands at 7.4 million. Failure to address people’s aspirations would rapidly lead to disenchantment with Labour and create a crisis of legitimacy.
Labour needs to develop better, robust policies. Sir Keir should start by broadening the policy-making space, and engaging with critical voices.
Lord Prem Sikka sits as a Labour peer in the House of Lords. He is Professor of Accounting at the University of Sheffield
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Inflation
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Navin Fluorine Q2 Results Review - Near-Term Overhang Could Be A Blessing In Disguise: Nirmal Bang
Working capital has come down considerably (110 days to 90 days) on account of receivables and inventory management.
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Nirmal Bang Report
Navin Fluorine International Ltd. management indicated production linked challenges and order deferrals while explaining underperformance in Q2 FY24.
Unlike peers, Navin Fluorine's agro exposure was not impacted significantly because of the better mix of generic and new molecules, wherein demand for new molecules remains robust.
We continue to remain positive on the complex fluorination space.
Maintain 'Buy' on better growth visibility over next four-five years.
However, commissioning delays, order deferrals in high value business and a lack of clarity on leadership could create a near term overhang on the stock.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
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Stocks Trading & Speculation
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- Stablecoin firm Tether said Tuesday it plans to invest its resources into renewable energy production for the mining of bitcoin.
- Mining bitcoin is notoriously power-intensive, relying on a distributed network of computers around the world to verify transactions are legitimate and release new coins into circulation.
- Earlier this month, Tether said it would shift its treasury management strategy to start investing a portion of its net profit in bitcoin.
The company said Tuesday that it plans to invest its resources into renewable energy production, marking its first foray into the energy sector.
Tether is also on the hunt for "experts in the area" to support its expansion into the renewable energy space, it said. Mining bitcoin is notoriously power-intensive, relying on a distributed network of computers around the world to verify that transactions are legitimate and release new coins into circulation.
"By harnessing the power of Bitcoin and Uruguay's renewable energy capabilities, Tether is leading the way in sustainable and responsible Bitcoin mining," said Paolo Ardoino, CTO of Tether.
"Our unwavering commitment to renewable energy ensures that every Bitcoin we mine leaves a minimal ecological footprint while upholding the security and integrity of the Bitcoin network."
Earlier this month, Tether said it would shift its treasury management strategy to start investing a portion of its net profit in bitcoin.
Tether issues what is known as a stablecoin. This is a token that, unlike bitcoin and other cryptocurrencies, is meant to hold a stable value at all times.
USDT is the largest stablecoin in the market, with a circulating supply of more than $83.2 billion, according to CoinGecko data. It competes with Circle's USD Coin and Binance's BUSD.
Stablecoins are used by traders to move in and out of different cryptocurrencies without converting money back into fiat currencies.
Tether says that each of its USDT tokens in circulation are backed 1-to-1 by an equivalent amount of U.S.-denominated assets held in reserve.
The company has gotten into hot water in the past, as regulators and economists have questioned the integrity of the assets backing its token.
Tether previously held most of its assets in commercial paper, a less liquid form of a corporate debt. It has more recently replaced all of its commercial paper with U.S. Treasurys.
Uruguay is seen as a leader in renewable energy production, sourcing more than 98% of its electricity output from renewables, primarily wind and hydropower, according to the U.S. International Trade Administration.
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Renewable Energy
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The Conservatives are meant to be champions of low tax – but the party has unleashed a stealth tax raid on the British public over more than a decade.
One in five workers will be paying income tax at a rate of 40pc or over because of the Government’s decision to freeze income tax thresholds until 2027-28, analysis by the Institute for Fiscal Studies, a think tank, revealed this week.
The proportion of workers paying higher rates of income tax has soared from just 3.5pc in 1991-92 to 11pc in 2022-23 and will hit 14pc by 2027-28, the research found. By then, 7.8 million will be higher-rate taxpayers, 1.7 million of whom will face marginal tax rates of either 45pc or 60pc.
Experts have called the stealth tax raid “fiscal drag on steroids” and warned that the worst is yet to come for workers who are already feeling the strain of higher taxes due to soaring inflation.
Just four years ago, Boris Johnson rose to power on the back of his pledge to not raise income tax, VAT or national insurance for five years in order to “put more money back in people’s pockets”.
Back then the former prime minister planned to deliver a £8bn income tax cut saving for some three million higher earners by increasing the threshold at which higher rate kicks in to £80,000. But it was a pledge he was eventually forced to drop, choosing to slash taxes on National Insurance instead.
Had the former prime minister stuck to his guns, just 2.7 million taxpayers would now be paying the higher rate, as opposed to 5.51 million today, according to analysis by the accountancy firm RSM.
Chris Etherington of the firm said the difference between the tax policies of Conservatives and Labour was now “paper thin”.
He said: “The Conservatives have to raise taxes in order to reduce spending. Normally they would turn to VAT, but they can’t because this is inflationary, which means they have to place the burden on the taxpayer.
“Following the local election results, the Prime Minister may feel he needs a more dramatic statement of intent on tax to win voters around ahead of a general election. Any tax giveaways will still need to be paid for though and the Prime Minister will be hoping for an improvement in the country’s economic fortunes to fund this.”
Tory MPs in favour of low taxation have accused the party of drifting further and further from the ideology of Margaret Thatcher and her chancellor Nigel Lawson who so many senior Conservatives claim to idolise.
Mr Lawson’s death last month led to an outpouring of tributes from Tory leaders, including Rishi Sunak, who said: “One of the first things I did as chancellor was hang a picture of Nigel Lawson above my desk.”
However, very few Conservative chancellors – if any – could be said to have followed in the footsteps of the tax-cutting politician, who is credited with transforming the British economy in the 1980s by cutting the basic rate of income tax from 30pc to 25pc between 1983 and 1988 and reducing the top rate at the time from 60pc to 40pc.
While former chancellor George Osborne, for example, cut the top rate of tax from 50pc to 45pc, he also promised to hand families a £1m inheritance tax protection – something he only partially delivered.
Today, the main £325,000 IHT exemption remains unchanged from where it stood in 2009, despite high inflation and soaring house prices in recent years. Families can claim added protection of up to £175,000 if passing on the family home to direct descendants, allowing spouses who can combine their tax breaks to pass on up to £1m. However, childless and unmarried people do not get the same deal.
The former chancellor also introduced the so-called “High Income Child Benefit Charge” in 2013 – a tax charge impacting parents claiming child benefit who earn between £50,000 and £60,000. The benefit tapers away after the highest earner's salary exceeds the £50,000 threshold before it is lost altogether after they start earning £60,000.
A family with three children faces paying effective tax rates of around 69pc on earnings between £50,000 and £60,000 because of the loss of the benefit, which used to be universal. He also saddled millions of young workers with student debt, which effectively amounts to a 9pc graduate tax on young workers, resulting in some young workers paying tax rates of 55pc.
The former chancellor then set his sights on landlords, announcing a three percentage point stamp duty surcharge for additional properties and cutting tax relief on buy-to-let mortgages.
Previously landlords could offset the interest payments on their mortgages against their tax bills but after Mr Osborne’s changes landlords now receive only a 20pc tax credit on their mortgage interest payments.
On top of freezing income tax thresholds, Chancellor Jeremy Hunt has also slashed capital gains tax and dividend tax allowances. The changes threaten higher tax bills for landlords, investors and pensioners and will help push the nation’s tax burden to its highest levels since the Second World War.
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United Kingdom Business & Economics
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Goldman Sachs economists may recognize that inflation is easing nationally, but you wouldn’t know it from the prices at the bank’s cafeteria.
The Wall Street giant’s rank and file grumble that, as they schlep into headquarters at 200 West St. in lower Manhattan five days a week, they’re greeted with stratospherically priced breakfast options that include a $7 cup of yogurt.
That’s up from $5 before the bank’s return-to-office mandate last year, according to one sticker-shocked banker. Breakfast sandwiches likewise have jumped to $7 versus $4.50 previously.
“Prices have changed over the years in slow increases but most dramatically in the past few months,” one insider told On The Money.
“The cafeteria has now become a running joke across the firm,” another added.
For lunch, some kvetch they’ll be forced to blow their bonuses just to cover the jacked-up prices. Poke bowls with protein have jumped to $17 from $14 previously, according to sources.
“It seems counterintuitive – wanting people in the office at their desks but then prices are so high people feel compelled to leave the office to get food,” one hungry banker groused.
“Now the incentive is to go eat somewhere else.”
Goldman’s headquarters is in Tribeca, which means there are plenty of other lunch options. But sources say the hike and the lengthy lines discourage many from venturing outside.
“I can get something comparable across the street for closer to $13 or $14,” said one source, who nevertheless adds that the foray is “time-consuming.”
Some insiders chuckled at the idea that Goldman bankers – who make well above six figures at the entry level – would be sweating the cost of a poke bowl.
One employee who spoke on the condition of anonymity said that the cafeteria – in a nod to market-based, supply-and-demand capitalism – would provide discounts to employees who bought food before or after the bank’s peak lunchtime.
“Even the New York Post is aware of persistent inflation and workplace cafeterias are no exception,” a spokesperson said in a prickly statement. “We will continue to provide competitively priced meals relative to what our employees would pay elsewhere.”
It’s a far cry from the early days in the pandemic when the bank lured in staff with a promise of free food if they showed up to the office.
Less than a year ago, Goldman removed the last vestige of pandemic perks: the complimentary “grab and go” coffee station at the building entrance — stocked with cold brew, as well as stashes of French vanilla creamer, almond milk, soy milk and half-and-half — that appeared during the pandemic to encourage attendance.
Ultimately, the brass determined it didn’t need sweeteners to get people back to the office, sources told The Post. Instead, management believed the threat of getting fired should be more than enough incentive, the sources said.
Drip coffee is $2.99 for a “crappy cup” and special coffees made by a barista are closer to $5, the source added.
The fear of getting fired is far from an empty threat – Goldman has already had three rounds of layoffs over the last year. Earlier this week the bank cut 150 managing directors on the heels of firing around 3,200 in January in what staff had dubbed “David’s Demolition Day,” an insider said.
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Inflation
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Rep. Cori Bush's campaign has funneled tens of thousands of dollars to her new husband, Courtney Merritts, for private security and other expenses during the first half of 2023, filings reviewed by Fox News Digital show.
The Missouri Democrat's campaign, which blew past the second quarter filing deadline and could face potential fines, finally submitted her committee report on Saturday, a week after it was due. The new filing shows Merritts pocketed $17,500 for security services and "wage expenses" between April and June. These payments follow the $12,500 that went to him during the first quarter for private security services, bringing his total to $30,000 for the year.
During this time, the "Squad" member also moved $62,000 to the St. Louis-based PEACE Security, which hires several "security operators" with military or law enforcement experience, despite her opposition to them, their website states. The campaign also paid Nathaniel Davis, who has claimed he's 109 trillion years old and can summon tornadoes, $27,500 for security services during the first half of the year.
Bush has said she requires protection due to previous attempts on her life. Since 2019, she's dropped over a half million dollars into such expenses, which mainly has gone to PEACE Security.
Shortly after Bush and Merritts married in February, her office announced they had been together before she entered Congress in 2021 – more than a year before she added him to her campaign's payroll in January 2022. Her campaign sent Merritts bi-monthly $2,500 checks totaling $60,000 last year while disbursing hundreds of thousands to the protection firm.
Merritts, meanwhile, did not have a private security license as of late February, Fox News Digital reported. Individuals must have a permit to perform security functions in St. Louis and its neighboring St. Louis County, which encompasses Bush's entire congressional district, a local official said at the time.
Merritts also did not appear in a Washington, D.C., database of licensed security specialists, and Bush's campaign did not respond to several prior emails on the matter. The payments have subsequently triggered at least two FEC complaints from watchdog groups.
Even before adding Merritts to her payroll, Bush faced criticism for using private security. In July 2021, Fox News Digital first reported on Bush's security payments while pushing to defund police, prompting CBS News inquiries about the cash and whether it was hypocritical to hire a security detail while pushing to strip money from law enforcement.
"They would rather I die?" Bush asked. "You would rather me die? Is that what you want to see? You want to see me die? You know, because that could be the alternative."
The progressive lawmaker said she would ensure she has security because she has had attempts on her life and has "too much work to do."
"So suck it up, and defunding the police has to happen," she added.
Rep. Ilhan Omar's, D-Minn., husband, Tim Mynett, tweeted out a picture of him and Merritts last summer celebrating Bush's 40th birthday party.
Local St. Louis' KMOV4 subsequently found that Bush had hired two sheriff's deputies as part of her security. The discovery of their unapproved side gig led to their termination.
Bush's campaign did not immediately respond to a request for comment on her husband's payments.
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Nonprofit, Charities, & Fundraising
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Morrisons and M&S have become the latest supermarkets to cut the price of basics as retailers face pressure to do more to tackle soaring living costs.
The chains will cut the price of scores of goods including minced beef, tomatoes and Greek yoghurt.
It follows similar cuts by Tesco, Sainsbury's and Aldi and comes as food price inflation is stubbornly high.
Retailers have been accused of not passing on falling wholesale costs to consumers, but they deny profiteering.
Morrisons, the UK's fifth largest supermarket chain, said the latest round of price cuts was its sixth this year and the reductions would remain in place for eight weeks.
It says more than 47 popular products including squash, cereal and pitta bread will be cut by on average 25%, to help with the cost of living
M&S said it was cutting the price of more than 70 family staples, including beef mince and chickpeas, and locking in previously made reductions on other goods.
Sainsbury's, Tesco, Aldi and Lidl have all reduced bread, milk and butter prices in the past few months.
Meanwhile last week, Asda froze the prices of more than 500 products until the end of August.
It comes as food prices in the UK rose by 19.1% in the year to April - nearly the fastest rate in 45 years- with staples such as sugar and pasta up sharply.
Supermarkets say they have faced higher wholesale food prices and energy bills due to the conflict in Ukraine, as well as demands from workers for higher wages, all of which has driven up their costs.
But the Competition and Markets Authority has launched an investigation into high food and fuel prices, saying it will look at whether a "failure in competition" meant customers are overpaying.
The regulator has already found some supermarkets have increased margins on petrol and diesel.
Grocers have denied profiteering, with the British Retail Consortium saying stores are working to keep prices "as low as possible".
Supermarkets say there is usually a lag before falling wholesale prices are reflected in the shops due to the long-term contracts retailers sign with food producers.
Last week, the boss of Tesco said there were "encouraging early signs" that price rises are easing as the retail giant reported higher sales.
He told shareholders at the company's annual general meeting that the "headline" food inflation figure was "dramatically lower" at Tesco in terms of the "true" prices customers face.
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Inflation
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When the gig is up: Gig workers don't always trust their boss and that might be a good thing
As the so-called 'gig economy' continues to grow, so do questions about how this type of non-traditional work compares to full-time work arrangements and how these new relationships differ and impact performance and commitment.
Researchers from the University of New Hampshire took a closer look at gig workers—which include freelancers, independent contractors and temporary workers—and examined relationships between workers and their managers and found that one trait, trust, could be a double-edged sword. The paper is published in the Journal of Trust Research.
"Millions of workers are now considered gig workers, offering them more flexibility with schedules, working remotely and short-term assignments," said Rachel Campagna, associate professor of management at UNH's Peter T. Paul College of Business and Economics.
"Our research found that with this flexibility also means less traditional workplace interaction and relationship investment by employers which can lead to less trust by workers. But ironically, that's not necessarily a bad thing because in some cases if something goes wrong, gig workers don't seem to take it personally, rebounding more quickly and brushing it off."
In their study researchers outline a series of four studies that looked at a variety of self-identified gig workers. Through surveys and tasks, they asked them to imagine a specific work situation that involved a certain level of trust and asked them how they would respond.
Previous studies show that work relationships are important, and trust is a key component, but researchers found in this case when there was an issue of mistrust with a manager, the gig workers were not as emotionally invested in their relationship with their manager as traditional full-time employees, who had a tendency to take breaches of trust harder emotionally, which had subsequent impacts on their performance and commitment to their manager.
"Gig workers are such a huge part our economy and it's not clear how well they are treated or respected," said Jennifer Griffith, associate professor of organizational behavior and management at UNH's Peter T. Paul College of Business and Economics. "Even though they rebounded more quickly, trust is important in building relationships with not only a manager but also with co-workers and teams and this study shows that it is important to invest in people, no matter their work circumstances."
The paper is among the first to theorize and test that trust in managers is different for gig workers than it is for traditional workers, and that it has implications for performance differences between the worker types. The researchers suggest that more research is needed in this area as companies and employees shift their work style and create new work arrangements.
More information: Rachel Campagna et al, When the gig isn't up: The importance (and relevance) of trust on gig workers' performance and commitment, Journal of Trust Research (2023). DOI: 10.1080/21515581.2023.2215747
Provided by University of New Hampshire
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Workforce / Labor
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Chancellor Jeremy Hunt has not ruled out cutting income tax in Wednesday's Autumn Statement, as he insisted economic growth was his priority.
Mr Hunt is finalising his statement, which will set out government spending plans.
The chancellor is known to be considering reducing taxes on income, inheritance and businesses.
But he told the BBC's Sunday with Laura Kuenssberg his speech would focus on removing barriers to growth.
The chancellor said he wanted to put the country on "the path to lower taxes" but would "only do so in a responsible way" that does not "sacrifice the progress on inflation".
UK inflation fell sharply in October to its lowest rate in two years, largely because of lower energy prices.
When asked if he would cut income tax, he said he would not comment on a decision ahead of the statement, adding: "Our priority is growth."
Tax levels in the UK are at their highest since records began 70 years ago and are unlikely to come down soon, according to a leading think tank, the Institute for Fiscal Studies.
Ahead of the Autumn Statement, Tory MPs on the right of the Conservative Party, including former Prime Minister Liz Truss, have been urging the chancellor to announce tax cuts.
Mr Hunt has previously said tax cuts are "virtually impossible" given the state of the economy and stressed bringing down living costs was his priority.
The BBC has been told the chancellor is considering cutting inheritance and business taxes.
Meanwhile, the Sunday Times reported that Mr Hunt was weighing up cuts to income tax or national insurance, and could put off the possible cut to inheritance tax until the Budget in the spring.
Speaking on Sunday with Laura Kuenssberg, Mr Hunt remarked that "if you believe the papers there won't be any taxes left".Also on the programme, the Conservative mayor of the West Midlands Andy Street said he would prefer taxes on businesses to be cut.
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United Kingdom Business & Economics
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President Joe Biden said he would veto Senate Republican efforts to overturn Department of Agriculture rules it says will protect LGBT people from discrimination in federally funded nutrition programs.
"No person in need of help should be turned away from a food bank or denied nutrition assistance just because of who they are or who they love," the White House's Office of Management and Budget wrote in a statement on Thursday. "Like many Americans, LGBTQI+ households often turn to federal nutrition programs like SNAP when they experience food insecurity. In fact, federal research shows that households with an LGBTQI+ member are more likely to report food insecurity compared to non-LGBTQI+ households."
Senate Joint Resolution 4 was introduced by Sen. Roger Marshall (R-KS) and disapproves of Food and Nutrition Service program rules regarding how to make complaints concerning allegations of discrimination on the basis of sexual orientation or gender identity. The rules were drafted in response to the Supreme Court's 2020 decision in Bostock v. Clayton County.
"This legislation would mean that needy people — including children who may go hungry — could be denied food and food assistance simply because of who they are or who they love," the White House said. "That is discrimination and it is wrong."
"If Congress were to pass this joint resolution, the president would veto it," it added.
Sen. John Fetterman (D-PA) amplified the White House's criticism of Marshall's measure, saying he could not "believe that this resolution is even real."
"This makes it possible for some random lunch lady to deny lunch to a hungry child because she says her God tells her to. School lunch should be free, and certainly free of judgment," he said. “Don’t we have better things to do in the upper chamber than picking on kids because of who they are?”
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Nonprofit, Charities, & Fundraising
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China’s Under-Developed CDS Market Worsens Real Estate Pain
The lack of insurance is a further blow to investors who have faced a string of defaults in recent months.
(Bloomberg) -- After a major default, investor attention usually turns to the potential payout from credit default swaps, a type of security that acts as insurance against bankruptcy. But when one of China’s biggest property developers missed a coupon on its bonds late last month, few bothered to check whether there would be any money up for grabs.
That’s because China’s CDS market is much less developed than in most major economies, meaning that many of the investors that bought Country Garden Holdings Ltd’s $10 billion of dollar bonds did so without hedging against default. The outstanding volume of swaps is so minuscule that the panel of dealers and investors which oversees the global CDS market ruled this week that it isn’t worth holding an auction to determine the size of a payout. Contracts will be settled bilaterally between buyers and sellers instead.
The lack of insurance is a further blow to investors who have faced a string of defaults in recent months as Chinese property firms struggle to pay back money borrowed when interest rates were much lower. The nation’s real estate developers still have around $160 billion in outstanding dollar bonds and not a single firm is included on a global list of 806 liquid CDS securities compiled by the Depository Trust & Clearing Corporation.
Resolving the collapse of China’s property market behemoths could take years, according to Carlos Casanova, a senior economist at Union Bancaire Privee in Hong Kong, and it’s likely to prove painful. “The restructuring of real estate sector debt will inevitably entail on-going defaults,” he said.
Credit default swaps never took off in Asia like they did in the US and Europe. In the early 2000s, China tried to build its own risk mitigation market, with securities that underpinned onshore bonds, but the market was fragmented and demand was weak for the instruments that function best in transparent, liquid markets.
Later, as China attempted to comply more with international standards, it tried to establish a CDS market for foreign-currency bonds but there wasn’t much interest since the volume of outstanding dollar debt was still quite small. When that debt load suddenly ballooned in the past decade, China’s low default rate meant that it didn’t matter much to investors that there was no safety net.
Read More: How China Is Reviving Tools for Hedging Credit Risk: QuickTake
As defaults pick up around the world due to rising interest rates, hedging is providing a lifeline for many investors. When French grocer Casino Guichard Perrachon SA defaulted on some coupon payments earlier this year, creditors who had bought CDS linked to the debt managed to recover 99% of the face value of their investment.
Investors in higher-quality Asian corporate debt can hedge using the Markit iTraxx Asia ex-Japan index which tracks CDS of 40 large investment-grade corporate and sovereign issuers in the region, but that doesn’t work as protection against high-yield bonds.
Some funds resort to using equity options as an alternative source of protection, according to investors interviewed by Bloomberg News. But that strategy also has its limits since shares of Chinese developers are often more volatile than their bond counterparts and not all companies with publicly listed bonds have listed equity. Another option is to buy bonds of one company and short stock of a peer.
Read more: How Country Garden Plays Into China’s Property Mess: QuickTake
--With assistance from Alice Huang.
©2023 Bloomberg L.P.
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Bonds Trading & Speculation
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Nandan Nilekani, Nikhil Kamath On Forbes Asia Heroes Of Philanthropy List
Nandan Nilekani made it to the list for donating Rs 320 crore ($38 million) to his alma mater IIT Bombay in June.
Nandan Nilekani, co-founder of Infosys Ltd., KP Singh, chairman emeritus at DLF Ltd., and Nikhil Kamath, co-founder of Zerodha, have been named on the 17th edition of Forbes Asia's Heroes of Philanthropy list released on Thursday.
The unranked list "highlights business leaders who are donating from their fortunes and giving personal time and attention to their select causes", Forbes said in a press release.
The annual list, which spotlights 15 philanthropists, does not include corporate philanthropy except for privately-held companies where the individual is a majority owner.
Nandan Nilekani, co-founder and chairman of tech giant Infosys, have made it to the list for donating Rs 320 crore ($38 million) to his alma mater IIT Bombay in June, Forbes said, adding that the gift will be made over a period of five years.
This was to mark his 50-year association with the technology institute, where he studied electrical engineering as an undergraduate.
Since 1999, Nilekani has given Rs 400 crore in total to the institute. In the past year, he donated an additional Rs 160 crore to educational causes.
Singh, who stepped down as chairman of DLF in 2020, in August divested his remaining direct stake in the real estate firm to fund philanthropic causes, Forbes said citing the company.
He garnered Rs 7.3 billion from the disposal of his 0.59% shareholding in the Delhi-based property developer.
The 92-year-old Singh, who has an estimated fortune of $14 billion, splits his time between London and Dubai.
After previously setting up the K.P. Singh Foundation Trust and the K.P. Singh Charitable Foundation Trust, Singh launched the KP Singh Foundation in 2020.
Kamath, who made it into the Forbes' philanthropy list, joined the Giving Pledge initiative in June.
In his pledge letter, the 37-year-old co-founder of discount broking firm Zerodha, wrote he is mainly interested in climate change, energy, education, and health as well as the foundation's mission to create a more equitable society.
Kamath's YouTube podcast series 'WTF is' has been giving away up to Rs 1 crore ($120,000) — contributed by Kamath and business leaders who are guests on his show — to a charity picked by audience members, Forbes said.
Kamath, who has an estimated net worth of $1.1 billion, plans to increase episode donations to Rs 4 crore, it added.
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Nonprofit, Charities, & Fundraising
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A typical five-year fixed mortgage deal now has an interest rate of more than 6%.
It comes after the Bank of England raised interest rates to a 15-year high of 5% last month, as it tries to bring down inflation.
Mortgage lenders have been increasing rates and withdrawing deals recently, driving up costs for homeowners.
Prime Minister Rishi Sunak has urged homeowners to "hold their nerve" over rising rates.
On Tuesday, the average rate for a five-year fixed mortgage stood at 6.01%, according to the financial information service Moneyfacts. The average two-year fixed deal is now 6.47%.
The last time those rates both topped 6% was in November last year, when interest rates rose sharply in the aftermath of then-Chancellor Kwasi Kwarteng's mini-budget.
But after a period of calm they have climbed steadily again in recent weeks.
A year ago, those rates were closer to 3%.
The Bank of England has raised interest rates 13 times since December 2021.
The idea is that by making it more expensive for people to borrow money, and more worthwhile for them to save, they will spend less and price increases will cool.
But inflation - which measures the rate at which prices are rising - remained stubbornly high at 8.7% in May.
The prime minister has pledged to halve inflation by the end of the year, and has backed the Bank of England's rate rises.
The Bank rate is a key influence on mortgage rates. Expectations that the Bank could continue to raise rates, and that they will stay higher for longer, have been reflected in the funding cost of mortgages, hitting new borrowers, and those trying to remortgage.
Lenders have been pulling deals and putting up rates at short notice, while some have been inundated with demand and so forced to pull or raise rates again.
More than 400,000 people will see their existing fixed deals end between July and September, a comparatively high number. Many face the prospect of having to budget for monthly repayments that are hundreds of pounds more expensive than they have become accustomed to.
However, while mortgage rates have risen rapidly, the rates on savings accounts have not gone up as fast.
With the average rate for a two-year mortgage now 6.47%, the average easy access savings rate is 2.45%, according to Moneyfacts. That is a gap of 4.02 percentage points.
Bank bosses have been summoned by the Financial Conduct Authority to explain the low saving rates on offer.
The recent rises in mortgage costs could also have a knock-on effect on renters who could face higher payments as landlords seek to recoup rising costs. Fewer rental properties could also be available as a result of squeezed landlords selling their property, according to the National Residential Landlords Association.
However, in a move to help mortgage-holders, banks and building societies will offer more flexibility on repayment terms. Borrowers will be able to make a temporary change to their mortgage terms, then will be able to return to their original deal within six months, allowing some to have lower repayments for a short time by just paying the interest on the home loan.
Rising interest rates and mortgage costs weighed on UK economic growth in April, but Chancellor Jeremy Hunt said the UK has "no alternative" but to increase interest rates in an attempt to tackle rising prices.
What happens if I miss a mortgage payment?
- A shortfall equivalent to two or more months' repayments means you are officially in arrears
- Your lender must then treat you fairly by considering any requests about changing how you pay, perhaps with lower repayments for a short period
- Any arrangement you come to will be reflected on your credit file - affecting your ability to borrow money in the future
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Interest Rates
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Saving money may feel like a pipe dream when bills and the cost of essentials, such as food, are rising fast.
But financial experts say it is crucial to put some money aside for emergencies.
And the interest being paid on some savings accounts now is better than anything seen for 15 years, so it will pay to spend some time putting your money in the correct place.
Why is now a good time to save?
That means two things for any money we have set aside.
Firstly, the returns (or interest) being offered on savings accounts has improved, although borrowing is more expensive. For example, you may find an account paying 5% a year, so £1,000 saved for a year will earn £50 in interest. Save for lots of years, and that lump sum keeps building under what is known as compound interest.
Secondly, the buying power of the money we do have saved is being diluted by rising prices.
Bank of England figures show that there is £268bn in non-interest paying accounts - which are primarily current accounts.
Experts say that finding a good savings account for that money will help people benefit from those higher rates, and counter some of the downsides of rising prices.
Investing the money is another option, although that carries greater risks.
Why save when it is so hard to budget anyway?
High energy and food bills mean that, for many people, their money doesn't last until the end of the month. Finding anything to set aside is difficult.
If you have debts that need bringing under control, then that is widely considered to be the priority, ahead of any savings decisions.
However, putting some money aside regularly into an emergency savings fund can help avoid serious debt. If your car breaks down, or the children's school shoes need replacing, then it is better to have money available than to borrow it.
You also might want to save throughout the year for Christmas or holidays.
How do I start saving money?
The general advice is to spend some time going through your finances, then set a savings goal, and to start with saving a small, manageable amount on a regular basis.
The Building Societies Association, which runs UK Savings Week, has a guide about how to get started.
What is the best account type for me?
This is where it can get quite complicated. There are a wide range of savings products available, and your personal circumstances will determine which is best for you.
The most basic savings product is an easy-access account. They tend not to have the best interest rates, but you can withdraw your money whenever you like.
Some accounts such as fixed-term accounts or bonds pay more in interest but your money is locked in for a certain period of time.
Anyone starting out might consider regular saver accounts, some of which are sold alongside current accounts. Again you might not be able to access the money for a certain period of time and, by starting small, it may take time before any meaningful interest is built up.
Also, there are notice accounts, which require you to tell the provider in advance when you plan to withdraw money. Alternatively, you can forgo interest and instead enter a prize draw, such as with Premium Bonds.
If you don't have access to a bank account, then credit unions offer the opportunity to save. Savings scheme incentives provided by the government may encourage longer-term savings. particularly for children.
There are plenty more and, with such a variety, it is best to shop around. That shouldn't only be for the best interest rate but, perhaps more crucially, to find the account that best suits your needs.
Anna Bowes, founder of the independent Savings Champion website, says some savers can suffer from "choice paralysis", so it might be best to set yourself a deadline when making a decision.
Helpfully, every account now displays a summary box outlining its key features, which makes it a bit less time-consuming to compare between them.
Will banks keep me on the best deal?
Definitely not. Banks, building societies and other savings providers often advertise eye-catching headline interest rates. Sometimes those deals are only available for a few weeks.
The best interest rate may only last on a product for a year, after which it may revert to a much lower rate. So, being loyal may be more convenient, but won't necessarily pay the most. That is why it is best to review old accounts you may have set up years ago.
In fact, banks have come under heavy pressure from MPs and regulators to ensure that rates - particularly on easy-access accounts - reflect the wider market and are not just used to make excess profits.
What are the tax and benefits implications?
Every basic and higher-rate taxpayer has a personal savings allowance, which means you don't pay tax on the first £1,000 of interest you earn from savings (or the first £500 if you're a higher-rate taxpayer).
Individual Savings Accounts, known as Isas, allow you to save up to £20,000 a year, and the interest is tax-free.
Large amounts held in savings can affect a claim for universal credit.
If a bank or building society goes bust, then the first £85,000 per person, per institution is safe and would be refunded.
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Banking & Finance
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The outcome of the Brexit vote and years of political uncertainty it triggered has had a chilling impact on business investment in Britain, a deputy governor of the Bank of England has said.
Dave Ramsden, the Bank’s deputy governor for markets and banking, said the fallout from the 2016 referendum had “chilled” investment levels compared with other leading nations and contributed to a lower “speed limit” for the UK economy.
“It’s hard to conclude otherwise, that the decision to leave the EU – that may have had lots of goods reasons for it – but that it has chilled business investment,” he said.
Speaking to MPs on the Commons Treasury committee, his comments come as the chancellor, Jeremy Hunt, prepares to use Wednesday’s autumn statement to focus on growing business investment in Britain.
Hunt told company bosses at a conference held by the CBI lobby group on Monday that he planned to unveil “a whole range of measures designed to unlock business investment” as the cornerstone of his growth plans.
Britain has historically lagged behind other leading economies for growth in business investment, but has fallen further back in recent years after a period of political and economic instability amid the Brexit vote, Covid pandemic and repeated “flip-flopping” of government policy.
A key driver for economic growth, business investment was now only 6% higher in real terms than in the second quarter of 2016, when the Brexit referendum was held, Ramsden said. “That’s less than 1% a year. Over that time, US business investment has gone up by over 25%,” he said.
“You can see a break in the trend for UK business investment in 2016. It had been going up since the global financial crisis and then it flattened off from 2016 onwards.”
The Bank’s deputy governor said certainty was a key driver of business investment decisions, suggesting it had been lacking in recent years. “Ideally you want low and stable inflation but also you want certainty around where fiscal policy is going, and certainty about what the kind of relationships your economy is going to have.”
He suggested weaker levels of investment had contributed to holding back the productive capacity of the UK economy. “We therefore think the speed limit the economy can grow at without triggering inflation is lower,” he said.
Answering questions from MPs before the autumn statement, Andrew Bailey, the Bank of England’s governor, warned against expectations for a rapid fall in UK inflation to pave the way for interest rate cuts.
Financial markets were “underestimating” the risk of inflation persisting at higher levels than anticipated, he warned.
City investors expect weaker levels of economic growth and falling inflation could lead the Bank to cut rates from the current level of 5.25% in the spring.
“We are concerned about the potential persistence of inflation as we go through the remainder of the journey down to 2%,” he said. “The risks are on the upside.”
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United Kingdom Business & Economics
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Customer loyalty schemes at Sainsbury's and Tesco are "not all they're cracked up to be" with regular prices being inflated so promotions look better than they really are, according to a consumer champion.
Which? says the supermarket giants are using "potentially dodgy tactics" and has shared the findings of its investigation with the Competition and Markets Authority.
But the retailers have disputed the claims - arguing it had failed to take inflation into account, and Trading Standards rules had been followed.
Which? said it had tracked more than 140 Clubcard and Nectar card prices at Tesco and Sainsbury's over six months.
About 29% of member-only promotions were at their so-called regular price for less than half of that period.
Which? identified three main problems around the regular price quoted for products on offer to customers with loyalty cards - that they were far more expensive than at other supermarkets, that they had been changed right before the promotion, or were only available for a short amount of time.
The research is part of the watchdog's inquiry into the increasingly widespread use of loyalty card schemes across supermarkets, which only gives customers who are signed up access to the lower tier of pricing.
Among the deals of concern to Which? was a jar of Nescafé Gold Blend Instant Coffee (200g) advertised at Sainsbury's for £6 with a Nectar card - a saving of £2.10 on the "regular" price of £8.10.
But the regular price had also been £6 at Sainsbury's until it went up to £8.10 just two days before the Nectar price launched.
Which? also found the regular Sainsbury's price was significantly higher than at other supermarkets, such as Asda, where the same jar cost £7, or at Morrisons, Ocado and Waitrose where it was available for £6.
It was even cheaper at Tesco (£5.99) and at Lidl (£5.49).
Read more:
One in four UK universities operating food banks for students
Older voters will back policies aimed at younger people - study
In another example, Which? found Heinz Salad Cream (605g) at Tesco with a Clubcard price of £3.50 and a regular price of £3.90 - even though its regular price had been £2.99 for several weeks before it was increased to £3.90, 22 days before the Clubcard promotion.
Which? found the condiment has been its regular price for just 25 days out of 183, or 14% of the previous six months.
Overall, Which? found a third of the products at Sainsbury's (34% of 71 products) were the "regular" price less than half the time over the previous six months.
At Tesco, the same was true for 24% of the 70 items analysed.
Which? said: "Tesco and Sainsbury's are using potentially dodgy tactics on some of their loyalty offers which can give the impression that savings are more substantial than they really are."
A Sainsbury's spokeswoman said: "Which? fails to recognise that base prices have been increasing throughout the year due to inflation. Our promotional rules around Nectar Prices are informed by the guidance from Trading Standards.
"The Nescafe Gold example demonstrates Which?'s flawed methodology as the claim that the 'regular' price was £6 is untrue.
"The base price of this item has been £8.10 since December 2022 and £6 was a promotional price throughout this year, including on Nectar Prices when it launched in April."
A Tesco spokesman said: "All our Clubcard Price promotions follow strict rules, including considering how they compare against prices in the market, to ensure they represent genuine value and savings for our Clubcard members.
"These rules have been endorsed by our Trading Standards Primary Authority."
Sue Davies, Which? head of food policy, said: "It's not surprising that shoppers are questioning whether supermarket loyalty card prices are really a good deal, as our investigation shows that up to a third of loyalty offers at Tesco and Sainsbury's are not all they're cracked up to be.
"Which? is calling on supermarkets to make sure that their loyalty card prices don't mislead and for the regulator to look more closely at this growing trend towards dual pricing. There is also the important issue of whether it is right for certain groups to be excluded from member-only schemes."
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Consumer & Retail
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In this article, we're going to take a look at 14 best blockchain stocks to buy now. To skip ahead and see more stocks that made our list, you can follow this link to read about the 5 best blockchain stocks to buy now.
Is Blockchain Still Around?
Let's go back to 2016. Trump was yet to win the election despite a lot of people saying there was no way in hell that could happen and pandemic was a word only used in history books. Around the same time, another word has started to catch on and that word was blockchain. Bitcoin had been around for 8 years already and Ethereum was picking up steam as a platform for decentralized applications. As Bitcoin's price started to surge and ended up gaining more than 2,000% the following year, something akin to a craze emerged around blockchain.
Of course, many saw blockchain as a way to get rich quickly, since in order for a blockchain to function (i.e. to continue adding data to the decentralized ledger) it needs some sort of cryptocurrency to power it. That's why in the following years we saw a waterfall of various cryptocurrencies that were used in hundreds of blockchain projects, with almost every one claiming to be the "next Bitcoin" or promising to revolutionize an industry that probably didn't even need revolutionizing anyways. Blockchain has made its way into healthcare, government, real estate, supply chain, finance and other industries.
However, most projects died as the interest towards them dwindled. And it seems that the hype around blockchain has also died down. According to Google Trends, the peak popularity for blockchain was around December 2017. Currently the numbers are less than a third from their peak.
So, should I invest in Blockchain?
Even though the interest towards blockchain is far from the peak of its popularity, there are still many projects that deserve attention. Even Bitcoin, the cryptocurrency that lies at the beginning of the "blockchain revolution," is still getting a lot of traction. In fact it's been considered some sort of a digital Store of Value, despite the price fluctuations. Moreover, Bitcoin has been in the limelight recently, as evidence suggests that the US Securities and Exchange Commission is on track to approve a number of Exchange Traded Funds tied to Bitcoin, which would allow more retail investors exposure to the cryptocurrency.
Also, Bitcoin ETFs will likely mark a new milestone for the whole blockchain and cryptocurrency sector. Bringing Bitcoin into the mainstream investing will open up a path where the government will have to impose regulations that will ensure more transparency for both the currencies and their underlying projects. This in turn will allow to projects with strong development teams and solid backgrounds to stand out, which is bound to attract more investors.
In the meantime, until we see Bitcoin ETFs trading on the stock exchange, there are plenty of stocks to choose from that have exposure both to blockchain technology and to Bitcoin cryptocurrency in particular. If you are looking for best blockchain stocks to buy now, you should know that the three tech giants, Microsoft Corp (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc (NASDAQ:GOOGL), have made public their interest to blockchain technology and even included it in their portfolio of offerings in the cloud computing segment. If you are interested in more of a "pick-and-shovel" approach, then look no further than the largest chipmakers like NVIDIA Corp (NASDAQ:NVDA) and Intel Corporation (NASDAQ:INTC), both of which manufacture chips that are widely used in cryptocurrency "mining".
As a conclusion, in order to invest "correctly" in blockchain, you should look beyond the hype and understand what is the inherent value of blockchain. It is a way to store data, in a centralized or decentralized way and it's best used for data that should not be corrupted or moved. That's why one of the most useful applications for blockchain is in finance and that's why companies like Mastercard Inc (NYSE:MA) and Visa Inc (NYSE:V) have also expressed interest in this technology.
Our methodology
To identify the best blockchain stocks to buy now, we scoured our database for companies that have exposure to blockchain in one way or another, either by providing blockchain-based solutions, like Microsoft Corp (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc (NASDAQ:GOOGL), providing hardware that has applications in blockchain like NVIDIA Corp (NASDAQ:NVDA) and Intel Corporation (NASDAQ:INTC), or are interested in applying blockchain technology in their business operations, such as Mastercard Inc (NYSE:MA) and Visa Inc (NYSE:V). We also identified a number of publicly-traded companies that are involved in Bitcoin mining. After compiling the list we narrowed it down to 14 best blockchain stocks to invest in based on hedge fund interest towards them.
14. Hut 8 Mining Corp (NASDAQ:HUT)
Let's kick off with Hut 8 Mining Corp (NASDAQ:HUT), in which three hedge funds tracked by Insider Monkey reported owning long positions as of the end of September, down by three over the quarter. Among the investors bullish on the company are Ken Griffin's Citadel Investment Group and Aaron Weitman's CastleKnight Management. Hut 8 Mining Corp (NASDAQ:HUT) is focused on digital asset mining, such as Bitcoin and its stock has nearly trippled since the beginning of the year, although it's still far from the all-time highs of $15 recorded in November 2021. The company is currently in the merger process with US Data Mining Group (doing business as US Bitcoin Corp). In the third quarter, Hut 8 Mining Corp (NASDAQ:HUT) mined 330 Bitcoin, down by 66% on the year. The company said the decrease was due to increase in network difficulty, suspension of operation at one of its facilities and ongoing electrical issue at another facility. Overall, Hut 8 Mining posted revenue of $12.51 million and a net loss of $0.24 per share.
13. Cipher Mining Inc (NASDAQ:CIFR)
Next in line in our list of best blockchain stocks to buy now is Cipher Mining Inc (NASDAQ:CIFR), which, similar to Hut 8 Mining Corp (NASDAQ:HUT) is engaged in Bitcoin mining. In October, the company operated 70,000 mining rigs and obtained 428 Bitcoin, which represents an increase of 3% from the previous month. Cipher Mining Inc (NASDAQ:CIFR) sold around 466 Bitcoin last month and has a balance of 516 Bitcoin. At the end of the third quarter, there were nine funds tracked by Insider Monkey that held shares of Cipher Mining Inc (NASDAQ:CIFR), down by two funds over the quarter.
12. CleanSpark Inc (NASDAQ:CLSK)
In CleanSpark Inc (NASDAQ:CLSK) there were 11 funds owning shares at the end of September, unchanged over the quarter. Among these investors, CleanSpark Inc (NASDAQ:CLSK) is a Bitcoin mining company, which has around 89,000 rigs as of the end of October. During the fiscal third quarter (ended June 30), CleanSpark Inc (NASDAQ:CLSK) generated revenue of $45.5 million, up by 47% on the year. The company also narrowed its net loss to $14.2 million from $29.3 million recorded in the same period of the last year.
11. Riot Platforms Inc (NASDAQ:RIOT)
Riot Platforms Inc (NASDAQ:RIOT) is the last Bitcoin miner in this list of best blockchain stocks to buy now. The company saw 17 hedge funds from our database holding long positions with a total value of $56.90 million as of the end of September. During the third quarter, Riot Platforms Inc (NASDAQ:RIOT) mined 1,106 Bitcoin. It ended the quarter with 98,694 miners, up by 77% on the year, and had a balance of 7,327 Bitcoin. For the quarter, Riot Platforms Inc (NASDAQ:RIOT) reported revenue of $51.9 million and a net loss of $0.25 per share, versus revenue of $46.3 million and a loss of $0.21 per share registered in the same period of last year.
10. Coinbase Global Inc (NASDAQ:COIN)
If you live in the US and have any relationship with the cryptocurrency space, then you've definitely heard about Coinbase Global Inc (NASDAQ:COIN) as it operates one of the largest cryptocurrency exchanges in the US. Coinbase went public in 2021 at a price of $381. As cryptocurrency markets were in a full-swing bull market at the time, the IPO was one of the most hyped at the time. However, since then Coinbase Global Inc (NASDAQ:COIN) saw its stock price drop by 75%. Year-to-date, Coinbase Global Inc (NASDAQ:COIN)'s shares have surged by 155% as the company managed to beat the top- and bottom-line estimates for the first two quarters of its fiscal 2023. For the third quarter, Coinbase Global Inc (NASDAQ:COIN) reported $674.15 million in revenue, beating the estimates by $20.6 million, but its net loss of $0.57 per share, was $0.04 lower than expected. At the end of the third quarter, there were 27 hedge funds tracked by Insider Monkey that held shares of Coinbase Global Inc (NASDAQ:COIN).
9. International Business Machines (NYSE:IBM)
Then there's International Business Machines, which saw 53 funds holding $843.12 million worth of its stock at the end of September. As one of the leading tech companies, International Business Machines (NYSE:IBM) is quick to adapt new technologies and blockchain is no exception. The company provides a suite of blockchain-based products such as Supply Chain Control Tower, which also leverages Artificial Intelligence and allows companies from various industries, such as healthcare, to keep track of their inventory. Another prominent example is IBM Food Trust, which connects stakeholders from food industry and creates a network that helps producers, sellers, and consumers to keep track of every step of the production process. One of the clients that is taking advantage of the blockchain-based IBM Food Trust is Walmart Inc (NYSE:WMT).
8. Block Inc (NYSE:SQ)
Block Inc (NYSE:SQ) was previously known as Square Inc and the company renamed itself a couple of years ago to signal its commitment towards new technologies including blockchain. As a payments company, Block Inc (NYSE:SQ) could definitely benefit from adapting blockchain technologies into its products. Meanwhile, its CashApp platform allows depositing and withdrawal of Bitcoin and Block Inc (NYSE:SQ) holds Bitcoin both for itself and its customers. Block Inc (NYSE:SQ) also maintains a separate entity called Spiral that contributes to Bitcoin development, TBD, a developer platform focused on decentralized finance, as well as a bitcoin mining system and a bitcoin hardware wallet. During the third quarter, the number of funds bullish on Block Inc (NYSE:SQ) declined by six to 60.
7. Intel Corporation (NASDAQ:INTC)
The chipmaking giant Intel Corporation (NASDAQ:INTC) also jumped on the blockchain bandwagon and last year launched a processor dedicated specifically to be used in Proof-of-Work consensus networks, although in April this year the product was discontinued. The chip called Blockscale ASIC (application-specific integrated circuit) was supposed to help with mining Bitcoin and other cryptocurrencies compatible with the SHA-256 hashing algorithm. Currently it is not known whether Intel Corporation (NASDAQ:INTC) plans to release any new versions of the so-called "blockchain" chip. Nonetheless, given the company's leading position on the CPU market, we still consider Intel Corporation (NASDAQ:INTC) one of the best blockchain stocks to buy now. At the end of September, 71 hedge funds in our database held shares of Intel Corporation (NASDAQ:INTC).
6. Mastercard Inc (NYSE:MA)
In Mastercard Inc (NYSE:MA), there were 140 hedge funds with long positions at the end of the third quarter, holding in aggregate $1.53 million worth of stock. As one of the leading payment processors, Mastercard Inc (NYSE:MA) is closely involved in blockchain technology from various avenues. For one, the company offers a dedicated crypto card which facilitates everyday transactions in cryptocurrencies. In addition, Mastercard Inc (NYSE:MA) has an accelerator program aimed at digital assets and blockchain projects. Moreover, in October, Mastercard Inc (NYSE:MA) announced a pilot project in partnership with the Reserve Bank of Australia and the Digital Cooperative Research Centre that would enable central bank digital currency (CDBC) use.
Click to continue reading and see 5 Best Blockchain Stocks to Buy Now. Suggested Articles: 10 Best Lumber Stocks To Invest In 2023 10 Best Bitcoin and Blockchain Stocks To Buy Now 12 Best Clean Energy Stocks To Buy According to Wall Street Analysts
Disclosure: None. 14 Best Blockchain Stocks To Buy Now is originally published on Insider Monkey.
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Stocks Trading & Speculation
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It's been 5 years since the bread price-fixing probe started. We still don't have any answers
Lack of results is eroding Canadians' trust at a time of escalating food prices, expert says
Consumer furor over rising food prices has reignited anger over the infamous bread price-fixing scandal, which became public in 2017 and allegedly involved several major grocers colluding to inflate bread prices.
"It's time to get answers," said anti-poverty activist Irene Breckon, 76, of Elliot Lake, Ont. "It's not right that the poor people are suffering so much more, and the rich people … keep bumping up their prices."
According to data released Tuesday, grocery prices have climbed by 11 per cent year over year.
The federal government is working on a grocery code of conduct to help foster competition in the industry. And in response to allegations grocers are raking in excessive profits, both the government and Canada's Competition Bureau are examining grocery pricing in Canada.
During a parliamentary committee hearing last month, Loblaw Companies Ltd. (which owns Loblaws and Superstore) and Empire Company Ltd. (owners of Sobeys and Safeway), said they're not profiteering but, instead, are passing on higher costs from suppliers.
Meanwhile, the Competition Bureau is still investigating the bread price-fixing scheme — almost five-and-a-half years after launching the probe on Aug. 11, 2017.
No charges have been laid and the competition watchdog says there is no conclusion of wrongdoing at this time.
"The Bureau must conduct a thorough review of all the facts of a case before reaching any conclusions regarding potential violations of the law," said spokesperson Marie-Christine Vézina in an email.
She offered no timeline, and said, by law, the bureau must conduct its work confidentially.
High Food Prices Rile Up Canadians Grocery stores have become a lightning rod for consumer discontent amid inflation and lingering mistrust after a bread price-fixing scandal.—@ZaxNewsStand
I remember the bread price fixing scandal <a href="https://twitter.com/hashtag/HeyPC?src=hash&ref_src=twsrc%5Etfw">#HeyPC</a>—@CarcelMousineau
8 years since Loblaw tip
Almost eight years ago in March 2015, Loblaw alerted the Competition Bureau to its part in an allegedly industry-wide price-fixing agreement to artificially inflate the price of some packaged bread from 2001 to 2015.
Loblaw received immunity from prosecution for its co-operation. It then offered customers $25 gift cards to make amends.
In 2017, the bureau began investigating other alleged parties: grocers Sobeys, Walmart, Metro and Giant Tiger, and producer and distributor Canada Bread. According to court records, in 2019, it also targeted Maple Leaf Foods, which was the majority shareholder of Canada Bread until 2014.
WATCH | Are you being gouged at the grocery store?
Food distribution expert Sylvain Charlebois claims the investigation is taking too long, and that the lack of results is eroding Canadians' trust at a time of escalating food prices.
"The grocers' crisis of confidence has a lot to do with the fact that there's still unfinished business out there," said Charlebois, the director of the Agri-Food Analytics Lab at Dalhousie University. "You need to move on this issue."
But competition law expert Jennifer Quaid said it can take time to gather evidence needed to prove a price-fixing conspiracy.
'[It's] particularly difficult when you're talking about large, economically powerful entities," said Quaid, a law professor at the University of Ottawa. "You can't just sort of snoop on them, right? We don't have a police state."
Other grocers respond
In 2004, the Competition Bureau launched what turned out to be a three-year investigation into allegations of price-fixing at gasoline stations in Quebec. By 2008, 13 people and 11 companies faced criminal charges in the case, and by 2009, the majority of them had pleaded guilty.
Quaid suggests that investigation had a speedier outcome because a number of people implicated agreed to assist with the bureau's investigation.
"The defining feature there is that because people co-operated and got immunity, they were able to get wiretaps. They were able to catch people calling each other."
Even though Loblaw is co-operating with the price fixing investigation, Quaid said it may be taking longer than expected because none of the other alleged parties appears to be offering a confession and co-operation in exchange for leniency.
Sobeys, Walmart and Giant Tiger each told CBC News they have no reason to believe they violated the Competition Act.
"We have steadfastly fought against these irresponsible allegations," wrote Sobeys spokesperson Tshani Jaja in an email.
Metro said it complies with the law and "has never been found to be in breach of the Competition Act."
Mexican multinational company Grupo Bimbo, which acquired Canada Bread in 2014, declined to comment. Maple Leaf Foods said it was unaware of any wrongdoing at Canada Bread when it was the majority shareholder.
Quaid said the biggest risk with a lengthy investigation is that, over time, it may be more difficult to secure evidence.
"For example, it might be harder to track down the people who were involved. Maybe they've moved on, maybe they work somewhere else, maybe they've died."
Even if no charges are laid as a result of the investigation, it won't be case closed for the bread price-fixing saga. That's because two class-action lawsuits, one in Ontario and one in Quebec, have been certified in court, each seeking financial compensation from companies allegedly involved.
If nothing else, anti-poverty activist Breckon hopes the lawsuits will result in some extra cash for class-action members who may be struggling with high food prices.
"I know so many people that are having an extremely difficult time," she said.
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Consumer & Retail
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Broadcom has confirmed it plans to close its $69 billion acquisition of VMware on Wednesday after securing all necessary regulatory approvals.
Chinese regulators approved the merger between the two firms, bringing to a close months’ worth of intense regulatory scrutiny.
The approval from China comes with limited “restrictive conditions”, the firm noted. Chinese regulators demanded Broadcom must not use the merger to abuse its market position and retain interoperability between VMware servers and alternative third-party hardware providers.
“Broadcom has received legal merger clearance in Australia, Brazil, Canada, China, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, the United Kingdom, and foreign investment control clearance in all necessary jurisdictions,” Broadcom said in a statement.
The chipmaker added there is now “no legal impediment” to closing the deal under US merger regulations.
Following the acquisition, Broadcom will now operate under the VMware brand.
Broadcom VMware merger: Key talking points
Broadcom’s merger with VMware rapidly became a regulatory flashpoint after it announced its intention to acquire the cloud computing giant in 2022.
Key concerns focused on the merged entity being able to prevent products from Broadcom competitors working with VMware services, such as its server virtualization software.
Some industry stakeholders also warned the deal could harm innovation and stifle competition.
EU regulators granted permission for the merger in July after Broadcom offered European rivals interoperability commitments. In August, the UK’s Competition and Markets Authority (CMA) also cleared the merger.
A CMA review concluded that the deal “does not substantially reduce competition”.
In recent months, geopolitical tensions between the US and China have created an additional layer of complexity and uncertainty.
Investors feared for the outcome of the deal after the Biden administration introduced more stringent controls on the export of high-end chips to China in October 2023.
Speculation began circulating that Chinese regulators could look to scupper the deal in response to the US administration’s aggressive stance on chip exports.
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Ross Kelly is ITPro's News & Analysis Editor, responsible for leading the brand's news output and in-depth reporting on the latest stories from across the business technology landscape. Ross was previously a Staff Writer, during which time he developed a keen interest in cyber security, business leadership, and emerging technologies.
He graduated from Edinburgh Napier University in 2016 with a BA (Hons) in Journalism, and joined ITPro in 2022 after four years working in technology conference research.
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Banking & Finance
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It appears that the New York civil fraud trial against former President Donald Trump and his company may be nearing its end, despite Trump’s best efforts to derail the proceedings. The heirs to his empire — his children Eric, Ivanka and Donald Jr. — have either already testified under oath or are scheduled to do so in the coming days. Most ordinary defendants would be looking to inspire leniency right about now — but not Trump.
Instead, since Judge Arthur Engoron already rendered a partial verdict in a pretrial ruling, there has been less to keep Trump fettered. Engoron ruled that Trump and his businesses had committed years of fraud, both overvaluing and undervaluing his properties’ value and inflating his own net worth on financial documents, to get better rates for loans and lower insurance premiums. Engoron also ordered that limited liability companies, or LLCs, connected with Trump in New York be dissolved, one of New York Attorney General Letitia James’ proposed remedies, alongside a suggested $250 million in damages.
The former president, predictably, hasn’t taken even partial defeat kindly.
The former president, predictably, hasn’t taken even partial defeat kindly. He has ranted against Engoron and his rulings on his Truth Social account. He has stormed out of the courtroom like a petulant child. He has been fined thousands of dollars for attacking Engoron’s staff in violation of a partial gag order.
In doing so, he’s hoping he can once again turn a short-term loss into a long-term victory, either politically through his long-practiced grievance shtick or legally through the appeals process. Trump’s lawyers already filed an appeal to overturn Engoron’s partial summary judgment. The emergency request to the New York Supreme Court Appellate Division resulted in a limited win for Trump, which, fittingly, he has exaggerated to all hell. “We won against Engoron in the Appeals Court, knocking out a big part of the case, but he then refused to accept their decision,” Trump wrote Wednesday morning on Truth Social. In reality, Associate Justice Peter Moulton did halt the dissolution of Trump’s entities, but only temporarily. His order also denied Trump’s request to halt the full trial pending appeal.
With Engoron’s partial ruling left standing, the current trial is focused more on exactly what penalties Trump should face. Given that the best chance of victory would now come in an appeal, his attorneys have opted to use the trial to lay the groundwork for that effort, as his legal team can’t raise any argument on appeal that wasn’t raised at trial. In the meantime, according to Rolling Stone, the game plan has been to “score some political and public-relations points for Trump, kick up as much dirt as possible, enrage the judge, gratuitously trash some of the witnesses, and turn the process into a media circus.”
That strategy dovetails with Trump’s other goal: framing any verdict against him as a political attack on him and his supporters. That has involved his Truth Social tear on Wednesday, which also included other hits at Engoron, warning the judge to “leave my children alone” and calling him a “disgrace to the legal profession.” He also railed against the “RIDICULOUS GAG ORDER” against him and said Engoron “fines me at levels never seen before.” Trump didn’t mention that the gag order covers only statements against Engoron’s staff, nor that it has resulted in just $15,000 in fines against Trump. Then again, why would someone who is at least in theory a billionaire care about what, for him, is literally chump change?
For all his delusions of grandeur, Trump does actually know when he’s been beaten.
Engoron has so far opted not to expand the gag order to include the former president’s invective toward himself. That makes sense on one level: Because this is a bench trial, there’s no chance of tainting a jury pool’s views of the case or the judge. And Trump’s yelling about Engoron is much more likely to be protected speech under the First Amendment than instances of potential witness intimidation, the basis for a much more robust gag order in Trump’s federal election interference case.
But that has left him free to post things like “Engoron is crazy, totally unhinged, and dangerous — Our Judicial System has gone to HELL.” And that sort of direct, personal attack is what has always made Trump’s ravings so dangerous. For all his delusions of grandeur, Trump does actually know when he’s been beaten. When he feels cornered, he goes beyond attacking the direct object of his ire — be it Engoron or former FBI Director James Comey or his loss in the 2020 presidential election — and calls into question the very system at hand. The troubling part is that there are now enough people who agree with his claims of persecution that, if given the merest chance, they’ll help him tear down those systems brick by brick.
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Banking & Finance
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Bankman-Fried Found Guilty Of Fraud At FTX Criminal Trial
He faces as much as 20 years in prison on each of the most serious charges.
(Bloomberg) -- Sam Bankman-Fried was convicted of a massive fraud that led to the collapse of his FTX exchange, following a month-long trial that pitted the testimony of the former crypto king against that of some of his closest friends.
Bankman-Fried was found guilty of seven counts of fraud and conspiracy after jurors in Manhattan deliberated for less than five hours Thursday. He faces as much as 20 years in prison on each of the most serious charges. Judge Lewis Kaplan set a sentencing date in March.
The verdict is a win for Manhattan US Attorney Damian Williams in the highest-profile criminal prosecution in the crypto world. It also caps a spectacular fall for Bankman-Fried from early 2022 when FTX was valued at $32 billion and celebrities including Tom Brady, Larry David and Steph Curry were paid to urge people to trade digital currency on the platform.
Bankman-Fried “perpetrated one of the biggest financial frauds in American history.” Williams said after the verdict. “A multibillion dollar scheme designed to make him the King of Crypto.”
Prosecutors said Bankman-Fried directed the transfer of FTX customer money into Alameda Research, an affiliated hedge fund, for risky investments, political donations and expensive real estate before both companies collapsed into bankruptcy last year.
Bankman-Fried was standing, holding his hands in front of him and looking at the jury box, as he listened to the verdict. He was led out of the courtroom a few minutes later as his parents watched from the front row of the public gallery.
His father, Joseph Bankman, doubled over and put his head down as the guilty verdicts were read out.
Prosecutors characterized him as the mastermind of a massive fraud at FTX, of creating a “pyramid of deceit” built on lies and false promises. Bankman-Fried’s lawyers positioned him as a hard-working math nerd who tried in good faith to reverse the fast-deteriorating situation in the company last year.
Bankman-Fried’s attorney, Mark Cohen, said while they respect the jury’s decision, they will look at an appeal.
“We are very disappointed with the result,” Cohen said in a statement. “Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him.”
The trial featured evidence from Bankman-Fried’s former friends and colleagues, including Alameda Chief Executive Officer Caroline Ellison, FTX co-founder Gary Wang and engineering chief Nishad Singh. All three members of Bankman-Fried’s inner circle pleaded guilty to felony charges and took the stand to implicate him in hopes of avoiding prison.
Ellison, who had an on-and-off romantic relationship with Bankman-Fried, gave the most emotional testimony of the trial, fighting back tears as she described the days leading to FTX’s Nov. 11, 2022, bankruptcy filing.
“That was overall the worst week of my life,” she told jurors.
Singh, a close friend of Bankman-Fried’s younger brother, testified that he became suicidal around the same time.
The verdict followed a series of legal setbacks for Bankman-Fried throughout the case, including rulings keeping him locked up before trial and limiting the evidence his team could present.
(Updates with lawyer statements starting in fourth paragraph.)
©2023 Bloomberg L.P.
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Crypto Trading & Speculation
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Binance, the world’s foremost cryptocurrency exchange, is grappling with an unprecedented crisis. The company has witnessed a staggering $1 billion in withdrawals in just 24 hours, a reaction not seen since the company and its founder faced 13 securities violations from the SEC. This financial outflow comes from founder and CEO Changpeng Zhao’s decision to resign following his guilty plea in a major legal battle with the U.S. Department of Justice.
Can't believe the twists in the crypto world lately! 😱 Just read about Binance's former CEO pleading guilty and the massive penalties. What's next for the crypto space? 🚀 #CryptoDrama #Binance #Ripple #Cardano #BinanceCoin #Solana pic.twitter.com/DK3SHj7YKk
— CryptoExplorer (@GiullyPeccini) November 23, 2023
The situation has its roots in accusations against Zhao and other high-ranking Binance officials. They were charged with breaching the Bank Secrecy Act due to a lack of an effective anti-money laundering framework and for knowingly violating U.S. economic sanctions. This legal entanglement has led Binance to agree to a monumental settlement comprising a forfeiture of $2.5 billion and a fine of $1.8 billion. U.S. Attorney General Merrick Garland underscored the gravity of this situation, labeling the $4.3 billion penalty as one of the largest ever imposed.
Market reactions have been swift and severe. Binance’s liquidity has plummeted by 25% as market makers have started to retreat. Furthermore, the exchange’s native token, BNB, has declined by over 8% in the last seven days. This is particularly concerning given Binance’s significant holdings of BNB, estimated at around $2.8 billion. At the time of writing, BNB is trading at $231, with a slight surge of 0.63% in the past 24 hours.
Zhao’s guilty plea to money laundering charges marks a significant development in the ongoing investigation into illicit financial activities in the cryptocurrency industry. His resignation and the appointment of Richard Teng, a seasoned Binance executive, as his successor signify a substantial shift in the exchange’s leadership. Teng’s experience and industry knowledge are expected to guide Binance through these turbulent times.
The implications of this development extend far beyond Binance. It represents another significant setback for the crypto industry, riddled with scandals and regulatory challenges. The massive settlement with U.S. authorities raises questions about the future trajectory of Binance, which has long been a dominant player in the crypto market.
As the cryptocurrency world reacts to these developments, the future of Binance remains uncertain. The exchange, once a symbol of the unregulated freedom of the crypto market, now faces a crucial juncture. It will be a credit to the resiliency and adaptability of the Bitcoin sector if it can manage these legal and financial difficulties successfully.
Read More- Amsys Cryptos
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Crypto Trading & Speculation
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India A Key Growth Driver For Global Consumer Firms Amid Macro Woes
Indian businesses remain more resilient than some of their global counterparts when the world is faced with uncertainties
India's resilience to global macroeconomic headwinds makes it a favourite market for multinational consumer goods companies, which remain optimistic about the country's growth prospects.
Indian businesses continue to be more resilient than some of their global counterparts at a time when the world is faced with unprecedented uncertainties due to geopolitical tensions, an inflation-led slowdown in consumption, and fears of an impending recession in Europe, the global chiefs of companies like Unilever Plc., Mondelez International, PepsiCo Inc., The Hershey Co., Coca-Cola Co., Nestle SA, and Colgate-Palmolive Co. said in their latest quarterly earnings call.
"India keeps on growing at a very accelerated pace, and there are no real signs of a slowdown," said Mondelez International's Chief Executive Officer, Dirk Van De Put.
The outlook in India for 2023 remains "optimistic", with investment planned in capacity expansion, distribution, and innovation, he said.
India, in fact, remains a key driver of success, driving double-digit growth for most of these companies. PepsiCo, for instance, said its Indian unit delivered double-digit organic revenue growth in the March quarter.
Nestle’s chief executive officer, Mark Schneider, said that the South Asia market, including India, recorded "strong" double-digit growth across most categories. This, he said, was supported by distribution expansion in rural areas, increased focus on premiumisation and e-commerce momentum.
The Hershey Co. continues to see distribution gains in India. "Net sales in Mexico, Brazil, and India grew a combined 25% in the first quarter, driven primarily by volume," said Hershey's Chairman and Chief Executive Officer, Michele Buck.
India's economy remains resilient with a strong job market and robust consumption, according to James Quincey, chairman and chief executive officer at Coca-Cola Co. The world’s largest beverage company drove nearly three billion transactions at affordable price points through single-serve packages and at-home entry packs in India between January and March.
In close alignment with its bottling partners, the company grew its business by adding retailers, investing in cold drink equipment, and offering the right products at the right price points to recruit consumers, Quincey said.
The company has also been increasing household penetration via targeted promotions on large packages for the at-home channel, he said.
For Colgate, the Asia-Pacific region comprises 15% of total sales. The company said that its organic sales growth in the region was led by India, other than the Greater China region, Australia, and the Philippines.
"India delivered mid-single-digit organic sales growth in the quarter, an acceleration versus recent trends, and we believe our plans for 2023 leave us well positioned to deliver improved performance for the year," said the company's management in a post-earnings prepared statement.
Under the new Chief Executive Officer, Prabha Narasimhan, the India unit is expected to grow its sales in the high single digits in FY24 and gain market share. Narasimhan re-iterated her strategy of driving category growth, especially in rural areas. Premiumisation in oral care and building personal care are also priorities.
However, the eponymous toothpaste maker needs aggression in execution, and it remains to be seen how much flexibility the India management has to drive the growth agenda from the parent side.
Meanwhile, the companies have voiced their concerns over the continued weakness in rural sales and the impact of inflation and weather on business in India. Coca-Cola's Quincey warned that there was "worse weather" in April, which had impacted business. only to add, "I don't think one can draw a lot from a couple of softer weeks in the first two weeks of April."
The revival of the rural economy was a critical part of Unilever's commentary, which counts India as its second-largest market after the U.S. In the March quarter, the U.S. market saw sales growth of 8%, while India reported 11.3% growth, with pricing growth at 7.3% and volume up 3.7%.
India saw some weakness in market volumes, especially in rural areas, said Unilever’s CEO Alan Jope during the March quarter earnings call.
"One overarching phenomenon that we're seeing is that urban India remains buoyant, whereas rural India is feeling the pressure of inflation. And so, there's quite a big difference emerging between the performance of urban India and rural India," he said.
Category-wise, Horlicks was back to growth, but the inflation pressure on rural Indian consumers continues to restrain volumes to some extent, he said. Home care, however, delivered 10.2% growth against a challenging operating environment, particularly in rural areas where market volumes continue to be quite depressed. Skin cleansing, too, delivered robust growth in India despite the need to adjust prices downward to reflect the impact of lower palm oil costs on the bar soap market price.
Jope added that while inflation remains high, it appears to be moderating. "The rural economy does now seem to be improving slowly," he said.
As India remains one of Unilever's powerhouses, Jope said the management remains confident in its ability to navigate the current turbulence.
Consumer goods makers have, so far, reported mixed earnings for the March quarter as they continue to cope with shrinking margins amid stretched balance sheets even as demand worries persist.
The consumption of consumer goods in rural India returned to growth after more than a year in the March quarter and is expected to grow for the rest of the year as inflation and price hikes eased, according to market analytics firm NielsenIQ. However, it said that consumers have not fully returned to buying bigger packs, as consumers living paycheck to paycheck are increasingly buying smaller packs of consumer goods to save cash.
NielsenIQ has forecasted the value of sales to rise 7-9% for the whole of 2023, higher than the 8.4% increase in 2022, benefiting from a likely timely monsoon and the RBI's expectations for the Indian economy to expand.
In its April monetary policy, the central bank projected real GDP growth at 6.5% for 2023–24.
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Consumer & Retail
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Jason Snell, writing at Six Colors:
I gotta be honest, this Huffman guy sure looks like a lying creep,
and all of Reddit’s public statements about honoring third-party
apps seem like an attempt to lie to Redditors so they don’t look
like the bad guys. But the bottom line is that Reddit repriced its
API in order to bankrupt third-party apps. (Selig says he’ll lose
$250,000 in the shutdown.)
It seems pretty clear that all of Huffman’s recent decisions are driven by Reddit’s hoped-for IPO. On one front is the ugly fact that Reddit’s valuation is sinking. TechCrunch reported last week:
Fidelity, the lead investor in Reddit’s most recent funding
round in 2021, has slashed the estimated worth of its equity
stake in the popular social media platform by 41% since the
investment. [...]
This devaluation, part of a broader trend that has hit a variety
of growth stage startups across the globe in the past year, raises
uncertainties about whether Reddit will maintain its initial
intent to reportedly go public at a valuation around $15 billion.
On the other front is OpenAI, currently buoyed by a sky-high valuation, and which used Reddit content as part of its massive training data. The whole point of going from free-of-charge to very-expensive with these APIs is to get OpenAI and similar companies to pay for them. It’s a pipe dream. Julie Bort at Insider:
“The Reddit corpus of data is really valuable. But we don’t need
to give all of that value to some of the largest companies in the
world for free,” said Steve Huffman, CEO of Reddit.
I asked ChatGPT if it is going to pay for Reddit data. It told me
its training data cut-off was September 2021 so it didn’t know
what was happening after that date.
Reddit already gave all its data to large companies for free. Huffman is trying to charge now for horses that were let out of the barn years ago. And he obviously doesn’t care about Apollo or other third-party Reddit clients, or what these moves do to Reddit’s reputation as a platform vendor. He’s just trapped in a fantasy where investors are going to somehow see Reddit as a player in the current moment of AI hype.
★ Friday, 9 June 2023
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Stocks Trading & Speculation
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404 Media (working with Court Watch) reports on a $30 Million cash-for-Bitcoin laundering ring operating in the heart of New York For years, a gang operating in New York allegedly offered a cash-for-Bitcoin service that generated at least $30 million, with men standing on street corners with plastic shopping bags full of money, drive-by pickups, and hundreds of thousands of dollars laid out on tables, according to court records.
The records provide rare insight into an often unseen part of the criminal underworld: how hackers and drug traffickers convert their Bitcoin into cash outside of the online Bitcoin exchanges that ordinary people use. Rather than turning to sites like Coinbase, which often collaborate with and provide records to law enforcement if required, some criminals use underground, in-real-life Bitcoin exchanges like this gang which are allegedly criminal entities in their own right.
In a long spanning investigation by the FBI involving a confidential source and undercover agents, one member of the crew said "that at least some of his clients made money by selling drugs, that his wealthiest clients were hackers, and that he had made approximately $30 million over the prior three years through the exchange of cash for virtual currency," the court records read.
Thanks to user Slash_Account_Dot for sharing the news.
The records provide rare insight into an often unseen part of the criminal underworld: how hackers and drug traffickers convert their Bitcoin into cash outside of the online Bitcoin exchanges that ordinary people use. Rather than turning to sites like Coinbase, which often collaborate with and provide records to law enforcement if required, some criminals use underground, in-real-life Bitcoin exchanges like this gang which are allegedly criminal entities in their own right.
In a long spanning investigation by the FBI involving a confidential source and undercover agents, one member of the crew said "that at least some of his clients made money by selling drugs, that his wealthiest clients were hackers, and that he had made approximately $30 million over the prior three years through the exchange of cash for virtual currency," the court records read.
Thanks to user Slash_Account_Dot for sharing the news.
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Crypto Trading & Speculation
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Now that Intuit is discontinuing its personal finance app Mint in January, some startups say they are already seeing a bump in new customers.
One of these is Monarch Money, a subscription-based money manager app co-founded by Val Agostino, John Sutherland and Ozzie Osman, with the goal of helping customers create financial goals and a path to achieve them. My colleague Mary Ann Azevedo reported on the company in 2021 when Monarch raised $4.8 million in seed funding.
Osman said via email that “since the news broke we're getting twice the number of users and it's all coming from this.” The app’s Google Play store page shows over 10,000 downloads lifetime, however Osman declined to get more specific on the exact number.
He did respond that Nov. 1 “was our biggest day in terms of new users since we launched the app” in January 2021. That included the time when it moved from waitlist to public and following assorted announcements.
In a blog post following Intuit’s news, Monarch’s CEO Agostino called the moment “bittersweet.” That’s because there’s some history there: Agostino was the first product manager on the original team that built Mint. He headed up the product team through the acquisition by Intuit that closed in 2010.
Then Intuit purchased Credit Karma in 2020. Agostino noted in his blog that Credit Karma “has an estimated user base of 130 million U.S. users,” larger than Mint’s 3.6 million monthly active users reported in 2021, according to Bloomberg. At the time of Credit Karma’s purchase, my colleague Ingrid Lunden noted that when Credit Karma launched its financial planning tool in 2013, it drew a direct comparison to Mint.
Following the Credit Karma acquisition, Fast Company reported that Mint’s development seemed to slow down. Agostino made a similar observation in his blog post, noting that “if you're Intuit, it doesn’t make sense to keep investing in both of these consumer platforms, so I’m not surprised they’re shutting Mint down and consolidating on Credit Karma.”
“When we started Monarch, my goal was to ‘fix’ many of the things I felt were broken at Mint,” Agostino told TechCrunch via email. “The biggest was the business model. A free personal finance app is simply not a viable business due to the high costs required for financial data aggregation. Moreover, users sign up for these apps with the hopes of improving their financial life. When an app is ad-supported, the needs of the advertisers are prioritized over the needs of the users, ultimately defeating the whole purpose.”
Meanwhile, when Intuit told customers earlier this week that Mint would be incorporated into Credit Karma, customers took to Reddit and social media to ponder what they will do instead and ask for recommendations for other apps.
Jess Manno responded to Intuit’s tweet with “ok but can I transfer my data from mint? I don’t wanna lose track of all my progress.”
Agostino told TechCrunch that Monarch does provide the ability to import Mint data so that users can try out Monarch and still “preserve their financial history.”
And Shawn Adrian, co-founder of spend tracking app Cheddar, tweeted that he had previously worked at a personal finance startup called Wesabe in 2008, and that “it was actually hard to compete with Mint.” TechCrunch spoke to Wesabe’s co-founder Marc Hedlund about that very topic in 2010.
Adrian said via direct message that “Intuit must be absolutely banking cash to view our largest competitor, Mint, as a languishing side project. That said, we've seen a huge influx of beta signups since the news, so I for one am thrilled.”
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Personal Finance & Financial Education
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Jeremy Hunt has denied the UK economy has a “broken leg” but admitted it is suffering from a “sprained ankle.”
The Chancellor had the medical analogy put to him by an audience member at a Resolution Foundation conference in Westminster – but insisted Britain should “not lose our self-belief.”
In a nod to his years as health secretary, Hunt was described as the UK’s “chief surgeon” and asked, “to what degree does our economy actually have a broken leg?”
But disagreeing with the metaphor, he claimed the UK was “one of the world’s best and most brilliant countries at beating ourselves up.”
Hunt said some commentators were “good at putting us under a magnifying glass, and identifying areas where – I’m not sure I describe it as a broken leg – but identifying areas where we can do better, and that is a very good thing for us that we do that.”
He added: “I think it’s really important not to lose our self-belief… sometimes we forget that other countries also have things that they need to improve.”
Citing the UK’s higher education system, its technology industry and its record on climate change, he insisted: “We’ve got a lot going for us – so if we’re going to go into dealing with the sprained ankle, rather than the broken leg, then let’s do so with respect to the positives.
“We’ve got so much going for us. I think we should have a little bit of optimism for the future because [we have] still got some of the most exciting prospects of any country in the world.”
The Chancellor also told the event, titled The Economy 2030 inquiry, which focused on ending stagnation, that the UK could be the “most prosperous” economy this century because of its “untapped potential.”
He said the industrial sectors – such as artificial intelligence (AI) and life sciences – which would grow the fastest – are ones “where we are doing really well.”
Hunt added: “If I was going to choose one country in the world that had the most untapped potential to become the most prosperous 21st century economy, it would be Britain.”
And he stressed that improving the UK’s productivity was the key challenge, but insisted last month’s Autumn Statement, which saw him announce tax breaks for business investment, was designed to improve this in the long term.
“The only way in the long run that you can raise living standards is by raising productivity,” he said.
November’s fiscal event, Jeremy Hunt said, introduced “the most competitive business investment reliefs in the world,” matched only among the OECD nations by Latvia and Estonia.
Along with the other 109 growth measures in the package, Hunt said it would increase business investment in the British economy by “£20bn a year.”
That would close “about half the gap” with competitors such as Germany, France and the US, where firms invest around two per cent of GDP more a year than in the UK.
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United Kingdom Business & Economics
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Subsets and Splits
List Unique Topics
Simple retrieval of unique topics from the dataset, useful for basic exploration but lacks deeper insights.