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Inheriting an IRA or 401(k) can add to your wealth but it can also bring some potential tax headaches. One tricky issue involves required minimum distributions or RMDs. IRA and 401(k) plan owners are required to take minimum distributions from their accounts beginning in the year they turn 72. The IRS has special rules regarding the RMD in the year of death that IRA and 401(k) beneficiaries need to be aware of.
A financial advisor can help you through the ins and outs of planning for retirement to put your mind at ease.
When Do RMDs Begin?
Under the tax code, certain retirement account owners are required to begin taking minimum distributions once they turn 72. The types of accounts that are subject to RMDs include:
Traditional IRAs
401(k) plans
Other defined contribution plans
Roth IRAs are not subject to RMDs during the account owner’s lifetime. You will, however, be subject to RMDs if you inherit a Roth IRA. The IRS is very specific about when these distributions must begin. The required beginning date (RBD) for RMDs is April 1st of the year following the year that the account owner turns 72. That’s important for understanding when an RMD in the year of death is necessary.
When Is an RMD in Year of Death Required?
If you inherit an IRA or another tax-advantaged account that’s subject to RMDs, the timing determines whether you’re required to take an RMD in the year of death.
Here’s how it works:
You must take an RMD if the account owner has reached their required beginning date but has not taken a required minimum distribution for the year.
You do not have to take an RMD if the account owner passes away before their required beginning date.
Here’s an example of how this works. Say your father turned 72 in March of 2020, making his required beginning date April 1, 2021. He passes away in November 2021 without having taken his RMD for the year. In that instance, you would be responsible for taking the distribution as the account beneficiary.
Now, say your father passed away in March of 2021 instead. Since he has not reached his required beginning date, you would not be obligated to take an RMD in the year of death.
When beneficiaries must take an RMD in the year the account owner dies, the amount is reported on their tax return as income. They must pay taxes on it, the same way that the account owner would have had to if they had taken the distribution themselves.
How to Calculate RMD in Year of Death
If you’re required to take RMDs in the year of death after the account owner passes away, the calculation method is based on the RMD they would have received. Following IRS rules, the RMD for any year is determined using this formula:
Required minimum distribution = account balance as of the end of the preceding calendar year divided by a distribution period from the IRS Uniform Lifetime Table
The Uniform Lifetime Table is designed for unmarried IRA owners, married IRA owners whose spouses aren’t more than 10 years younger than they are and married owners whose spouses aren’t the sole beneficiaries of their IRAs. Table I (Single Life Expectancy) is used when the beneficiary is not the spouse of the IRA owner. Table II (Joint Life and Last Survivor Expectancy) is used for owners whose spouses are more than 10 years younger and the sole beneficiary of the IRA.
If the account owner named multiple beneficiaries and didn’t take their required minimum distribution, each beneficiary shares responsibility for it. Beneficiaries can split the account into multiple inherited IRAs, which would allow them to claim their share of the account balance while also shouldering their part of the tax obligation.
For RMDs in the year following the account owner’s death, distribution calculations will depend on who is the beneficiary of the account. Generally, designated beneficiaries will use the IRS Single Life Expectancy Table to figure the distributions. This table uses life expectancy and the IRA balance to determine RMDs.
What If You Don’t Take an RMD in Year of Death?
The deadline for taking RMDs in the year of death is December 31st of the year in which the original account owner passes away. The IRS imposes a strict penalty when RMDs are required but not taken by beneficiaries. If you inherit an IRA or 401(k) and fail to take the RMD for the year of the account owner’s death, a 50% tax penalty applies.
There’s an exception if the estate is named as the beneficiary of an IRA. In that case, the estate takes the RMD and is responsible for reporting the distribution.
The 50% penalty can substantially reduce what you’re able to withdraw from an inherited IRA or 401(k). For that reason, it’s important to understand when RMDs are or are not required when the account owner passes away. Talking to a tax expert or your financial advisor can help you to prepare for any tax liability that might be created if you stand to inherit an IRA or 401(k) from someone else.
Withdrawing an Inherited IRA
The IRS rule for the year of death RMDs is not the only tax rule to be aware of with inherited retirement accounts. You also have to be aware of your tax liability for managing the account in future years.
Spouses have several options for inheriting an IRA. For instance, they can:
If you are not the account owner’s spouse, you can only set up an inherited IRA. You won’t be allowed to make any new contributions to the account. You also have to fully withdraw all of the money in the account. You have 10 years following the original account owner’s death to do so. If you fail to do so, the IRS can apply a tax penalty.
In terms of how withdrawals are taxed, they follow the same tax rules as the original IRA. So if you inherit a traditional IRA, withdrawals are taxed at your ordinary income tax rate. If you inherit a Roth IRA, RMDs are required but withdrawals are tax-free as long as the account is at least five years old.
The Bottom Line
Inheriting retirement accounts can add a wrinkle to your tax situation and it’s important to be aware of the rules for the year of death RMDs. The main thing to know is when the account owner’s required beginning date is, as that can decide whether you’ll need to take an RMD in the year of death or not.
Tips for Retirement Planning
Consider talking to your financial advisor about how to handle an inherited retirement account. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
When rolling over an inherited IRA, give some thought to which brokerage you’d like to use to hold those funds. Brokerages can vary greatly in terms of the fees they charge and the range of investment options they offer. Comparing different online brokerages can help you find the best place to keep inherited retirement funds.
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Personal Finance & Financial Education
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Dimitrios Kambouris/Getty Images
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Hunter College's class of 2023 gathered for their commencement ceremony on May 30 in New York City. Many of these graduates are due to make their first student loan payments in the coming weeks.
Dimitrios Kambouris/Getty Images
Hunter College's class of 2023 gathered for their commencement ceremony on May 30 in New York City. Many of these graduates are due to make their first student loan payments in the coming weeks.
Dimitrios Kambouris/Getty Images
Roughly 7 million federal student loan borrowers are new enough to the system that they have never had to make a payment on their loans. That changes in October, when loan payments come due after a years-long pandemic pause, and these brand new borrowers take the first steps of a long journey toward paying off their debt.
Those first steps can feel intimidating – but we're here to help. Here's what new borrowers should know in the lead up to October:
The student loan portal is your friend.
It's time to get acquainted with it! Go to the U.S. government's loan portal. You'll need your FSA ID to access your account. If you don't have one, or don't remember it, it could take some time. So don't delay.
Once you're logged in, make sure your contact information is up to date. If anything has changed, the U.S. Education Department and your loan servicer need to know.
Speaking of servicers, while you're there, you can find out who your servicer is (just go to the "My Loan Servicers" section). That's important because, next, you'll need to go to your servicer's website and add or update your contact information there, too. Redundant? Perhaps, but you need to do it. If they can't find you, they can't bill you – but that won't keep your loans from ballooning with interest. Here's a list of the current federal student loan servicers:
Remember to save your password and FSA ID somewhere safe – moving forward, you should make a habit of checking in on your loans every month or two.
And if you can't figure out how to log into the government's portal, you can always call for help: 1-800-4-FED-AID (1-800-433-3243).
There's a tool for finding the repayment plan that makes sense for you.
The kind folks at the Department of Education's office of Federal Student Aid have built a handy loan simulator that will ask you all sorts of life questions, like whether you're currently employed, or paying for health insurance, or married (with children). It'll ask you where you went to school, how much debt you have and how much income you're earning.
And then it will let you choose your plan based on your repayment goals. Do you want to pay as little money as possible in the long-run or focus for now on keeping your monthly payments as low as possible? That's the key question you'll need to answer for yourself.
For the long-run savers, the traditional, "standard" 10-year plan is almost certainly your best bet. You'll have larger, fixed payments right out of the gate – but that also means you'll end up paying the least amount of interest over time compared to other, more stretched-out plans.
If you're a young earner and want/need a low monthly payment, great. The Biden administration's new income-driven repayment plan, known as the SAVE plan, might be a good fit, especially if your debts all come from undergraduate student loans.
But be warned! Procrastination could cost you. If you put off choosing a plan for yourself, the system will choose (and in some cases has already chosen) for you – the standard plan, which could come as a shock to your finances.
Loan forgiveness is still a thing.
President Biden's big loan relief plan was struck down by the U.S. Supreme Court, but there are other loan forgiveness options that are very real and plentiful.
Like Public Service Loan Forgiveness, which promises that if you work for 10 years in public service (in government or for a qualified nonprofit) while making 120 qualifying payments, your remaining balance will be forgiven. If this rings your bell, you should consider the new SAVE plan. There's no point paying hefty monthly sums upfront, through the standard 10-year plan, if you think you will qualify for forgiveness in 10 years anyway.
Income-driven repayment plans, like SAVE, also come with different levels of forgiveness. Typically, it's 25 years for graduate school debt and 20 years for undergraduate debt. The new SAVE plan will also include a new tier of forgiveness for low-debt borrowers: Folks who take out $12,000 or less can qualify for forgiveness after 10 years, though that part of the plan won't go into effect until July 2024.
Enrolling in auto pay can lower your interest rate.
If you tend to pay your bills at the last minute and have been known to miss a deadline or two, consider enrolling in auto pay. You'll even get a 0.25% cut on your interest rate.
The "on-ramp period" will seriously slow you down.
You might've heard President Biden or Education Secretary Miguel Cardona trumpet something the administration is calling an "on-ramp period" for borrowers. It lasts a year, from now through Sept. 30, 2024, and it basically means borrowers who can't or choose not to make their monthly payments won't have the delinquency reported to credit agencies.
It seems nice, right? Patience baked into policy. But here's the problem: Loan interest will continue to accrue regardless of whether you make your payments. Even if you genuinely can't afford repayment, you have better options than this on-ramp. For one, it's possible – perhaps likely – that you could qualify for a low monthly payment, as low as $0, on the SAVE plan, which also cancels whatever interest is not covered by your monthly payment.
Avoid default.
In normal times, if a borrower goes 270 days without a payment, they'll go into what's called default. Default destroys a borrower's credit and allows the government to dip into your wages, tax refund and Social Security. In short, the government's likely going to get its money the easy way, or the hard way. Try the easy way first.
If you can't afford a monthly payment right now, that's fine – again, check out the SAVE plan. You may qualify for a $0 payment. You can also call your loan servicer and request a temporary forbearance or deferment – not as good as being on a repayment plan but preferable to default.
Don't wait to call your loan servicer.
The companies the government pays to answer student loan questions are struggling as borrowers flood their phone lines. In normal times, these servicers help several million borrowers a year move into repayment. Right now they need to help tens of millions — and do it with less money than usual. The more you can do online on your own, the better off you'll be.
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Personal Finance & Financial Education
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The Tories have been accused of “giving up” after hundreds of communities’ pleas for extra Government cash were denied.
Fifty-five projects across the UK were awarded a share of nearly £1billion from the Government's levelling-up fund. But Labour criticised ministers for failing to explain what will happen to those areas whose bids were unsuccessful.
The Department for Levelling Up was forced to shake up its funding allocation after criticism that the last tranche was disproportionately handed to the relatively affluent South East. Rishi Sunak faced a huge backlash after his own leafy Richmond constituency in Yorkshire received a hefty cash injection in the previous round.
The Department stressed that this third round of funding is spread across all parts of Great Britain. It said the money will help spread opportunity, create jobs and revitalise local communities, with £825 million going towards regenerating high streets and £150 million towards improving transport links.
But following the announcement, Shadow Business Minister Justin Madders told the Commons: "Where does this leave the hundreds of projects that still haven't been successful? There was no mention of any future rounds in the statement. In fact, I think the minister said this was the final round of bidding, so where does that leave all the places that have been unsuccessful so far?
"What is the plan to address those communities that are crumbling, those high streets that are emptying, is this the end of any hope of levelling-up for them?" He said "this statement offers no path ahead to deal with those issues, it just rearranges the deck chairs with what has gone before", adding: "They are not levelling-up, they're giving up."
The Democratic Unionist Party (DUP) complained that no cash was allocated to Northern Ireland despite "hundreds of suitable applications". The party's Treasury spokesman Sammy Wilson said: "This is an outrageous act by the Government. Under the cloak of economic blackmail, the Government has syphoned money away from Northern Ireland to shore up Conservative seats in England. The Government should be honest. The real reason for this allocation is to direct more money into the marginal seats in Great Britain where the Conservative Party is struggling."
The latest projects earmarked for funding were chosen from a pool of bids that were unsuccessful in the second round, avoiding the competitive bidding process seen previously. The North West receives £128million, the North East £59million, Yorkshire and the Humber £16 million and the Midlands £171million in total, according to the levelling up department.
Allocations include £20 million to grow fishing and high-skilled sustainable jobs in Torbay, £18 million to regenerate three former mining communities in Doncaster and £15 million to upgrade Blackpool's transport network. The highest award in the funding round - £48 million - goes towards upgrading the Penistone railway line in Yorkshire.
Levelling Up Secretary Michael Gove said: "Levelling up means delivering local people's priorities and bringing transformational change in communities that have, for too long, been overlooked and undervalued. Today we are backing 55 projects across the UK with £1billion to create new jobs and opportunities, power economic growth and revitalise local areas. This funding sits alongside our wider initiatives to spread growth, through devolving more money and power out of Westminster to towns and cities, putting in place bespoke interventions to places that need it most, and our Long-Term Plan for Towns."
The Tories’ flagship levelling-up plan came under further criticism last week after a report by the National Audit Office said just 64 out of more than 1,300 projects have been completed while 76 were still yet to begin. It said delivery across three government funds worth up to £9.5billion is behind schedule.
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United Kingdom Business & Economics
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Maharashtra Government Approves Lek Ladki Yojana; Aditi Tatkare Says Scheme Will Empower Girl Child
The scheme offers financial support to the girl child whose family holds an orange or a yellow ration card.
*This is in partnership with BQ Prime BrandStudio
The Maharashtra cabinet has approved the Lek Ladki Yojana (Dear Daughter Scheme), which guarantees financial support to the girl child whose family holds an orange or a yellow low-income ration card. The scheme offers over Rs 1 lakh to such children and their families over a period of 18 years from birth, with payouts dependent on the girl child's ongoing education.
Aditi Tatkare, who heads Maharashtra’s Women and Child Development Department and has been instrumental in conceiving the scheme and advocating women empowerment in the state, announced that it will “reduce the incidents of female foeticides and school dropouts, which will help in curbing child marriages.”
"I am sure that Lek Ladki Yojana will empower the girl child in Maharashtra," remarked Tatkare, who is also the only woman minister in the current state cabinet.
The scheme will be implemented from April 1, 2023, with retrospective effect. As part of the scheme, the government will pay Rs 5,000 at the time of birth of a girl child, Rs 6,000 on her getting admitted to a school, Rs 7,000 when she reaches class 7, Rs 8,000 upon getting admission in a college and Rs 75,000 when she reaches the age of 18 years. Thus, the government will be providing the girl child and her family a total of Rs 1,01,000.
Tatkare said the objective of floating the Lek Ladki Yojana is to empower girls in the state and prevent the girl child from dropping out of school because of perceived financial burdens on the family.
If there are one or two girls or one boy and one girl born in a family after April 1, 2023, the girl will be eligible to receive the benefit of this scheme. Both girls will be eligible for benefits if there are twins born during the second delivery, but either the mother or the father will need to undergo a family planning procedure.
The scheme was announced during the budget session in March earlier this year. Tatkare had earlier said that the scheme, which holds womanhood in veneration, will be “rolled out from Navratri,” an auspicious period that honours the divinity of Goddess Durga.
“We were getting continuous suggestions for this scheme, but now we have got the final nod of the cabinet,” Tatkare said.
The scheme aims to assist orange and yellow ration card holders from low-income families. Families earning between Rs 15,000 and Rs 1 lakh annually are allotted orange ration cards, while those living in urban areas and earning less than Rs 15,000 annually are provided yellow ration cards.
The scheme will benefit 2.56 crore families that hold the ration card in Maharashtra, of which 1.71 crore families hold the orange ration card and 62.60 lakh families have the yellow ration card, as per the Economic Survey of Maharashtra 2023.
Due to financial limitations, girls from households with yellow or orange ration cards are often asked to make compromises on education and drop out of school. The scheme aims to prevent this from happening by assuring that the girl child gets financial support right from birth up to the age of 18 years, based on qualifying criteria related to education, thus providing monetary motivation to families to support the education of girls.
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India Business & Economics
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The UK is set for five years of "lost economic growth", with the poorest hit hardest, a think tank has warned.
The National Institute for Economic and Social Research said a triple blow of Brexit, Covid and Russia's invasion of Ukraine had badly affected the economy.
It added that the spending power of workers in many parts of the UK will remain below pre-pandemic levels until the end of 2024.
The BBC has contacted the Treasury for comment.
The amount of money made by the UK economy, its gross domestic product - or all the goods and services produced - is not forecast to return to 2019 levels until the second half of next year, Niesr forecast.
This weak "stuttering growth" over a five year period has widened the gap between the wealthier and poorer parts of the country, the think tank said.
In London, real wages are expected to be 7% higher by the end of next year than they were in 2019 - whereas in regions such as the West Midlands they are forecast to be 5% lower, its analysts said.
Despite pay increases, high inflation has forced up prices and the rising cost of living has left households throughout the UK feeling squeezed.
Niesr forecasts that inflation, the rate at which prices rise, will remain continually above the Bank of England's 2% target until early 2025, meaning the cost of living will also continue to rise. Inflation is currently 7.9%.
The Bank, which is tasked with keeping inflation under control, said last week it expected to meet its own target of 2% by early 2025.
As a result, people's wages, when taking inflation into account, would be below the level they were before the pandemic until the end of next year in "many UK regions", the think tank said.
Prof Adrian Pabst, deputy director for public policy at Niesr, said low-income households would be hit hardest, with real disposable incomes in this group falling by about 17% over the five years to 2024.
"For some of the poorest in society, coping with low or no real wage growth and persistent inflation has involved new debt to pay for permanently higher housing, energy and food costs," Prof Pabst said.
Last week, the Bank of England put up interest rates for the 14th time in a row as it continued with its efforts to make borrowing more expensive, dampen demand and therefore slow inflation.
The Bank also signalled it would keep interest rates higher for longer, projecting that inflation would fall below 5% this autumn or winter.
But not all economists agree that the Bank should be raising rates when many households and business are struggling financially. Raising rates too aggressively could push the economy into recession, which is defined typically as when it shrinks for two three-month periods - or quarters - in a row.
Niesr said it expected the UK to avoid going into a recession this year, but said there was a "60% risk" of one by the end of 2024.
The Bank has said the UK will not enter a recession, but has forecast growth to be limited and unemployment to rise.
A growing economy generally means there are more jobs, companies are more profitable, and pay packets grow. Higher wages and larger profits also generate more money for the government in taxes that can be spent on public services.
Prof Stephen Millard, deputy director for macroeconomic modelling and forecasting at Niesr, said the "supply shocks" of Brexit, Covid, the Ukraine war and rising interest rates had "badly affected the UK economy".
"The need to address the UK's poor growth performance remains the key challenge facing policy makers as we approach the next election," he added.
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United Kingdom Business & Economics
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Eric Trump is expected to be, one day after a lawyer for the New York Attorney General's Office called his testimony "extremely favorable" to the state's .
On Thursday, he and older brother Donald Trump Jr. each downplayed their connection to financial records at the center of the case against them. They testified that they had limited involvement with the preparation of financial documents that inflated the value of Trump Organization properties and their father's wealth.
The judge in the case has already found the Trumps and their company liable for fraud, determining that they manipulated financial statements to obtain favorable deals with banks and insurers. New York Attorney General Letita James says the family profited from fraud to the tune of at least $250 million. The Trumps and the other co-defendants in the case deny all wrongdoing.
Eric Trump's first day of testimony
The case revolves around documents called statements of financial condition, which showed inflated values for Trump properties and Trump's personal assets, and were used to secure better rates on loans and insurance. On Thursday, Eric Trump testified that he didn't think he "ever saw or worked on a statement of financial condition" and "never had anything to do with" them.
He was shown email exchanges with company executives referring to "annual financial statements" for his father, or the abbreviation "f/s." Eric Trump said he understood them to be referring to financial statements, but not necessarily the specific annual statements of financial condition that are the focus of the case.
Later, an attorney for James' office showed pretrial deposition footage of Eric Trump and highlighted apparent discrepancies between Eric Trump's statements then and evidence collected by the office.
Eric Trump said he stood by both his testimony and his deposition, but acknowledged that evidence showed he had some involvement in the preparation of the financial statements — "but to a very small point," he said.
Eric and Donald Trump Jr. each sought to blame the Trump Organization's accountants — both internal and external — for any inaccuracies that led to the state's allegations of fraud. Their father, former President Donald Trump, is expected to testify Monday, and their sister Ivanka Trump two days after that.
As Thursday's testimony drew to a close, the two teams of lawyers argued over whether a lawyer from the attorney general's office was repeating questions to get the testimony they wanted.
But New York Attorney General special counsel Andrew Amer said he had been "happy with" Eric Trump's "great" testimony.
"This witness's testimony is extremely favorable to our case," Amer said.
for more features.
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Banking & Finance
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Story at a glance
- GOBankingRates reviewed multiple U.S. cities based on their population and costs of living to find the 15 best for those looking to retire on a budget of $2,500 a month.
- Akron, Ohio, ranked as the best place to retire, the analysis found.
- With other estimated costs like health care and groceries added in, a retiree would pay on average $2,361 per month to live there.
(WJW) — If you’re looking to retire, and do so on a budget, it may be hard to know where to live to get the most bang for your buck.
A new analysis by the personal finance site GOBankingRates suggests a northeastern Ohio city may be just the place for you.
GOBankingRates reviewed multiple U.S. cities based on their population and costs of living to find the 15 best for those looking to retire on a budget of $2,500 a month.
It was Akron, Ohio, that ranked as the best place to retire, the analysis found.
With other estimated costs like health care and groceries added in, a retiree would pay on average $2,361 per month to live there, according to GOBankingRates. It wasn’t the least expensive city on the list, but it had a high livability score (based on the area’s amenities, commute, cost of living, crime, employment, health, safety, schools, housing, and reviews).
The most affordable city on the list was Jackson, Mississippi.
Texas, Ohio, and Pennsylvania make up most of the list with a few other Midwestern and Southern cities also being featured.
Here are the 15 best cities to retire in on a budget, based on GOBankingRates’ analysis:
- Akron, Ohio
- Pampa, Texas
- Robstown, Texas
- Johnstown, Pennsylvania
- Borger, Texas
- Jackson, Mississippi
- New Castle, Pennsylvania
- Cleveland, Ohio
- Freeport, Illinois
- Amherst, Texas
- Riverview, Missouri
- Steubenville, Ohio
- Altoona, Pennsylvania
- Alliance, Ohio
- Memphis, Texas
You can view GOBankingRates’ full report here.
A recent report found that those between the ages of 65 and 74 have the highest average net worth of any age group in the U.S. Between 2019 and 2022, the Federal Reserve reports the average net worth for U.S. households was about $1.06 million. For those between the ages of 65 and 74, the average net worth was almost $1.8 million.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Personal Finance & Financial Education
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Rachel Reeves is under pressure to drop Labour’s blanket opposition to higher taxes on wealth, amid growing alarm within the party over extreme levels of inequality and the battered state of Britain’s public finances.
After a conference in Liverpool designed to showcase party unity and economic credibility, trade union leaders and senior figures on the shadow chancellor’s left said they would keep “banging the drum” for a Labour government to raise billions of pounds more in tax from the very richest.
Paul Nowak, the general secretary of the Trades Union Congress, said the union movement would maintain pressure on Reeves. He said: “I’ve got a huge amount of respect for Rachel and want her to be the next chancellor. But on this issue, I think it’s fair to say I disagree. I think we do need to raise the question around wealth taxes.
“I’m a trade unionist – so you don’t give up at the first word. If you ask for things and someone says no, you don’t just give up and wave a white flag. We’re going to carry on banging the drum.”
Andy Burnham, the mayor of Greater Manchester, told a conference fringe meeting that more needed to be done to tackle wealth inequality. “I think we overtax work and undertax capital and assets,” he said, suggesting a levy on land values or reforms to council taxes could be considered.
“We need to look at assets, land and capital because that is how society has changed and then you could take some of the burden off labour.”
Reeves confirmed in August that she would not bring in a mansion tax on expensive properties or hike the rates charged on capital gains from shareholdings and property. However, the shadow chancellor faced repeated questions on her stance in Liverpool amid disquiet from grassroots members and leftwing MPs.
The Fire Brigades Union’s general secretary, Matt Wrack,, said a Labour government “must introduce a tax on the assets, land and wealth of the super-rich” to help fund public services. “This would be a hugely popular measure with voters.”
Beth Winter, a Labour MP from the leftwing Socialist Campaign group, said ensuring wealthy households paid a “fair level of tax” was vital for the proper funding of public services. “It’s outrageous that the huge wealth, assets and land of the richest is taxed at a lower rate than on incomes from work.”
Reeves ruled out a rise in the tax rates charged on capital gains, which are lower than those charged on income from salaries, telling a fringe event sponsored by the Tony Blair Institute that a “wholesale equalisation” could hit investment in Britain.
While leaving some wriggle room for a more modest rise, she said: “We think it is important to create the incentives to invest in UK businesses – to help create businesses, to help grow businesses, and to have preferential tax treatment in doing that.”
Charging tax on incomes and capital gains at the same rate was a policy introduced during the 1980s by Margaret Thatcher’s chancellor, Nigel Lawson, but it was later dropped. Rishi Sunak considered reviving it after the pandemic and it has been promoted by Joe Biden in the US.
A government review commissioned by Sunak found in 2020 that up to £14bn a year could be raised by increasing the 28% rate charged on capital gains to match rates of income tax, which is levied at 20% for basic-rate taxpayers, and 40% and 45% for higher and additional rate earners in England and Wales.
Sharon Graham, the general secretary of the Unite trade union, said another option could be to launch an entirely new levy. “As a starter, a 1.5% annual tax on wealth over £10m would bring in about £17bn a year. There’s a choice I think most people could get behind,” she said.
Despite refusing to move on wealth taxes, Labour has several other measures aimed at raising more revenue from wealthy individuals and businesses, including scrapping non-dom status, charging VAT on private school fees, and a more extensive windfall tax on energy company profits. Reeves also argues that spurring faster economic growth will bring in more for the exchequer.
However, Nowak said an incoming Labour government would inherit a devastating outlook for the public finances from the Conservatives. “If you’re serious about rebuilding the NHS, repairing and renewing services – … we’re going to have to find the money from somewhere.”
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United Kingdom Business & Economics
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Chinese Property Bonds, Shares Jump On Funding Support Plan
China Vanke, Seazen and Longfor are among companies that have been named in a draft of the so-called white list for funding.
(Bloomberg) -- Chinese developers’ bonds and shares gained after people familiar with the matter said regulators are drafting a list of 50 developers eligible for a range of financing, the latest move by Beijing to support the embattled property sector.
Longfor Group Holdings Ltd.’s 3.85% note due 2032 rose 4.2 cents Monday to 42 cents, while Seazen Group Ltd.’s 4.8% bond due 2024 climbed 3.4 cents to 35.4 cents, with both poised for their biggest gains in almost two weeks. Longfor’s American depositary receipts rose 6.2% on Monday to their highest level since Oct. 2. China Vanke Co.’s 3.5% notes due 2029 rose another 0.4 cents to 58.8 cents on the dollar on Tuesday morning after climbing 5.9 cents on the dollar Monday.
China Vanke, Seazen and Longfor are among companies that have been named in a draft of the so-called white list for funding, the people said, asking not to be named because the matter is private.
The list, which includes both private and state-owned developers, is intended to guide financial institutions as they weigh support for the industry via bank loans, debt and equity financing, the people said. It couldn’t be determined which other developers were included on the draft list.
The move may help boost confidence toward some developers but is unlikely to mark the end for developer defaults, according to JPMorgan Chase & Co. analyst Karl Chan.
“We do not think a whitelist alone can prevent a company from defaulting on bonds,” Chan wrote in a note. “Directionally this would be positive as it should enhance confidence from both homebuyers and banks, but if property sales of a non-SOE deteriorate substantially, we believe most banks may still be reluctant to extend support, as a whitelist may likely only serve as a ‘reference.’”
Chan cited Country Garden, which received financing support from authorities and banks but still failed to avoid a default.
©2023 Bloomberg L.P.
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Asia Business & Economics
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Recent data on how much money people have tucked away in their 401(k) plans highlights just how far most Americans have to go to reach their retirement savings goals.
As of the third quarter, 401(k) participants whose plan was managed by Fidelity Investments had a median balance of $23,800, according to recent data from the wealth management firm. Savings were even slimmer for other types of retirement plan, with median savings of $20,600 for 403(b) accounts and $14,500 for individual retirement accounts.
One measure of how many people are likely to fall short: An August survey from brokerage firm Charles Schwab found that.
Fidelity's data, which is based on an analysis of the roughly 45 million retirement accounts it manages, also shows stark differences in account balances across different generations. Perhaps not surprisingly, given they've had longer to save, baby boomers lead all groups in money saved with an average of $212,600 saved in 401(k) accounts, $196,600 in 403(b) accounts and $201,640 in IRAs.
Yet many boomers are headed toward retirement report from the National Institute on Retirement Security., a Credit Karma survey found earlier this year. Likewise, millions of Generation-X Americans have only $40,000 in savings, according to a July
One of the best ways to boost a 401(k) balance is to funnel pay raises from your employer into the retirement account, according to Kamila Elliott, a certified financial planner in Georgia. Elliott told CBS News earlier this month that Americans don't make adjustments to their employer-sponsored retirement account as often as they should.
"They auto-enroll in the 401(k) plan, but they never increase their contribution as they make more money," Elliott said.
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Personal Finance & Financial Education
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Ever since it floated on the London Stock Exchange in 2010, Ocado has always been a 'jam tomorrow' stock.
The online grocery retail and technology company has consistently argued that online will become the fastest-growing grocery channel in all markets around the world.
As such, investors have asked to be patient, to carry on backing the company as it rolls out its technology and builds new partnerships around the world. The profits, they were promised, will eventually roll in.
A glance at Ocado's full year results, published on Tuesday, would suggest to the casual reader the company is winning that argument.
It noted: "Online market share has stabilised at materially higher levels following the pandemic [and is more than] 50% higher in the top 20 markets worldwide.
"Industry data forecasts widespread and continued channel growth. For example, Edge Ascential expects online market share in the top 20 markets, globally, to grow by 30% through 2027."
Unfortunately, investors were unmoved. The market focused not on the optimistic projections for online groceries but on Ocado's ballooning losses.
A pre-tax loss of £501m for 2022 was up from one of £177m in 2021 and appreciably worse than the £429m loss that analysts had pencilled.
It was the continuation of a long trend in which the red ink has flowed liberally. In 2020, Ocado reported a pre-tax loss of £52.3m. In 2019, it was £214.5m and in 2018 it was £44.4m.
The shares, which have more than halved in the last year, fell by more than 8%. The brief period during the lockdown boom, in which Ocado's stock market valuation eclipsed that of the market leader Tesco, seems a long time ago. The stock market now values Tesco at nearly four times that of Ocado.
It is fair to say that there is plenty of scepticism around.
Clive Black, retail analyst at the investment bank Shore Capital and a long-standing critic of Ocado, told clients the results were "awful" and represented "a truly dismal performance".
In a damning note entitled 'Somewhere over the rainbow', Mr Black, one of the sector's most renowned analysts, noted that he did not forecast Ocado's financial performance because there was "little to no visibility", pointing out that the company had "persistently missed market, and its house brokers, estimates, with downgrade after downgrade to anticipated losses".
He went on: "One day in a distant time zone the Ocado Group may be surrounded by the words, meaningful sequential pre-tax profits, who knows, it may even pay Corporation Tax, but one cannot yet see the rainbow, never mind any pot of gold."
So why did losses widen during 2022?
The most obvious reason is that Ocado's costs continue to rise more rapidly than its sales. The latter rose by just 0.6%, to £2.5bn, while the former rose by 16.5% to £1.2bn. There were also some £349m worth of accounting charges and there was also a near-14% rise in financing costs.
What really appears to have spooked the market is what has been happening in sales.
There are essentially three strands to Ocado. One is international solutions and logistics - under which it licences its platform, the Ocado Smart Platform (OSP), to, among others, supermarket partners including Kroger in the United States, Casino in France, Lotte in South Korea, Alcampo in Spain and Coles in Australia.
The other is UK solutions and logistics, which services both Morrisons as a partner and also the third strand of the business, Ocado Retail. This is the part of the business familiar to most consumers and is a 50/50 joint venture with Marks & Spencer.
It is this latter division that has unnerved the market. Ocado Retail's sales fell during the year by 3.8% to £2.2bn, which the company blamed on "a challenging market as we see the unwind of the COVID impact and normalised consumer behaviour, leading to smaller baskets, exacerbated by the cost-of-living crisis".
In mitigation, the company noted that the number of active customers at Ocado Retail rose by 13% during the year, to 940,000 customers, while the average number of orders received per week rose by 5.6% to 377,000. Unfortunately, the average size of each shop fell by 8.5% to £118, while the number of individual items fell on average from 52 to 46.
That was not in the script and runs contrary to the promises of Ocado's co-founder and chief executive, Tim Steiner, that more people would increasingly spend more with the company as online grocery shopping grows in popularity.
Mr Steiner was insisting on Tuesday that, as unfavourable comparisons to its turbo-charged performance during the pandemic fade away and inflationary pressures recede, the benefits of signing up more customers would come through.
But he has a problem in that, rightly or wrongly, Ocado is perceived by many shoppers as expensive. Ocado plans to challenge this by benchmarking the price of 10,000 of its items against those of Tesco, promising customers money off their next shop if Ocado proves more expensive, but it faces an uphill battle in changing perceptions.
The real jam, of course, is offered in international solutions and logistics. If Ocado can truly build scale and carry on building relationships around the world then, if online grocery shopping really does take off, it will reap the rewards. It is not there yet, though: Mr Black pointed out today the division is losing almost as much as it is recording in sales.
Read more from business:
Stronger public finances weaken government's stance on pay, IFS says ahead of budget
Grocery inflation hits 'new record high of 17.1%
He added: "International Solutions sales, where the group sees the excitement, amounted to £148m. To put the latter into context, a top Tesco hypermarket in the UK will report over £100m of sales per year."
Financially speaking, things will get worse before they get better, with another big loss expected this year.
Capital expenditure, which rose by 17% to £797m during the last year, is likely to remain high while some analysts fret that, with net debt more than doubling during the year to £577m, a cash call will be required on the heels of last year's £575m issue of new shares.
Those financial pressures have also obliged the company to pause the rollout of new distribution centres in the UK.
Ocado remains an admirable business in many ways. Few enterprises of this kind have been built from scratch and certainly not with its technology. Its heavy investment in research and development is something that the UK government would love to see replicated across British business. And its retail offering, as all Ocado customers will know, continues to offer a high class service.
None of this, however, looks like benefiting shareholders in the near term.
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United Kingdom Business & Economics
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Alistair Darling warned Rachel Reeves not to fall into “Tory traps” as Labour prepares for the next election, the shadow chancellor has said, as she revealed how he helped shape the party’s current policies before he died.
Reeves said she was in regular contact with the former chancellor before his death, which was announced on Thursday by his family. She said the former chancellor had been a mentor to her, both when she was a new MP and later when she began to shadow his former brief.
“He quite quickly took me under his wing [after she was elected in 2010] and was a bit of a mentor to me,” Reeves told the Guardian. “I would speak to Alistair regularly and I would see him quite regularly. When I was campaigning in Scotland I would make sure to see him and have dinner with [his wife] Maggie and him. I very much benefited from his advice and wisdom.”
She said Darling had emphasised to her the need to be open about the scale of the economic problems Labour would inherit if it won the next election, and not to make promises she did not intend to keep.
Reeves has avoided promising to commit more money to daily departmental spending despite pressure from Labour MPs to help bolster Britain’s frayed public services. “[Darling] told me you’ve got to make sure your sums add up; don’t promise things you can’t deliver; you’ve got to be watertight,” she said. “The Tories will try and set traps for you – don’t fall into them.”
Darling’s family said he had died after being hospitalised with cancer. Political leaders from all major parties have paid tribute to a man seen by many as one of the most competent senior ministers of the New Labour years.
The former prime minister Gordon Brown, who made Darling his chancellor in 2007, said on Friday he had been integral to shoring up the financial system after the crash in 2008 and ensuring the economy began to grow afterwards. Brown’s predecessor Tony Blair said: “[Darling] was highly capable, though modest; understated but never to be underestimated; always kind and dignified even under the intense pressure politics can generate.”
Many close to Darling believe his role in designing and pushing through the bank bailout of 2008 has been underappreciated.
Reeves said: “The bank recapitalisation, taking their assets on to our country’s balance sheet, guaranteeing people’s deposits to stop the run on the banks, the quantitative easing programme that injected the liquidity into the economy – all of these were novel policies he signed off, helped steer through parliament and built a national consensus for.”
Some also believe his naturally cautious approach has been taken up by the current Labour leadership. Darling famously earned the wrath of those around Brown by telling the Guardian in 2008 that the UK economy was in its worst state for 60 years, and he then went into the following election promising deeper spending cuts even than those carried out by Margaret Thatcher.
Starmer said this week he had been “incredibly fortunate to have benefited from Alistair’s counsel and friendship”.
Reeves said Alistair and Maggie Darling had watched her respond to the recent Autumn statement from his hospital bed. “They were cheering me on,” she said.
Asked whether Darling would have gone into the next election promising to match Conservative spending plans, which would mean 4.1% annual cuts across unprotected departments, she said: “He would have said: ‘Be honest with people and don’t overpromise. People will believe you, don’t let them down.’”
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United Kingdom Business & Economics
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Retirement can seem like a faraway goal until all of a sudden, it’s not. When you only have a few years left until you retire, the financial decisions you make take on a new importance. Once you’re inside the five-year window, that’s a good time to review your plan to make sure you’re on track. It’s helpful to understand why the last five years before you retire are critical. Talking to a financial advisor can give you some clarity on what’s working in your plan or what isn’t.
Timing Matters for Retirement Planning
When you’re younger, time is on your side when it comes to investing for retirement. The more time you have to save and invest, the more opportunity your money has to grow. Waiting to start saving for retirement can mean having to play catch-up later. If you’re approaching the last five years before you retire, a late start can put you at a serious disadvantage. There are two reasons why.
First, you have less time to benefit from compounding interest. Even if you’re maxing out annual contributions to a 401(k) or IRA, including catch-up contributions because you’re 50 or older, that may not be enough to make up for lost time in the market.
The second reason is tied to the first. It’s natural that as you get older, you may begin to shift more of your assets toward safer investments. Moving into more conservative investments, such as bonds, can reduce the risk of losing money right before you retire. But you may also be trading off higher returns by doing so, something your portfolio may need if you got a late start on saving.
Why the Last Five Years Before You Retire Are Critical
The last five years before you retire are essentially a test of your preparation and planning up to that point. When there are five years left on the clock until your retirement, there’s one big question you need to answer: can I afford it?
Whether the answer is yes or no depends largely on everything you’ve done to plan ahead. Some of the most important factors that can influence retirement preparedness include:
What you’ve saved in workplace retirement plans or IRAs
The amount of debt you have, apart from your mortgage
Your expected expenses in retirement, based on your preferred lifestyle
How long your savings will need to last, based on your age at retirement
If you’ve planned well and remained consistent with your plan, then you may not need to do much tweaking in the last five years before you retire. On the other hand, if your plan has some holes or you’ve yet to start planning at all, you may have more work to do to get ready for retirement.
5 Years Until Retirement Checklist
If you have five years until you retire, it’s helpful to know what you should be doing to gauge your readiness. Here are some of the most important things to tackle to ensure that you can retire comfortably and on time.
Review your savings: In order to be where you want in retirement, you’ll need to know where you are right now. Specifically, that means understanding how much you have saved for retirement and how much you still need to save within the next five years to reach your goal.
Running the numbers through a retirement savings calculator can help you see how close or how far away you are from your goal. You can use the resulting number to shape the next steps in your financial plan.
If you’re behind, for example, then you may need to substantially increase 401(k) or IRA contributions. Or you may need to adjust your investment strategy in order to generate higher returns within the remaining years you have until you retire.
Know your income sources: It’s a good idea to know what sources of income you’ll be able to count on once you actually retire. Depending on your situation, that might include:
Withdrawals from a 401(k) or similar workplace plan
Pension income if your employer offers a pension plan
Social Security benefits
Federal Employees Retirement System (FERS) benefits
Rental property income if you own real estate
You may also have income from other sources, such as retirement accounts you inherit or a Health Savings Account (HSA). An HSA isn’t a retirement account, per se, as they’re intended to be used for eligible medical expenses. However, after 65 you can withdraw money from an HSA for any reason, penalty-free. You’ll just pay ordinary income tax on distributions.
Taking inventory of your potential income sources can give you a better idea of how much you may have to spend. It can also help you to determine things like when to begin taking withdrawals from tax-advantaged plans, how much to withdraw and the best age to apply for Social Security benefits.
Estimate retirement spending: Income is one side of your retirement budget and spending is the other. If you’ve got five years to go until retirement, that’s a good time to start thinking about what kind of lifestyle you want vs. what you’ll be able to afford based on what you’ve saved.
Typical retirement expenses include housing, utilities, food and health care. But your budget may also extend to travel, recreation or new hobbies you’ve been wanting to try. Creating a mock budget, then comparing the numbers to your expected monthly income can help you see how far apart the numbers are.
You may also take things a step further and try living on your retirement budget in the last five years before you retire. That can help you evaluate how realistic it is. If you expect to spend less in retirement than you are now, doing a test run of your budget could leave you with some additional money to save each month.
Consider long-term care needs: Long-term care costs can easily wipe out your retirement savings. If you’re in the five-year span before retirement, that’s a good time to assess your personal risk.
Medicare doesn’t pay for long-term nursing care, but Medicaid can. There’s a catch, however, as qualifying for Medicaid usually means spending down assets. If you don’t want to do that, you might consider buying a long-term care insurance policy in the five years before you retire.
Long-term care policies can pay out benefits to cover necessary nursing care. If you’re not sure whether you’ll need long-term care, you could consider a hybrid policy that also includes life insurance. If you don’t use the long-term care benefit, then the policy can still pay out a death benefit to your beneficiaries.
Review your tax situation: Managing tax liability in retirement can allow you to hold on to more of your savings. You may consider making some tax moves in the last five years before retirement that can position you to pay less to the IRS later.
For example, you might convert your traditional IRA to a Roth IRA to get the benefit of tax-free withdrawals in retirement. Converting a traditional IRA to a Roth doesn’t allow you to escape taxes completely; conversions are subject to the same tax rules as withdrawals.
However, once you’ve converted to a Roth account you won’t pay any tax on distributions going forward. That could yield significant tax savings if you expect to be in a higher tax bracket when you retire.
Bottom Line
The last five years before you retire can pass in the blink of an eye and there’s no time to waste when it comes to finalizing your plans. Taking time to review where you are and where you hope to be, can help to ensure that you don’t come up short once it’s time to leave the workplace behind for good.
Retirement Planning Tips
Creating a five-year plan for retirement can also include planning for any contingencies that might come along. Talking to a financial advisor can help you come up with a plan B if you’re worried about anything derailing your retirement timeline. 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.
Investing in tax-advantaged accounts, such as a 401(k) or IRA, is a smart move for retirement planning. If you want to add another savings option into the mix, you might consider opening a taxable brokerage account. Taxable accounts are subject to capital gains tax when you sell investments at a profit. However, they don’t have the same annual limits on contributions as tax-advantaged accounts and there are no early withdrawal penalties either.
Photo credit: ©iStock.com/PeopleImages, ©iStock.com/AzmanL, ©iStock.com/Onfokus
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Personal Finance & Financial Education
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China Drafts List Of 50 Property Firms Eligible For Funding
Chinese regulators are drafting a list of 50 developers eligible for a range of financing, according to people familiar with the matter, the nation’s latest effort to put a floor under the property crisis.
(Bloomberg) -- Chinese regulators are drafting a list of 50 developers eligible for a range of financing, according to people familiar with the matter, the nation’s latest effort to put a floor under the property crisis.
China Vanke Co., Seazen Group Ltd. and Longfor Group Holdings Ltd. are among companies that have been named in a draft of the so-called white list, the people said, asking not to be named because the matter is private.
The list, which includes both private and state-owned developers, is intended to guide financial institutions as they weigh support for the industry via bank loans, debt and equity financing, the people said. It couldn’t be determined which other developers were included on the draft list.
The yet-to-be-finalized list would expand on previous rosters created by banks that only focused on some “systemically important” state-backed firms. It underscores Beijing’s growing concerns about the sector following record defaults, a swathe of unfinished apartments and a deep contraction in real estate investment that threatens to derail growth in the world’s second-largest economy.
Some Chinese builders’ dollar bonds rallied after the report. Vanke’s 3.5% note due 2029 climbed 3.9 cents on the dollar, set for the biggest jump in two weeks, according to data compiled by Bloomberg. Longfor’s 3.85% note due 2032 rose 3.2 cents, while Seazen’s 4.8% bond due 2024 climbed 2.2 cents.
China’s biggest banks, brokerages and distressed asset managers were told to meet all “reasonable” funding needs from property firms at a Friday gathering with the top financial regulators, according to a government statement that didn’t mention a white list. Financial firms were also asked to “treat private and state-owned developers the same” when it comes to lending.
At the same event, regulators asked banks to ensure that loan issuance to private builders grows at the same rate as the industry average, people familiar with the matter said. China’s outstanding property loans at the end of September fell on a yearly basis for the first time, underlining stress in the sector.
The People’s Bank of China, the National Administration of Financial Regulation, Seazen and Longfor didn’t immediately respond to requests for comment. Vanke declined to comment.
China’s housing crisis remains a serious drag on the economy, even though other indicators such as industrial production recorded some improvement in recent months.
Instead of a bazooka, China has resorted to a trickling of policies to address property funding and sales challenges. They include mortgage-easing for homebuyers, down-payment reductions, income tax rebates, a push for urban infrastructure upgrades and affordable housing, and a 200 billion yuan special loan pledge to ensure projects are delivered. The measures however have failed to reverse the slump in the sector.
The real estate industry contracted 2.7% in the third quarter, the biggest drop this year. Home prices declined the most in eight years in October.
“The results so far are disappointing, because these measures mainly focus on boosting demand but overlook the supply side, namely, the financing needs of developers,” Macquarie Group Ltd. economists led by Larry Hu wrote in a Nov. 17 note. “A key thing to watch is whether and when policymakers would take bolder actions.”
--With assistance from Yujing Liu and Zhang Dingmin.
(Updates with developer bond moves in the fifth paragraph)
©2023 Bloomberg L.P.
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Asia Business & Economics
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SANTA FE, N.M. -- Record-breaking oil production in New Mexico is likely to provide state government with a new multibillion-dollar surplus during the upcoming budget year, economists for the state announced Wednesday.
Annual state general fund income would increase to $13 billion for the fiscal year that runs from July 2024 to June 2025 — a surplus of $3.5 billion, or 36%, over current annual general fund spending obligations, according to the forecast from lead economists at four state agencies including the Legislature’s budget and accountability office.
The estimates were presented to a panel of leading legislators Wednesday and set the stage for budget negotiations when the Legislature meets in January 2024, amid public concerns about crime, health care and the quality of public education in a state with high rates of childhood poverty and low workforce participation.
Annual oil production in New Mexico has more than doubled over the past five years, as the state became the No. 2 producer behind Texas. The energy industry delivered record-breaking income to the state over the past year through severance taxes and federal royalty payments, while the oil sector also bolstered government income linked to taxes on sales, corporate income and personal income.
“We are living in unprecedented and historical times in the state of New Mexico," said Wayne Propst, secretary of the state Finance and Administration Department, announcing state income projections.
Money is piling up in state accounts. Uncommitted general fund balances surpassed $4.3 billion on July 1, equal to roughly 50% of annual state spending commitments.
Still, several legislators sounded a note of caution on new spending commitments — and whether they can be sustained if energy markets and production falter.
“My concern is we need to be really careful on how we’re spending it,” said state Democratic state Rep. Harry Garcia of Grants. “If we keep on doing this and that money goes away again, we’re going to be in deep problems. It happened in 2016 and how quickly we forgot.”
Surging oil production has allowed New Mexico in recent years to bolster public salaries, expand access to no-pay childcare, and offer tuition-free college to its residents —- while also setting aside billions of dollars in a variety of “rainy-day” emergency accounts and investment trusts.
The trusts are designed to sustain public programs and ease future dependence on the fossil fuel industry, as oil reserves are depleted or demands decline or both. A state trust for early childhood education, initiated in 2020, already has a balance of $5.5 billion.
Legislation adopted this year will divert excess income from petroleum to the state's severance tax permanent fund, to generate investment income and underwrite construction projects. New deposits of between $2.2 and $3.1 billion are expected by 2028.
“We're building our bridge from peak oil to investment income," Taxation and Revenue Secretary Stephanie Schardin-Clarke said.
Democratic state Sen. George Muñoz of Gallup, chairman of a lead budget-writing committee, said the state’s giant budget surpluses won’t last. He lauded efforts to generate more income through savings and investments.
“We have an opportunity ... to move the state toward less reliance on oil and gas,” he said in a statement.
Legislators have responded to budget surpluses in recent years by approving tax relief and direct rebates — including payments in June of $500 to individuals, or $1,000 per household, and a gradual reduction in taxes on sales and business services.
Democratic Gov. Michelle Lujan Grisham in April signed off on refundable credits of up to $600 per child, a tax break for health care providers and new incentives for the film industry. But she vetoed an array of tax cuts and credits to safeguard state finances.
The governor said Wednesday in a statement that a robust state income forecast “proves that what we are doing in New Mexico's economy is working.” Lujan Grisham also described her support for “meaningful and long-lasting investments” without offering further details about budget priorities for next year.
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Energy & Natural Resources
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Hussain Elius is best known as the co-founder of Pathao, one of Bangladesh’s top ride-sharing apps. For his latest startup, however, Elius is exploring the world of DeFi with Wind.app, a self-custodial, smart contract wallet with three main features. The first is enabling businesses to send payments to remote employees around the world. The second is allowing people to use Wind.app as a virtual bank account. And the third is is the on-ramp/off-ramp infrastructure that the company is building to enable users to change their crypto holdings for fiat or vice versa.
So far, Wind.app has facilitated over $3 million in annualized gross transaction volume (GTV) within a few months of its launch. The Singapore-based startup announced today that it has raised $3.8 million in pre-seed funding co-led by Global Founders Capital and Spartan Group, with participation from backers like Saison Capital, Alumni Ventures and Tiny VC.
By the time Elius left Pathao, it had become one of the most dominant consumer tech companies in Bangladesh and Nepal, offering food delivery, payments and BNPL, aside from ride-sharing, and gaining investment from backers like Gojek. During the COVID pandemic, Elius began exploring crypto. But he realized how hard it is to use for people who, unlike him, do not have a tech background.
“I”m a tech savvy person. If it takes me seven to 10 days to figure out things like MetaMask, gas fees, private keys, public keys and mnemonics, from me coming from a consumer tech background and going into crypto, I realized that crypto is still for nerds,” he said.
Elius decided to build an app accessible to people with minimal blockchain and crypto experience. For one thing, users don’t have to deal with gas fees. And they also store their money in stablecoins, since bitcoin is too volatile. Instead of using private or public keys, users can sign up for Wind.app with their emails or phone numbers.
Wind.app's team
Wind.app is starting off by targeting freelancers and remote workers for payment, especially in Southeast Asia. It’s live in the Philippines, India and Bangladesh, and plans to enter more countries. Many of its early customers are other Web3 startups. “It’s easy to get our value proposition across to other Web3 companies because they get it from day one,” Elius said. Wind.app allows them to use it instead of an exchange with high fees to pay their remote workers.
Elius says Wind.app differentiates from Wise or Payoneer because it uses blockchain for settlement and is able to charge lower fees. Another benefit is being able to open an account quickly because Wind.app’s self-custodial wallet doesn’t require advanced KYC.
“Eventually, we want to go down the ladder and target the underbanked segment, who don’t have as much KYC information anyway, to give them a very easy way to start accepting money,” says Elius.
While Wind.app has users around the world, it started in Southeast Asia—specifically the Philippines—because there is a very large remittance market for USD there. Elius says the country is also very crypto savvy, and many people are familiar with crypto.
“I was in the Philippines a couple of times and even some of the tuk-tuk drivers own crypto,” he says. “They own some bitcoin. So it’s both a remittance market and a big crypto market, which makes it a good first market to start off with.”
One feature that may make Wind.app appealing to consumers it that it has built its own offramp and onramp for fiat and crypto coin.
“The reason we did that was because we initially tried to use different partners and saw it was pretty expensive,” Elius said. “Any other on ramps and off ramps charge between 2% to 3%, which is a lot especially if it’s a dividend. So we do our own and we got the cost down to less than 30 bips or so. And now we actually started to offer that to other businesses, and other businesses that are moving money.”
Some companies in the same space as Wind.app include Binance and Coinbase, but Elius says he doesn’t see them as competitors because people use them mostly for trading. Instead, more direct competitors include Payoneer and Transferwise. “We are coming in and saying that hey, you know we are different because our entire tech stack is different, our regulatory advantage is different,” Elius said.
In terms of user safety, Wind.app is a self-custodial wallet, which means the startup doesn't have access or control of user funds, Elius says. Similarly to Coinbase Wallet, MetaMask or Trust Wallet, wallets are secured cryptographically in the blockchain and their private keys are stored directly in users' phones. If Wind.app was to shut down, users would still have access to their wallets and can transfer funds to other wallets.
Wind.apps new funding will be used for tech development, and procuring licenses and compliance as it builds it off and onramps. Part of it will also be used on the startup’s customer acquisition strategy, including approaching businesses directly and individual users, too.
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Crypto Trading & Speculation
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Pay Hike For Some Private Bankers Not In Sync With Business Growth: RBI Governor
The RBI is also looking at the attrition numbers in some private sector banks, Shaktikanta Das said.
The increase in packages of some private sector bank executives, in some cases, is not commensurate with the business growth, according to Reserve Bank of India Governor Shaktikanta Das.
"It is in such cases, we send it back to bank boards and ask them to re-look it and then come to us," he explained, while referring to the central bank's circular on private sector bank executives' compensation.
Das was addressing questions at the Business Standard BFSI Summit.
The central bank's circular is only a principle-based regulation, the governor said. It doesn't define how much fixed and variable pay should be there for these private sector bank executives, but just the ratio.
"It is the NRC of the banks, which is expected to decide the compensation... We don't put any restrictions," he said.
In terms of attrition at some private sector banks, the governor said that the RBI is looking at it as a part of its supervisory role.
"RBI has always looked at it, but now we are looking at it more closely as times have changed... Banks need to focus on it."
On corporate governance, he said that the Indian banking sector and non-bank financial companies are healthy and robust.
Even the banks' exposure to non-bank financial companies is also monitored regularly by the RBI, Das said.
Internationalisation Of Rupee
As for the internationalisation of the Indian rupee, it is not a target but a process, and there is a phased road for it, according to the RBI Governor.
"There is no particular time that we are trying to reach as the size, presence and impact of the Indian economy in global scenario is also expanding," he said.
At this point, the Indian economy is contributing around 15% to world growth. The dependence on one currency for international trade in any economy has its risks, Das said.
However, this is not a case of pitting the Indian rupee against the U.S. dollar, but merely looking at ways to increase the footprint of the rupee in international trade, he said.
For this, India has also actively taken steps, especially with countries where there are active trade relations.
Growth
The growth momentum in India continues to be strong, and the Q2 GDP numbers are expected to surprise everyone, according to Das.
While there was no estimate, he said that when the numbers are released at the end of November, they will surprise everyone on the upside.
Domestic factors like inflation and growth are the principle determinants of India's monetary policy, he said.
Cryptocurrency
Addressing questions on cryptocurrency, Das maintained that it is a serious issue and a threat to the financial stability of countries, especially for emerging market economies.
"We are not against innovation, but it must serve a public purpose," he said.
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India Business & Economics
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Savile Row has a long association with the Tory Party: Sir Winston Churchill kept an account at Henry Poole & Co until a row over an unpaid bill in 1937 ended the association, while more recently David Cameron was known for his penchant for Richard James suits.
Yet the Conservatives were persona non grata on the storied tailoring street last week.
Fifty or so luxury business chiefs gathered on Savile Row in the spitting rain to protest against Rishi Sunak’s tourist tax. None had good words to say about the current government.
“I don’t quite understand why the Treasury doesn’t seem to be able to explain why this is such a good idea that everyone’s losing money all over the country,” says Kiki McDonough, the founder of the eponymous jewellery chain, whose earrings typically cost upwards of £4,000.
“I mean, seriously, how out of touch do you have to be?”
The throng, which included the longstanding Tory donor and hotelier Sir Rocco Forte, were there to call for the return of VAT-free shopping to the UK.
Retailers ranging from clothing brands to jewellery makers have been up in arms since the perk was axed by Mr Sunak when he was Chancellor of the Exchequer in 2021.
Tax-free shopping is still available in Europe and business chiefs argue the loss of VAT-free shopping has damaged the UK’s status as a global destination.
Anda Rowland, director of the Savile Row tailor Anderson & Sheppard, which has clothed Cary Grant and Fred Astaire among others, says: “The idea that this is not a discretionary spend, that customers aren’t going to shop around, is just nonsense. If they can find something similar or the same, and get 20pc off, they will. And people who lose out in the long term are going to be British businesses and jobs.”
It is a particular bugbear of the luxury industry, where the VAT tax break was more attractive to buyers given the high prices of goods.
More than 400 senior executives have added their names to a campaign to abolish the tourist tax and the chiefs of Harrods, Harvey Nichols and Burberry, among others, have all spoken out against the policy.
However, Caroline Rush, managing director of the British Fashion Council, says it’s not just major retailers suffering.
She says: “They think that it’s a luxury tax for the big business, but actually, it’s the independents that rely on the international tourists, and some of their biggest customers that just aren’t coming to London or aren’t shopping in London.”
Outwardly at least, the Government has largely refused to budge on the issue, despite mounting pressure. “Rishi is still privately insisting this is primarily a problem for a few luxury retailers in the West End,” says an industry source.
However, there are signs that Mr Sunak’s position may be softening.
Business Secretary Kemi Badenoch was in Japan a fortnight ago to promote British luxury brands in Tokyo and to attend the G7 Trade Summit in Osaka.
Her agenda in Tokyo also included exploring how the Japanese duty-free system works. She is understood to have been impressed by Japan’s approach to tax-free shopping.
In Japan, travellers can qualify for tax-free shopping as long as they are in the country for no longer than six months and if the items they buy cost above a certain price.
Retailers have to obtain a special licence to sell tax-free goods and confirm that their customers meet certain requirements. In those stores that do offer tax-free shopping, the tax is either deducted from the purchase price at the tills or can be refunded at a dedicated tax-free counter.
Tourists have to present their passport upon sale.
While the ‘tourist tax’ is ultimately a matter for the Treasury, Badenoch, who is the bookies’ favourite to be the next Conservative Party leader, is taking a proactive role in examining alternatives.
She told The Telegraph last week: “What I can do is look at options for what a new system could look like if the Treasury ever made the decision to switch it back on.”
Japan’s system is not without its issues: the country is currently considering whether it should reform the scheme to combat a rise in tax-free items being sold for a mark up outside of the country.
Still, news that a senior minister is at least considering what a potential new approach could look like will be greeted positively by the retail industry.
The Treasury has insisted that restoring VAT-free shopping is too expensive and would come at a cost of around £2bn a year at a time when the Government is trying to pay down the nation’s debts.
It has pointed to the examples of Canada and New Zealand, which do not offer VAT-free shopping, and the USA, which does not on a country-wide basis, but are all popular tourist destinations nonetheless.
Since VAT-free shopping was done away with, figures show that tourism itself has risen but the amount of money spent at British tills has dwindled.
Visits to the UK from the US rose by 17pc in the second quarter of 2023 compared to 2019, but the amount of cash they spent in the West End of London fell by 1pc. Over the same period, spending by American tourists in France rose by 183pc and 174pc in Spain.
Middle Eastern shoppers, once a lucrative source of income for the West End, have also cut their spending in the capital.
Non-UK visitors can still access VAT-free shopping if they have the products sent directly to their overseas address, but retailers say this is not as popular as being able to take the clothes away with them.
“The whole idea of having a great time in London, ordering some things, having a wonderful time, picking them up, wearing them to restaurants... that’s gone,” says Rowland.
Whether this opprobrium will be enough to convince the Prime Minister to make a u-turn remains to be seen. At the very least, the executives that gathered in Savile Row last week will be hoping Badenoch’s alternatives are gaining traction in Downing Street.
A spokesman for HM Treasury said: “VAT-free shopping does not directly benefit Brits – it allows foreign tourists who buy items in the UK to claim back VAT as they return home.
“Evidence shows that the key motivators for tourists visiting the UK are our rich history and heritage, and vibrant towns and cities – not shopping.”
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United Kingdom Business & Economics
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NEW YORK (AP) — The Supreme Court has ruled the Biden administration overstepped its authority in trying to cancel or reduce student loan debt, effectively killing the $400 billion plan, which would have canceled up to $20,000 in federal student loans for 43 million people. Of those, 20 million would have had their remaining student debt erased completely.
The court's decision means, barring an act of Congress, those Americans are on the hook for payments starting in October.
Still, borrowers who are worried about their budgets do have options. For instance, the government has other loan forgiveness programs that are still in effect, even if Biden's plan was struck down.
Here's what to know about how the decision will affect you:
WHEN WILL STUDENT LOAN PAYMENTS RESUME?
Student loan payments that have been frozen for the last three years because of the pandemic are set to restart in October. That was going to happen no matter what the Supreme Court decided. Interest will start accruing Sept. 1.
HOW SHOULD I PREPARE?
Betsy Mayotte, president of the Institute of Student Loan Advisors, encourages people not to make any payments until the pause has ended. Instead, she says, put what you would have paid into a savings account.
“Then you’ve maintained the habit of making the payment, but (you’re) earning a little bit of interest as well,” she said.
Mayotte recommends borrowers use the loan-simulator tool at StudentAid.gov or the one on TISLA’s website to find a payment plan that best fits their needs. The calculators tell you what your monthly payment would be under each available plan, as well as your long-term costs.
Katherine Welbeck of the Student Borrower Protection Center recommends logging on to your account and making sure you know the name of your servicer, your due date and whether you’re enrolled in the best income-driven repayment plan.
WHAT IF I CAN’T OR DON'T WANT TO PAY?
If your budget doesn’t allow you to resume payments, it’s important to know how to navigate the possibility of default and delinquency on a student loan. Both can hurt your credit rating, which would make you ineligible for additional aid.
If you’re in a short-term financial bind you may qualify for deferment or forbearance — allowing you to temporarily suspend payment.
To determine whether deferment or forbearance are good options for you, you can contact your loan servicer. One thing to note: interest still accrues during deferment or forbearance. Both can also impact potential loan forgiveness options. Depending on the conditions of your deferment or forbearance, it may make sense to continue paying the interest during the payment suspension.
ARE THERE ANY OTHER PROGRAMS THAT CAN HELP WITH STUDENT LOAN DEBT?
If you’ve worked for a government agency or a nonprofit, the Public Service Loan Forgiveness program offers cancellation after 10 years of regular payments, and some income-driven repayment plans cancel the remainder of a borrower’s debt after 20 to 25 years.
Borrowers should make sure they’re signed up for the best possible income-driven repayment plan to qualify for these programs.
Borrowers who have been defrauded by for-profit colleges may also apply for borrower defense and receive relief.
These programs aren’t be affected by the Supreme Court ruling.
WHAT’S AN INCOME-DRIVEN REPAYMENT PLAN?
An income-driven repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size. It takes into account different expenses in your budget, and most federal student loans are eligible for at least one of these types of plans.
Generally, your payment amount under an income-driven repayment plan is a percentage of your discretionary income. If your income is low enough, your payment could be as low as $0 per month.
If you’d like to repay your federal student loans under an income-driven plan, the first step is to fill out an application through the Federal Student Aid website.
HOW CAN I REDUCE COSTS WHEN PAYING OFF MY STUDENT LOANS?
— If you sign up for automatic payments, the servicer takes a quarter of a percent off your interest rate, Mayotte says.
— Income-driven repayment plans aren’t right for everyone. That said, if you know you will eventually qualify for forgiveness under the Public Service Loan Forgiveness program, it makes sense to make the lowest monthly payments possible, as the remainder of your debt will be cancelled once that decade of payments is complete.
— Reevaluate your monthly student loan repayment during tax season, when you already have all your financial information in front of you. “Can you afford to increase it? Or do you need to decrease it?” Mayotte said.
— Break up payments into whatever ways work best for you. You could consider two installments per month, instead of one large monthly sum.
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The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
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Personal Finance & Financial Education
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- The APR is the interest rate or cost you pay yearly to borrow money for the purchase — and card rates are now near record highs.
- Store or retail cards have the highest interest rates
- Buy now, pay later plans generally don't usually charge interest, but do levy late fees
Feeling the pressure of inflation and rising interest rates over the past few months, an increasing number of consumers have been making credit card payments 30 days late or more, according to the Federal Reserve Bank of New York's latest Quarterly Report on Household Debt and Credit.
That climbing "credit card delinquencies" rate may trend higher this holiday season. Typically, it's at the end of the year when more consumers start to pay late.
Knowing what the words credit card delinquencies mean is important because being delinquent or late with card payments can lower your credit score. That lower score can impact the interest rate you pay on mortgages, auto and private loans, the cost of insurance premiums — and even your ability to land some jobs.
With so many different ways to pay for purchases with credit, "knowing your words" — especially regarding your personal finances — is more important than ever as you shop for gifts for family and friends this holiday season.
Here are three terms that you should familiarize yourself with:
If you're paying for holiday purchases with a credit card, you should know the annual percentage rate, or APR, on it before you buy. The APR is the interest rate or cost you pay yearly to borrow money for the purchase — and card rates are now near record highs. The average APR on a credit card is more than 21%, according to Bankrate, and nearly 30% for retail store credit cards.
"Holiday shoppers need to know that the APR on that store credit card that you may be tempted to buy is going to be crazy high," said Matt Schulz, LendingTree chief credit analyst. A LendingTree survey of 100 cards found some retail cards can have interest rates as high as 35%.
The best way to borrow is to pay no interest at all — and you can do that if you are able to get a "0% APR" card. This means that you'll pay no interest for a certain period of time for the ability to borrow money to make purchases.
The best 0% APR cards will allow you to pay no interest for up to 21 months, so you may not have to pay interest charges on purchases made now until August 2025. Pay close attention to when that 0% interest period will end, because when it does the rate will spike up to the national average — or higher — and as rates continue to rise that could mean you'll 25% in interest charges or more.
Buy now, pay later, or plans are another popular way to finance holiday purchases that's now offered by most major retailers as well as by app-based lenders. Affirm, Apple Pay Later, and Klarna are among the most popular BNPL apps.
In the finance industry, BNPL products are also called point-of-sale installment loans.
Here's how the plans work: You can make purchases and pay for them over time after an upfront initial payment. BNPL plans generally don't usually charge interest, which makes them an attractive alternative to credit cards. But they may charge a fee — of up to $15 — especially if you miss a payment.
"The issue with those is that it can be really easy to get and that can lead to more overspending," cautioned LendingTree's Matt Schulz. "You only have that short window of time to pay it off as an installment loan, as opposed to with a credit card where you have a little more flexibility on the actual payments that you make."
— Stephanie Dhue contributed to this article
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Interest Rates
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It can be tempting to set automatic payments for your credit card and other bills, to eliminate the chore of having to manually make payments every month and the possibility that you might forget to pay off an account.
Indeed, autopay options ensure that charges are settled on time and late fees are avoided.
But it's a convenience that comes with trade-offs. For example, you could inadvertently autopay a bill that contains errors, or risk being dinged with overdraft fees if thefrom where payments are being withdrawn contains insufficient funds.
In other words, "sometimes set it and forget it can be a ticket to overspending," Ted Rossman, senior credit card analyst at Bankrate told CBS MoneyWatch.
Here are the pros and cons of setting bills to autopay, and how to decide when to make manual versus automatic payments, according to experts.
Avoiding late fees
One big benefit to autopay is that typically, this option means you'll never have to pay a late fee.
"You don't have to log in, and you're not at risk of paying late because you forgot, which can lead to late fees and ding your credit score. These are reasons why people like to set up auto payments," Rossman said.
Consistently paying one's bills on time helps build a strong credit score. "It can positively impact your credit score, as payment history is a significant factor in credit scoring models," Michael Hershfield, founder and CEO of savings platform Accrue Savings told CBS MoneyWatch.
It's still wise to log in to your account periodically to make sure a payment was made in case there's a technical glitch, or the card with which you're paying the bill has expired, two scenarios that could result in late fees despite choosing to autopay a bill.
Time saver
Automatically paying bills can reduce the stress of managing different due dates while worrying about missing payments. Another advantage: It saves time.
"You don't have to spend time each month logging in to various accounts and making payments," Hershfield said.
It can be worth it to take advantage of these benefits of autopayment when it comes to fixed rate bills that seldom change.
"The bills that make the most sense to put on autopay are the ones that stay the same every month," Rossman of Bankrate said. "But even there, check in periodically to make sure it did get paid on time and also that something didn't change. Sometimes hidden charges creep up, surcharges get added, or a fee goes up."
Not safe for credit cards
Credit card bills, on the other hand, can fluctuate dramatically month to month, depending on how much you spend. It's important to pay your bill off each month, given the current climate of.
"Certainly with, you want to pay your whole bill off if you can to avoid owing interest," Rossman added.
Online shoppers sometimes pay for things that never show up. Other times, fraudsters make unauthorized purchases using others' funds.
If you don't review your credit card statement monthly you could accidentally miss, and pay for incorrect or fraudulent charges. Once you've paid for a charge, it's harder to dispute. "It's like trying to get the horse back in the barn," Rossman said.
Fixed-rate bills
Fixed monthly bills for rent, a mortgage, internet or cable, with amounts that don't change are generally safe for autopay, according to Hershfield of Accrue Savings. The same goes for gym memberships, magazine and streaming service subscriptions, for which the amount remains steady, he added. One note of caution is to be cognizant of price hikes, which businesses can implement at any time.
for more features.
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Personal Finance & Financial Education
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Americanas Nears Agreement With Banks To Restructure Debt
As part of the plan, its top shareholders would inject some 12 billion reais and banks would convert some debt into equity.
(Bloomberg) -- A deal between Americanas SA and bank creditors to overhaul the Brazilian retailer’s debt could be reached as soon as today, according to a person close to the matter.
An agreement is a key step toward eventually exiting bankruptcy protection. Lenders have found common ground with the embattled company on details of the text to overhaul the debt, including a specific clause that banks should drop litigation rights, said the person, who asked not to be identified discussing confidential negotiations.
Americanas declined to comment.
Some 11 months after it sank into a crisis due to an accounting fraud that more than doubled its debt to 42.5 billion reais ($8.7 billion), an agreement would allow the company to present a new plan in court and should be approved in a creditor meeting slated for Dec. 19. Banks have the majority of the debt, so their support is crucial.
No final agreement has been reached, the person said, and talks could still extend into the coming weeks.
As part of the plan, the company’s top shareholders — the billionaire trio of Jorge Paulo Lemann, Marcel Telles and Carlos Sicupira — would inject some 12 billion reais and banks would convert some debt into equity. New bonds would be issued to swap out older notes at a discount and suppliers would also be paid.
Its main creditors include Banco Bradesco SA, which holds 4.8 billion reais of debt, Banco Santander SA’s Brazil unit with 3.7 billion reais and Banco BTG Pactual SA with 3.5 billion reais.
All told, Americanas Chief Financial Officer Camille Loyo Faria expects the company to be recapitalized with 24 billion reais in 2024. She said in an earnings call last week that a deal with banks could be reached in December.
The progress in talks comes after the retailer published new earnings reports for 2021 and 2022 that showed it lost nearly 20 billion reais in the period in which the estimated size of the accounting fraud was 25 billion reais.
That, along with higher prospects for a debt deal, helped propel the share price more than 25% since the release on Nov. 16 to trade around 1.08 reais per share. The market value of the retailer is 975 million reais compared to 10.8 billion reais before the crisis.
Banco Safra SA issued a statement this week saying Americanas should have presented more financial data and a new list of creditors before calling the meeting at year-end. It didn’t say whether it will support the deal under discussion.
O Globo columnist Lauro Jardim reported earlier Friday that a deal could be signed as early as today.
(Adds share price in 10th paragraph.)
©2023 Bloomberg L.P.
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Latin America Economy
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Supporters of Jeremy Corbyn should "dry their eyes" and accept his leadership was a "shipwreck", according to Wes Streeting, who has defended Labour's "tight" spending plans.
Speaking on Beth Rigby Interviews... the shadow health secretary rejected claims his party's offer on the NHS is too similar to the Conservative government's but refused to give a financial commitment as the next election approaches.
He acknowledged there is "frustration" when Labour is pressed to outline its spending plans but "the answer is either no or not yet confirmed".
"But that's because we are absolutely determined, both to rebuild trust in politics, but also to rebuild stability in the public finances," Mr Streeting said.
Labour has promised to build an NHS "fit for the future" with a focus on reforms and prevention.
Steve Barclay, the current Tory health secretary, has also said the health service should "evolve" to focus on prevention - amid warnings it is in "critical condition" and may not make its 100th anniversary in 2048.
But Mr Streeting said "shoot me now" when it was put to him that Labour's focus on reform over funding sounded similar to what's on offer from the Conservatives.
"Look, funding's important, but it's not always just about spending more money," he said.
"Steve Barclay's talking as if he's just walked in off the street taken over the Department of Health and decided he's got a reform agenda. They've been in power for 13 years. Where is it?"
Mr Streeting went on to admit that it's "tough for shadow cabinet members like me who have to follow these tight fiscal rules", amid criticism from some within the party that Labour's spending plans are not ambitious enough.
But he said he is "100% behind" Labour leader Sir Keir Starmer and shadow chancellor Rachel Reeves "when they're making those tough calls".
He told Beth Rigby: "One of the reasons why we have lost not just the last two general elections, but the last four general elections, was because people said, can we trust you with the money?
"What you are seeing from Keir and Rachel, and the rest of our team, is that we are going to be careful with the public finances because Liz Truss and the Conservative Party shows exactly what happens when you go on a spending spree without any idea about how you'll pay for your promises."
Sir Keir and Ms Reeves have been working to show that Labour is fiscally responsible.
The pair have largely avoided making large spending commitments - drawing a firm line under the economic arguments of the Corbyn years.
Last month, Ms Reeves watered down Labour's flagship £28bn green prosperity plan, blaming rising interest rates and the "damage" the Conservatives have done to the economy.
However, critics saw it as the latest U-turn, with Sir Keir previously backing away from leadership pledges to abolish tuition fees, nationalise public utilities, scrap Universal Credit and increase income tax for the top 5% of earners.
The Labour leader was interrupted on Thursday by climate protesters angry about the climate fund U-turn, while he was trying to give a speech on the party's plans for overhauling education.
But Mr Streeting dismissed left-wing critics who might feel "betrayed" by Sir Keir backtracking on promises he made to Labour members in order to win the party's leadership contest in 2020.
"Well, I'm afraid they have to dry their eyes and be glad of the fact that we might finally, after 13 years, get this Conservative government out and have a Labour government able to change our country once again," he told Sky News.
He also said it was "extraordinary" for former shadow chancellor, John McDonnell, to use a recent BBC interview to accuse Sir Keir Starmer of being "drunk with power".
Mr Streeting said: "To be honest I thought that was extraordinary. I thought it was extraordinary, because, what Keir has done is take the Labour Party from its worst defeat since 1935, when we weren't trusted on a whole range of issues, and where people had been bullied and hounded out of the Labour Party, not least through the issue of antisemitism.
"And he has taken that absolute shipwreck that the Labour Party was in 2019, and now made it seaworthy, and I hope on course for a general election victory."
You can watch the full discussion with Wes Streeting on Beth Rigby Interviews at 9pm tonight on Sky News.
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United Kingdom Business & Economics
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- Pandemic-related emergency funding from the Supplemental Nutrition Assistance Program, formerly known as food stamps, ended this month in most states.
- For retailers like Kroger, Walmart and Dollar General, the decline in SNAP dollars will put pressure on discretionary sales.
- Add in lower tax refunds on average this year, and shoppers have fewer dollars to spread around.
For some shoppers who already struggle to cover grocery bills, the budget is getting tighter.
This month, pandemic-related emergency funding from the Supplemental Nutrition Assistance Program, formerly known as food stamps, is ending in most states, leaving many low-income families with less to spend on food.
More than 41 million Americans receive funding for food through the federal program. For those households, it will amount to at least $95 less per month to spend on groceries. Yet for many families, the drop will be even steeper since the government assistance scales up to adjust for household size and income.
For grocers like Kroger, big-box players like Walmart and discounters like Dollar General, the drop in SNAP dollars adds to an already long list of worries about the year ahead. It's likely to pressure a weakening part of retailers' business: sales of discretionary merchandise, which are crucial categories for retailers, as they tend to drive higher profits.
Major companies, including Best Buy, Macy's and Target, have shared cautious outlooks for the year, saying shoppers across incomes have become more careful about spending on items such as clothing or consumer electronics as they pay more for necessities such as housing and food.
Food, in particular, has emerged as one of the hardest-hit inflation categories, up 10.2% year-over-year as of February, according to the U.S. Bureau of Labor Statistics.
"You still have to feed the same number of mouths, but you have to make choices," said Karen Short, a retail analyst for Credit Suisse.
"So what you're doing is you're definitely having to cut back on discretionary," she said.
The stretch has made it impossible for some to afford even basic items. It's still too early to see the full impact of the reduced SNAP benefits, said North Texas Food Bank CEO Trisha Cunningham, but food pantries in the Dallas-Fort Worth area have started to see more first-time guests. The nonprofit helps stock shelves at pantries that serve 13 counties.
Demand for meals has ballooned, even from pandemic levels, she said. The nonprofit used to provide about 7 million meals per month before the pandemic and now provides between 11 million and 12 millions meals per month.
"We knew these [extra SNAP funds] were going away and they were going to be sunsetted," she said. "But what we didn't know is that we were going to have the impact of inflation to deal with on top of this."
So far, retail sales in the first two months of the year have proven resilient, even as consumers contend with inflation and follow a stimulus-fueled boom in spending in the early years of the pandemic. On a year-over-year basis, retail spending was up 17.6% in February, according to the Commerce Department.
Some of those higher sales have come from higher prices. The annual inflation rate is at 6% as of February, according to the Labor Department's tracking of the consumer price index, which measures a broad mix of goods and services. That index has also gotten a lift from restaurant and bar spending, which has bounced back from earlier in the pandemic and begun to compete more with money spent on goods.
Yet retailers themselves have pointed out cracks in consumer health, noting rising credit card balances, more sales of lower-priced private label brands and shoppers' heightened response to discounts and promotions.
Some retailers mentioned the SNAP funding decrease on earnings calls, too.
Kroger CEO Rodney McMullen called it "a meaningful headwind for the balance of the year."
"We're hopeful that everybody will work together to continue or find additional money," he said on the company's earnings call with investors earlier this month. "But as you know, because of inflation, there's a lot of people whose budget is under strain."
Credit Suisse's Short said for lower-income families, the food cost squeeze comes on top of climbing expenses for nearly everything else, whether that's paying the electric bill or filling up the gas tank.
"I don't think I could tell you what a tailwind is for the consumer," she said. "There just isn't a single tailwind in my view."
Emergency allotments of SNAP benefits previously ended in 18 states, which could preview the effect of the decreased funding nationwide. In a research note for Credit Suisse, Short found an average decline in SNAP spending of 28% across several retailers from the date the additional funding ended.
Some grocers and big-box retailers could feel the impact more than others. According to an analysis by Credit Suisse, Grocery Outlet has the highest exposure to SNAP with an estimated 13% of its 2021 sales coming from the program. That's followed by BJ's Wholesale with about 9%, Dollar General at about 9%, Dollar Tree at about 7%, Walmart's U.S. business with 5.5% and Kroger with about 5%, according to the bank's estimates, which were based on company filings and government data.
Retailers that draw a higher-income customer base, such as Target and Costco, should feel comparatively less effect, Short said. If nothing else, the dwindling SNAP dollars could shift shoppers from one retailer to another, she said, as major players seek to grab up market share and undercut on prices.
Another factor could make for a bumpier start to retailers' fiscal year, which typically kicks off in late January or early February: Tax refunds are trending smaller this year.
The average refund amount was $2,972, down 11% from an average payment of $3,352 as of the same point in last year's filing season, according to IRS data as of the week of March 10. That average payout could still change over time, though, as the IRS continues to process millions of Americans' returns ahead of the mid-April deadline.
Dollar General Chief Financial Officer John Garratt said on an earnings call this month that the discounter is monitoring how its shoppers respond to the winding down of emergency SNAP benefits and lower tax refunds.
He said stores did not see a change in sales patterns when emergency SNAP funds previously ended in some states, but he added that "the customer is in a different place now."
Tax refunds can act as a cash infusion for retailers, as some people spring for big-ticket items like a pair of brand-name sneakers or a sleek new TV, said Marshal Cohen, chief industry advisor for The NPD Group, a market research company.
This year, though, even if people get their regular refund, they may use it to pay bills or whittle down debt, he said.
One bright spot for retailers could be an 8.7% cost-of-living increase in Social Security payments. Starting in January, recipients received on average $140 more per month.
However, Cohen said, the cash influx might not be enough to offset pressure on younger consumers, particularly those between ages 18 and 24, who have just started jobs and face milestone expenses like signing a lease or buying a car.
"Everything's costing them so much more for the early, big spends of their consumer career," he said.
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Consumer & Retail
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Online shopping often feels like a one-way street from the point of view of the physical retail world: e-commerce has a wider selection, it’s open all the time, and there seems to be an endless funnel of data that online retailers can use to make their offers better and more personalized to each browsing consumer. But as rampant inflation wreaks havoc on any kind of price stability for consumers, it’s not quite game over, either.
Datasembly — a startup based in the Virginia suburbs of DC that provides retailers and CPG companies with big data-based analytics on product pricing and product promotions as well as insights into assortment — has raised $16 million in funding.
The round is a Series B and is being led by Noro-Moseley Partners — an Atlanta VC that focuses on backing tech startups out of the Southeast of the U.S. — with participation from Grotech Ventures, Topmark Partners and Staley Capital. The valuation is not being disclosed, but it comes with other interesting socioeconomic context.
This Series B comes almost 3 years after Datasembly raised a $10.3 million Series A led by Craft Ventures, a round closed in the throes of Covid-19, when many wondered just how and if physical stores would make it out of the pandemic alive.
Physical stores, as it turned out, didn’t die off, and many of those that have remained standing have definitely become more digitally savvy to improve how they can compete in the wider retail landscape.
That is where Datasembly comes into the picture. Fittingly, or ironically, for a company that aims to help those selling goods in brick-and-mortar settings compete better with the online world, its power comes from the fact that so much information is available online today: its big data analytics engine ingests more than 12 billion prices across some 150,000 online and offline storefronts on a weekly basis, working out to some 1.2 trillion “total observations in collection.”
“The critical information we use is on the web,” CEO and co-founder Ben Reich said in an interview. “We collect at a massive scale from the public web, focusing on price, promotion and assortment.”
He noted that retailers and brands have always focused on gathering this kind of information, but in the past it might have been teams of individuals tracking other physical stores, eventually adding a small selection of online stores into the mix.
That has changed not just because so much more shopping is now done online, he said.
“The inflationary period we’re in, combined with the economic effects of the pandemic and continuing supply chain issues have all caused unprecedented volatility,” he said. “The level of precision of bringing a product to market has exploded as a result.” There used to be national price zones, he said. “But these have shrunk and shrunk. Individual stores can have their own price zones now.”
And on a product-level, he added, everything now changes “with more speed and granularity than ever before. So brands and stores need to be more responsive. They are hungry for more information and transparency.”
While some of the world’s very biggest retailers online, like Amazon, may well have all the data and data science muscle they need to carry out this kind of work in house, the thinking goes that many of Datasembly’s would-be customers might not. (Reich would not comment on whether Amazon was a customer of the startup.)
And today, Datasembly already has a sizable business. It works with hundreds of partners (in its phrasing), including some 230 retailers like Target, Walgreens and Starbucks, and brands and organizations like General Mills, Nestle’s Purina and the U.S. Food and Drug Administration.
Retailers may be the most obvious category, but the others are just as hungry for this kind of data. The FDA tracks and publishes price indices and research, among other work where pricing is critical information; and as for brands, they have long had to grapple with a major disconnect when it comes to direct relationships with their consumers. The rise of social media has definitely changed the marketing game for them, and companies like Datasembly open the door to understanding what customers like and don’t like (and don’t buy, or do buy) even more.
And that also points to how Datasembly will be using this funding. The plan is to continue investing in more measurements that are demanded by its customers and to expand that customer base overall. For now, Datasembly is focused mainly on consumer packaged goods and groceries, but there is an obvious opportunity to extend this in all kinds of ways. It could expand to kinds of retail products like apparel, products purchased wholesale (not by consumers, that is), and beyond goods to pricing for consumer services.
Interestingly, Datasembly is in the business of business intelligence but not business itself: that is to say, it doesn’t currently make recommendations on how to price something or how to bundle a promotion; nor does it have any kind of inventory management as part of its platform. Reich said that was because retailers and brands still have their own individual strategies that they might follow: they may have different goals on margins; or they might want to, say, intentionally be more competitive (cheaper) on specific items to lure shoppers to build bigger overall baskets.
Whatever the aim, those businesses know they need data to understand better what to do next.
“CPGs and retailers need comprehensive, cost-effective, real-time pricing and product availability data,” said John Ale, a general partner at Noro-Moseley Partners, in a statement. “Datasembly provides the best-in-class solution, collecting and normalizing billions of data points weekly. As its customers continue to fight inflation and weather supply chain issues, Datasembly is instrumental in empowering effective pricing, promotion and assortment decisions.”
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Consumer & Retail
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Everything You Need To Know About The Mahila Samman Savings Certificate
Few of the small details in MSSC that need attention to ensure that the investment process is smooth.
The government has introduced a new investment opportunity for women in the form of Mahila Samman Savings Certificate.
While the investment allows for a total of Rs 2 lakh for a period of two years earning 7.5% per annum for women including a minor girl child there are several small details that need the attention.
This will ensure that when a person is making an actual investment they are able to comply with the conditions and that the process is smooth.
Availability
The MSSC is available at both post offices as well as banks in the country.
This makes the actual process of investment easier as there are multiple places where the investor can go and make the investment.
Those who prefer to invest through their banks because of both convenience as well as comfort will find that all public sector banks as well as some private sector banks like ICICI Bank, Axis Bank, HDFC Bank and IDBI bank offer the scheme
Investment Number And Gap
There is an overall limit of Rs 2 lakh that can be invested in the MSSC but this need not be invested in a single lot.
This means that investors can invest in parts depending on the availability of money with them. Every investment is called an account under the scheme. The minimum investment is Rs 1,000 and then additional investments has to be in lots of Rs 100. There is no limit on the number of times one can invest as long as the overall limit of Rs 2 lakh is not breached.
However, there is one factor that can act as a restriction and this is very crucial because knowing it is important—There has to be a gap of at least three months between the investment in two accounts so this will act as a natural barrier to too many investments being made.
Accumulating money and then investing it in a few instalments can be a better strategy both in terms of management as well as actual completion of the investment if Rs 2 lakh is not present as a lumpsum.
Interest
The interest rate that is earned for the two year period on the scheme is 7.5% per annum. There are two factors here that will impact investors here.
One is that the interest is not paid out but keeps accumulating and it is only paid out at the time of maturity. This means that the certificate should not be considered as an option that can generate regular cash due to the nature of the payout.
The other thing is that in the calculation the interest is compounded each quarter and then this accumulates. This is a good thing as the benefit of keeping the money in the scheme is given to the investor in the form of higher returns as the compounding increases the yield for the investor.
Withdrawal And Premature Closing
The actual time period of the investment is two years so this has to be counted for every investment that has been made.
For example, if the first investment is made in April 2023 then this will mature after two years in April 2025 while a second instalment invested in October 2023 will mature in October 2025. However, there is an option to withdraw 40% of the balance in the account after one year from the date of opening so this can provide some needed liquidity.
There are specific conditions where the account can be prematurely closed before the completion of two years. One is on the death of the account holder the account can be closed. The second is in extreme conditions where there is some life threatening disease of the account holder or the death of the guardian for a minor. In this case the necessary documents will need to be first produced and then the account can be closed.
There is also another option to close the account after six months without giving any reason but it comes at a cost as the interest rate earned in such a situation will drop by 2 % to 5.5%.
Arnav Pandya is founder Moneyeduschool
The views expressed here are those of the author and do not necessarily represent the views of BQ Prime or its editorial team.
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India Business & Economics
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Costco's (COST) fourth quarter results beat estimates on both the top and bottom lines as cheap gas prices likely won over inflation-weary consumers.
For the fiscal fourth quarter, Costco reported adjusted earnings per share of $4.86, higher than Wall Street expectations of $4.78. Revenue also came in higher at $78.94 billion, compared to expectations of $77.72 billion, per Bloomberg data.
The company's latest earnings, which were reported Tuesday after market close, come as major headwinds like higher gas prices, student loan repayments, and higher interest rates, among others, take a toll on Americans' wallets.
Same-store sales, including gas and foreign exchange, came in slightly lower than anticipated — up 1.1% compared to estimates of 1.87%. Excluding gas and FX, sales jumped 3.8%, slightly below expectations for 3.92%.
"For F4Q23, we remind investors that Costco’s gas business likely faces a difficult prior year comparison on fuel margins," Raymond James analysts wrote in a note ahead of the results. "Recall, national gas fuel margins (per OPIS) saw sizable y/y expansion last year during the summer months as oil prices were dropping (OPIS national margins were up 60% y/y during Costco’s F4Q22)."
Gas prices spiked over the summer compared to earlier in 2023, making Costco's cheap fuel attractive for customers. As of Tuesday, the national average gas price stood at $3.84 per gallon, per AAA, slightly off the 2023 high.
As consumers flock to Costco to fill up their tanks, they also tend to shop in stores.
Placer.ai data showed that, compared to last year, visits to Costco were up 3% in August, 4.5% in July, and 3.6% in June. Meanwhile, overall visits to wholesale clubs and superstores dropped 1.9% in August and 0.4% in June and July.
"Disinflation continues in Food/Sundry … while gas price deflation (only -2%) is worth tracking – particularly given August’s surge," Evercore ISI analyst Greg Melich wrote in an Aug. 31 note. "Further appreciation in fuel prices could provide an additional traffic, comp and share tailwind to further highlight the loyalty model."
The earnings rundown:
Here's what Costco reported in its fiscal fourth quarter versus Wall Street estimates, according to Bloomberg data:
Net sales: $77.43 billion versus $77.6 billion expected
Adjusted EPS: $4.86 versus $4.78 expected
Same-store sales growth: 1.1% versus 1.87% expected
E-commerce sales growth: -0.8% versus 5% expected
Inventory growth: -7.01% versus 7.31% expected
Costco stock fell 1.4% in after-hours trading on Tuesday following the results. Shares are up 21% year to date.
What else we're watching: Costco membership fees
Membership fees, a key revenue stream for the wholesale retailer, came in at $1.51 billion, higher than Wall Street expectations for $1.46 billion. In the third quarter, the company brought in $1.04 billion in membership fee revenue.
While no plans were shared yet to increase prices this quarter, investors will be watching closely to see if Costco announces any plans to raise membership fees in the near future, as the company typically raises prices every five years and seven months on average.
Costco last raised membership prices in June 2017, and a Costco Gold Star membership costs $60 per year, while an Executive Membership goes for $120.
"We’ve been anticipating [a membership fee increase] for a while now," CFRA analyst Arun Sundaram told Yahoo Finance Live, adding he expects the price hike to be between $5 to $10. "They’re really waiting for inflation to moderate before they decide to raise fees. But now we are starting to see inflation moderate. … I think we could see a membership fee increase announced by the end of this year."
Last quarter, the company delayed hiking fees. During the Q3 earnings call, CFO Richard Galanti told UBS analyst Michael Lasser that Costco feels "very good" that it could increase membership fees "without impacting, in any meaningful way, renewal rates or sign-ups or anything."
"And at some point, we will," Galanti added. "But our view right now is that we've got enough leverage out there to drive business, and we feel that it's incumbent upon us to be that beacon of light to our members in terms of holding them for right now."
What Wall Street is saying ahead of earnings:
"Costco's value proposition continues to shine as the U.S. core comp accelerated to +4.5% in July ... led by the best traffic growth since July 2022. The sequential acceleration was driven by fresh foods as performance in food and sundries and non-food was steady.
"Another positive in the month was e-commerce, which returned to YOY growth after nine months of declines, marking a 760 bps sequential improvement in 2YR growth, and likely indicating healthier big-ticket trends. Macro uncertainties remain, but COST is one of the most consistent operators in our coverage, and should continue to be a share gainer given its value proposition." -Krisztina Katai, Deutsche Bank
—
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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Consumer & Retail
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- The Supreme Court's decision to strike down student loan forgiveness will become the latest challenge for retailers coping with more cautious consumers.
- Student loan payments will also restart this fall after a Covid pandemic-related pause.
- Investors say retailers that sell discretionary merchandise, such as clothing and electronics, are the most vulnerable.
By striking down student debt forgiveness Friday, the U.S. Supreme Court not only added a hefty expense back into millions of Americans' budgets. It also created the latest challenge for retailers already struggling to predict how consumers may spend in the coming months.
The court's decision squashed President Joe Biden's plan to forgive up to $20,000 per borrower in federal student loan debt. Student loans will already take a bigger bite out of budgets this fall as payments and interest accruals resume after a more than three-year pandemic-related pause.
The opinion means outstanding loan balances will be higher as those payments resume than they would have been if the court had ruled in favor of Biden. The plan would have wiped out all debt for nearly 45% of borrowers, or about 20 million people, according to the White House.
The return of payments adds another disruption for the approximately 40 million Americans who have student loans at a time when consumers are showing more caution. Nearly all Americans said they are pulling back on spending in some way, according to a recent CNBC and Morning Consult survey. Retailers, including Walmart, Target, Home Depot, Kroger and Foot Locker, said customers are buying fewer big-ticket items and switching to lower-priced private-label brands.
The timing of the change could amplify its impact on retailers. Student debt repayment is poised to resume just before the all-important back-to-school and holiday seasons.
The loan changes won't "make or break if we go into a recession or not," said Brad Thomas, a retail analyst at KeyBanc Capital Markets. Yet he said it may have a psychological effect on debt-saddled Americans who are on the hook for hundreds of dollars in monthly payments again.
"It's enough to potentially give us what could be an ugly and disappointing holiday season, relative to expectations," he said.
Lenèe Gill, 31, is one of the borrowers who would have had $20,000 of her loans wiped away. The Denver resident, who works as sales director at a technology company, received Pell Grants to put toward her undergraduate degree at Louisiana State University. Biden's plan would have eliminated her remaining student debt balance.
Gill said she got a taste of how life without student loans would look during the Covid pandemic. For about three years, she did not pay roughly $400 a month toward her balance. Instead, she saved more money and spruced up the home where she and her fiance live with a new couch, nicer dishes and plants. She chipped away at credit card debt and paid off her car.
Yet she said she never banked on her debt getting canceled.
"It was always one of those things that I felt was too good to be true," Gill said. "So I never really put a lot of hope or a lot of thought or planning, or even let myself go as far as 'What would life look like without these payments?'"
Gill said she'll tighten up the budget as she pays down that debt again. She will likely drop higher-end grocery purchases, such as organic fruits and vegetables and better cuts of meat. Instead of shopping at the farmer's market, she said she will likely buy more at big-box stores like Walmart for cheaper prices.
Stubborn inflation has forced Americans to pay more for food and housing, and concerns about a potential recession have added to the pressure facing consumers and companies. Meanwhile, government programs like loan relief designed to keep households afloat during the pandemic have fallen by the wayside.
Stimulus checks, expanded child tax credits and a stronger Supplemental Nutrition Assistance Program for low-income households all boosted budgets. That cash infusion has ended, even as consumers less wary of Covid have shifted spending toward experiences instead of goods.
All of those factors could hurt retail sales this year.
KeyBanc's Thomas said the student loan payment pause was yet another pandemic tail wind for retailers. It could generate an annualized headwind of about 2% to retail sales over the next year if not offset by higher incomes or more borrowing, according to KeyBanc. Many retailers said on earnings calls this spring that smaller tax refunds contributed to slower sales.
Estimates vary on how much student loan borrowers will pay each month. The Bank of America Institute estimates that the median impacted household will pay around $180 a month. Higher education expert Mark Kantrowitz estimated that the typical monthly bill will be about $350. KeyBanc estimates an average monthly payment between $400 and $460.
Kantrowitz said there is little data on how Americans used the money that they did not spend on student debt. Did they buy more luxury items, book a vacation or save?
He said he's skeptical that the resumption of payments will have a major effect on retailers, since the sum accounts for a tiny percentage of the country's gross domestic product.
"The impact on retailers is yes, it's going to be a negative, but it's not going to be a huge decrease," he said. "It is a mild decrease."
Brett House, an economics professor at Columbia University's business school, echoed similar sentiments. He said the student loan changes are modest compared with the pinch that people feel from inflation or the dwindling of pandemic-strengthened savings accounts.
He added that many Americans have gotten raises since the payments paused three years ago.
The end of student loan relief may hit some businesses harder than others.
Some of the most exposed companies are ones that sell a lot of discretionary merchandise, including Bath & Body Works, T.J. Maxx parent TJX Cos., Dick's Sporting Goods and Best Buy, according to Wells Fargo analysts. Experience-driven companies are also at risk, including FanDuel's parent company Flutter Entertainment, DraftKings and Lifetime Fitness, the firm said.
Several equity research firms, including KeyBanc, named Target as a retailer that will get squeezed, since its sales have already weakened and it draws younger and college-educated customers.
Retailers may not have accounted for consumers resuming student loan payments in their forecasts for the year, and most major players in the sector have not commented on the possible implications. The decision to stop extensions of the student loan pause, which was part of an agreement reached by Republicans and Democrats to raise the nation's debt ceiling, came after the end of the retail earnings cycle.
Though some retailers may take a hit when payments resume, analysts and executives largely believe people will keep spending on dining out and airline tickets.
Rick Cardenas, CEO of Olive Garden's parent company Darden Restaurants, said last Thursday that the return of student loan payments will be a factor for the company, but not a significant one. Darden owns a mix of restaurant chains, including LongHorn Steakhouse and The Capital Grille.
"Any time you take money out of consumers' pockets, it's a headwind, but it shouldn't be material, because student loan payments are a very small component," Cardenas told analysts on the company's earnings conference call.
He added that Darden's customers will be better able to juggle the payments, since a high percentage earn more than $100,000 annually.
Wall Street analysts don't anticipate a big drop in sales for eateries when loan relief ends, either.
Citi Research analyst Jon Tower wrote in a March note to clients that it's a "contained risk" for restaurants.
BTIG analyst Pete Saleh told CNBC that "it will be just another drag on consumer spending, in addition to inflation."
"But we know that historically, all of this other stuff is traditionally noise — what drives most restaurants' same-store sales and traffic is job growth and income growth, and we're getting both of those right now," he said.
Airlines also may be more immune to the hit to borrowers' budgets.
Strong travel demand and airfares at about pre-pandemic levels helped lift some airlines' revenue to a record in the first quarter of the year, and airport security screenings on some days this month have surpassed pre-pandemic levels as consumers spend on experiences.
"Given how much incomes have increased in the past three years, I can't see how this is going to be a major challenge," Frontier Airlines CEO Barry Biffle told CNBC.
Where airlines are more vulnerable to a pullback in spending is during off-peak periods.
"You're going to travel for Thanksgiving and Christmas. I think that's engrained in the U.S. consumers' head," said Conor Cunningham, airline analyst at Melius Research. "I'm not worried about summer travel. Summer travel is going to be amazing. It's the off-peak stuff that's got me worried."
That usually occurs after the peak summer period and in between holidays when business travel — and during the pandemic, remote work and off-season trips — had been able to fill in the gaps. Some airlines could alter their schedules to adjust for weaker demand.
Even if many industries do not take a hit from the demise of student debt cancelation and the resumption of payments, millions of Americans will feel the change acutely.
Tiffany Serra said the reality of her looming payments is "starting to creep in and stress me out."
The 23-year-old graduated in 2022 from Cornell College in Iowa with a bachelor's degree in finance and environmental studies — along with $120,000 in debt. She is working a seasonal position on Shelter Island in New York and makes $22 an hour, along with having her housing costs covered. Serra said she has had trouble finding a full-time job.
Starting this fall, Serra will pay that debt down for the first time. She's tried to prepare by socking away money to cover that big bill, which she expects will be at least $600 per month. Serra also embraced new habits to cut spending, including growing herbs at home and making her own oat milk.
Student loan forgiveness would have made a small dent in her total debt, but Serra said she still wishes the plan had stuck. Serra recently got into law school, but decided to turn it down to avoid racking up more student loans.
She said she'll have to make tough decisions in the months ahead, such as whether she can afford to renew the lease on her car. She won't have the breathing room that allowed her to buy steel-toed boots for work or book a trip to the San Francisco Bay Area to visit a friend.
"It's definitely going to be a large financial burden when I do have to start making those payments," Serra said.
— CNBC's Amelia Lucas, Gabrielle Fonrouge, Leslie Josephs and Annie Nova contributed to this story.
Disclosure: CNBC's parent company Comcast and NBC Sports are investors in FanDuel.
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Consumer & Retail
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complex variety of schemes that should support the economically inactive back into work do not meet the needs of people affected and will fail to boost growth, councils have warned.
Research commissioned by the Local Government Association (LGA) found many risk being left out of the labour market as the 51 national job support programmes identified are not joined up and few address economic inactivity specifically.
Figures published by the Office of National Statistics show about a fifth of adults aged 16 to 64 in the UK, totalling 8.7 million people, were economically inactive between May and September.
The number of these people classed as economically inactive due to long-term sickness grew to a record level of 2.5 million, an increase of 400,000 since the onset of the pandemic.
Economists warn the resulting restriction on labour supply has limited productivity and undermined efforts to boost sluggish economic growth.
The Government has defended its efforts to tackle the problem.
In September, Work and Pensions Secretary Mel Stride said overall economic activity in the UK is below the average across comparable countries and levels have fallen by 360,000 since the pandemic peak due to Government policies.
However, the Labour-led LGA said a new approach would significantly boost progress.
It noted that many people who are fit for work and want a job are not eligible for support from jobcentres as they do not claim out-of-work benefits, leading to vacancies remaining unfilled.
The LGA called for better collaboration across Whitehall departments and between the Government and councils in order to respond effectively to the often complex reasons why people are economically inactive.
These can include physical and mental health conditions, loss of self-esteem, access to transport or a need to learn new skills.
The report by Shared Intelligence called for councils to be given a leading role in assisting people back to work in their areas, backed by simplified and long-tern funding arrangements.
Economic inactivity does not have a quick fix and short-term, limited schemes will not be enough to get millions of people back into work.
This would enable eligibility to be broadened and support linked to existing frontline council services such as public health, housing and adult learning, as well as the NHS, it added.
Martin Tett, Conservative chair of the LGA’s people and places board and leader of Buckinghamshire Council, said: “Economic inactivity does not have a quick fix and short-term, limited schemes will not be enough to get millions of people back into work.
“Councils know their communities best and can use their unique coordinating role to tackle this fundamental national issue and its underlying causes.
“Given the right powers and funding, local government can do so much more to unlock the labour market, join up support and boost economic growth”
The report found that the 51 national initiatives identified are led by 17 public bodies, of which 12 are Government departments. The remainder are either executive agencies, non-departmental bodies or organisations commissioned by the Government.
The Department for Work and Pensions funded more than a third of the initiatives, with the others led by the Department for Education, the Ministry of Defence and the National Health Service.
A Government spokesperson said: “Our drive to get more people into jobs and grow the economy is paying off – inactivity has fallen by more than 200,000 since the pandemic peak – but we are determined to help everyone fulfil their potential through work.
“That is why we are investing an extra £3.5 billion into the next generation of welfare reforms, to help thousands into jobs, grow the economy and halve inflation. This includes tailored one-to-one, expert help at our Jobcentres, where we’re working with employers, the NHS and other partners to provide joined-up support, break down barriers and get Britain working.”
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United Kingdom Business & Economics
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Investigating resiliency and vulnerability of global supply chains during the COVID-19 pandemic
It's no secret that the COVID-19 pandemic disrupted supply chains across the globe. In the United States, it often seemed like stores couldn't keep certain items in stock. Now, new research is diving more deeply into the resiliency and vulnerability of global supply chains during the COVID-19 pandemic.
The research team investigated the U.S.-China supply chain during each of its economic shutdowns in the COVID-19 pandemic and focused on measuring credit risk through one of its most liquid variables called credit default swaps, which essentially is insurance against default. The paper, "The impact of COVID-19 on supply chain credit risk," was published in the journal Production and Operations Management.
Researchers found that when China experienced its economic shutdown first and the rest of the world was not yet impacted, U.S. firms with Chinese suppliers and customers were vulnerable to the economic downturns happening in China.
Conversely, when China's economy reopened and the United States went into an economic shutdown, U.S. firms with Chinese suppliers and customers remained more resilient to the local shocks of the U.S. economy. Essentially, firms with global supply chains remain resilient to local shocks, but it exposes firms to global shocks.
Additionally, the researchers find that factors like firm size, investment grade rating, cash holdings, inventory, number of business segments, network centrality, and capital redeployability make a firm more resilient to global risks. On the other hands, factors like high financial leverage, operational leverage, and strong market competition make a firm more vulnerable to global economic shocks.
Senay Agca, study author and a professor of finance at the George Washington University, says this study demonstrates how markets adjust to global supply chain risks. She said it'll be important for companies moving forward to weigh these pros and cons as they re-evaluate their supply chain strategies.
More information: Şenay Ağca et al, The impact of COVID‐19 on supply chain credit risk, Production and Operations Management (2023). DOI: 10.1111/poms.14079
Provided by George Washington University
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Banking & Finance
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A pub has closed for business a month after its collection of golly dolls was seized by police.
Five Essex Police officers removed the offensive dolls from behind the bar at the White Hart Inn, Grays, following a hate crime allegation.
Heineken and Carlsberg have told the pub to stop serving its lager, while maintenance company Innserve refused to continue working on site.
The pub's leaseholders closed the doors to customers on Monday night.
In an interview with Thurrock Nub News, co-leaseholder Benice Ryley cited opposition from the Campaign for Real Ale (Camra) and the suppliers, and said: "I've had enough."
'Discriminatory'
The police seized the dolls on 4 April and the building was vandalised with white paint and had its windows damaged on 16 April.
Camra removed the pub from its Good Beer Guide and also removed the Pub of the Year awards on display.
Mrs Ryley said the collection of about 30 dolls were donated by her late aunt and from customers, and had been in the pub for nearly 10 years.
"If they don't like it, they don't have to come through the door," she told the BBC last month.
A Heineken UK spokesperson said it told the pub on 20 April to stop serving its beer, and that it would stop supplying materials such as glasses, and said in a statement: "After being made aware of the abhorrent display feature in the White Hart Inn, we advised the pub owners that we want nothing more to do with them.
"They go against everything we stand for.
"We believe pubs should be places of inclusivity and respect for all people, regardless of their race, ethnicity, religion or gender."
Camra national chairman Nik Antona said on Wednesday: "We believe pubs are for everyone - there is never a place for discrimination."
An Essex Police spokesperson said: "At this stage our investigation is still ongoing."
Mrs Ryley declined to comment when contacted by the BBC and said she preferred to wait until police speak to her husband and fellow licensee, Chris Ryley, later this month.
He is currently abroad.
Admiral Taverns, the company which owns the pub building, said: "The licensees have made us aware of their decision to leave the pub.
"We will be looking to reopen the pub under the management of new licensees."
The dolls are thought to date back to minstrel entertainment shows, when typically white actors painted their faces black and depicted negative stereotypes of black people.
It became a fictional character that appeared in books from Florence Kate Upton in the late 19th Century.
The name for the dolls has since been used as a racial slur.
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Consumer & Retail
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Households were paid to cut back on their electricity use for an hour on Monday evening in the first test of a National Grid scheme aiming to cut energy consumption in Great Britain. The second trial was taking place on Tuesday, between 4.30pm and 6pm.More than 1m households and businesses have signed up to the live -demand flexibility service.Here, five people share what it was like to reduce their power use for an hour – from those who turned off everything to those who cut back – and what motivated them to take part.‘It’s no hardship for us’Morag BramwellWe’ve been already participating in the Octopus saving sessions. I think we saved about £8 across three sessions last year. On Monday it was 5-6pm, but we extended it to 4.30pm to 7pm because our costs are very high during that time period.The fridge and freezer were pretty much all that was running. We’re careful to make sure nothing is running in the background, like the transformer attached to our sofa’s electronic foot raiser.We ate dinner at 4.30pm and used candles and the wood burning stove. We phoned our son, and did the crossword on our phones – we have a bit of competition going between us.It’s no hardship for us as retired people. If this can help prevent the National Grid using coal-fired power then we’ll feel like it was really worth it. Part of this for me is learning how to deprive myself of something – I’ve been thinking hard about how to reduce my environmental impact. Morag Bramwell, 65, near Inverness, retired‘It was peaceful’Gillian Williamson Photograph: Gillian WilliamsonI decided to take part to try to save money – I’m in arrears. I know it won’t be much but it might help a little bit – I don’t know yet how much I’ve saved.I turned off the fuse box on Monday at 5pm so the wifi was down and it was peaceful – the kids loved it. I’d had the heating on before and it was still kind of warm – we had blankets so it wasn’t too bad.I lit a scented candle and sat talking with my daughter. It was good to have nothing to do at all – we just spoke to one another.My nine-year-old twins are usually on their phones all the time, but there was no way of getting on the wifi so they actually played, rolling balls around. One of my sons is now saying he wants to do it again. Gillian Williamson, 48, Castleford, housekeeper‘I got the whole family involved’Lee ThompsonI have taken part in smaller events before through my energy provider. On previous occasions we didn’t completely cut down, just reduced things on standby. But this time I got the whole family involved and told them it was a national event that we were being asked to do to help out the National Grid. Every small thing done by everyone can have an impact.My children understood and my daughter went round and turned all the plugs off. I’d prepared dinner for 5pm so everything was off and we sat and ate with a single light on downstairs. It was nice to sit and chat. The children either did homework or instrument practice. I played a board game with one of my sons. Easy, really. No big deal. Lee Thompson, 49, Nottingham, youth worker‘We can manage without hot drinks’Carole BentonWe went round turning off standby devices, toasters, computers and chargers but left the router functioning for the smart meter. We lit candles and watched The Chase on TV. We always watch that between 5 and 6pm anyway so it wasn’t massively difficult for us and we can manage without hot drinks for that time, it won’t kill us! At the moment we have to think about it a bit, but it’s not life changing.Now that we’re retired, it doesn’t take a huge amount for us to reorganise our life so we don’t need to use electricity. I’m quite happy to leave it for people who have got children and have to get school uniforms washed and dried for the next day.The Octopus app is still calculating our “reward” so we wonder if we’ve actually made a difference. We’d do the same again if it worked. Carole Benton, 61, East Sussex, retired‘We’ve all got to do our bit’We planned our meal and ate earlier than normal, at 4.45pm. We either read (with a head torch) or used a prepared laptop to watch a film or talk. Heating off, lights off.We’ve all got to do our bit to help with the fuel crisis and avoid the possibility of blackouts. If the people in Ukraine can live with daily power cuts and hardship it isn’t a big thing for us to sit at home (safe and warm under blankets) and not use appliances for an hour or so.I made sure that everyone at home was happy about participating and understands why we’re doing it. You have to make sure everyone agrees with it, you can’t convince teenagers – they have to buy in, that’s really important. You can’t make them be miserable for an hour.Sarah, 50, Chesterfield. lawyer
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Energy & Natural Resources
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Sam Altman, the now former CEO of OpenAI, has departed his role and is leaving its board, according to a company post on Friday. But questions about his role at other entities like Worldcoin, his crypto project he co-founded, remain up in the air as its token falls on the news.
Worldcoin’s token, WLD, fell more than 13% on the day, to $1.91, CoinMarketCap data showed. When asked about Altman’s future at Worldcoin or its plans going forward, Worldcoin did not respond to TechCrunch’s request for comment.
Altman’s crypto project raised $115 million in May in a Series C round led by Blockchain Capital. In March, TechCrunch reported Altman was on the board of Worldcoin, but is not involved in the “day-to-day” operations.
Worldcoin obtains users by scanning irises through its Orb, which then assigns users an “iris code” or “World ID” that grants users access to the projects’ application and provides them with “a digital passport,” Tiago Sada, head of product for Tools for Humanity and a core contributor to Worldcoin, said on TechCrunch’s Chain Reaction podcast in September. The verification process purportedly allows people to prove their identity, and the iris code is used to make sure they don’t go and get another one.
In August, Worldcoin faced pushback from countries, including Kenya, which halted the project from scanning any more of its citizens’ eyeballs (and the project ignored initial orders). Worldcoin has faced backlash from critics, who allege the company targets developing economies. Given that the project gives most participants (outside the U.S. and some other countries) 25 WLD tokens, worth roughly $48, in exchange for signing up, which could be seen as exploitative.
Sada said that giving out the free tokens and going to developing countries was fair because most projects, especially in crypto and tech, focus on emerging markets, as “those are the easier ones to operate in.”
While OpenAI stated Friday that the board “no longer has confidence in [Altman’s] ability to continue leading” the company, its statement didn’t fully explain why Altman was fired or where he stands with other related organizations, like Worldcoin.
Worldcoin’s application has over four million downloads and its active users are “more than double” globally, according to a blog post from the beginning of November. There are more than 2.4 million “unique humans” on Worldcoin and in the most recent seven days at the time of writing, about 53,800 new accounts have been made, and there have been over 59,000 daily wallet transactions, according to the company’s website.
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Crypto Trading & Speculation
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By Safiyah Riddle
(Reuters) - More than half of U.S. small business owners believe the economy is already in a recession, marking a slight decrease between July and April, despite most firms reporting their own financial condition was strong, a survey released on Monday showed.
The survey conducted in July from the National Federation of Independent Business focused mainly on small businesses' views on the state of banking and their credit needs, and also showed small businesses are much less worried about the health of their bank than they were in the immediate aftermath of this spring's bank failures, including that of Silicon Valley Bank.
On the economy, 52% of small business owners said they believe the economy is already in a recession, down from 55% in April, the survey found. That belief comes despite broad signs of strength across the economy and growing body of evidence that the economy could avoid a long-anticipated downturn.
Recent indicators have shown strong retail sales and rising spending on services, the two largest small business industries. Moreover, businesses see their own financial condition as strong and their local economies relatively healthy.
For instance, more than two-thirds of all firms said that the financial state of business was "excellent" or "good," a slight decline since April, but still strong as consumer spending continues to surpass expectations, and expectations for third-quarter gross domestic product growth continues to get revised upwards. On top of that, 80% of firms reported that the local economy was at least "okay."
Optimism about the banking sector improved as well, recovering from the second-biggest U.S. banking collapse on record in March, as over half of all owners were not at all concerned about the health of their bank, an increase from 31% in April. There was heightened concern among small businesses at the outset of the collapse since 80% of all small businesses use a small, mid-sized or regional bank for financial needs.
The increased cost of borrowing after 525-basis points worth of tightening from the Federal Reserve since March 2022 continued to be the greatest source of concern for the majority of firms that have borrowed or tried to borrow since April.
(Reporting by Safiyah Riddle; Editing by Josie Kao)
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Banking & Finance
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Walmart and Costco Agree to ‘Aggressive’ Price Cuts on Food After Canada Turns Up the Heat
They are among the top five chains promising to hold down costs after the Trudeau government threatened action over rising grocery bills
Canada's federal government received initial commitments from the country's five largest grocery chains to stabilize food prices, it announced Thursday.
The government said that the grocers will support its efforts to stabilize rising food prices, and that the grocery chains will propose “concrete actions” to keep prices down by Thanksgiving, which falls on Oct. 9.
Each grocer has already identified initial actions that they will implement in the coming days and weeks, including “aggressive” discounts across key food products, price freezes and price-matching campaigns, according to the statement.
The government also said it will establish a Grocery Task Force, which will monitor the grocers’ commitments and investigate practices that hurt consumers, like "shrinkflation." On Sept. 21, the government introduced legislative amendments to increase competition in the grocery sector in an attempt to drive down prices.
“If we don't see results, we will take additional action to restore the food price stability that Canadians expect,” the government said in its release.
The announcement follows from a meeting held last month by François-Philippe Champagne, the country’s Minister of Innovation, Science and Industry, with executives from five chains — Metro, Loblaws, Empire, Walmart and Costco — that make up about 80% of the Canadian market to discuss food prices.
Prime Minister Justin Trudeau said last month that his government was considering imposing taxes on the grocery chains if they did not develop measures to grapple with rising food prices.
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Annual inflation came in at 4% in August, an unwelcome acceleration from the 3.3% rate in July, Statistics Canada reported last month. Prices for food purchased in stores slowed to a still-high yearly rate of 6.9% in August, down from 8.5% in July.
Much like the U.S. Federal Reserve, the Bank of Canada has been raising its interest rates to wrangle inflation down to its 2% target. The Canadian central bank held its rates at 5%, its highest level since 2001.
Bank of Canada official Nicolas Vincent warned that the practice of changing prices more often, which has become easier in places like grocery stores given electronic price tags, could make it more difficult for the government to tame inflation.
“In other words, if recent pricing behavior settles into a new normal, it could complicate our return to low, stable and predictable inflation,” Vincent said in a speech Tuesday.
Canada is not the only country struggling with rising grocery prices. Last month, French supermarket chain Carrefour began placing “shrinkflation” labels on products that have gotten smaller but cost the same to pressure major suppliers, including Nestlé, PepsiCo and Unilever, to slash prices.
Retailers in the country are currently negotiating with major brands to usher in price cuts as shoppers turn to retailers’ private label items for some pricing relief.
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Inflation
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Experts say the OPEC+ oil cartel’s shock decision to slash production will make the next few months “pretty painful for drivers” — and wide-eyed motorists are already reeling from sticker shock.
“Here we go again,” Vincent Bruno, 50, said Tuesday morning as he gassed up his sedan at a Sunoco on Queens Boulevard in Briarwood, where a gallon of regular costs $3.60. “It’s not a huge hike, but it’s just enough to get you where it hurts. They don’t care about the little guy.”
Miguel Reyes, a 44-year-old bus driver from Kew Gardens, Queens, said he thought prices were dropping until he reached his local Shell station, where it was listed at $3.46 per gallon.
“It is a burden — a few more dollars, it adds up,” Reyes said. “That money has to come from somewhere else. Maybe I buy the lower-priced ice cream for my kids or the lower-priced cereal that they don’t like.”
And it will likely only get worse.
With its Sunday decision to suddenly chop production by more than a million barrels a day, the powerful oil cartel — which counts Russia among its members — immediately drove up the price of a barrel of Brent crude from about $77 on March 31 to $81 on April 3.
There were instant consequences at the pump.
On Tuesday, a gallon of gas went for about $3.50 per gallon nationwide, according to AAA’s online tracker.
That’s up from $3.43 a week ago, and $3.39 a month ago, AAA said.
Wall Street observers have said that the OPEC+ cuts could eventually push the price beyond $100 a barrel, which would certainly drive up per-gallon rates and frustrate American drivers still aching from last year’s record-high gas prices.
This could lead to hikes of roughly 26 cents per gallon, according to Kevin Book, managing director of ClearView Energy Partners LLC.
That’s on top of the usual seasonal increase that happens when refineries switch to their summer blend of gasoline. The Energy Department calculates that at about 32 cents per gallon, Book said.
“It’s fair to say that this is going to be pretty painful for drivers for the next couple of months,” Robert Sinclair, spokesman for AAA Northeast, told The Post. “I just feel sorry for the consumers, the folks who can’t afford these fluctuating gasoline prices.”
But Sinclair was reluctant to speculate how high prices could rise in the delicate oil market, which is overly sensitive to global events such as the Ukraine war, refinery capacity in Venezuela and China’s demand for fuel, among other things.
“I think there will be an initial bump in prices, but how high? Hard to say,” Sinclair said. “It’s not something that changes month by month, or week by week, or even day by day. It’s minute by minute.”
Still, the price hikes will likely throw a wrench into people’s spring and summer plans, he added.
“The great American family road trip might get shortened as a result,” Sinclair said.
But for others who sit behind the wheel for a living — such as cab driver Mehedi Roy — it’s best not to dwell on the ever-changing gas bill.
“I pay what it costs. What else can I do?” Roy, 30, told The Post on Tuesday at the Queens Boulevard Sunoco. “I spend all my day burning gasoline. If I think about how much it costs, I can get very depressed.”
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Energy & Natural Resources
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This year has already been a lucrative one for those with savings in the bank, as interest rates on all types of deposit accounts have surged to record highs over the past 15 months. It's now easy to earn more than 5.00% with dozens of savings, money market, and certificate of deposit (CD) accounts in our various rankings of the best nationwide rates.
That's all thanks to the Federal Reserve, and the aggressive fight it has been waging against post-pandemic inflation that, at one point, had reached a 40-year high. Since March 2022, the Fed has been rapidly hiking the federal funds rate, and as it's done so, the returns that banks and credit unions are willing to pay you for your cash deposits have gone up too.
But as rosy as things already are, current Fed sentiment suggests interest rates still have room to run. How much higher can they go? While there's never a crystal ball, here's what we know.
Key Takeaways
- Rates on savings, money market, and CD accounts are at their highest levels since at least 2007, pushed there by the Federal Reserve's current rate-hike campaign that began in March 2022.
- Since the Fed has not yet achieved its inflation-fighting goal, it has indicated it's likely to further raise its benchmark rate this year.
- Any additional rate hike by the Fed will almost certainly nudge CD rates higher.
- It looks unlikely that the federal funds rate will be reduced in 2023.
- Predictions on Fed rate movements should be taken with a grain of salt, as the Fed makes each decision based on the latest economic data and financial news.
Today's CDs Are Already Paying Record Rates
The trend line for certificate of deposit (CD) rates is directly influenced by the federal funds rate. When the Fed raises its benchmark rate, most banks and credit unions raise their deposit rates in turn (though not necessarily by the same amount). The reverse is true when the central bank decreases the fed funds rate.
Today we are in a historic period of rising rates, launched in March 2022 when the Fed began increasing the fed funds rate in earnest. Triggered by pandemic-fueled inflation, the Fed rapidly raised rates over the following 14 months by a cumulative 5.00%, its fastest pace of increases in 40 years.
As a result, CD rates have skyrocketed. At the start of 2022, before the Fed's first hike, the leading rates for CD terms of 6 months to 5 years ranged from just 0.80% to 1.50% APY. In contrast, today's leaders in our daily ranking of the best nationwide CDs are paying three to six times more, with top rates ranging from 4.77% to 5.65% APY.
It's estimated that certificate of deposit rates have not hit levels this high since at least 2007, as that's the last time the federal funds rate was as high as it is today. From June 2006 to September 2007, the Fed's benchmark rate sat a quarter-point higher than today's rate. But since then, the highest peak was less than half of today's rate, while in nine of the last 16 years, the fed funds rate was effectively zero.
Will CD Rates Climb Higher This Year?
No one knows the answer to this question for sure, but at the moment, signs are pointing to yes. That's because the latest inflation reading was still double the Fed's target inflation rate of 2.00%, and as a result, the Fed says it has more work to do to slow the economy and reduce inflationary pressure.
When the Fed's rate-setting committee met last week, it opted to hold rates where they are for now, rather than implement an 11th rate increase in as many meetings. But in his post-meeting comments, as well as in testimony to Congress this week, Fed Chairman Jerome Powell made it clear that one or more rate hikes are still in the cards for 2023.
More specifically, the Fed's post-meeting report indicates that 12 of the committee's 18 members currently favor at least two rate increases before the year ends.
If one or more of these rate increases comes to pass, it would likely raise the federal funds rate by 0.25% to 0.50%, which would match or exceed the Fed's 2006-2007 peak rate. In turn, it would almost certainly push CD rates higher as well.
Of course, any additional Fed rate increase is not guaranteed, as the Fed makes each rate decision based on the latest economic data and financial news. A surprise in inflation or employment data, or a major development in the banking sector, could definitely sway the Fed's decision.
Note
For cash you're not willing to commit to a CD, high-yield savings and money market accounts also offer excellent returns right now, with several options in our daily rankings of the best savings accounts and best money market accounts paying 5.00% or better. Just be aware that these accounts' rates are variable, meaning they can go down at any time, unlike the locked nature of a CD rate.
Could CD Rates Go Down This Year?
Though it's often true that what goes up must eventually come down, it's looking unlikely at this time that the Federal Reserve will reduce rates this calendar year. In fact, Atlanta Fed president Raphael Bostic said in mid-May that he doesn't see rates declining this year.
The Fed's "dot plot" from its June 14 meeting corroborates this. The graph shows where each member of the Fed committee believes the fed funds rate should be over the current and coming years, and of the 18 Fed members, not one indicated a 2023 fed funds rate lower than today's rate. In fact, the most conservative projection represented in the dot plot was just two members who saw the fed funds rate holding at its current level for the rest of the year.
Once again, it's important to note that Fed moves cannot reliably be predicted, as things can shift in the economy between meetings. But at this moment, it seems most likely that whatever rate level we reach this year, we're likely to hold onto until sometime in 2024.
The Bottom Line for CD Shoppers
With rates already at record highs, it's hard to go wrong with opening a top-paying CD right now. Sure, rates could inch up a bit over the coming months. But the increase is likely to be minor relative to how high CD rates have already climbed to-date.
In addition, we don't know for sure that any Fed increases will actually come to fruition. If instead the fed funds rate plateaus where it is now, that means CD rates are likely at their ultimate peak already.
Still, there's no denying that, right now, the odds are favorable that we'll see further rate improvements at the Fed's July or September meetings, or perhaps even both. So it's certainly possible that holding off on a CD right now could pay dividends by scoring a higher yield later this year.
Rate Collection Methodology Disclosure
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the CD's minimum initial deposit must not exceed $25,000.
Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.
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Interest Rates
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Tata Technologies IPO Fully Subscribed Within 36 Minutes Of Opening
It's the first public issue from the Tata Group since 2004 listing of TCS.
Tata Technologies Ltd.'s initial public offering was fully subscribed within 36 minutes on the first day of opening, underscoring demand for the first public issue from the Tata Group since 2004.
The offer had been subscribed 1.11 times by 10:39 a.m., according to data on the BSE Ltd. The demand was led by qualified institutional buyers, who put in bids 1.98 times the shares set aside by that time. It was followed the portion for institutional investors that saw a subscription of 1.17 times.
Tata Technologies raised Rs 791 crore from anchor investors ahead of its initial public offering.
The engineering services company allotted 1.58 crore shares at Rs 500 apiece to 67 anchor investors. The buyers include Fidelity International, Nippon Life India, BNP Paribas, SBI Mutual Fund, HSBC, Kotak, DSP, Motilal Oswal, Edelweiss, and Goldman Sachs, among others.
SBI Multi Asset Allocation Fund secured 4.30% of the allocation, the highest in the list.
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Stocks Trading & Speculation
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Vodafone Idea’s New Funding To Be Used For Capex, Payment Of Vendor Overdues, Says CEO Akshaya Moondra
Vodafone Idea is yet to roll out 5G and has seen no major site additions in the current fiscal.
Vodafone Idea Ltd.’s plans to utilise its future funding to be utilised towards overdue payments to its vendors and capital expenditure towards 4G and 5G.
The cash strapped telecom operator is yet to receive funding basis which it will be able the company’s ability to stay afloat will be determined.
“Our growth capex in terms of expanding our 4G coverage and also rolling out 5G which will go side by side, will happen based on the new funding being tied up,” Akshaya Moondra, chief executive officer of the company said in an earnings call following its second quarter results.
Moondra added that the company will be able to conclude discussions with equity investors in the October to December quarter. Basis this equity funding, the banks “will process the request for bank funding and process their internal approval.”
The company’s second quarter capex spend stood at Rs 520 crore, in contrast with Bharti Airtel whose capex stood at over Rs 9,000 crore in the same period. Vodafone Idea is yet to roll out 5G and has seen no major site additions in the current fiscal.
“We continue to incur some minimal capex and that will continue as to the necessary capex in terms of where we are operating today,” Moondra said.
He further attributed the lack of investment that is preventing Vodafone Idea’s ability to “compete in the market and primarily the lack of 4G coverage.”
The company said in August that a promoter group has promised to infuse Rs 2,000 crore, if required. Its promoters, including Aditya Birla Group and Vodafone Group, hold 18.1% and 32.3% stakes, respectively, as of Sept. 30.
The company has added 18 lakh subscribers to its 4G network in the second quarter of FY24 to 12.47 crore. The overall subscriber based stood at 21.98 crore, witnessing a churn of 16 lakh, the lowest since quarterly subscriber decline since the merger.
Debt Breakup
The Aditya Birla Group and Vodafone Plc.-backed company’s existing debt payable by Sept. 30, 2024, stood at Rs 7,174 crore, according to a regulatory filing.
It includes Rs. 1,600 crores of Optionally Convertible Debentures to American Tower Corp. “..if those get converted, then this will not need to be serviced,” Moondra said.
The balance is bank debt including Rs 2,000 crore taken to meet the “short term funding gap.” Moondra said that the company will service this in a single tranche in the last quarter of FY24.
Moreover, the company reclassified debt of Rs 3,189.6 crore from non-current borrowings to current maturities of long-term debt “for not meeting certain covenant clauses under the financial agreements.” This is now payable until March 31, 2024.
Tax Provision
Following the Oct. 16 Supreme Court ruling that held that licence fee paid at regular intervals should be classified as capital expenditure, Vodafone Idea said that it created a tax provision for Rs 822 crore.
The company has provisioned for the interest amount without mentioning the exact figure. “We will not be able to share that with you separately because it is a mix of various things,” Murthy GVAS, the chief financial officer at Vodafone Idea said during the earnings call. “The tax figure was more relevant.”
However, he underscored that the interest provision is part of interest cost. The company’s finance cost from July to September was Rs 6,569 crore, up from Rs 6,398 crore in the first quarter.
Moondra said the company has not created any deferred tax asset against this tax adding that there is no immediate outflow of tax. He further added that Vodafone Idea is expected to get tax refunds which will offset the tax demand in this case, if any.
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India Business & Economics
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ALASTAIR GRANT/POOL/AFP via Getty Images
toggle caption
British Prime Minister Rishi Sunak visits Writtle University College, an agricultural college in Writtle, United Kingdom, a day after making his announcement about changes to Britain's climate policies.
ALASTAIR GRANT/POOL/AFP via Getty Images
British Prime Minister Rishi Sunak visits Writtle University College, an agricultural college in Writtle, United Kingdom, a day after making his announcement about changes to Britain's climate policies.
ALASTAIR GRANT/POOL/AFP via Getty Images
LONDON — Amid growing international criticism, British Prime Minister Rishi Sunak has defended watering down key U.K. climate policies.
In a press conference Wednesday, Sunak announced a series of major U-turns on climate policies, including delaying by five years the target to ban sales of new gas and diesel cars — which will now come into force in 2035 rather than 2030 — and a nine-year delay on phasing out gas boilers, which will now come into force in 2035.
Sunak insisted he was not slowing down efforts to combat climate change. But his government's own climate adviser called the prime minister's assertion that the U.K. would still succeed in meeting its 2050 net-zero target "wishful thinking."
Sunak said the changes were about being "pragmatic" and sparing the British public the "unacceptable cost" of net-zero commitments.
His home secretary, Suella Braverman, told the BBC that the Conservative government was "not going to save the planet by bankrupting British people."
The government's Climate Change Committee — independent advisers on cutting carbon emissions — estimates that meeting Britain's legally binding goal of reaching net zero by 2050 will require an extra $61 billion of investment every year by 2030.
But the committee has said that once the savings from reduced use of fossil fuels are factored in, the overall resource cost of the transition to net zero will be less than 1% of GDP over the next 30 years. By 2044, the committee has said, breaching net zero should become cost-saving, as newer clean technologies are more efficient than those they are replacing.
Criticism at home and abroad
Sunak's overhaul of his green targets has been met with criticism at home and internationally.
Former U.S. Vice President Al Gore described the changes as "shocking and disappointing" and "not what the world needs from the United Kingdom."
Some in the prime minister's own Conservative Party warned that the changes risk damaging Britain's reputation as a global leader on the climate.
Sunak decided not to attend the United Nations Climate Summit in New York this week, making him the first British prime minister to miss a U.N. General Assembly in a decade.
Former Conservative minister Alok Sharma, who chaired the 2021 COP26 U.N. Climate Change Conference in Glasgow, told the BBC Wednesday's announcement had been met with "consternation" from international colleagues.
"My concern is whether people now look to us and say, 'Well, if the U.K. is starting to row back on some of these policies, maybe we should do the same,'" he said.
In the U.K., Sunak's announcement prompted a backlash from climate activists, car manufacturers and the energy industry.
In a statement, U.K. Ford chair Lisa Brankin said, "Our business needs three things from the U.K. government: ambition, commitment and consistency. A relaxation of 2030 would undermine all three."
And the chief executive of one of Britain's largest energy suppliers, Eon UK, said the move was a "misstep on many levels."
Sunak's pivot occurs as extreme weather due to climate change is growing more frequent
Sunak said the announcement was part of his desire for a more "honest debate" about what reaching net zero will actually mean for the British public.
But he has come under criticism from the British media for claiming to scrap measures that some have pointed out never existed as formal government policy in the first place, such as taxing meat and requiring households to have seven different waste and recycling bins. (The government had previously said it wanted to standardize waste collection in England, although the plan was subsequently delayed and never became policy).
Political analysts say Sunak's gamble marks a shift for the prime minister, who has spent his first year in office largely steadying the ship after the tumultuous governments of his predecessors Liz Truss and Boris Johnson. With a general election coming up next year, they say, Sunak has chosen net zero as a dividing line.
Sunak's pivot away from more aggressive action on global warming occurs as extreme weather is becoming more frequent and more intense around the world, including the U.K., because of the effects of climate change. Scientists say this will continue as long as humans continue to emit planet-warming greenhouse gases.
In the U.K., temperatures hit 40 degrees Celsius (104 degrees Fahrenheit) for the first time on record in July 2022. The World Weather Attribution network says this would have been "basically impossible" without climate change.
During this week's climate summit in New York, London Mayor Sadiq Khan said the capital faced what he called the "incredibly worrying" prospect of seeing 45-degree Celsius (113 degrees Fahrenheit) days in the "forseeable future."
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United Kingdom Business & Economics
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All-inclusive package holidays have jumped in price for Mediterranean hotspots including Majorca and Crete.
The average price of a week with full food and board in Majorca in Spain is up 21%. Prices for Tenerife have risen more than 22%, figures from TravelSupermarket showed.
Crete in Greece is 25% more expensive than last year.
Overall the most popular destinations, Spain, Turkey, Greece, Portugal and Cyprus have gone up by nearly 12%.
Prices for countries beyond the Med have also risen, according to the figures compiled by the price comparison website for the BBC.
That has left people like Sophie West, from Castleford in Yorkshire, paying significantly more than they did last year for the same holiday.
Sophie saved to afford her trip, and is currently in a hotel with a water park in Crete with 25 members of her extended family and her friend Sarah. She says at least having the all-inclusive deal will help keep a lid on their spending while they are there.
"It's mainly for my brothers, because they've all got kids," she says. "It's so much easier for them to know that they don't have to take any other money."
There are "ice-creams on tap" for the youngsters.
Sophie has managed to keep costs down other ways too. She booked in January when there were cheaper deals, and she got ten days holiday for less than the rest of her party are paying for seven, by flying on off-peak days.
The family could have saved money by holidaying somewhere cheaper, but even for lower cost destinations prices are up this year. A week in Morocco is 27% more expensive than last year. Bulgaria has gone up 13%.
TravelSupermarket calculates the average using the results of searches for holidays in the given destinations. While this shows a general trend, exact costs will vary depending on location and time of booking.
The average of the top five most popular destinations for UK travellers has risen by 11.9% since last year, but there is variation between countries. The average package price has risen fastest in Spain, up nearly 15%, but only by 5% in Portugal.
Compared to before the pandemic the average price across the top five destinations is up more than 30%, well above the rate of general inflation since 2019.
Sandra Ollerton, who runs Preston Travel Centre, in Lancashire says nevertheless demand remains high.
But she says some people are cutting the length of their holidays from two weeks to one to save money or finding other ways to "travel smarter".
"We're seeing an increase in multi-generational holidays, because we're finding that some of the grandparents weren't affected as much financially by Covid or the cost-of-living crisis, so they are helping out their children and their grandchildren," she says.
One common trick, to wait until the last minute to see if prices fall, may not work this year, according to Richard Singer, chief executive of TravelSupermarket.
"It is unlikely that prices will fall substantially for this summer," he says, because despite higher prices, demand is outstripping supply.
"Prices for next year are looking on a par with this year," he adds.
How to save money on your holiday
- Choose a cheaper location. A UK holiday eliminates travel and currency costs, but overseas destinations vary a lot too.
- To decide whether all-inclusive will save you money, first look at local costs for eating out and don't forget about drinks and airport transfers
- Travel outside the school holidays if you can
- Booking early can help, especially if you have to travel at peak times
- Check whether you can get a cheaper flight by travelling mid-week
- Haggle. Call the travel agent to see if they can better the price you found online
- Choose destinations where the value of the pound is strong. This year that includes Turkey, Bulgaria and Portugal
Source: Which?and TravelSupermarket
Beyond travel and accommodation, holidaymakers will also have to fork out more money to leave their car at the airport. The average rate per night went up by nearly 10% this year, from just over £13 in May last year to more than £14.
The cost of travel insurance is also up by around 10%.
There is one cost, however, that has come down: car hire. After spiking higher last summer as operators struggled to scale back up after the pandemic, hiring a car this August has become more affordable. For example, the average daily rate for hiring a car in Ireland dropped from £203 in August last year to just £48 this August. Rates in Croatia, Italy, Spain and the United Arab Emirates have also dropped by more than 40%.
Against that backdrop Laura Betchette, an assistant tax manager from Wakefield, and her partner James are wrestling with their travel plans.
They are getting married at the end of August, and wanted a traditional honeymoon following the wedding day, but the quotes they were given for their "dream honeymoon" was beyond their budget.
"For the Maldives for a week we were looking at between nine and ten thousand pounds," she says.
So they are postponing the trip until in November or December giving them time to put a bit more in the "honeymoon pot".
And they are working out whether booking flights and hotels separately themselves would be cheaper than an all-in-one package.
But switching destinations could bag them more savings.
They are now considering a week in Dubai, in the United Arab Emirates, the only destination out of the top ten where the average all-inclusive package price has come down since last year, at least for travellers going in August.
And any cash gifts at the wedding can always go towards the honeymoon fund too, she says.
Additional reporting by Anna Crossley
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Europe Business & Economics
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Americans continued to pile on credit card debt this year, with total balances approaching $1 trillion sooner than some experts had expected.
US credit cardholders now owe $986 billion in debt, data from the Federal Reserve of New York found Monday. That’s $59 billion higher than the record set in the fourth quarter of 2019, when balances stood at $927 billion. It’s also the first time since 2001 in which credit card debt didn’t fall in the first quarter.
The uptick in credit card debt is a sign that some US households are being forced to lean on credit cards to meet basic monthly expenses as inflation and high interest rates diminish their savings.
Still, there are some ways consumers can use credit cards to their advantage, experts say, when used wisely.
"I'm not opposed to having a credit card, but you've got to be able to only use it within the context of a monthly budget," Scott Inman, a GenWealth financial advisor, told Yahoo Finance Live (video above). "I think that's what we're finding here is that people are having a hard time paying their expenses within the context of where their income is."
Credit cards are "not a piggy bank," he added.
Although inflation has shown some signs of cooling, prices remain elevated.
Food prices are up 7.7% year over year in April. Meanwhile, the cost of transportation was up 11%, the Bureau of Labor Statistics said, and shelter was 8.1% higher.
"There’s no question that the current economic environment we’re in with inflation running as hot as it’s been for the last two years has caused people to be in more of a pinch than maybe they were before," Inman said.
Still, credit cardholders should think twice before racking up debt. Overspending and falling behind on payments can be detrimental to credit scores. According to LendingTree, a missed payment could drop your score by as much as 180 points and stays on your credit report for up to 7 years.
"I understand that using a credit card may seem like a last resort, it may actually be that, but when it comes to credit card usage, we tell our clients to understand and be educated on how to use them wisely," Inman said.
Credit cards, he added, are not "a place to spend money on vacation. It's not a place to buy your next car or the next little toy, it should be a last resort to leave a balance on a credit card."
Not paying off your balance can also snowball into unmanageable debt especially if the Fed continues to hike interest rates.
The average APR for all current credit cards increased to 20.09% in the first quarter of 2023, data from the Federal Reserve revealed, up from 19.07% in the fourth quarter. At the same time, APRs for cards accruing interest jumped to 20.92% from 20.40% in the fourth quarter of 2022.
Those are the highest rates the Fed has posted since it first began tracking the data in 1994, LendingTree Chief Credit Analyst Matt Schulz wrote.
"Of course, your best move is to make those interest rates a moot point by paying your card debt in full, but that’s often easier said than done," Schulz wrote.
One way: transferring your debt to a 0% balance transfer card. With a 0% balance transfer card, borrowers can avoid paying interest on transferred balances for up to 21 months, depending on the card’s promotional terms. That said, credit card issuers typically charge between 3% to 5% of the balance for each transfer – which can add up.
"If you're not able to effectively create a plan to [minimize credit card debt] in the near term, you've got to look at some 0% offers," Inman said. "You've got to attack that credit card debt. Right now."
Gabriella is a personal finance reporter at Yahoo Finance. Follow her on Twitter @__gabriellacruz.
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Inflation
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At least £60m will be made available to councils and social landlords to buy empty and private sector houses, the Scottish Government has announced.
The First Minister said the national acquisition plan will help increase the supply of social and affordable housing in Scotland.
Humza Yousaf said it’s in an effort to alleviate the demand for temporary accommodation.
Other measures to reduce the demand will include working with social landlords to increase allocations to homeless households and providing national guidance for local authorities to support good practice around changing temporary accommodation into permanent and affordable homes.
Specific plans for the hardest-hit local authorities will also be developed, the Scottish Government said.
The First Minister said: “Housing is crucial to achieving our aspirations of a fairer country.
“We recognise the varying challenges that exist across Scotland and that these cannot be addressed by a single solution.
“That is why the range of actions we will be taking, including our £60m plan, will help us effect real change.
“A great deal of consideration has been given to the best way to reduce the number of households in temporary accommodation.
“I am thankful to members of the Temporary Accommodation Task and Finish Group and all its contributors for the role they played in shaping the final recommendations.”
John Mills, joint chair of the Task and Finish Group, said: “We’re heartened by the Scottish Government’s recognition of the seriousness of the current situation, the damage that is being done to many families living in temporary accommodation for long periods and the increasing challenges councils are facing in meeting their needs.
“We’re particularly pleased by the commitment to a national acquisitions programme to bring more homes into social renting quickly and we look forward to working with the Scottish Government, COSLA and Shelter Scotland to recapture the momentum towards ending homeless that we had pre-pandemic.”
Alison Watson, director of Shelter Scotland and co-chair of the Temporary Accommodation Task & Finish Group, said: “Scotland is experiencing a housing emergency that is ruining lives.
“By being here today, the First Minister is showing that he is serious about this emergency.
“At Shelter Scotland, we see the impact of our broken and biased housing system in the work we do with families and individuals trapped in temporary accommodation. When a system isn’t working it is those groups most marginalised – children, disabled people and minoritised ethnic groups – that feel the impact the most.”
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United Kingdom Business & Economics
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Here’s another edition of “Ask Sophie,” the advice column that answers immigration-related questions about working at technology companies.
“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”
TechCrunch+ members receive access to weekly “Ask Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.
Dear Sophie,
With more than 750,000 H-1B registrations this year, is it realistic for my early-stage startup to consider hiring candidates who are seeking them?
— Skeptical Startup
Dear Skeptical,
I know, I know: The numbers are intense.
I understand your skepticism given that the odds of companies getting their H-1B visa candidates selected in the annual lottery process have been on the decline as demand among employers for H-1B visas continues to rise. Despite some well-publicized layoffs, many employers continue to hire, plus the CHIPS Act of 2022 and the Infrastructure Investment and Jobs Act of 2021 are spurring more job creation.
For this year’s H-1B lottery, the U.S. Citizenship and Immigration Services (USCIS) received a whopping 758,994 eligible registrations, and for the first time, more than half — nearly 408,900 — were H-1B candidates who had more than one employer that registered them in the lottery. (How does the annual lottery work? Check out my podcast for an overview.)
Again this year, with no second lottery on the horizon, these are important questions to ask.
Still, I believe it’s still worth it to register employees in the annual H-1B lottery as part of a multiprong strategy to attract and retain international talent in the United States, as the six-year, dual-intent status is so valuable to companies and the team members who hold it.
That remains true even if the USCIS implements a proposal to increase the H-1B lottery registration fee to $215, up from the recent $10 fee. Although it’s a large increase, the additional $205 per registration likely won’t be a limiting factor for even early-stage startups considering the process.
The chances of having an H-1B candidate picked in the lottery has dropped dramatically, particularly since 2020, when the USCIS implemented its online H-1B lottery registration system. Before 2020, companies that wanted to enter an employee or prospective employee in the H-1B lottery had to submit a completed H-1B application.
This time-intensive, costly, and risky process often meant that participating in the H-1B lottery was unrealistic for most startups. Additionally, companies had to be ready to front the full filing fees at the time of the lottery, not knowing how many people would be selected and how many checks would be cashed. Now it’s easy to register candidates, and companies have discretion about whether to proceed with the full petition after knowing whether somebody was selected.
Raising the annual cap of 85,000 H-1B visas (65,000 for those with bachelor’s degrees and 20,000 for those with master’s or higher degrees) requires congressional approval and remains highly unlikely. However, the USCIS could look at alternative administrative changes, such as limiting each H-1B candidate to one entry in the H-1B lottery regardless if that individual has multiple job offers, in order to provide a more level playing field.
This year’s H-1B lottery
While getting job offers from multiple companies that register an H-1B candidate in the lottery is not against the law, the USCIS indicated it would closely scrutinize H-1B beneficiaries, companies, and applications for potential abuses and fraud.
After this year’s lottery, the USCIS stated:
The large number of eligible registrations for beneficiaries with multiple eligible registrations — much larger than in previous years — has raised serious concerns that some may have tried to gain an unfair advantage by working together to submit multiple registrations on behalf of the same beneficiary. This may have unfairly increased their chances of selection.
If any of your early-stage employees are on F-1 Optional Practical Training (OPT) or STEM OPT, the two-year extension for students who graduated in a STEM field, make sure to enter them in the H-1B lottery every March until they are selected before they graduate and while they are maintaining OPT and STEM OPT status. You can look at other visa alternatives as well.
Visas for citizens of specific countries
You have other options if your startup’s employees or prospective employees aren’t selected in the H-1B lottery. There are a handful of work visas aimed at individuals from certain countries. If any of your employees or prospective employees are from Australia, Canada, Chile, Mexico, or Singapore, these are great options to consider:
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Workforce / Labor
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A firm founded by Rishi Sunak’s father-in-law signed a billion-dollar deal with BP two months before the prime minister opened hundreds of new licences for oil and gas extraction in the North Sea.
In May, the Times of India reported that Infosys bagged a huge deal from the global energy company which is thought to be the second-largest in the history of the firm.
The Indian IT company is owned by the prime minister’s wife’s family although Sunak has insisted the matter is of “no legitimate public interest”.
It has since come to light that the IT giant has been involved in £172 million worth of public sector contracts in the UK, and even the most innocent bystanders would admit that the current drive to increase oil and gas exploration in the North Sea is more than convenient.
What’s more, it is made even more convenient by the fact that one of Infosys’ other major clients is Shell, whose CEO joined Rishi Sunak’s new business council two weeks ago and promised a “candid collaboration” with his government.
Sunak has insisted granting new oil and gas licences for the UK was “entirely consistent” with the UK commitment to reach net zero emissions by 2050.
The PM said even then the UK would still need oil and gas for 25 per cent of its energy needs, with the PM saying he was seeking to “power Britain from Britain” rather than the UK “relying on foreign dictators” for its energy supplies.
Speaking about the need for oil and gas, the Prime Minister said: “If we’re going to need it, far better to have it here at home rather than shipping it here from half way around the world with two, three, four times, the amount of carbon emissions versus the oil and gas we have here at home.
“So, it is entirely consistent with our plans to get to net zero.”
But doubts have even been raised about those claims which are expertly set out by Ciaran Jenkins here:
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United Kingdom Business & Economics
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They called him the “Godfather.”
Before he was FBI director, Jim Comey was general counsel of Bridgewater Associates, the world’s largest hedge fund. There he would practice and perfect the knack for drama that later thrust him into the center of the national political scene.
Comey was far from a household name when he joined Bridgewater in 2010. He was best known for his stint as US attorney for the Southern District of New York, and he made no secret to friends of his financial motive for jumping to Bridgewater, which would pay him $7 million per year.
Bridgewater founder Ray Dalio, famed for devising a collection of so-called “Principles,” also made no secret of his hopes for the new hire. Dalio’s Principles, later adapted into a best-selling book and TED Talks, centered on a philosophy of “radical transparency” that involved tearing into the firm’s troublesome corners. They called for videotaped, internal “trials,” and investigations of even the smallest problems at the firm; these were often called “diagnoses” to find the “root cause.” Staff voted in real-time on disagreements. Dalio told staff that Comey would be like a godfather adjudicating it all.
Comey’s early days were inglorious. He often acted as if the hedge fund’s rules did not apply to him. Most every meeting, no matter how minor, was recorded at Bridgewater’s Connecticut headquarters, and at six foot, eight inches, Comey would sometimes reach toward the ceiling to deactivate any hidden recording devices in the light fixtures. He tended to speak in meetings from his experience, so Dalio would quickly correct him that he should apply the firm’s Principles rather than his own (one read, “Don’t tolerate badness,” while another prescribed “truth at all costs”).
Comey was smart enough to course correct—he was soon citing Principles with such frequency that Dalio told the whole firm that his new general counsel was a “chirper,” or someone who repeats stale ideas. Evidently eager to finally prove his worth, Comey found an opportunity to earn some points.
A relatively new lawyer on Bridgewater’s staff, Leah Guggenheimer, had taken to The Principles with gusto. She ostensibly worked in the operational side of the organization, but had earned a reputation for hunting firmwide for “badness,” including writing up a colleague for failing to bring in bagels on the agreed-upon day. This went on long enough that her colleagues voted to let her go. Her salary was cut off.
Dalio caught wind and didn’t like the idea of penalizing an employee—even a tedious one—for speaking her mind. He called in Comey for a second opinion.
Comey seemed to sense an opening to impress his new boss.
“Do you want it done like case law?”
Dalio energetically confirmed that he did.
“Well, Ray, the trial has happened. It’s gone through due process. It looks like it followed The Principles. So reopening it doesn’t make any sense, unless we hear it de novo.”
“What’s that?”
“You assume that the other trial never happened and you look at everything fresh.”
Dalio was fine with that.
Comey threw himself into the investigation. He listened to reams of meeting recordings and told Dalio that his review indicated the firing was justified.
Dalio concluded that beyond adjudicating the blow by blow of the bagels, Comey had performed a poor diagnosis:
“You didn’t get to the root cause.”
Dalio ordered a third investigation.
This time around, Comey applied brute force. He searched the records of Guggenheimer’s company-issued cell phone and found that she’d turned it on at home after her trial. When she protested that she needed to save personal contact information, Comey said she should have asked for permission.
He also began searching through the files on Guggenheimer’s office computer. Amid the usual mundanity, Comey came upon what he thought was quite the kompromat. Guggenheimer, a single woman, was using the computer to send messages on dating websites. Some of the messages bordered on blue—“near pornographic,” Comey told some at Bridgewater.
Dalio saw it differently. “What is pornography?” he mused. People have their private business, and the messages weren’t nearly a fireable offense, he concluded.
“Weak case, Jim,” Dalio told him.
Embarrassed in more ways than one, Guggenheimer decided not to return.
Comey’s responsibilities included oversight of Bridgewater security. This vast role gave him an excuse to poke and prod in virtually all corners of the firm. As one Principle laid out, “You should have such good controls that you are not exposed to the dishonesty of others.”
The taping of meetings represented just the tip of the surveillance ecosystem at Bridgewater. A slew of ex FBI agents staffed the security team. Not only did cameras cover seemingly every inch of the property, but they seemed to be watched in real time. Staffers who left their desks even briefly would return to sticky notes left on their computer monitors admonishing them for failing to put up a screen saver. New employees were often warned to be careful about their use of the company gym, which lent out clothes. One staffer, exhausted after a particularly tough workout, was chastised after absentmindedly walking out wearing a pair of Bridgewater loaner socks. The employee was let go. (A spokesperson for Dalio said, “No one was ever fired for taking a pair of socks.”)
As Comey’s search for office bugs indicated, most Bridgewater employees had a quite reasonable fear of being listened in on. When personal calls had to be placed during company time, many trudged out of the office and into the surrounding woods. That lasted roughly until a rumor circulated inside the fund that Comey’s team was studying how to install devices in the trees that could intercept phone calls before they reached surrounding cell phone towers. (A spokesperson for Dalio said Comey did not investigate installing devices in trees. Comey declined to be interviewed; he wrote in an email, “I will buy the book when it comes out.”)
As head of security, Comey reported to Dalio’s longtime deputy Greg Jensen, who seemed eager to prove that he took the protection of Bridgewater’s secrets as seriously as Dalio. With little evidence of actual offending behavior to snuff out, they created their own. Comey helped come up with a plan to leave a binder, clearly labeled as Jensen’s, unattended in the Bridgewater offices. It worked like a charm. Comey watched as a low-ranked Bridgewater employee stumbled upon the binder and began to peruse it. Jensen and Comey put the employee on trial, found him guilty, and fired him, with Dalio’s approval.
During and after Comey’s era at Bridgewater, tens of thousands of hours of the firm’s internal deliberations, arguments and trials were uploaded into what was called the “Transparency Library” and available for playback for all at the firm.
Lordy, there was plenty to watch.
No doubt Comey’s most infamous internal case was his prosecution of Bridgewater co-chief executive officer, Eileen Murray, who stood out like a pimple in Bridgewater’s blue-blooded executive suite. She’d grown up in a housing project in Queens, rarely wore skirts, never married, never had children, and talked frequently about her dogs. A former Morgan Stanley executive, she sent emails off the cuff, all lowercase, with typos, suggesting she was too busy to give anything her full attention.
The proximate cause of Murray’s lesson in the application of The Principles was innocuous enough. A job candidate mentioned to a Bridgewater executive that he was familiar with the hedge fund’s head of accounting, Perry Poulos, one of Murray’s hires. The job candidate evinced surprise—didn’t they know Poulos had been fired from Morgan Stanley?
Comey grabbed a former FBI agent on the Bridgewater staff and went to intercept the unsuspecting Poulos. The duo pulled him into a conference room without warning.
“Hi, guys,” Poulos said.
“We just want to know, is there anything in your background we should know about?” Comey responded.
“I had some things there, but it’s all cleared up now.”
“You wouldn’t mind if we ask a few questions and look a little more?”
There’s really nothing to find, Poulos said.
Go ahead. He exited the room, heart racing, and soon found Murray. She knew, as he did, that he had been let go from Morgan Stanley after questions were raised about his expenses. But Murray sensed a larger target at play. “It’s not you,” she told Poulos. “It’s me. They are trying to get to me.”
Comey called in Poulos for another interview.
“Did you talk to anyone about this?” Comey asked.
“No.”
“Are you sure?”
“No, I haven’t talked to anyone.”
“You live with Eileen, don’t you?”
Knowing Bridgewater’s reputation for intimate relationships, Poulos assumed Comey was sniffing for a romantic angle. During the week, Poulos said, he sometimes spent the evening at Murray’s place, in separate bedrooms.
“Even that evening, after we spoke, you didn’t talk to her?” Comey asked.
“I don’t remember saying anything in particular.”
The answer evidently didn’t strike Comey as credible, so the same question was asked of Eileen. Did she speak to Poulos? She answered no. Murray was instructed to write a memo with everything she knew about Poulos’s background.
The email that landed in Comey’s inbox, labeled as sent from Murray’s BlackBerry, was pristine. The grammar was clean and every word was properly capitalized. Comey showed it to Jensen. Both agreed it could not possibly have been written by her. Comey had access to security cameras. He pulled the footage and showed it to Jensen. Murray, sitting at her desk, was on camera, clearly in conversation with a subordinate in the minutes leading up to the email’s being sent. One could even pinpoint the moment she asked her subordinate to hit send.
Comey and Jensen pulled Murray into another meeting.
Are you sure you didn’t talk to anyone about this? they asked.
“Of course not.”
Even as the words left her mouth, Murray must have known she had made a mistake. She had worked on the email with an assistant, dictating phrases and going back and forth until they had come up with clean answers. She had been visibly nervous that she was walking into a trap and wanted to get it all exactly right. But now she was in a deeper hole of her own making. She had now been dishonest twice—once about speaking to Poulos, and now about typing the email.
Murray fled to Dalio and confessed her sins. She had lied only out of panic. She hadn’t been feeling herself, she said. She had just been trying to stay out of Comey’s crosshairs, and to keep Poulos away from the dragnet, too. “It was a white lie,” she said.
Dalio paused to confirm that the tape recorder was on and then said that Bridgewater was a place where liars were punished. There would have to be a trial.
It wasn’t just a trial, it was the trial. The investigation of Murray and Poulos went on for nine months. Cameras rolled all the while as Comey and Jensen probed Murray and Poulos on their transgressions. Everyone at the firm saw footage of Murray sitting at her desk, dictating the infamous email. The inquest didn’t stop at Murray’s pair of confessed lies. Comey seemed to act as if he had gotten Al Capone on tax evasion—once Comey had her in court, he had an excuse to investigate her whole life’s story.
Murray walked past Comey’s office one day to see the walls covered in newspaper clippings, and sticky notes, all about her, with lines drawn all over like a police sketch board on a procedural television series. She felt sick to her stomach.
It seemed to Murray and those sympathetic to her as if Dalio couldn’t get enough. He sat in as judge and turned the investigation into a real-time case, called “Eileen Lies.” Videos were released weekly, as serialized viewing for all Bridgewater staff. The updates were a combination of reality television, soap opera, and cinema verité. Comey played bad cop; in one video, he told Poulos, “Just tell the truth, it might make you feel good.” Jensen cast himself as the victim. “You lied to me,” he told Murray.
New episodes of “Eileen Lies” continued to air even after Poulos was fired, and after Murray’s assistant—called to testify against her boss—decided to resign instead.
After the better part of a year, even Comey and Jensen could wring no more juice out of the incident. Jensen presented his final argument: Eileen was an inveterate liar, and an avowed violator of the most sacred of The Principles. She had to be fired, for the good of the firm. Comey backed him up.
Dalio punted. Murray had lied, he ruled, but she hadn’t been proven to be a liar. The whole incident, Dalio told the firm, was a learning experience. It inspired him to write two new Principles. One dealt with white lies—they were acceptable, in small quantities. The other new Principle: “Everything looks bigger up close.” Of course, Murray would have to pay penance. He stripped her of her co-CEO title, bouncing her down to firm president. Everyone was unsatisfied. Murray had lost her role and her dignity. Comey was even more apoplectic—he had proven his case and lost anyway
In time, Comey came to see that a job at the world’s biggest hedge fund was not the slam dunk it had once seemed. Comey’s name was being whispered about for high-level government jobs, and what was happening at Bridgewater had the potential to burn, rather than burnish, his résumé.
For all Bridgewater’s talk of radical transparency, considerable secrecy surrounded Comey’s own resignation in October 2012, which came without an immediate explanation from Dalio. Questions piled up, and when employees were asked to vote at a Bridgewater town hall on queries to be answered, the top-voted topic was Comey’s imminent departure.
Comey laid out his thinking in an email:
From THE FUND: Ray Dalio, Bridgewater Associates, and the Unraveling of a Wall Street Legend by Rob Copeland. Copyright © 2023 by the author and reprinted by permission of St. Martin’s Publishing Group.
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Banking & Finance
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The Biden administration proposed a new rule Wednesday that would make 3.6 million more US workers eligible for overtime pay, reviving an Obama-era policy effort that was ultimately scuttled in court.
The new rule would require employers to pay overtime to so-called white collar workers who make less than $55,000 a year. That’s up from the current threshold of $35,568 which has been in place since 2019 when Trump administration raised it from $23,660. In another significant change, the rule proposes automatic increases to the salary level each year.
Labor advocates and liberal lawmakers have long pushed a strong expansion of overtime protections, which have sharply eroded over the past decades due to wage stagnation and inflation. The new rule, which is subject to a publicly commentary period and wouldn’t take effect for months, would have the biggest impact on retail, food, hospitality, manufacturing and other industries where many managerial employees meet the new threshold.
“I’ve heard from workers again and again about working long hours, for no extra pay, all while earning low salaries that don’t come anywhere close to compensating them for their sacrifices,” Acting Secretary of Labor Julie Su said in a statement.
The new rule could face pushback from business groups that mounted a successful legal challenge against similar regulation that Biden announced as vice president during the Obama administration, when he sought to raise the threshold to more than $47,000. But it also falls short of the demands by some liberal lawmakers and unions for an even higher salary threshold than the proposed $55,000.
Under the Fair Labor Standards Act, almost all hourly workers are entitled to overtime pay after 40 hours a week, at no less than time-and-half their regular rates. But salaried workers who perform executive, administrative or professional roles are exempt from that requirement unless they earn below a certain level.
The left-leaning Economic Policy Institute has estimated that about 15% of full-time salaried workers are entitled to overtime pay under the Trump-era policy. That’s compared to more than 60% in the 1970s. Under the new rule, 27% of salaried workers would be entitled to overtime pay because they make less than the threshold, according to the Labor Department.
Business leaders argue that setting the salary requirement too high will exacerbate staffing challenges for small businesses, and could force many companies to convert salaried workers to hourly ones to track working time. Business who challenged the Obama-era rule had praised the Trump administration policy as balanced, while progressive groups said it left behind millions of workers.
A group of Democratic lawmakers had urged the Labor Department to raise the salary threshold to $82,732 by 2026, in line with the 55th percentile of earnings of full-time salaried workers.
A senior Labor Department official said new rule would bring threshold in line with the 35th percentile of earnings by full-time salaried workers. That’s above the 20th percentile in the current rule but less than the 40th percentile in the scuttled Obama-era policy.
The National Association of Manufacturers last year warned last year that it may challenge any expansion of overtime coverage, saying such changes would be disruptive at time of lingering supply chain and labor supply difficulties.
Under the new rule, some 300,000 more manufacturing workers would be entitled to overtime pay, according to the Labor Department. A similar number of retail workers would be eligible, along with 180,000 hospitality and leisure workers, and 600,000 in the health care and social services sector.
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Workforce / Labor
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The Big Bond Market Event Wednesday Is at Treasury, Not the Fed
The Federal Reserve’s policy statement is setting up to be the No. 2 event on Wednesday, with investor focus instead likely to be on the Treasury Department’s new borrowing plan, due hours ahead of the interest-rate decision.
(Bloomberg) -- The Federal Reserve’s policy statement is setting up to be the No. 2 event on Wednesday, with investor focus instead likely to be on the Treasury Department’s new borrowing plan, due hours ahead of the interest-rate decision.
The so-called quarterly refunding announcement will reveal the extent to which the Treasury will ramp up sales of longer-term debt to fund a widening budget deficit. Those securities have been tumbling for weeks, even amid signals from Fed officials they’re “at or near” the end of rate hikes.
The selloff has sent yields to the highest levels since before the global financial crisis — making longer-term Treasuries more costly for the government. Investors are eager to see whether officials maintain the pace of increase in longer-term debt sales they announced in the August plan. Bumpy auctions of some securities in recent weeks have only increased that focus.
“Market participants are really hyper-focused on supply now and we kind of know the Fed is on hold,” Angelo Manolatos, a strategist at Wells Fargo Securities, said in a telephone interview. “So the refunding is a bigger event than the FOMC. It also has a lot to do with the moves we’ve seen in yields since the August refunding.”
Many bond dealers predict a refunding size of $114 billion, representing the same cadence of increases per each refunding security as laid out in the $103 billion August plan, which marked the first step up in issuance in more than two years.
An alternative view predicted by several large dealer firms would be a smaller bump in longer-term debt, given the surge in yields, and greater reliance on bills, which mature in a year or less. Some see this tweak potentially combined with a signal that a further increase of long-term sales isn’t certain for the next refunding, in February.
“Looking at the refunding, the composition of Treasury issuance might be very consequential and relevant” to the market, said Subadra Rajappa, head of US interest rates strategy at Societe Generale SA. As for the other Wednesday event, “this meeting is sort of a placeholder for the Fed,” she said.
Indeed, Fed Chair Jerome Powell — a former Treasury official himself — and his colleagues may take interest in investor reactions to the refunding. He and others, including Dallas Fed President Lorie Logan, who previously oversaw the Fed’s market operations, have said the surge in long-term yields may mean less need to raise the benchmark rate.
Yellen’s Rebuff
Ten-year yields were around 4.8% at the end of last week, well over three quarters of a percentage point higher than before the August refunding. Yields remained high even after the outbreak of the Israel-Hamas war three weeks ago – the kind of geopolitical flashpoint that can spur haven demand for Treasuries. Israel’s weekend invasion of Gaza will again test previous norms.
While Treasury Secretary Janet Yellen on Thursday rejected the idea yields were climbing due to swelling federal debt, Powell this month did list a focus on deficits as a potential contributing factor.
Read more: How Rising Rates, US Debt Brought Back Term Premiums: QuickTake
Earlier this month, Treasury data showed the federal deficit roughly doubled in the fiscal year through September compared with the year before, effectively reaching $2.02 trillion. The worsening trajectory helped prompt Fitch Ratings to strip the US of its top-tier AAA sovereign rating on the eve of the August refunding.
On Monday, the Treasury will set the stage for its issuance plans with an update of quarterly borrowing estimates, and for its cash balance. In August, officials penciled in net borrowing of $852 billion for October through December. Lou Crandall at Wrightson ICAP LLC says he’s not expecting any downward revision in Monday’s update.
US debt managers in August lifted the refunding issues, which include 3- and 10- and 30-year Treasuries, by $2 billion, $3 billion and $2 billion relative to each of those securities’ previous auctions of new debt. They also increased issuance of all other note and bond maturities, something dealers see happening again this time.
A $114 billion plan for Wednesday would mean the following upcoming quarterly refunding auction sizes:
- $48 billion of 3-year notes on Nov. 7
- $41 billion of 10-year notes on Nov. 8
- $25 billion of 30-year bonds on Nov. 9
The JPMorgan Chase & Co. rates team is looking for a “rinse, repeat” of August. That, they say, was also signaled by Josh Frost, the Treasury’s assistant secretary for financial markets, in a talk last month.
That’s not the universal view, however. Wells Fargo, Goldman Sachs Group Inc., Barclays Plc and Morgan Stanley are among those expecting the Treasury to tilt this time more toward short-term securities, in part given the rise in long-term rates.
Read more: Barclays Predicts Treasury Is About to Slow Terming-Out of Debt
Solid demand for Treasury bills, which yield well over 5%, means there would be ready buyers, but bills currently make up more than 20% of marketable Treasuries. That’s slightly above the recommended range of 15% to 20% laid out by the Treasury Borrowing Advisory Committee — a panel including dealers and investors. Even so, in August, TBAC said it’s comfortable with bills temporarily taking a larger share.
While the government has a longstanding pledge to be “regular and predictable” with its debt-issuance plans, the group of dealers forecasting a change in the pace of the expansion in note and bond auctions argues that the Treasury’s credibility would remain intact. That’s in the context of the August TBAC guidance on bills and an expected lift in auctions of all coupon-bearing maturities.
Besides issuance plans, investors will also be looking for an update from the Treasury of its progress in assembling a program of buybacks of existing securities. The department has said those will start in 2024.
The deficit isn’t the only dynamic forcing the government to borrow more from the public. The Fed is running off its holdings of Treasuries at a pace of up to $60 billion a month. Powell cited this process, known as quantitative tightening, as another potential contributor to the rise in long-term yields.
Next February
It all means the department may have little option over time.
“Treasury will have to again raise funds across the maturity spectrum” on Nov. 1 and again in February, said Praveen Korapaty, chief interest-rate strategist at Goldman Sachs. Goldman’s economists don’t see Fed QT ending completely until early 2025.
The backdrop is ripe for volatility after the 8:30 a.m. refunding details hit the wire.
“Treasury does make adjustments based on how markets are receiving supply,” Korapaty said. “Right now the market is telling you that if you are putting more duration supply in then the market clearing price is going to be higher.”
--With assistance from Elizabeth Stanton and Carter Johnson.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Bonds Trading & Speculation
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Photo by Christopher Furlong/Getty Images. On a chilly Friday afternoon, three weeks before Christmas, the first snow of the year was turning to slush outside one of Britain’s first “warm banks” in Kennington, south London. Inside, a cross-section of Londoners were keeping themselves busy while avoiding the cold. A group of women from the nearby estate had gathered for their weekly knitting meet-up, while a group of pupils discussed the World Cup in the library around the corner. “I just got here not too long ago,” said Leon, 16, who moved to the area a few weeks ago from Nigeria and lives with his uncle. It was his first time experiencing snow. “It’s cold!” The modern, coffeehouse-style space in a repurposed church is run by the Oasis Charitable Trust. Recognising the impact the rising cost of living was having on people’s ability to pay their energy bills, it was one of the first places in Britain to open as a “warm bank”: a place where people who cannot afford to heat their homes can sit and warm up for free. Since September, the number of warm banks – which exist in halls, churches, and other community hubs – that have opened up across the country has grown rapidly. More than 4,300 warm banks had opened by the end of November – an average of 475 new ones opening every week. Organisers at Oasis said that demand for their space had reached a “tipping point” over the past few weeks, with more people coming in to keep warm. “The whole place is buzzing almost on a daily basis,” said David, 38, a local resident who was sitting on a black, velveted-covered chair. Select and enter your email address Morning Call Quick and essential guide to domestic and global politics from the New Statesman's politics team. 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David and his friends are feeling the pressure from the cost-of-living crisis: “ We’re too afraid to turn on the heating, even though it’s freezing. We just sit in our jackets”. Content from our partners “It’s so nice to have this space – it makes such a difference,” he continued. “There’s a lot more poverty around and a lot more struggle going on these days.” The scene in Kennington is one that is not exclusive to the capital. It reflects the situation across the country. [See also: The cost of living crisis is pushing disabled people into poverty] Warm banks span every part of the country, and every political subgroup according to data from the Warm Welcome campaign. From the heart of the Red Wall in Doncaster Central (14 warm banks); to the SNP’s Stirling (six warm banks); to the Tory stronghold of East Devon (16 warm banks), spaces where people are able to go to warm up for free are increasingly common. The End Fuel Poverty Coalition estimates that 22 per cent of the country are now officially in fuel poverty – meaning after they’ve paid their energy bills their residual income is below the poverty line – up from 13 per cent in 2020. In Birmingham, Manchester and Sheffield more than 40 per cent of households are estimated to be in fuel poverty. Most of England’s high-fuel poverty constituencies are already represented by Labour MPs, but every constituency in England with 30 per cent or more households in fuel poverty is predicted to become a Labour seat in the next election. The New Statesman Britain Predicts election model shows that current Labour seats with high levels of fuel poverty are predicted to return with significant majorities. Meanwhile, Tory seats in high-fuel poverty areas are expected to swing strongly back to Labour. [See also: Michael Marmot: The causes of fuel poverty are all avoidable] “Stoke-on-Trent is one of the most deprived areas in the country, and we have an incredible network of community organisations,” said Birgit Allport, 53, who started the Better Together Community Centre in the Conservative constituency of Stoke-on-Trent Central in 2018. “However, it's never enough,” she added. Allport, who is originally from Berlin, started the community group so that people around her age could meet and socialise without going to the pub. Demand has soared in recent months. “Definitely double the numbers, if not more” now claim the food parcels, and attend the warm space in the community centre, which has run since the cost-of-living-crisis began. “We have some families where both parents are working and they still can't cover the bills – and that is so heart-breaking to see,” she added. Jo Gideon, the MP for Stoke-on-Trent Central, is currently a patron of the Better Together charity that Allport runs. Allport describes the Conservative MP – who flipped the constituency and won her seat in 2019 with a 2.1 percentage point majority – as “fantastic in supporting us” and kind-hearted. It’s “difficult to say,” Allport concluded, whether Gideon – whose party’s policies set out in its Autumn Statement will see the largest drop in household disposable incomes since records began – will personally face political consequences at the next general election. “Yes, she's a Conservative MP. But if you ask her for help, she will help you.” As of 9 December 2022, the Britain Predicts model forecasts that Stoke-on-Trent Central will swing back to Labour with a 36-point lead. On this prediction, Gideon may lose her seat by 36 points – with her party losing more than 250 seats, with barely 100 MPs in the Commons. [See also: How many people in the UK are nearing fuel poverty?] Many see the rise and necessity of food banks, and now warm banks, as a consequence of political choices made by the Conservative Party over the past 12 years. In 2010/11, the Trussell Trust, one of Britain’s largest food bank networks, had around 35 food bank centres. Now, that number stands at more than 1,200 – which accounts for more than a third of all food banks across Britain. In the constituency of Don Valley, which covers villages on the outskirts of Doncaster, the Conservative MP Nick Fletcher only has an eight point majority. In his constituency, there are 15 warm banks open, according to the Warm Welcome website, and another seven are registered to open; among the highest in the country. This summer, rising energy bills meant that The Ark, a community café in Rossington, Don Valley, couldn’t afford to stay in business. But instead of closing down completely, it chose to shut the money-making part of the business, and become a not-for-profit community centre funded by council grants and donations. It distributes food parcels and offers a warm space for locals. The Ark welcomes around 60 attendees a week. Elaine Spencer, the hub's organiser said: “Rossington is an area that is known to be deprived, some of the poverty comes from the fact that the colliery used to employ 2,000 people,” she explained. “Now, we’ve got gigantic Amazon warehouses and we had Rossington people who worked at Doncaster airport, and now that’s closing down; lots of them are out of work, or worrying that they will be soon. “People tell me ‘I feel like a failure because I can’t feed my children’,” Spencer added, “and you have to convince them that ‘you’re not a failure, and you’re not the only one.’ It’s a failure of the system.” The Britain Predicts model forecasts that Don Valley will swing back to Labour with a 24-point margin. Back in the Oasis “living room” space in Kennington, as the evening fell and the snow continued to slowly melt, staff prepared roast potatoes and other festive food for an evening gathering. Many running warm spaces see themselves as a “safety net” to the government’s own safety net, with Universal Credit, pensions and other benefits often failing to offset the rising cost of living. As government provision becomes increasingly ineffective, food banks, warm banks and other community hubs across the country, such as Oasis, are constantly having to evolve to meet increasing local needs. “I [previously] came here for studying,” said Nawesa, a mother-of-two who moved to the area from Afghanistan six years ago. “I was preparing for a GCSE exam, and I noticed it was very calm and quiet. But now I can see everyone's here!” she continued, as her daughter, aged seven, slumped down on a nearby chair after playing in the toy area. For Nawesa, like millions across Britain, soaring inflation and the cost-of-living crisis makes this year incomparable to the previous one. “Heating, shopping, every day I'm thinking: ‘I must be careful how much I must spend – for everything,” she said. “Before this situation there was Covid. There’s another nightmare now.” [See also: Fuel efficiency gap will cost households hundreds of pounds]
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United Kingdom Business & Economics
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DoubleLine Capital CEO Jeffrey Gundlach believes that interest rates are about to trend lower as the economy deteriorates further and tips into a recession next year.
"I do think rates are going to fall as we move into a recession in the first part of next year," Gundlach said on CNBC's "Closing Bell" Wednesday.
The Federal Reserve's rate-setting committee unanimously agreed Wednesday to hold the key federal funds rate in a target range between 5.25%-5.5%, where it has been since July. This was the second consecutive meeting that the central bank chose to keep rates static, following a string of 11 rate hikes, including four in 2023.
The so-called "bond king" pointed to a few signs of an economic slowdown. Firstly, the unemployment rate, while still low, has been trending higher. Secondly, the key spread between 2-year and 10-year Treasury yields has stayed inverted for over a year, and has recently started to steepen, which is a recession signal, he said. He also saw an initial wave of layoffs.
"I really believe that layoffs are coming," Gundlach said. "We've seen hiring freezes, and now we're starting to see layoff announcements ... they're out there [for] financial firms and technology firms, and I believe that's going to spread."
Gundlach also sounded an alarm over the growing federal deficit, which ballooned to nearly $1.7 trillion at the end of the latest fiscal year that ended in September. The budget shortfall adds to the staggering U.S. debt total, which stood at almost $34 trillion.
"One thing that the market is going to have to confront is we cannot sustain these interest rates and this deficit any longer," Gundlach said. "We can't afford this government that we're running at today's interest rate level. It's completely unsustainable."
Billionaire investor Stanley Druckenmiller earlier Wednesday echoed similar concern about government spending, saying the U.S. opted not to issue debt at low, long-term rates in past years, which will ultimately lead to tough choices in the future, like cutting entitlement programs such as Social Security.
As for the Fed's next move, Gundlach said the central bank is not going to be as aggressive as the current dot plot signals, which suggested one more rate hike this year.
Fed Chair Jerome Powell said Wednesday that the rate-setting committee hasn't begun considering a rate cut, and it won't do so until inflation is brought under control.
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Interest Rates
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NEW YORK -- The nation's biggest and most complex banks will need to hold additional capital on their balance sheets under an initial proposal by the Federal Reserve designed to help banks better withstand risks to their businesses that go beyond a recession or financial crisis.
The proposal released Thursday, boiled down from highly complex and technical nuances, roughly means that Wall Street collectively will have to set aside tens of billions of dollars to meet the Fed's new rules. Banks that rely more on fee income will see a greater impact than those holding bonds and other securities.
The main question addressed by the proposal is how banks over $100 billion in assets should value what are known as risk-weighted assets on their balance sheet when determining how much of a buffer the bank has to withstand market gyrations and economic fluctuations. Risk-weighed assets came out of what is known as the Basel Accords, an international agreement among banks, whose most recent iteration known as Basel III came after the 2008 financial crisis.
“Capital is foundational to the safety and soundness of the banking system, and capital requirements should align with the risks that a bank’s activities pose to its own safety and soundness and financial stability,” wrote Michael Barr, the Fed's vice chair for supervision, in a statement Thursday.
Under the Fed's proposal, banks that rely on more volatile sources of income such as fees and trading might have to set aside more to meet these Basel III requirements. Banks such as Morgan Stanley, or even a credit card company such as American Express, would be more impacted because their business models are heavily weighed toward fee income.
The proposal also takes aim at those banks with between $100 billion to $250 billion in assets, which have been among the most impacted by the banking panic that started in March this year with the collapse of Silicon Valley Bank and Signature Bank, as well as the failure of First Republic Bank.
Fed policymakers have said repeatedly that there needs to be more supervision of these big-but-not-gargantuan institutions.
The banking industry had a hostile reaction to the Fed's proposal. Banks have long contended that they hold more than enough capital to withstand even a global financial crisis — pointing to the COVID-19 pandemic and other industry reforms since 2008, such as the Fed's “stress tests.” The industry's main argument is that capital that has to be warehoused on a bank's balance sheet is capital that cannot be used to fund loans, make trades, or return profits to shareholders through stock buybacks or dividends.
“It is essential that policymakers take steps to fully understand its costs and benefits in the months ahead while also seriously considering industry feedback ahead of issuing a final rule,” said Lindsey Johnson, president and CEO of the Consumer Bankers Association, in a statement.
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Banking & Finance
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Stablecoins may be crypto's killer app, but there needs to be regulation in place to allow them to flourish – which could benefit the U.S. dollar, according to Brian Brooks, a partner at Valor Capital Group.
Speaking to CNBC's "Squawk Box" Friday, Brooks – who was previously the CEO of the U.S. arm of crypto exchange Binance and before that, the acting U.S. Comptroller of the Currency – took issue with the Biden administration's seeming opposition to stablecoins and discussing stablecoin policy.
"Citizens in countries that have high inflation are really strongly demanding dollar-denominated products to keep their money safer after they've earned the money," he said. "In many countries where you can't get a dollar bank account, stablecoins are your best solution."
"If only the U.S. government would create a framework that allows dollars to back stablecoins in a regulated way, that demand would flourish," he continued. "That would be good for dollar adoption globally, but as long as we're allowing governments to suppress stable coins, you have the sort of push-pull phenomenon, which is what creates the problem."
Stablecoins are cryptocurrencies whose prices are pegged to an underlying asset, typically a fiat currency. Bernstein this week called them the "killer app" for crypto because of their ability to facilitate payments. The firm identified this as a nearly $3 trillion opportunity over the next five years.
This week, payments giant PayPal launched its own dollar-backed stablecoin – a first for a major U.S. financial institution. The move comes as the crypto market awaits a vote in Congress on a key stablecoin bill, which has just advanced to the House with three other crypto-related measures – another first for crypto in the legislation department.
"Demand for [stablecoin products are] a way for us to make the dollar relevant again at a time when governments around the world are looking to decouple from the dollar," said Brooks. "That's really a pretty important policy issue. It's not about crypto, it's about the role the United States plays in the financial system."
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Crypto Trading & Speculation
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Gold Price Slump May Boost Demand From India’s Festive Shoppers
But the positive outlook is likely to increase imports and strain the country’s trade deficit.
(Bloomberg) -- A slump in gold prices to a seven-month low in India may stimulate demand in the current festive season, when people traditionally buy more coins and ornaments.
Strong purchases during the October-December festival period, considered an auspicious time to own and wear gold, may underpin the global market. But the positive outlook, which follows a drop of almost 12% in purchases in the first half of 2023, is likely to increase imports and strain the country’s trade deficit that has already widened due to elevated oil prices.
“Overall, the sentiment is positive and this price drop has come at the best time for the market,” said Suvankar Sen, managing director of Kolkata-based Senco Gold Ltd. Footfalls have increased in stores and Indian demand is expected to be 10% to 15% higher than last year in the festival season, he said.
Gold prices in India, the world’s second-biggest consumer, have dropped about 7% from a record high in May. Although, the Israel-Hamas conflict has arrested a fall in global bullion prices, they are facing pressure from surging US bond yields due to expectations that the Federal Reserve may keep the monetary policy tighter for longer. Higher rates are typically negative for gold, a non-yielding asset.
The brighter demand prospect has buoyed shares of major jewelers in India. Kalyan Jewellers India Ltd. has jumped 15% so far this month, Tribhovandas Bhimji Zaveri Ltd. has gained 5%, while Tata Group’s Titan Co. has advanced almost 4%. Shares of SAIF Partners-backed Senco has doubled from the offer price since its listing on Indian exchanges in July.
Read More: Out-of-Favor Gold Attractive as Risks Mount, Nikko AM Says
The World Gold Council said in August that demand in India, the world’s most populous nation, may drop this year to 650 tons to 750 tons, the lowest since the coronavirus pandemic hit the country in 2020, from 774 tons in 2022. The group is expected to release its data for the July-September quarter and estimates for the full year soon.
In contrast to earlier expectations of a sharp decline, there are now hopes that demand could be flat this year, said Chirag Sheth, principal consultant with Metals Focus Ltd. “If prices remain around these levels until Diwali in November or fall more, then we can see a fairly good increase in sales,” he said, referring to the Hindu festival of lights.
Some of the price benefits for consumers will depend on the local currency, Sheth said, adding that a weaker rupee could negate the advantages of lower global gold prices. A depreciating rupee makes gold expensive in India as the nation imports almost all the bullion it uses, mainly from Switzerland.
--With assistance from Muneeza Naqvi.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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India Business & Economics
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The Asda chairman has warned of "unintended consequences" if the government asks supermarkets to impose price caps on basic food.
Stuart Rose told the BBC any such move could be "counterproductive", and that shoppers face the possibility of missing out on better deals.
His comments came as Asda agreed to buy the UK and Ireland business of petrol station giant EG Group for £2.27bn.
The deal will see Asda step up its growth in the convenience food sector.
At the weekend it emerged that the government is in talks about asking supermarkets to cap prices on basic food items to help tackle the rising cost of living.
Mr Rose told the BBC that UK food retailers were "already competing very heavily with each other to give our customers the best possible deal" and were "well ahead of what the government can offer"'
"Starting to try and manipulate markets or control markets is is not going to be effective," he said. "Be careful about what you wish for, be careful about the unintended consequences."
He said any action by the government to fix prices "actually would be counterproductive because if you say you're going to fix the price and suppose then you could actually do it cheaper and you'd agree to keep it at a higher price, you'd be depriving the customer of a better deal".
"So that's the anti-competitive and actually it's almost a cartel, and cartels are illegal."
Asda's deal to buy the UK and Irish assets of EG Group brings together two businesses that are already owned by the billionaire Issa brothers.
The newly-combined company will have revenues of nearly £30bn and employ about 166,000 people.
EG has about 350 petrol stations and more than 1,000 food-to-go locations. All of its sites will be rebranded under the Asda name.
Asda - which is the UK's third largest supermarket - currently has 438 petrol stations, including 129 forecourts that it bought from the Co-op last year in a £600m deal.
There are already 166 Asda "On the Move" convenience stores, which have been rolled out on EG sites since the Issa brothers bought the supermarket in 2021.
Asda co-owner Mohsin Issa said the combination would be "positive news for motorists, as we will be able to bring Asda's highly competitive fuel offer to even more customers".
The Competition and Markets Authority (CMA) is currently investigating all supermarkets over high food and fuel prices.
The competition watchdog is looking at whether a "failure in competition" means customers are overpaying, despite claims by supermarkets that they are working to keep food prices "as low as possible".
A separate investigation into the fuel market has found some supermarkets have increased margins on petrol and diesel.
Asda said it planned to invest more than £150m over the next three years to fully integrate the two businesses.
It also says it hopes to make savings of about £100m in the next three years, by taking advantage of the size of the new group, and through "higher volumes and cross-selling opportunities from a large and highly complementary customer base".
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the idea behind the tie-up was that "by being super-competitive on petrol, Asda may win more grocery custom from rivals at a time when grocery top-ups are all the rage, rather than dedicated weekly shops".
"But while the cost-of-living crisis rages... the search for value may be prioritised over convenience for the foreseeable future," she added.
Retail analyst Richard Hyman predicted job cuts at a senior level would follow.
"It was inevitable the Issa brothers would want to consolidate assets they already own," Mr Hyman said. "The only reason they'll be doing this is to cut costs."
Zuber Issa, co-founder and co-chief executive of EG Group, said the Asda deal was "an important strategic step for EG Group".
"Following this sale, EG Group will benefit from a significantly strengthened balance sheet," he said in a statement.
EG said proceeds from the sale of its UK and Ireland business to Asda, together with $1.4bn (£1.1bn) raised from the US deal, would be used to pay down its debts.
The tie-up between Asda and EG has been expected for some time, and ahead of the deal being announced the GMB union called for it to receive "proper scrutiny" by the CMA.
GMB national officer Nadine Houghton said the union was concerned that rising interest rates would saddle Asda with "unsustainable" levels of debt.
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United Kingdom Business & Economics
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Rishi Sunak has been warned the UK economy could be in recession next year as stubbornly high inflation pushes interest rates to more than 5% before the next general election.
Setting the stage for a further rise in borrowing costs on mortgages and loans for millions of households, economists predicted the Bank of England could be forced to drive Britain’s economy into a recession to tame inflation.
At the end of a week of troubling economic developments, the chancellor, Jeremy Hunt, was being roundly criticised for appearing to say he thought this was a price worth paying, despite the pain already caused to families by an unrelenting cost of living crisis.
Keir Starmer, the Labour leader, said: “Almost nobody feels better off after 13 years of this government. I’m really worried about mortgages. People are struggling to pay the bills. Mortgages are a big part of that.”
Jagjit Chadha, the director of the National Institute of Economic and Social Research, said that if interest rates continue to rise, “we’re in danger of engineering a recession”.
As financial markets drove up UK government borrowing costs to the highest level since Liz Truss’s ill-fated premiership, the prime minister’s ability to deliver on his promise to halve inflation this year, one of five central pledges of his premiership, came into question.
Andrew Sentance, a former policymaker at the Bank of England, suggested Sunak’s promise was a “mistake” because it has been the central bank’s responsibility since it was handed independence by Gordon Brown in 1997.
“I would say if you believe the Clinton mantra that ‘It’s the economy, stupid’ – which I think is quite correct for the UK, and if the opposition looks competent – then it’s going to be quite a sticky wicket for the government economically next year,” he said. “The public can’t sack the governor of the Bank, so they express their dissatisfaction with the government.”
Official figures this week showed that the UK’s annual inflation rate fell by less than expected to 8.7% in April, with a steadying in energy prices largely offset by the soaring price of food.
Financial markets are now betting that the Bank will drive up its key base rate to as high as 5.5% from the current level of 4.5% before the end of the year.
Virgin Money became the latest big lender to increase its mortgage rates on Friday, with the cost of its fixed-rate deals edging higher. On Thursday, Britain’s biggest building society, Nationwide, hiked rates by up to 0.45 percentage points for those taking out a new mortgage.
After Wednesday’s disappointing inflation figures caused turbulence in the money markets, financial data firm Moneyfacts said 38 mortgage products had been withdrawn, and experts warned borrowers to brace for 5%-plus fixed-rate deals.
David Gauke, a former Conservative chief secretary to the Treasury, said the Conservatives’ best chance at the next election would come if living standards were improving and if interest rates were falling.
“The economy has performed better than expected so far in 2023, but if this means that inflation is going to be sticky and the Bank still has to go further to combat inflation, the economic pain is going to be badly timed for the government.”
Former IMF deputy director Mohamed El-Erian said the Bank of England would be forced to raise interest rates higher for longer – which he said would mean recession or close to zero growth. “The risk we now have, you put all that together – sticky inflation, the Bank having to go higher, borrowing costs going up – all that translates into a higher threat of stagflation.
“I use stag for shorthand for insufficient economic growth. It can be recession, it can be zero growth. This is not about abstract numbers; it’s about something that hits the poor particularly hard.”
Treasury sources said they felt words had been put in the chancellor’s mouth that did not reflect his comments.
“If you look at exactly what he’s saying, it’s that inflation is the greatest reason for economic instability and why growth is slowing across the world, and it is the true threat that could cause a recession. Inflation is the No 1 enemy and we need monetary and fiscal policy aligned to tackle inflation and prevent a recession,” the Treasury source said.
The Liberal Democrat deputy leader, Daisy Cooper, said: “This would be a recession made in Downing Street. Rishi Sunak’s promise to grow the economy has been left in tatters. This government’s failure to cut inflation is sending mortgage rates spiralling as the Conservative economic chaos continues.
“Rishi Sunak and Jeremy Hunt could have acted to reduce energy bills and keep food prices under control. Instead, they’ve sat on their hands while inflation goes through the roof.”
Sunak had struck an optimistic note about the economy during his trip to the G7 in Japan last week, saying there were “lots of signs that things are moving in the right direction”.
He pointed to the positivity of chief executives about investment in the UK and argued that real household disposable income was “hugely outperforming what people thought”. The opposition criticised his comments as being out of touch with people struggling with their budgets during a cost of living crisis.
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United Kingdom Business & Economics
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People living in some of Britain's worst 5G not-spots say they have been forgotten by major mobile phone companies and are lagging behind the times.
Earlier this week, a report revealed a stark digital divide between rural and urban areas that is continuing to get wider, with as many as 883,000 people missing out on 5G coverage completely.
The study, commissioned by Vodafone UK, revealed that more than half of rural deprived areas were classified as 5G 'not spots', whereas the same can only be said for 2.7% of urban, deprived communities.
Scotland and Wales, as well as the English regions of East Anglia (Norfolk and Suffolk), Cumbria, and the South West (Devon, Cornwall, Somerset) had some of the highest average not-spot rates, and multiple constituencies classified in the 30% lowest-ranked in the index.
MailOnline went to speak to residents in Wells, Somerset, the Cynon Valley in South Wales and the Lake District in Cumbria to learn what life is like in these digitally-deprived areas.
In each region, 50 people were surveyed to find out whether they had 5G, 4G or 3G connection and asked to download 'Call Me' by Blondie on Spotify to see how long it look them.
Call Me download: Complete failure for all that tried, the infamous digital wheel of death kept spinning and one person couldn't download it at all.
According to the report, Wells was in the worst 1% for coverage against its standard deprivation levels.
Close to 29% of the political constituency is made up of 5G not spots and 71.66% of 5G partial not spots.
Students in Shepton Mallet said it was impossible to contact people in the 'dead zones' of the town and had been an issue for a number of years.
Harry Johnson, 24, said: 'The service for my phone is really dreadful, especially when I walk towards town. The bit by the church is the worst place.
'That's been like that for years, and I've lived around here for my whole life and things have never changed.
'Everywhere else has changed but Wells remains a dead zone.'
Ellie Johnson, 19, added: 'I was just trying to get hold of my brother on the phone and I couldn't at all. I can never contact anyone, which is worse because I can't drive. I'm with Three and there's just no service.'
In Glastonbury, business owners described how the poor mobile coverage had been detrimental to their sales.
Avi Gray, 34, said: 'There are days where there is just a complete black out which is detrimental for the market because I need to hotspot my device and keep track of sales.
'Sometimes I need to join the local restaurant's wifi just so I can make a sale, so that's pretty frustrating.
'It happens multiple times a day, Instagram messages don't come through, WhatsApp messages won't come through, it not just a reception problem, it's an internet problem.
'I have lost sales because people don't have time to go and get cash out.
'I commute from Glastonbury twice a week to sell at the market, and it's even worse during the bigger markets because it's even more saturated.'
Adam Kelly, 57, said: 'I lose sales because often the reception doesn't work because people just don't carry cash any more.
'If there's not enough service you can't get to your platform or even connect to your card machine, and people just walk off and they don't come back.
'It's the biggest market in the south west, there should be more service and I don't understand why, I've never been given a proper answer.'
Trying to download 'Call Me' by Blondie was a complete failure for all that tried, the infamous digital wheel of death kept spinning and one person couldn't download it at all.
Another person took ten minutes before they could play the song on their phone with 4G.
Chris Brown, a 58-year-old consultant from Wells said: 'It's very poor, 4g drops out all he time, even when it says it's working – we've had to even get our landline reinstalled.
'We have to use WhatsApp to call people over Wi-Fi and I always work from home, so I have to give my personal phone number which is awkward.
'We've only just moved down from Manchester which has perfect service, so It's been a hard adjustment with the communication, we really struggle with the black spots.
Call Me download: Worked instantly for all that tried
In Wales, an average of 53.8% of rural premises are in 5G total not-spots, with 13 of the 40 constituencies falling into the worst 10% of the Coverage / Deprivation index.
In fact, half of the country's constituencies are classed as rural and rank within the worst 30% of the index.
The Cynon Valley ranked in the worst 2% in the Coverage / Deprivation index and not a single customer of the 50 surveyed by the MailOnline were able to access 5G while paying the same rate as users across the country.
Mobile phone users in the main town of Aberdare were able to access 4G but in the neighbouring villages of Fernhill and Penrhiwceiber they can only get 3G and in some spots nothing at all.
Residents vented their anger at what they described as a 'black hole' for phone signal.
School kitchen assistant Matthew Hitchings, 29, of Aberdare, said: 'It's rubbish around here - if I want to stream football it just buffers all the time. It's very frustrating.
''There are some areas where you can get 4G but 5G is still a thing of the future here.
'I can get 5G in Cardiff but as soon as you enter the South Wales Valleys it goes. We have been forgotten about in Aberdare - it's a mobile phone ghost town.'
Father-of-three Chris Walters, 45, said: 'Don't get me started - the signal is useless here. They haven't invested in fibre-optics so we are behind the times.'
The Cynon Valley ranked in the 1% most deprived areas on the report and residents in the area felt this was why mobile phone companies were so slow to install 5G.
Part-time accountant Tammy Llewellyn, 45, an EE customer, said: 'I live in a three-storey house, the ground floor is in the basement and the signal there is terrible.
'My office is there which isn't ideal because the reception is quite poor.
'There's a lot of unemployment around here so giving people 5G that works is not a priority of the mobile phone companies. But it can be quite stressful and difficult without it.'
Salaman Khan, 25, manager of the Fone (CORR) Solutions shop in Aberdare, said: 'EE and Vodophone,, two of the biggest providers, are pretty terrible here in the Cynon Valley.
'02 and Three are a bit better but we are being neglected as a region. Businesses need 5G, most other places have got it. It's in Cardiff but as soon as you drive North into the Welsh valleys you lose it.'
Despite the poor coverage, a number of locals were content with their current phone service, as long as they were still able to contact loved ones with ease.
When tasked with trying to download Call Me by Blondie on streaming site Spotify, the experiment showed it worked instantly.
Receptionist Joanne Riden, 46, said: 'I can get 4G in the house but only if I sit by the window so it's not very good.
'My husband is with Three and I think that's a better network for around here. So long as we can talk to each other on our mobiles, it's fine.'
Grandmother Dawn Meyrick, 67, of Penrhiwceiber, added: 'I'm on a pay-as-you-go contract, I can get 3G but that's all.
'Once you leave the village and get onto country roads, there's nothing.
'But so long as me and my husband can text each other I'm not too worried.'
Call Me download: Locals in Cumbria able to download the song with ease
In the north-east county, five out of the six total constituencies, and 100% of the rural constituencies, were in the worst 30% of the Coverage/Deprivation Index.
Despite being one of the UK's most popular destinations for tourists, the Lake District in Cumbria has been poorly served with mobile coverage, with an average of 72.1% of premises in 5G partial not-spots.
Fed up residents in the picturesque town of Windermere said they're sick of constant slow internet and claim it negatively affecting their daily lives.
Mum Diana Zirael says the faulty signal often causes stress when it comes to arranging childcare.
The 32-year-old trainee dental nurse said: 'It cuts out quite a bit and it is frustrating.
'There's no 4G and it can cause problems because you need to make texts and calls every day.
'When you live in this area you do get used to it but it's still an issue.
'I use my phone a lot at home and I have childcare there so it's important i keep in touch with what's going on.
'But that's sometimes difficult to do when it's slow or it cuts out.
'I know it's quite a big issue and it's not just me it affects.
'I used to work at Tesco nearby and a lot of the staff there would regularly complain about it, but there wasn't much you could do.
'It is frustrating and I can see why it gets called a 'notspot.''
Local wildlife volunteer Colin Fenton also struggles at home with the faulty connection and the 57-year-old used to attend the local library to try get service.
He said: 'My broadband goes on and off and it can be really frustrating.
'The broadband is good when I do get it but it drops off quite a lot.
'It has improved slightly for me, but I used to have to go to the library and even they couldn't get signal at certain points.
'Communication with my colleagues is really important for me because I'm out and about a lot but sometimes that's a struggle.
'It does get annoying at times and hopefully it gets better over time.
'I don't think I'm the only one in the area that has the same battle.'
It was announced in September that residents in the Lake District were set to benefit from a share of £1 billion investment in the 4G mobile coverage.
The scheme is said to develop new masts to connect the areas that have extremely poor coverage.
By the town's lake, ice-cream shop worker Lisa Barr said she relies on the connectivity to serve customers but often finds it impossible.
The 53-year-old said: 'I use the internet when I'm in the shop and in the area but it goes in and out.
'The phone signal does struggle and I'd say it goes off around seven or eight times a day.
'I always know when it's slow or it goes down because I have the radio on connected to my phone. When that dips out I know the internet has gone.
'The only thing I can do is wait for it to come back on.
'It's hard when I'm at work and serving people because I need the card machine to connect but that goes down too.
'It's a lovely place to come and to live but it is hard when the signal is like this.
'There's nothing specific that triggers when it struggles, it's just one of those things.'
In nearby Kendal, the issue still remains for many including Darrell Robinson, 32, who said: 'I live on the outskirts and it's terrible.
'The housing estates have it pretty bad outside the town centre and it's frustrating to put up with.
'For me personally, I'm used to it. But it's still annoying and I know it affects other people.
'Sometimes I find the peace and quiet to be a nice change, but you still need to be able to connect with people.
'It's been an issue for ages but one day hopefully it will get sorted.'
Sheila Stafford lives slightly further up in the town but admitted the problem is no better where she lives.
The 55-year-old part-time healthcare worker said: 'We've put up with it for many years and it is frustrating.
'You use the Internet for everything but it's also annoying when you're trying to get through to people and you can't.
'I know there is supposed to be put some fiber technology in and we've been told they're trying to improve it but nothing has happened yet.
'My daughter also struggles with it when she comes to visit and it is a problem.
'Unfortunately you just have to put up with it.'
Despite this, similar to residents in Wales, locals in Cumbria were able to download Call Me by Blondie with ease.
5G is the 5th generation mobile network and is designed to connect virtually everyone and everything together including machines, objects, and devices.
In Scotland, three in ten (29%) constituencies are rural and fall within the worst 30% of the Coverage/Deprivation index.
Angus MacNeil, MP for Western Isles which contained areas without any 5G overage from any mobile operator, said the UK Government was not taking "all of the UK seriously".
Mr MacNeil said "Connectivity is a huge problem in parts of the UK, not least the islands.
"Other parts of the world, from the Faroes, Switzerland and Rwanda, which are more mountainous than the Scottish Highlands don't have these problems.
"Countries that are more independent don't seem to have these problems and its about time the UK Government treated the whole of UK equally, not least over connectivity."
The wireless technology is meant to deliver higher multi-Gbps peak data speeds, ultra low latency, more reliability, massive network capacity, increased availability, and a more uniform user experience.
Vodafone UK says the new research highlights the need to roll-out 5G infrastructure across the UK faster, in an attempt to close the rural divide by delivering 95% 5G standalone geographic coverage by 2034.
The broadband provider believes greater 5G access will allow rural populations to pre-empt and react to health emergencies in a more timely fashion, especially in hard-to-reach places, as well as offering greater opportunities in education and agriculture.
Andrea Dona, Chief Network Officer at Vodafone UK, said: 'We believe everyone should have access to connectivity and our research shows the alarming rate at which almost a million people living in deprived rural communities are being left behind.
'It's clear we need to accelerate the roll-out of the UK's 5G infrastructure, which is what we commit to do as part of our proposed merger with Three UK. We would close the rural digital divide by delivering 95% 5G Standalone geographic coverage by 2034.'
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United Kingdom Business & Economics
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UNIVERSITY PARK, Pa. — One person’s trash may well be another’s “come up,” or what the rapper Macklemore calls hidden treasures in the song “Thrift Shop,” but only if secondhand shoppers follow the rapper’s lead and dig through what are sometimes messy bins. New research from Penn State and Texas Christian University shows that shoppers looking to “pop some tags” may be drawn to disordered thrift shop displays because they signal hidden treasure in their inventory.
“Secondhand markets are growing in popularity, especially among younger people,” said Lisa Bolton, professor of marketing and Anchel Professor of Business Administration at Penn State. “We found that disorder in these markets increases consumer perceptions of risk but also the possibility of finding hidden treasure.”
These perceptions work against each other, meaning that risk — such as concerns about product quality or wasted time and effort — decreases purchase likelihood while hidden treasure perceptions increase purchase likelihood, according to the researchers.
“We wanted to see what sellers can do to dampen risk perceptions and increase perceptions of finding hidden treasure,” Bolton said. “Just because shoppers enter a messy store doesn’t mean they should walk away. There could be good deals to find.”
The researchers conducted four separate studies to determine how disorder in brick-and-mortar secondhand retail locations affects consumer behavior and what retailers can do to encourage purchase likelihood.
“Unfortunately, we were in the middle of a global pandemic, so going out to secondhand stores to talk to consumers directly was not an option,” said Bolton.
Instead, the researchers went online and asked participants — most of whom reported having experience shopping in secondhand retail stores — to view images of ordered or disordered retail displays. They were asked to value the products and rate their likelihood of making a purchase under different scenarios. Scenarios included going to a thrift store to casually browse items versus going with the intent to buy a specific item, shopping at a store that offered a clear return policy, and shopping at a store where the retailer demonstrated low to high inventory knowledge.
The research team found that disorder in the secondhand retail marketplace enhanced perceptions of risk and finding hidden treasure, but that risk perceptions outweighed perceptions of finding hidden treasure for a net negative effect on purchase likelihood. When retailers instituted clear return policies, perceptions of risk diminished, but so did hidden treasure perceptions as customers questioned the special nature of the items. When retailers demonstrated high inventory knowledge through their ability to answer customer questions and share the backstories of items, shoppers viewed the products as being carefully curated by the seller. In response, risk perceptions decreased and perceptions of hidden treasure and purchase likelihood increased. The researchers reported their findings in the March issue of the Journal of Retailing.
“Consumers like tidiness and organization, but in a thrift store, where items are constantly coming in, it’s difficult to stay organized,” said Gretchen Ross, assistant professor of marketing at Texas Christian University, first author of the study and a doctoral graduate of Penn State. “We found that when displays are messy and the seller has high inventory knowledge, hidden treasure perceptions increase. Consumers think the seller must know what to pick for their inventory, and they’re not going to choose poor quality items, which reduces risk and increases purchase likelihood.”
Additional steps secondhand retailers can make to increase perceptions of hidden treasure and decrease risk are to incorporate “hidden treasure” in their shop’s name and build community either online or by hosting annual events, according to the researchers.
The study suggests that disorder in the form of messy displays is not as damaging as secondhand sellers may think, said Meg Meloy, professor of marketing and David H. McKinley Professor of Business Administration at Penn State.
“In general, there is excitement when people are shopping secondhand,” she said. “We’re now seeing giant online retailers offering returned mystery boxes, so there is an appreciation for and an excitement that builds around the possibility of finding hidden treasure. If a consumer naturally appreciates the potential for hidden treasure, they won’t necessarily be put off by disorder in the marketplace.”
Journal
Journal of Retailing
Article Title
Disorder in secondhand retail spaces: The countervailing forces of hidden treasure and risk
Article Publication Date
20-Mar-2023
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Consumer & Retail
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- TikTok Shop launched in September in the U.S., following in the footsteps of other social media platforms launching shopping platforms.
- Shoppers remain divided on whether they love or hate the shopping feature.
- Some are taking advantage of the low prices while others question the ethics of some of the products.
Consumers are increasingly turning to social media for their shopping this holiday season, and TikTok's latest venture into e-commerce has emerged at the forefront.
The platform introduced TikTok Shop in the U.S. in September as an in-app shopping experience, capitalizing on the #TikTokMadeMeBuyIt trend. The shop gives opportunities to both content creators who could sell their own products and avid TikTok users who could buy directly on the app, following in the footsteps of other social media apps like Instagram.
Though TikTok Shop previously faced backlash and was forced to shut down in Indonesia, consumers are increasingly trending toward buying off of social media. According to a recent Shopify-Gallup survey, nearly half of Generation Z respondents – people born after 1997, according to the Pew Research Center – said they plan on buying some holiday gifts on social media apps. And 86% of Gen Z shoppers say social media influences their shopping habits, according to an ICSC report.
One of those TikTok Shop enthusiasts is 29-year-old Chuck Vaughn, who called the TikTok Shop phenomenon "a gold rush."
"There's some crazy coupons on there combined with sale prices, and then you end up getting things 50% off or 60% off," the Tennessee resident told CNBC. "There's no good reason to not be using it as far as I can tell."
Though some argue that using the platform strips shoppers of their privacy, Vaughn said it's clear that consumers today are already giving up data in most of their apps. Instead, he's leaned into the trend, with his most recent purchase being Pokémon cards. Whereas the market price for cards would normally be around $70, Vaughn said, he bought his on TikTok Shop for just $33 with free shipping – and they arrived in under a week.
As he heads into the holiday season, Vaughn said he plans on doing at least some of his holiday shopping on the app and is recommending his friends and family to use TikTok Shop as well.
With in-app purchases, the ability to purchase quickly is even more prevalent. It's a trend that was especially bolstered by the earlier days of the pandemic, when people were largely staying home either due to mandates or worries about catching Covid. According to the U.S. Department of Commerce, Americans spent $791.7 billion on e-commerce during 2020.
According to TikTok, the Shop platform has over 200,000 sellers, and the #TikTokMadeMeBuyIt hashtag has over 77 billion views as of this month. This holiday season, TikTok added that the Shop feature will include multiple promotions, coupons and deals on trending products.
Though in-person commerce has made a comeback post-pandemic, according to Gartner digital commerce analyst Ant Duffin, consumers' propensity to buy online has undoubtedly surged in the past few years.
The social media commerce landscape has constructed a particularly interesting ecosystem made up of brands, creators, technology and consumers, each playing a role in bolstering the e-commerce space, Duffin told CNBC.
"What you're now starting to see is TikTok bucking the trend where they're providing a complete social commerce ecosystem of tactics, from paid advertising to short-form video through to immersive shops and being able to transact all within the app," Duffin said.
This new realm could be a "fresh battleground" for small and medium-sized businesses, according to Duffin. Especially over the holiday season, smaller businesses can raise awareness and build their brands successfully on the social media app and fill in the gaps for brands looking to capitalize on new market opportunities.
However, Duffin said he does not believe TikTok Shop will be able to rival the likes of Amazon or have an impact beyond a stocking stuffer purchase just yet.
But not everyone is a fan of being able to scroll and purchase simultaneously.
Grace Romine, a sophomore at Indiana University, said she first found the Shop feature to be annoying, especially with the increased advertisements. She also said she found it was drowning out some of the creative content produced by creators on the app.
Romine said she doesn't agree with some of the ethics of the products being sold on the app, especially with lower prices begging broader conversations about where those products are coming from.
"TikTok Shop does offer the opportunity for small businesses to succeed, and small businesses really need e-commerce platforms," she said. "But a lot of the products I've seen that thousands of people are promoting are not small businesses."
She added: "They are, you know, the $4 purse, and if they're selling it for $4, what are the ethics behind that? Is it sustainably made? What kind of labor was used to make this product?"
Romine said the combination of fast fashion and overconsumption work together to sour her taste for the Shop feature, even as she sees classmates walking around campus in sweatshirts she's seen ads for on the app. She's also eager to see how the app adapts to its "first Christmas" in the holiday market.
For Fordham senior and history major Ana Kevorkian, the ads have become increasingly tempting even though she's "principally opposed" to buying anything on TikTok Shop. She said she's specifically had her eye on a leather purse being sold for $3, but she's still questioning the ethics behind it.
"I try to be intentional about my shopping, and I think TikTok Shop is the exact opposite of intentional shopping," Kevorkian said, adding that it encourages people to overspend and overconsume.
"It takes 10 seconds to go onto Safari and buy something, and that's not a huge inconvenience," she said. "If we need to shop so much that that is too much, then there is something wrong with the culture."
Still, every time that leather purse pops up on her For You Page, Kevorkian said she hesitates. Since she's never bought anything on the app, she has an automatic 70% discount for her first purchase.
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Consumer & Retail
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If you're on Social Security, you probably have at least a basic idea of what cost-of-living adjustments (COLAs) do. They're designed to give your checks a boost each year, though the amount you get varies depending on the size of the COLA and the size of your checks.
You might think that's all there is to know about COLAs, but you'd be surprised. Here are three lesser-known details worth filing away in your memory bank.
1. COLAs aren't guaranteed
You hear about a COLA nearly every year, so it's understandable if you assume that Social Security recipients get them every year. But that's not true.
The Social Security Administration uses data from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to calculate each year's COLA. The CPI-W measures the cost of a basket of goods and services. By taking the third quarter CPI-W from the current year and comparing it to the previous year's figure, any increase becomes the COLA the following year. For 2024, the COLA will be 3.2%.
But sometimes, there isn't a year-over-year change in the CPI-W. When this happens, there's no COLA for the following year. That said, this has only happened three times since Social Security began offering COLAs in 1975 -- in 2009, 2010, and 2015 -- so it's a pretty safe assumption that there will be a COLA in most years unless inflation is especially low.
2. They don't always keep up with inflation
Social Security benefits have actually lost about 40% of their buying power since 2000, according to the Senior Citizens League. As a result, seniors have been forced to make do with less or rely upon other sources of retirement income to cover some of the expenses their Social Security checks used to pay for.
Some argue that this could be corrected if the Social Security Administration were to start basing COLAs on the Consumer Price Index for the Elderly (CPI-E) rather than the CPI-W. They say the CPI-E better reflects seniors' spending habits and would result in larger COLAs. A senior who filed for average Social Security benefits over 30 years ago would have received an additional $14,000 by now had the CPI-E been used to calculate COLAs rather than the CPI-W, according to the Senior Citizens League.
But unfortunately, this remains a matter of debate among politicians. There are those who want to increase Social Security benefits while others fear higher COLAs could exacerbate Social Security's solvency issues. For now, there's not much the average beneficiary can do other than wait and see what changes (if any) the government decides to make to the program in the future.
3. They could come back to bite you
Most people think of gaining money when they think of COLAs, but these increases could also raise taxes for some people. The federal government taxes the Social Security benefits of those whose provisional income -- adjusted gross income (AGI), nontaxable interest, and half their annual Social Security benefit -- exceeds $25,000 for an individual or $32,000 for a married couple. Some states tax Social Security benefits as well.
The thresholds for benefit taxation haven't changed in years. As the average benefit check continues to rise thanks to COLAs, more seniors find themselves facing these taxes. This could further reduce the value of your Social Security checks. It could also lead to serious headaches at tax time if you're not prepared.
This is another problem that the average American can't change, much as you might like to. All you can do is familiarize yourself with the rules around Social Security benefit taxation and set aside the government's cut in case you owe anything.
None of this is intended to be discouraging. COLAs do make life a little bit easier for many seniors. But being aware of their limitations and drawbacks can help you avoid unpleasant surprises in the future. Anticipating potential problems now gives you more time to prepare, so you're not left scrambling if your future COLAs don't help you as much as you'd hoped.
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Inflation
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The UK economy is likely to see zero growth until 2025, while interest rates remain high for longer, the Bank of England has warned.
It came as the Bank left rates on hold for the second time in a row at 5.25%, their highest level in 15 years.
Rishi Sunak has pledged to get the UK growing by the end of the year, but the lower forecasts put this in doubt.
However, the bank expects inflation - the pace at which prices rise - to fall sharply in the coming months.
This means the prime minister is on track to meet his promise to halve inflation to around 5% by the end of the year.
Up until September, the Bank of England had raised rates 14 times in a row to tame soaring inflation which has been squeezing households.
It has led to increases in mortgage payments, squeezing borrowers, but also higher savings rates.
Despite the gloomy economic forecasts, Bank of England boss Andrew Bailey said it was "much too early to be thinking about rate cuts".
"We will keep interest rates high enough for long enough to make sure we get inflation all the way back to the 2% target," he said.
And Mr Bailey said: "We'll be watching closely to see if further rate increases are needed."
The most recent inflation figure was 6.7% in the year to September, but the Bank expects it to continue to fall as energy and food price rises ease and expects it to remain at around 3% throughout next year, above the Bank's target.
While the Bank is not predicting a recession, it expects zero growth from now, across the whole of next year - when there is likely to be a general election - and into 2025.
"UK economic growth is slowing," the Bank said.
Chancellor Jeremy Hunt promised there would be measures to get Britain growing again when he unveils the government's plans to try and boost the economy in its Autumn Statement later this month.
"The Autumn Statement will set out how we will boost economic growth by unlocking private investment, getting more Brits back to work, and delivering a more productive British state."
But Labour said 13 years of "economic failure" had "left working people worse off", while the Liberal Democrats called the interest rates decision a "cold comfort for the millions of hard working families".
'Buying our first house seems further and further away'
Mortgage rates have shot up as the Bank of England has put up interest rates. That has affected first-time buyers, people remortgaging and those on variable and tracker deals.
In the UK, the rate on an average five-year, fixed-rate residential mortgage is 5.87%, down slightly from levels seen earlier this year but still high compared with a few years ago.
Ebony Cropper from Warrington and her fiancé are saving up for a deposit to buy their first home. But while they are budgeting hard, their rent went up an extra £45 a month in August making the job harder.
"We got engaged this year but then I think [the wedding] has got to wait because it's a big expense as it is for just one day and a house is more important," she told the BBC.
"It just feels a bit futile at the moment because your goal [of owning a home] is getting further and further away."
Ways to save money on your mortgage
1. Make overpayments. If you still have some time on a low fixed-rate deal, you might be able to pay more now to save later.
2. Move to an interest-only mortgage. It can keep your monthly payments affordable although you won't be paying off the debt accrued when purchasing your house.
3. Extend the life of your mortgage. The typical mortgage term is 25 years, but 30 and even 40-year terms are now available.
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LIVERPOOL, England (AP) — Britain’s main opposition Labour Party said Monday that it will focus on economic growth rather than higher taxes to “rebuild” the country after more than a decade of Conservative rule.
Labour economy spokeswoman Rachel Reeves told delegates at the party’s annual conference that “Labour will tax fairly and spend wisely.”
“But I must tell you, you cannot tax and spend your way to economic growth,” she said. “The lifeblood of a growing economy is business investment.”
Reeves was making her pitch to British voters and businesses at the four-day conference in Liverpool, where Labour is trying to cement its front-runner status in opinion polls before an election due in 2024.
The party is running 15 or more points ahead of the governing Conservatives in multiple opinion polls, as Britain endures a sluggish economy and a cost-of-living crisis driven by the COVID-19 pandemic, the war in Ukraine and economic disruption following the U.K.’s exit from the European Union.
Labour is trying to show it can provide an alternative to Prime Minister Rishi Sunak’s Conservatives, who have been in power since 2010. But the opposition party is wary of promising big public spending increases that would require tax hikes. The social democratic party also wants to convince corporate Britain that it is on the side of business.
For years, businesses were wary of the party, which has its roots in the trade union movement, and tended to favor the Conservatives. But recent economic and political upheavals have made many think again.
Reeves said a Labour government would get the economy growing faster to fund public services and boost investment through a new national wealth fund. She pledged to build 1.5 million homes to ease Britain’s chronic housing crisis, reform an “antiquated” planning system Labour says is holding back infrastructure improvements, and repair the creaking, overburdened state-funded National Health Service.
Money for health and education will come from abolishing “non-domiciled” tax status, which allows some wealthy individuals to avoid paying U.K. tax, and ending private schools’ tax-free status, she said.
Reeves said Labour also will strengthen workers’ rights and abolish “zero hours” contracts that do not guarantee employees a minimum number of hours a week.
The speech was broadly welcomed by both business and workers’ groups — no mean feat. Rain Newton-Smith, chief executive of the Confederation of British Industry, said businesses would be “encouraged” to hear Labour “speak so ambitiously about driving up business investment and committing to tackle some of the key blockers.”
Gary Smith, general secretary of the GMB trade union, said Reeves’ speech “gave a far-sighted vision of a better U.K.”
Reeves also said a Labour government would appoint a “COVID corruption commissioner” to try to recoup some of the billions lost to fraud and waste during the pandemic.
Reeves said the commissioner would bring together tax officials, fraud investigators and law enforcement officers to track down an estimated 7.2 billion pounds ($8.8 billion) in lost public money spent on grants and contracts related to COVID-19, and “get back every penny of taxpayers’ money that they can.”
Like many countries, the U.K. was forced to sidestep usual rules as it rushed to procure essential supplies and prop up people’s livelihoods during the coronavirus pandemic.
A multi-year public inquiry is examining Britain’s handling of the pandemic, which left more than 200,000 people in the country dead.
Leader Keir Starmer has steered Labour back toward the political middle ground after the divisive tenure of predecessor Jeremy Corbyn, a staunch socialist who advocated nationalization of key industries and infrastructure. Corbyn resigned after Labour suffered its worst election defeat in almost a century in 2019.
The brutal, shocking attack by Hamas militants on Israel, and Israel’s military response, overshadowed the gathering of a party that has spent several years confronting allegations that antisemitism was allowed to fester under Corbyn, a strong supporter of the Palestinian cause.
After being elected leader in 2020, Starmer apologized and vowed to restore relations between Labour and the Jewish community. Corbyn was expelled from the party.
The conference schedule includes several meetings by pro-Israel and pro-Palestinian groups, including one on Monday organized by Labour Friends of Palestine that opened with 30 seconds of silence to reflect on the “horrors” of recent days.
In a speech to delegates, party foreign affairs spokesman David Lammy said that Labour “utterly condemns Hamas’s appalling attack on Israel.”
“There is never a justification for terrorism,” he said. “Labour stands firmly in support of Israel’s right to defend itself, rescue hostages and protect its citizens.”
He reiterated Labour’s support for a two-state solution that now seems a distant prospect.
“There will not be a just and lasting peace until Israel is secure, Palestine is a sovereign state and both Israelis and Palestinians enjoy security, dignity and human rights,” Lammy said.
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United Kingdom Business & Economics
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My Money explores how people across the UK manage their spending in a typical week.
As prices rise, BBC News has been hearing about their ways of cutting costs and the financial choices they have to make.
Aaron 'Mr A' Beveney, is a 33-year-old DJ from east London.
He earns around £3,000 a month depending on how many gigs he gets and rents a room in a shared house for £575.
I had meetings to plan work for the week and sent invoices for the weekend's gigs.
I spent £5 on the tube fare when I went to meet a client in Knightsbridge and bought lunch for £30.
Later, I bought dinner from an amazing Caribbean shop near my house for £10, which I prepared at home. I'm pretty health conscious and try to eat as much homemade food as I can.
I then went to football, which cost £10 to pay the subs.
Amazon Prime was taken out at £6.99 as well as an Apple app at £21.99.
That means today's total spending was £83.98.
I work from home a lot during the week organising the Hero Games, an upcoming documentary series featuring emerging artists in the community.
This has drastically reduced my travel costs and means I eat out less during the day. I bought lunch from Tesco, which cost £10.
I cancelled my gym membership a while back and built a gym in my garage. I trained there today, and friends often come over to join me for a workout session.
I don't charge people to workout there, but some pay £20-30 for a training session, so I've made money from it.
I DJ at lots of places across London. I had a gig at Sushi Samba, a rooftop restaurant in the City, for their staff party and had a few free drinks. My Uber home cost £25.
£85 went to BT Broadband & TV, I paid a Transport for London congestion fine of £85 and £4.25 more went to TfL.
In total I spent £209.25.
I had a dentist's appointment which set me back £180, and I had to pay for a speed awareness course which was £92.
Lunch cost £15.50 at Caribbean Flavours and dinner from Tesco was £9.95.
Everything came to £297.45.
I gave a lesson to a DJ student who comes over to my home studio. They paid me £200 for a two-hour session (£100 per hour).
Lunch from Tesco was £8.95, home cleaning products to tidy the house cost £11.34 and I bought some fruit and veg from the market for £4.20.
A friend came over to train and later an old friend visited for a takeaway, so I got us Chinese for £25.00.
Today I earned £200 and spent £49.49.
I bought lunch for £10 and had dinner at my favourite Vietnamese restaurant in Shoreditch for £19.13.
Then I got ready to DJ at Annabel's private members nightclub, where I get paid £500 a set.
I spent £29.13.
I drove to two meetings about music and put petrol in my car for £50.
If I'm going to spend so much money on petrol then where I'm driving should make me money, for a meeting or for a gig.
I had meetings at Jin Bo Law, a rooftop bar in Aldgate, then LDN East nightclub in Canning Town. I get free drinks at both.
In the evening, I met a friend at Sushi Samba and bought a round of drinks for £70.37.
A subscription for a design app called 'Beautiful Ai' came out of my bank account at £24.30. I use that for making presentations.
When I'm gigging, it isn't unusual for me to DJ at three or four venues in one day or night. I did that on New Year's Eve and it was fantastic to get to experience four different parties in one evening.
Tonight, I finished the night at Village Underground and bought a bottle of water for £5.80.
Today's total spend was £150.47.
Sundays are usually quite chilled, especially if I've been gigging on Saturday or had a night out.
I'm a massive animal lover and I bought a laser pen for my cat on Amazon for £12.99, as well as £10 for the Hero Games website domain subscription.
My Sunday spending came to £22.99.
Overall, this week I have spent £842.76.
I've had two years without a steady income or support network, so I feel proud I can now get through life.
I'm getting by, I'm still here and I'm only going to make more money by doing great things with good people.
As told to Jamie Moreland. Design by Jenny Law.
Would you like to share your weekly spending with BBC News? If you're living in the UK, email my.money@bbc.co.uk
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United Kingdom Business & Economics
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By Joe Locker, Local Democracy Reporter
A community centre which helped provide food and support to people in Broxtowe has closed for financial reasons amid claims the Labour Party removed the local political group’s access to a bank account.
The hub, in Chilwell Road, Beeston, was established by the Broxtowe Labour group in around 2018 as a way to provide advice, support and guidance from a centralised location to people across the borough.
It was home to a community food larder and clothing bank, and members also set up a food parcel scheme during the Covid pandemic which helped feed more than 10,000 people.
However, in August, the group was forced to vacate the premises and close the hub.
Cllr Teresa Cullen (Lab), who represents Toton and Chilwell Meadows at Broxtowe Borough Council, sat on the management committee for the centre.
She told the Local Democracy Reporting Service the hub had been established ‘democratically’ by using funds raised from union grants as well as their members, of which there were 900 at its peak.
She says the national Labour Party raised issue with how the hub was being funded over a year ago and the signatures on the constituency bank account were changed, thus removing the local group’s access.
The account contained around £11,000, Cllr Cullen said.
Ever since members have been unable to access the account to pay bills and rent on the premises in Chilwell Road.
Cllr Cullen also said the issue also impacted the recent Broxtowe Borough Council elections, when party members were forced to pay out of their own pockets for campaigning.
“We’ve had a really sad time,” she said.
“We set up the community hub way before Covid as we wanted to be able to help the community and hold councillor surgeries. We did some great stuff.
“During Covid it really came into its own. We launched a food bank and won a national award.
“Then all of a sudden someone in the Labour Party raised a question if we were diverting [party] funds to this.
“They started an investigation and froze [us out of] our Broxtowe Labour bank account, but we managed to keep it going.
“The landlord was really good, but when you have rent to pay you cannot just stay there.
“We could not pay our electricity bills. But we had £11,000 in the bank.
“It is really distressing. We made the decision we would have to close the hub but there were already costs incurred because of missed rent.”
Cllr Cullen said the bank account is now under the control of officials higher up in the East Midlands Labour group.
“The Labour Party still has not paid [the rent],” she said. “It is an absolute mess and it does not make sense.
“I have debt collection companies calling me up daily. I pass them on to East Midlands Labour, but it is like a wall of silence.
“It is a local landlord and it is embarrassing for us as the local Labour Party. There is no local democratic oversight of the bank account now.
“We cannot do anything. We are constantly asking the East Midlands Labour office and it is a wall of silence.”
According to Cllr Cullen the investigation, which began over a year ago, has yet to conclude.
Councillor Will Mee (Lab), who represents Kimberley, added: “It’s a massive shame.
“When the national party are focussing on giving more power to communities it is wrong to strip us of the hub which helped so many during Covid and more recently with the cost of living crisis.
“I’m very upset to see it end like this.”
East Midlands Labour was contacted for comment on Thursday, August 17.
A spokeswoman said the group would not be commenting at this time, pending conclusion of the ongoing investigation.
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United Kingdom Business & Economics
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WASHINGTON -- Federal Reserve Chair Jerome Powell said Thursday that the central bank may have to tighten its oversight of the American financial system in the wake of the failure of three large U.S. banks this spring.
Powell said in prepared remarks delivered at a banking conference in Madrid that tougher regulations put in place after the 2007-2008 financial crisis have made large multinational banks much more resilient to widespread loan defaults, such as the bursting of the housing bubble that led to that crisis.
But the collapse of Silicon Valley Bank, Signature Bank and First Republic Bank exposed different vulnerabilities that the Fed will likely address through new proposals, Powell said.
He did not provide details, but other Fed officials have said banks should be required to hold more capital in reserve to guard against loan losses.
Such proposals are likely to face resistance from the banking industry and some congressional Republicans, who argue that the Fed had the necessary tools to prevent the bank collapses but failed to use them.
One reason regulators missed the threats to the three banks was “the natural human tendency to fight the last war,” Powell said.
The 2008 financial crisis occurred because of widespread defaults after the housing bubble burst. But Silicon Valley Bank failed for different reasons: A rapid increase in interest rates sharply lowered the value of its bond holdings, because they paid out lower interest rates than newer bonds.
“These events suggest a need to strengthen our supervision and regulation of institutions of the size of SVB,” Powell said. “I look forward to evaluating proposals for such changes and implementing them where appropriate.”
In a question and answer session, he indicated that the rules needed to be updated to account for how quickly a bank run could happen.
“A bank run used to be people standing in line at an ATM," the Fed chief said. "That’s very different from what we saw at Silicon Valley Bank,” with depositors using smartphones to move money instantly.
Fed supervisors had spotted bank vulnerabilities, including exposure to rising rates, but were working within a system that moved too slowly to head off trouble, Powell said.
“The supervisors were on the right issues, but they were operating under a standard playbook where you escalate things fairly carefully, fairly slowly,” he said.
An ongoing review of Fed supervision would “try to find ways to be more agile and, where appropriate, more forceful," Powell said.
Banks with $100 billion to $250 billion in assets — which included all three failed banks — were freed from some requirements in 2018 under legislation passed by Congress and rules issued by the Fed.
Last week, Powell faced significant pushback from Republicans during House and Senate hearings over the potential for tighter rules. Michael Barr, the Fed's top regulator, has said the central bank might require larger banks to hold more capital in reserve.
Yet GOP members of Congress charge that such requirements would limit banks’ ability to lend and slow the economy.
Powell said during those hearings that a proposal might be issued next month. But he repeated Thursday that any new rules would require a public comment process and would be phased in over time, meaning they might not come into effect for several years.
“The bank runs and failures in 2023 ... were painful reminders that we cannot predict all of the stresses that will inevitably come with time and chance,” Powell said. “We therefore must not grow complacent about the financial system’s resilience.”
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AP Business Writer David McHugh contributed from Frankfurt, Germany.
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Banking & Finance
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Large corporations have fuelled inflation with price increases that go beyond rising costs of raw materials and wages, pushing shopping bills to record highs, according to an analysis of hundreds of company accounts.
Highlighting a trend dubbed “greedflation”, the research indicates that supermarkets, food manufacturers and shipping companies are among hundreds of major firms who have improved their profits and protected shareholder dividends, giving an extra lift to prices, while the cost of living crisis has meant workers face the biggest fall in living standards in a century.
Analysis of the top 350 companies listed on the London Stock Exchange by a team of researchers at Unite, the UK’s largest private sector trade union, showed that average profit margins – a company’s revenue above the cost of sales – rose from 5.7% in the first half of 2019 to 10.7% in the first half of 2022.
“This means the average profit margin of firms in the FTSE 350 jumped 89% in the first half of 2022 compared with the first half of 2019,” the report said.
In the UK, Tesco, Sainsbury’s and Asda made combined profits of £3.2bn in 2021, almost double pre-pandemic levels, Unite’s 170-page report shows. Global food manufacturers such as Nestlé have also increased profits and margins over the last 18 months.
Higher profits margins are the result of “tacit collusion” by large companies, adding to the prices of hundreds of goods and services that were already under pressure after the Covid-19 pandemic and Russia’s invasion of Ukraine, the report said.
“Profiteering is a reflection of Britain’s broken economy. From price gouging to state-licensed monopolies in energy and utilities, the choices made by corporations are revealed to have caused historic ‘price spiralling’ – and governments are letting them do it,” it said.
Unite said it had also examined the accounts of international companies that sell services and materials that directly affect UK inflation figures.
“The four global giant agribusiness corporations that dominate crucial crops such as grains – ADM, Bunge, Cargill and Louis Dreyfus – saw profits shoot up 255%, making a combined $10.4bn in 2021. The world’s top 10 semiconductor manufacturers made £44bn profit between them – 96% more than in 2019,” the report said.
Tesco and Sainsbury, which together have a 43% share of the grocery market, are on course to make large profits again this year. Tesco said it expected to make profits up to £2.5bn this financial year, and Sainsbury indicated that it would hit almost £700m.
Sharon Graham, Unite’s general secretary, said households were suffering from a systemic problem. “Our research exposes where and how the economy is being rigged against workers – from supermarkets to energy bills, oil refineries to transport, we’re all paying the price,” she said.
Graham said she was concerned that policymakers in the Bank of England and the Treasury were focused on workers’ wages as a driving force behind rising prices when the analysis of corporate profits showed boardrooms played a significant role – insulating themselves from the impact of higher raw material costs by passing on price rises.
The report is an update on figures published last summer by Unite that revealed the growth of corporate profits while inflation soared and economic growth slowed to a halt across the industrialised world.
Graham said: “The profiteering crisis isn’t just a few bad apples – it’s systemic across our broken economy. Entire industries are choosing to take advantage of a crisis, resulting in the spiralling prices of goods we all need.”
The supermarket chains included in the report denied that they were partly to blame for rising prices. A spokesperson for Sainsbury’s said: “We are acutely aware of the pressures facing millions of households right now, and our number one priority continues to be doing all we can to keep prices low for our customers.
“In the last two years, we have invested over £550m in value, and we have consistently passed on less price inflation to customers than our competitors.”
An Asda spokesperson said: “Asda is the lowest-priced traditional supermarket and invested heavily during 2022 to keep prices in check for customers.
“This resulted in Asda topping the Grocer 33 weekly price comparison 43 out of 50 times last year and the Which? ‘big shop’ price survey every month during 2022,” they said, adding that “value products and a loyalty programme give customers money off every time they shop”.
Officials at the European Central Bank recently met to discuss the impact on inflation of price gouging by corporations, but have yet to reveal their conclusions.
The Bank of England official Catherine Mann recently said she was “concerned about the extent to which there is strong pricing power among firms and acceptance of those price rises by a lot of consumers”.
Paul Donovan, chief economist at UBS Wealth Management, is one of the few City economists to call attention to the increase in corporate profits as a cause of rising prices.
He said: “I believe that much of the current inflation is driven by profit expansion. Typically one would expect about 15% of inflation to come from margin expansion, but the number today is probably around 50%.
“One of the most telling signals is the decline in labour costs – automation has increased productivity, wage growth has been very weak in real terms, and as with commodity prices, moderating the inflation story rests on margin expansion.”
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Inflation
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Britain’s national health service is, by any definition, facing a turning point. It needs help, not hindrance. Of the many stress points, the inability to move mostly older patients between hospitals and care homes is perhaps the most extreme. The principal reason has been the shortage of 165,000 workers in the care sector, or about 11% of its labour force. Crucial to this service has been the temporary visa scheme for care workers and home carers introduced last year, after EU recruitment was crippled by Brexit. About 58,000 new workers have come in under the scheme. The care sector depends on these workers, which means so do the hospitals dependent on moving patients into care.
Enter the proposal by a small group of rightwing Tory MPs complaining that the overall level of immigration into the UK has eroded public trust in the government. They want to cut the number of care home visas, thereby reducing immigration, so they say, by 82,000 people. It is like preparing for the Battle of the Somme by slashing infantry numbers. The MPs also want to cut the number of overseas students and their dependents, raise the income threshold for visas to other British jobs, and limit incoming refugees. Overall, they say, this should more than halve immigration, which in turn should make people feel better in “red wall” seats. They do not ask how people would feel in hospitals and care homes.
One of the more plausible rocks on which Tory ideology has rested, at least since Robert Peel, is that prosperity results from opening your economy to free markets. That includes the market in labour. Throughout its history, Britain has benefited from incoming Huguenots, Jews, West Indians, Africans and migrants from the subcontinent and east Asia. During the UK’s EU membership, Margaret Thatcher boasted of the competitive opportunities of being part of Europe’s single market. Supporters of Brexit, including these “new” Conservatives, disagreed. They argued that Britain would do better by exchanging Thatcher’s single market for a much larger one – the entire world. This would somehow also mean fewer immigrants.
Brexit cut Britain off from the EU’s labour market. It has been a disaster for sectors such as farming, hospitality and welfare services, which depend on an often seasonal supply of new workers. In the case of health and social care, a cut-off in supply was replaced, of necessity, by longer-term immigration from the rest of the world. Between a quarter and a third of UK doctors are now from abroad, while demand for staff has meant net inward migration rose to 606,000 last year, which is nearly double pre-Covid levels. You can no more close your economy to new labour without harm than you can close it to energy or food.
There may be separate arguments for reducing the role of Britain’s universities as finishing schools for the world’s middle classes. There are certainly arguments for reaching a hard and fast deal with the French to stop them cynically decanting their immigrants on to British shores. There are no arguments for crippling Britain’s care homes.
The “new” Conservatives are not Conservatives, but reactionaries. They are pandering to prejudice in the hope of garnering a few xenophobic votes. We might point out to them that users of welfare services vote, too. The reality is that these politicians promised immigration would be lower under Brexit. They now complain that the care sector is leading them to break that promise. Like so much of Brexit, that promise was a lie. Better by far would be to apologise for the lie, and do what it takes to find enough staff for the care homes.
Simon Jenkins is a Guardian columnist
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United Kingdom Business & Economics
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Early on Saturday morning, as Paul Crane, a trader at London’s renowned Borough market, was arranging blood oranges from Valencia on his stall, he admitted that his industry is facing some of the toughest conditions in a quarter of a century.
The wholesale price of tomatoes, peppers and aubergines has quadrupled, and English cauliflowers are up too. Some stallholders are not even selling vine tomatoes because they are just too expensive.
“There are supply chain issues, as in there isn’t enough to go round. It’s all to do with price,” said Crane, who has worked in the south London market for more than 35 years. “It’s been like it for six or seven weeks. All prices across the board have risen.”
While supermarkets face problems because growers cannot fulfil their contracts, greengrocers are better placed, said Crane, who had arrived at New Covent Garden Market in Nine Elms, south London, at 3am to buy his stock. As news of fresh goods shortages spread last week, the stall had got busier. “Greengrocers can find anything. You’ll always find stuff – it’s just how much you’re willing to pay.”
Louise Owens, 55, a training manager from Chelsfield in south-east London, and her husband were carrying two tote bags full of goods they bought from the market as a monthly treat. She noticed that some items at the market, including tomatoes, were more expensive than usual, and said that Waitrose has been low on some products.
“It makes you think: OK, I’ll eat what’s in season locally rather than trying to get the thing you might have had before.”
Farmers said the rationing of selected salad items at some supermarkets last week, including Asda and Morrisons, involves several factors, including the climate crisis, energy prices and Brexit. While the poor weather has been the key factor, the episode has once again exposed the fragility of the modern supply chain.
Tim Lang, emeritus professor of food policy at City, University of London and author of Feeding Britain, said: “Our supply chains are creaking and we are seeing a forerunner of what could be a huge crisis. There has been a total failure by the government to develop a proper food strategy.”
He said it is “absurd” to be increasingly relying on fresh produce grown more than 1,000 miles away in places such as north Africa while UK production is being wound down.
It is not just food that is at risk in complex supply chains. Pharmacists, who rely on drugs from China and India, report that some patients are now forced to go from chemist to chemist to try to find one that can fill their prescriptions. There have been shortages of cold and flu medicines, from Lemsip to Night Nurse, over the winter.
Car makers have similarly been hit by the dearth of computer chips since the pandemic, cutting production in some factories.
Covid led to limited supplies of carbon dioxide, which is used to keep packaged food fresh and to stun livestock before slaughter. The complexity and lack of resilience in many parts of supply chains extending across the globe were exposed by the pandemic. Experts warn that the vulnerabilities are systemic and require urgent attention.
Lea Valley has been described as the “salad bowl” of London and beyond, with its greenhouses from Epping Forest in Essex into Hertfordshire, growing cucumbers, tomatoes, peppers and pears. Its growers now warn they are being driven out of the business by soaring costs and worker shortages.
Tony Montalbano, a director of Green Acre Salads in Roydon, Essex, typically produces a million kilograms of baby cucumbers a year, but his glasshouses were standing empty last week. He said he delayed growing his crops this year until March to avoid winter fuel bills of up to £500,000 a month. He expects his production to be cut by up to half this year.
“It’s sad and frustrating but I can’t afford to grow,” he said. “I have to make a profit this year to make up for what I lost last year. If I don’t, there’s no point in me going on. Lots of growers are closing their doors and selling up.”
Jack Ward, chief executive of the British Growers Association, said: “Up and down the country, we’ve got empty glasshouses.
“People who would grow two or three crops of cucumbers a year may cut that to just one because they want to avoid using more energy than they have to. The fresh produce industry is on the edge of a crisis.”
The British Tomato Growers Association said last week that many of its members have also delayed their crop season by two or three weeks to avoid high heating bills. It still expects significant volumes of homegrown tomatoes from April onwards.
The UK is more dependent than ever on foreign imports for some of the most popular staples. The production of UK-grown and marketed tomatoes has fallen from 134,000 tonnes in 1990 to 68,000 tonnes in 2021, and now accounts for just 17% of total UK supply.
Over the same period, UK-grown and marketed cucumber production has dropped from 100,000 tonnes to 55,000 tonnes. The volume of UK-grown lettuces, mushrooms, apples, pears and plums has also declined.
Farmers were last week warning that leeks, carrots and cauliflowers may also soon be in short supply, as farmers in Britain and mainland Europe contend with a volatile climate. Temperatures broke the 40C (104F) mark for the first time last summer in the UK, and this was followed by a series of hard frosts in winter.
Guy Poskitt, who farms carrots and parsnips in East Yorkshire, said his carrot crop production was down nearly a third compared with last year. “It’s been a nightmare. Traditional vegetables just don’t grow well in hot weather. They shut down. And, on top of that, we’ve had massive inflationary costs.”
The latest warning over shortages of fresh produce comes as shoppers are getting used to gaps on their supermarket shelves. During the pandemic there were shortages of pasta, flour and even toilet paper as the supermarkets’ “just-in-time” model ground to a halt.
Sunflower oil supplies were seriously disrupted last year by the war in Ukraine, one of the world’s biggest suppliers. And there is also a continuing shortage of eggs as producers struggle with outbreaks of avian flu and rising food and energy costs.
Liz Webster, chair of the campaign group Save British Food, said Brexit compounded many food supply problems because farmers in mainland Europe find it easier to sell within the European Union than face extra paperwork by transporting produce in short supply to the UK. “The government is getting rid of our food security and relying on imports while cutting off links to Europe.”
Shoppers who may face a shortage of some produce in their local supermarket are also finding gaps in their shelves at the local chemist. Pharmacists say they are routinely struggling to obtain prescription and over-the-counter drugs.
Olivier Picard, owner of Newdays Pharmacy, which has four chemists in Berkshire, said: “There have always been drug shortages but in recent months there have been almost 200 medications we couldn’t get hold of, or the prices had increased significantly.
“I had a lady who came in this morning and she wanted a nasal spray for allergies. She had been to about 10 chemists in the Windsor area. There are two forms: one is prescription and the other is over-the-counter. Both are unavailable.”
He added: “There are still some forms of penicillin that we can’t get and certain strengths of antidepressant. There are other medications where the price has gone through the roof and I am losing £40 or £50 by dispensing a prescription. I spend an hour a day just trying to source medication.”
He said his pharmacies had almost empty shelves for some products because of the limited availability of popular cold and flu remedies.
China is the world’s largest producer of active pharmaceutical ingredients while India is the biggest manufacturer of generic medicines in the world. The pandemic and the war in Ukraine have disrupted these supply chains. Community pharmacists have recently faced higher-than-normal outbreaks of seasonal illnesses that have strained supplies, including those manufactured in the UK.
The pandemic also exposed the pivotal role of Taiwan in supplying the world with computer chips, which were in short supply as demand soared from consumers in lockdown. The island nation accounts for 92% of production of the world’s most advanced chips, according to a 2021 report by the Boston Consulting Group.
The increase in gas prices forced factories in the UK and Europe that make fertilisers and carbon dioxide to halt or cut back production. Carbon dioxide is widely used across the food sector, from carbonating fizzy drinks to stunning livestock before slaughter. There have been widespread shortages and reported price increases of up to 3,000%.
Richard Wilding, emeritus professor of supply chain strategy at Cranfield University in Bedford and an industry consultant, said supply chains had prioritised being low cost and “lean” but were at risk of failure when faced with a series of adverse events or large fluctuations in demand.
“They were designed when there were very few ‘black swan’ [highly unpredictable] events, and now we have got a flock of them coming at us,” he said. “Companies are now going to have to procure more for resilience rather than cost. We will be able to get the stuff but it’s going to cost more.”
He said many large corporations were already redesigning their supply chains, switching manufacturing locations, building new warehouses and changing shipping routes.
At her speech at the National Farmers’ Union conference last week, the union’s president, Minette Batters, called for a new food intelligence unit to highlight risks in the sectors and make recommendations to ministers.
While Thérèse Coffey, the environment secretary, suggested last week that consumers might eat more turnips when other vegetables are in short supply, industry figures said the government needed to “get a grip” on the UK supply chain.
Shane Brennan, chief executive of the Cold Chain Federation, said: “We need more UK production and to seek out more places to buy produce from. We also need to ensure we have the storage capacity and the transport resilience.
“We now have unpredictable climate and unpredictable harvests. This is the new reality and we can’t pretend it’s not a problem.”
A government spokesperson said: “The UK has a highly resilient food and medicine supply chain and is well equipped to deal with disruption.” The government also announced £168m in grants for farmers last week to drive innovation, support food production and protect the environment and animal welfare.
Despite the problems, fruit and vegetable trader Crane seemed optimistic at Borough market, looking forward to warmer months and better supplies. “This is the worst,” he said. “It will get better from now.”
Meanwhile in France…
At the covered Marché Saint-Quentin not far from the Gare du Nord – just over two hours from London – the fruit and vegetable stands were a palette of vibrant colours: tomatoes of all shapes and sizes; a dozen varieties of salads and greens; apples, clementines and quinces.
When a section began to look a little sparse, the stallholder wheeled out another crate of boxes.
It was the same picture in local supermarkets, corner shops, organic stores and greengrocers along the nearby rue du Faubourg Saint Denis, stocked with tomatoes from France, Tunisia and Spain, salads from France, clementines from Morocco …
Any shortages? “Non?”
Higher prices? “Mais oui.”
One shopper stopped to point out: “There may be no shortages, but the price of a cucumber has doubled in the last couple of weeks.”
In the Ardèche, south-east France, Terry Sparrow, a long-distance HGV driver who works for French haulage firm Jacques Martin, said he had not noticed any shortage of Spanish produce lorries on the motorways.
“I for one know fruit and veg is on the move because I’m on the A7 Lyon-Valence every week,” he said of the well-travelled route for Spanish produce to northern Europe. “There’s no let-up in Spanish refrigerated trucks whatsoever,” he said. “Maybe they’re all carrying turnips and ice-cream?”
British writer Caroline Harrap, who lives in Paris, sent a picture of her local greengrocer who reported no problems getting produce. “As a vegan in Paris, I can’t say it’s always been easy living here. But in terms of fruit and veg, we have always been spoiled for choice – and I haven’t seen any change in that,” she said.
“From the supermarket to the local greengrocer to the market at the bottom of our street, they all seem perfectly well stocked to me. In fact, I’m planning on making tomato soup this weekend.” Kim Willsher
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United Kingdom Business & Economics
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If you want to get fit, joining a gym is often the starting point but the financial pressures caused by the cost of living crisis mean that for many Britons, committing to another big monthly expense is simply not an option.Indeed, a study issued this month found that more than a third of consumers have given up fitness memberships for money reasons. Generation Z and millennials were hardest hit, with half of 25- to 34-year-olds cancelling memberships, rising to 56% for 18- to 24-year-olds, according to the poll by the workspace firm IWG.But the appetite for getting fit and participating in activities is still there: in December, sports and outdoor retailers had their strongest month since last March, with sales of gear and equipment up 3.5%, according to Barclays data published this week.The Barclays report says almost a third of those seeking cost-effective ways to start new resolutions are looking to take up “free” forms of exercise, such as running or following YouTube workouts. Here, we look at how to get fit at no or low cost.Look to your council Councils offer people low-cost access to sports clubs and facilities. A lot of what’s available is not means-tested. Some of these services will be free, or have a minimal charge. For example, Southwark council in London allows residents to sign up for a free swim pass that can be used at many leisure centres in the borough on Fridays and at weekends. Sign-up is usually required before attending, as new members will have to provide proof of address.Certain groups will also be entitled to additional classes and clubs. For instance, in Northern Ireland, Mid Ulster’s “active lifestyle programme” is running £1 classes, including yoga, water aerobics and strength and balance. Some sessions are open to everyone but they primarily focus on children and young people with disabilities, new mothers and older people.Welsh councils, including Conwy, Swansea and Wrexham, have a 60+ active leisure scheme providing cheap access to local facilities for the over-60s. This includes a free initial period.Seek out initiatives If you are set on taking up a specific sport, it is worth searching for initiatives funded by Sport England, Sportscotland, Sport Wales and Sport Northern Ireland.Tennis clubs are particularly keen on helping new members into the sport. Tennis For Free offers sessions nationwide with all equipment provided (in most cases, classes will be starting up again in the spring). Clubs are also worth approaching directly.Meanwhile, Skate Nottingham runs free weekly skateboarding classes for those aged seven to 14.Does your child want to learn skateboard skills? Photograph: Lenscap/AlamySome commercial brands also run free sessions. Sweaty Betty offers classes in-store, including yoga, barre and Hiit (high-intensity interval training), although you will need to sign up for a free Sweaty Betty membership. Locations include Islington, Brighton, York and Bluewater in Kent.Brave the outdoors Wrap up warm and head to your local green space for some free, or low-cost, exercise.Keep an eye out for public table tennis setups and outdoor gyms, as well as basketball and tennis courts. These are often free to use, although with some there may be a small fee, usually via the council’s website. You will typically have to take your own equipment.If you are bold enough to give open water swimming a go, you could save a fortune in swim passes all year. Swimming on the coast, or in swimming ponds, is largely free, although some of the famous ponds, such as Hampstead in north London, charge a small fee (£4.25 or £2.55 for concessions in the case of Hampstead). Outdoor swimming groups and free information can be found at the Outdoor Swimming Society.“Swimming is so cheap,” confirms Kate Rew, the society’s founder. “You don’t need any gear – it’s perfectly acceptable to jump in wearing a T-shirt and pants. You can move on to more gear – but none of it is necessary.”The not-for-profit sports organisation Our Parks is also offering free classes at various parks around the country. Sessions include yoga, dance, pilates and fitness. However, if you are not able to get to the park, they also have a variety of live online sessions.A wild swimming women’s group take a dip at Hampstead Heath ponds. Photograph: Hollie Fernando/Getty ImagesAnother option is parkrun, which hosts a free weekly 5km run on Saturday mornings at lots of UK parks. There’s also a 2km junior parkrun for children aged four to 14 on Sunday mornings.For those wanting to go at a slower pace, the Ramblers has hundreds of free walking routes across the country, and also hosts free Wellbeing Walks.Go virtual Virtual classes via apps, YouTube and fitness platforms are probably the most cost-efficient option, depending on how much space and self-motivation you have.The free NHS Couch to 5K running podcast is a popular option. NHS Fitness Studio also has free exercise videos for pilates and yoga, strength and resistance, and aerobics.Gyms often offer free trials at the start of a year. Photograph: Sergio Azenha/AlamyYouTube has a plethora of free-access sports coaching videos and exercise sessions to get involved in, regardless of whether you are hoping to take up boxercise, Hiit or Zumba.The Better at Home app also provides 600 virtual free exercise classes.Take up gym trials There is often increased interest in gyms in January, and, consequently, gyms often offer free trials at the start of the year. Use this time to think about whether you really will commit to regularly doing weight training and cardio, or attending classes. Some gyms also offer a free personal training session.If you can’t see a free trial advertised, contact the team and ask if you can try before buying. If that fails, ask friends if they have a referral, or a free pass to a nearby gym.If you do pursue a membership, check the contract carefully to ensure you are not locked into an unaffordable long-term commitment. Remember that local leisure centres will often be cheaper, although they may have fewer facilities.Meanwhile, if you have a health condition, you may be entitled to a free pass. For instance, Everyone Active offers a free gym pass to anyone with Parkinson’s.Get the gear Avoid investing in expensive gear if you feel that your commitment to a new fitness regime could waver.In the short-term, ask friends and family if they have old equipment, such as footballs, weights and badminton rackets, that you could borrow. The chances are someone you know invested in some, motivated by new year goals, and never used them again.The ball manufacturer Alive and Kicking has scores of “football libraries” across the country that enable locals to borrow footballs for free.Sites such as eBay, Vinted and Preloved Sports offer secondhand sportswear and equipment. In many cases the items will have never been worn.However, be cautious about buying certain items. For instance, it may be dangerous to buy a secondhand horse-riding helmet or other protective gear.If you are in Scotland, your child could be entitled to sports gear via the nationwide Kit for All scheme. In Aberdeen, for example, you can apply for sportswear via Aberdeen city schools.For those after bigger purchases, such as a bike or an e-bike, there may be payment schemes to help. The nationwide salary sacrifice scheme Bike2Work saves on tax by enabling you to pay via your employer. There’s a calculator on its website to work out how much you could save.Certain people may also be entitled to an equipment grant.
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United Kingdom Business & Economics
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Hundreds more school buildings in England might be crumbling and unsafe for pupils, Britain’s education minister warned on Monday, after authorities announced more than 150 British schools are at risk of collapse.
UK’s Secretary of State for Education Gillian Keegan said the government was still waiting on responses from around 10% of the 15,000 schools in England that were sent surveys to identify those at risk.
This comes after authorities ordered 104 schools to shut buildings with old and weak concrete to close because of safety concerns.
More than 150 schools have been found to contain buildings made from reinforced autoclaved aerated concrete (RAAC), which has been assessed to be at risk of collapse after exceeding its 30-year lifespan.
The lightweight form of RAAC concrete was widely used for walls, floors, and ceilings during the 1960s-80s, but now it is considered weak and unsafe for construction purposes.
Keegan said schools that are suspected to have RAAC would be inspected in the next two weeks.
“Most of them won’t have RAAC,” she told BBC Radio. “It could be hundreds more.”
A majority of the currently affected schools would still be able to operate largely normally, the government has said.
The revelations of crumbling school buildings just days before the start of a new term has sparked anger among parents and teachers, and represent a new political headache for Prime Minister Rishi Sunak’s Conservative government ahead of an election expected next year.
The crumbling school buildings issue has added to the impression of decaying public infrastructure in Britain.
British Finance Minister Jeremy Hunt said on Sunday the government would move to fix unsafe school buildings quickly after the schools were told to shut some buildings.
Hunt said most of the affected schools would still be able to operate largely normally, adding, “We will spend what it takes to sort out this problem as quickly as possible.”
An official in the former government put the blame for the shortcomings in UK schools on Sunak, who in his previous job as Finance Minister had halved annual funding to repair schools when the education department had asked for it to be doubled.
“We were saying there is a critical risk to life if this program is not funded,” former Permanent Secretary Jonathan Slater told BBC Radio. “I was absolutely amazed to see ... the decision made by the government.”
The Conservative government has not taken repeated warnings about crumbling schools seriously, the opposition Labor Party said.
It accused Sunak of “putting children’s lives at risk” by refusing to approve what needed to be spent to fix the problem.
The scandalous UK government has been facing its worst economic issues in decades.
Also, UK workers in various sectors, including transportation, hospitals, and schools, are in dire economic straits.
The workers have gone on repeated strikes in past years over their tough labor conditions, low wages, and rising cost of living in the country.
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United Kingdom Business & Economics
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The soaring cost of childcare in the UK is revealed in new figures today, suggesting nurseries will raise fees by £1,000 this year.
A survey of 1,156 providers by the Early Years Alliance found nine out of 10 expect to increase fees, typically in April, and by an average of 8% - higher than in previous years.
Cost of living - latest: Semi-skimmed milk and children's jeans - the details behind inflation
UK childcare costs are already among the most expensive in the world, with full-time fees for a child under two at nursery reaching an average £269 a week last year - or just under £14,000 annually.
An 8% rise would take that to more than £15,000.
Three and four-year-olds in England attending a nursery or childminder are eligible for either 15 or 30 free hours a week depending on whether their parents work, so their costs are a lot lower.
There are different schemes in Wales and Scotland.
But the concern is that by this stage many parents - particularly mothers - have felt forced to drop out of work or cut their hours.
Tory MPs have been pressing the chancellor to take measures to make childcare more affordable in the March budget in order to reduce pressure on families, and enable more women to re-enter the workforce.
But an option to extend free hours to all two-year-olds is understood to have been ruled out.
Most nurseries and childminders surveyed - 87% - said the money they get from the government does not cover their costs to provide the "free" hours - leaving them out of pocket.
More than half of providers (51%) said they had operated at a loss last year. A handful said they were looking at fee increases of as much as 25%.
Becky Burdaky, 26, from Wythenshawe, Greater Manchester, told Sky News she had taken the "daunting" decision to leave her job in sales after having her second child, Bobby, last year.
Her daughter Harriet, aged three, goes to pre-school near their home, but the family found the costs they would face for their baby son beyond their reach.
She will stay at home and they will live on the wages of her partner Steve, an electrician.
'Not asking other people to pay for my kids'
Becky said: "When we looked into the fees it was £70 a day - it would have been all of my wage. With Harriet it was about £54, so that's a huge difference.
"And if he was home poorly, I wouldn't get paid but I'd still have to pay his fee. Once we sat down and worked it out I would have been paying to go to work.
"I never envisaged myself being a stay-at-home mum, you know just cooking and cleaning and bringing up children, as I've always worked.
"It's our decision to have children - I'm not asking other people to pay for my children. And I definitely don't want people's taxes to go up because of it.
"But I think slightly subsidising the cost of fees so it's affordable for working parents means we can work and contribute.
"You don't know what it's going to be like when you return to work, you're starting from the bottom."
The campaign group Pregnant Then Screwed surveyed 27,000 parents last year and found nearly two thirds paid more for childcare than their rent or mortgage.
Although childcare costs have risen significantly in recent years, many providers are struggling to stay in business - with 5,400 closing their doors in the year to August 2022.
Fees for the youngest children, aged under three, are often used to keep the nurseries in business, and the rising cost of living means parents are cutting back.
'I've put my savings in to cover wages'
Delia Morris is the owner of Morris Minors pre-school in Croxley Green, Hertfordshire, where children used to start aged two but are now increasingly starting at three.
She is paid £5.41 an hour by the local authority for their free hours, but says providing it costs her around £7.
"Children come in later, when they are funded," she said.
"That's had a huge impact. I did raise my fees a very small amount this year but it doesn't cover it because we only have one or two children doing a couple of sessions a week [that parents pay for].
"I've had to put my own savings in to cover the wages last summer, and the staff had to drop a session."
As to what the government should do, she said: "They have to put money in. It's difficult to say, but I have to be realistic that if I can't make ends meet I will have to close and that's it."
Neil Leitch, chief executive of the Early Years Alliance, said the organisation had closed half of the 132 nurseries it operated in the last four years.
"They are exclusively in areas of deprivation, which seems to fly in the face of any levelling up agenda. These are families and children who would benefit most from support and care," he said.
According to the OECD, the UK tops the table for the proportion of a mother's income taken up by childcare costs - based on two children in full-time care.
Christine Farquharson, education economist at the Institute for Fiscal Studies, said childcare costs for two-year-olds have risen twice as fast as inflation in the past decade - with a lasting effect on women's pay.
"We ended up in a situation where the youngest children have the highest prices they're ever going to pay, with the least access to government support," she said.
"And it's coming at this critical moment where parents are making decisions about whether or not to go back to work after they've been on parental leave.
"When mothers - and it is mostly mothers - make that choice to step back from the labour market it's not just those few years. The gender pay gap just explodes and literally takes decades to come back to anything approaching the situation before they became parents."
Proposals, championed by Liz Truss, to increase the ratio of children looked after by each adult, have attracted opposition from nurseries and parents.
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But Tory MPs are pressing the government to help parents with the cost of childcare by reducing business rates for nurseries or extending free hours to two-year-olds.
Robin Walker, chair of the education select committee, said some of the existing schemes are not working effectively - such as tax-free childcare - for which uptake is only around 40%.
Universal Credit claimants are also eligible to have up to 85% of their childcare costs funded but are put off by having to make upfront payments.
"There is money there that isn't being used," he said. "Upfront payment for Universal Credit and tax-free childcare are putting a lot of parents off using them at all.
"The government is already spending more than any previous government has in this space, but other countries in Europe are spending more particularly in the 0-2 age bracket.
"If we were to make the case for more investment it would unlock those opportunities for people to continue in the workplace and stimulate children in the early years."
If they win power, Labour have promised an expansion of childcare from the end of maternity leave until the start of primary school.
Shadow education secretary Bridget Philipson told Sky News this would be a "key battleground issue" at the next election.
A Department for Education spokesperson said: "We recognise that families and early years providers across the country are facing financial pressures and we are currently looking into options to improve the cost, flexibility, and availability of childcare.
"We have spent more than £20bn over the past five years to support families with the cost of childcare and the number of places available in England has remained stable since 2015, with thousands of parents benefitting from this."
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United Kingdom Business & Economics
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NEW YORK – The judge presiding over the civil fraud trial of Donald Trump admonished him to keep his answers concise, reminding him and the courtroom that “this is not a political rally” as the former president and leading Republican president candidate began testifying in a lawsuit accusing him of dramatically inflating his net worth.
“We don't have time to waste. We have one day to do this,” an exasperated Supreme Court Judge Arthur Engeron said at one point. At another, he said, “In addition to the answers being non-responsive, they're repetitive."
Trump's turn on the witness stand, in a case that cuts to the heart of the business brand he spent decades crafting, represents a remarkable convergence of his legal troubles and his political ventures at a time when he also faces criminal indictments while vying to reclaim the White House in 2024.
The testimony gives him the opportunity to try to use the witness stand as a campaign platform, but its under-oath format, before a judge who has already fined him for incendiary comments outside of court, also invites clear peril for a businessman and candidate famous for a freewheeling rhetorical style.
Tensions between Engeron and Trump, already on display last month when the judge fined him $10,000 for incendiary outside-of-court comments, were evident Monday when the ex-president was repeatedly scolded about the length and content of his answers.
“Mr. Kise, can you control your client? This is not a political rally. This is a courtroom,” Engeron told Trump lawyer Christopher Kise, who himself has clashed with the judge.
The judge later added: "I do not want to hear everything this witness has to say. He has a lot to say that has nothing to do with the case or the questions.”
Trump walked slowly to the witness stand, tugging at his suit coat as he settled in for hours of questions in a lawsuit by the New York state attorney general that accuses him and his company of inflating his property values and deceiving banks and insurers in the pursuit of business deals and loans.
Echoing the stance taken by two of his sons, Donald Trump Jr. and Eric, in their own testimony last month, Trump sought to downplay his direct involvement in preparing and assessing the financial statements that the attorney general claims were grossly inflated and fraudulent.
“All I did was authorize and tell people to give whatever is necessary for the accountants to do the statements,” he said. As for the results, “I would look at them, I would see them, and maybe on some occasions, I would have some suggestions.”
He also downplayed the significance of the statements, which went to banks and others to secure financing and deals. As he has in the lead-up to testifying, Trump downplayed the statements’ significance, pointing to a disclaimer that he says amounted to telling recipients to do their own calculating.
“Banks didn’t find them very relevant, and they had a disclaimer clause -- you would call it a worthless statement clause,” he said, insisting that after decades in real estate, “I probably know banks as well as anybody … I know what they look at. They look at the deal, they look at the location.
Trump complained in court that his 2014 financial statements shouldn't be a subject of the lawsuit at all.
"First of all it’s so long ago, it’s well beyond the statute of limitations,” Trump said before turning on the judge, saying he allowed state lawyers to pursue claims involving such years-old documents “because he always rules against me.”
Engoron said: “You can attack me in whichever way you want but please answer the questions.”
The courtroom at 60 Centre St. has already become a familiar destination for Trump. He has spent hours over the last month voluntarily seated at the defense table, observing the proceedings. Trump once took the stand — unexpectedly and briefly — after he was accused of violating a partial gag order. Trump denied violating the rules, but Judge Engoron disagreed and fined him anyway.
Before Monday, Trump's speaking has happened outside the courtroom, where he has taken full advantage of the bank of assembled media to voice his outrage and spin the days' proceedings in the most favorable way.
Unlike most Americans, Trump has ample experience fielding questions from lawyers and has a long history of depositions and courtroom testimony that offer insight into how he might respond. But Cohen, who worked for Trump for more than a decade, said nothing in Trump's past has come close to what he's facing now since they were largely civil matters "where even though the dollar amounts were in the millions of dollars, they were never of any real consequence to him or obviously to his freedom.”
“Right now this New York attorney general case is a threat to the extinction of his eponymous company as well as his financial future," he said. Trump's forthcoming criminal cases — accusing him of misclassifying hush money payments, illegally trying to overturn the result of the 2020 election and hoarding documents at his Mar-a-Lago club "have far more significant consequences, most specifically the termination of his freedom.”
___ Associated Press writer Eric Tucker in Washington and Jennifer Peltz in New York contributed to this report.
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Banking & Finance
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In a recent study published in the scientific journal Frontiers in Psychology, researchers provide evidence that cryptocurrency technology, specifically its current adopters in the United States, tends to align more closely with conservative moral values rather than liberal ones.
The world of cryptocurrency, often associated with decentralized financial systems, has surged in popularity in recent years. While many view it as a tool for financial freedom, its underlying motivations have remained relatively unexplored in academic circles. Prior research has examined the financial and technological aspects of cryptocurrencies but has largely ignored their sociopolitical implications.
Researchers at the University of Utah and Toronto Metropolitan University ventured into a study to understand the moral foundations of crypto advocates. Given the divisive nature of discussions surrounding cryptocurrency — with enthusiasts often promoting it as a solution to many economic woes — the study was rooted in understanding societal and political inclinations behind the topic.
In their research, the team analyzed a large set of tweets related to Bitcoin and conducted a controlled survey — overall, unpacking information learned across two studies. In the first study, a total of 959,393 tweets regarding crypto were analyzed for their usage of moral-language (such as words like “pure”, “impure”, and “theft”).
In the second study, a total of 500 participants, all based in the United States, were recruited through a study recruiting website called Prolific. 487 passed all attention checks and were included in the analysis, with 297 women and 190 men, averaging 37 years old. All of them answered a series of questions probing interest and attitudes towards cryptocurrency.
Then, researchers compared the alignment of crypto enthusiasts with what are known as “binding moral foundations” (Authority, Purity, and Loyalty) – typically associated with political conservatives – to “individualizing foundations” (Fairness and Care) which are often linked to liberals.
The findings were revealing. Crypto enthusiasts, especially in the U.S., seem to resonate more with the conservative values of Authority, Purity, and Loyalty than the liberal ideals of Fairness and Care. In simpler terms, those with an interest in cryptocurrency, based on tweet analysis and survey results, showed a stronger alignment with the moral values often held by political conservatives. This suggests that the appeal of cryptocurrencies might be deeply rooted in these moral principles, potentially influencing adoption decisions.
The researchers concluded that “our findings document convergent evidence indicating that crypto is best understood as ‘right-wing tech’ more closely aligned with conservative moral foundations at the current stage of adoption. Our analyses of a large set of Bitcoin tweets and a controlled survey indicate that binding moral foundations (Authority, Purity, and Loyalty) that are more closely associated with political conservatives better reflect one’s interest in cryptocurrency than individualizing foundations (Fairness and Care).”
However, it’s essential to understand the scope of these findings. While the research provides a novel insight into the moral alignments of cryptocurrency users, it’s mainly correlational. This means while there’s a noticeable link between conservative values and crypto interest, it doesn’t necessarily imply a direct causation. Also, this study primarily focused on crypto advocates within the U.S., so extrapolating these findings to a global audience might not be entirely accurate.
Furthermore, the research centered more on understanding the majority – those investing and showing interest in cryptocurrency. It didn’t dive deeply into the actions of a minority, like fraudulent businesses trying to scam investors. And while cryptocurrency’s decentralized and open-record nature might seem a deterrent for dishonest activities, it doesn’t mean dishonesty is entirely absent.
Sachin Banker of University of Utah, alongside Joowon Park and Eugene Chan of Toronto Metropolitan University, authored this study — titled “The moral foundations of cryptocurrency: evidence from Twitter and survey research“.
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Crypto Trading & Speculation
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Investing apps help anyone access the stock market to make trades. Alpaca, a San Mateo-based startup, offers stock and crypto brokerage trading services via API that enables investing fintech companies and others to embed this functionality into their apps. Today, the startup announced it has secured $15 million in the form of a convertible note from Japanese financial firm, SBI Group.
The strategic investment, which brings the Y Combinator-backed startup‘s total raised to $120 million since its inception in 2015, will allow Alpaca to speed up its expansion in Asia, CEO of Alpaca Yoshi Yokokawa told TechCrunch.
The startup’s B2B2C model serves more than 5 million end-users via over 100 corporation partners in 30 countries, including Saudi Arabia, Indonesia, Thailand, and India, Yokokawa said, adding that nearly 20% of its clients are based in Asia, primarily Southeast Asia. Alpaca currently has two clients in Japan — SBI and Woodstock– but expects a few more users from Japan after the strategic investment from SBI, which has more than $2.6 billion in assets under management in venture capital and private equity investment.
“SBI Group has the biggest network amongst financial institutions in Japan and has been expanding to Southeast Asia recently,” Yokokawa said.
Thailand-based digital bank Dime and Singaporean investment app Syfe use Alpaca’s brokerage platform to offer U.S. stock trading services to their end users, Yokokawa noted. On top of that, the outfit recently received a broker-dealer license from Japan’s Financial Services Agency. The permit allows Alpaca to offer U.S. stock trading services to enterprises’ end users in Japan.
Alpaca plans to launch new products and services for the U.S. business, such as options, bonds, mutual bonds, and individual retirement account accounts, Yokokawa said.
Since its last funding, a $50 million Series B in 2021, the company’s revenue has increased by 15 times, and the number of investing apps on its platform has grown four times to around 150, Yokokawa said. He declined to provide the baseline of the revenue, which the company generates via a variety of methods, including transactions from trading fees, foreign exchange fees, SaaS recurring, and more. The number of staff has reduced to 150 from 175 people last year to operate the company efficiently, Yokokawka told TechCrunch.
When asked about its crypto API that Alpaca launched in October 2021, two months after its Series B round, its crypto business still does not produce significant revenue. Still, the company expects the crypto API would grow as the crypto market recovers, the CEO said. Alpaca’s crypto API enables businesses and developers to trade crypto and stocks and build apps that offer crypto and stock investing services in one API.
Alpaca has built a community for developers. The CEO said tens of thousands of monthly active developers can try out Aplaca’s product for free, writing sample code to interact with its brokerage platform via API.
Its previous backers include Portage Ventures, Spark Capital, Tribe Capital, Social Leverage, Horizons Ventures, Unbound, Elefund, Positive Sum and Y Combinator.
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Stocks Trading & Speculation
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- Former President Donald Trump is expected to testify in the $250 million civil fraud trial brought by New York Attorney General Letitia James.
- James accuses Trump, his adult sons and Trump Organization executives of fraudulently inflating the values of Trump's assets for financial benefits.
Former President Donald Trump is expected to testify Monday in the $250 million civil fraud trial that threatens to torpedo his family's business empire.
New York Attorney General Letitia James seeks to permanently bar Trump and his two adult sons from running a business in the Empire State because, she says, they have engaged in years of financial fraud.
James' lawsuit in Manhattan Supreme Court alleges that the Trumps intentionally misstated the values of his assets on financial statements to falsely inflate Trump's net worth and obtain various financial benefits.
The witness stand is a rare position for the former president and current 2024 Republican presidential frontrunner. Trump's aggressive political and personal speaking style will be tested when he is forced to answer questions under oath.
Trump insists the financial statements at the heart of the case were never meant to be definitive.
"My worth is far greater than on financial statements, plus they contain a full disclaimer clause telling readers of this information to do their own due diligence," Trump posted on Nov. 2.
But Trump's former personal lawyer Michael Cohen, has accused him in court of directing executives to falsely manipulate his net worth.
The first time Trump was questioned under oath in this case, he invoked his Fifth Amendment right against self-incrimination more than 440 times, during a deposition with James' attorneys in August 2022.
Legal experts say that unlike a criminal case, where a defendant opting to take the Fifth cannot be held against them, in a civil case, a judge can draw an adverse inference from a witness' refusal to testify.
Trump's two adult sons, Donald Trump Jr. and Eric Trump testified last week that they relied on the company accountants who helped prepare the annual financial statements.
Judge Arthur Engoron, who will deliver verdicts in the no-jury trial, has already found the defendants liable for fraud and ordered the cancellation of their New York business certificates. The trial, which is scheduled to last until late December, addresses six other claims alleged by James.
Trump is appealing Engoron's pretrial ruling, which is on hold as the trial takes place. He consistently denies all wrongdoing and frequently repeats a laundry list of public defenses, including that his financial records contained an absolute disclaimer clause, and that the banks who approved his loans ultimately made money.
This is developing news. Please check back for updates.
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Banking & Finance
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A company co-founded by OpenAI CEO Sam Altman has raised $115 million for Worldcoin, a crypto coin project that scans users' eyeballs in order "to establish an individual's unique personhood." In addition to leading the maker of ChatGPT and GPT-4, Altman is co-founder and chairman of Tools for Humanity, a company that builds technology for the Worldcoin project.
Tools for Humanity today announced $115 million in Series C funding from Blockchain Capital, Andreessen Horowitz's crypto fund, Bain Capital Crypto, and Distributed Global. Blockchain Capital said that Worldcoin's "World ID" system that involves eyeball-scanning will make it easier for applications to distinguish between bots and humans.
"Worldcoin strives to become the world's largest and most inclusive identity and financial network, built around World ID and the Worldcoin token—a public utility that will be owned by everyone regardless of their background or economic status," the crypto firm's funding press release said.
Worldcoin offers a World app for iOS and Android, which "allows a person to set up their Worldcoin account and access a digital wallet connected to Worldcoin, Bitcoin, Ethereum and other digital and traditional currencies including stablecoins," the company says.
The eyeball-scanning part comes into play for anyone who signs up for a World ID. This requires going to a physical location and using your eyes and a device called an "Orb" to verify that you're a real person.
"The Orb uses iris biometrics to establish an individual's unique personhood, then creates a digital World ID that can be used pseudonymously in a wide variety of everyday applications without revealing the user's identity," Worldcoin says.
Orb availability is limited
The World app itself can be used without signing up for a World ID, the company says. But Worldcoin says that people who get a World ID will also receive some free Worldcoin tokens and some amount of free bitcoin and ether currency.
Worldcoin is still in beta, and its tokens are "not intended to be available to people in the United States or other restricted territories," a project FAQ says. A US resident can obtain a World ID, but the World app tells users that there are no Orbs in the United States yet.
"We're working hard to bring Orbs to every country in the World," the app says if you're located in one of those unfortunate Orb-less countries.
Even though Worldcoin says its tokens aren't intended to be available to people in the US, the Orb hardware will be on display in a few US cities in the coming months. The company announced an Orb "tour" in which "Worldcoin Orbs will be available for a limited time" from May through July in Berlin, Dubai, London, Mexico City, Miami, New York City, San Francisco, Seoul, and Tokyo.
Investor: Worldcoin is not a “dystopian nightmare”
In a press release, Tools for Humanity said the new funding "will accelerate TFH's continued R&D and growth, enabling it to support the expansion of the Worldcoin project and to further develop World App, the first wallet for the Worldcoin ecosystem."
Blockchain Capital General Partner Spencer Bogart defended Worldcoin against the privacy and security criticisms the iris-scanning project has received. "I thought Worldcoin was some dystopian Orwellian nightmare, then our team invested hundreds of hours evaluating what the project's contributors have actually built and I completely changed my mind," Bogart wrote on Twitter.
Bogart claimed that "Worldcoin is quite likely the single most misunderstood project in all of crypto," noting that upon "first glance, it appears to be a noxious combination of hardware, biometrics, crypto and AI."
But "in reality," according to Bogart, "Worldcoin's World ID is the most compelling solution we've seen" to a decades-old problem. "In short, Worldcoin has a unique opportunity to establish and scale a new privacy-preserving primitive for the Internet (World ID) that enables any application to easily distinguish between machines (bots) and humans."
Blockchain Capital said on its website that "World ID empowers individuals to verify their humanness online while maintaining anonymity through zero-knowledge proofs. Verification is as simple as clicking a button to sign a transaction."
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Crypto Trading & Speculation
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Just about every bank puts a limit on how much cash you can withdraw each day. In part, this is a security feature to prevent thieves from cleaning out unauthorized accounts. In other part, this helps banks and ATMs to stabilize liquidity. If accessing cash, especially on an unscheduled basis, is important to you, here’s what you need to know about daily withdrawal limits from a personal account at a commercial bank.
If you’re not sure what type of financial institution should keep your money then you may want to consider working with a financial advisor.
What Are Withdrawal Limits?
A daily withdrawal limit is the maximum amount of money you can withdraw from your bank account in a single day. These limits largely exist for two reasons.
The first is to manage cash flow and liquidity. Banks keep a limited amount of cash on hand at any given time, as do ATMs. By setting withdrawal limits, the bank can control how much they have to distribute at any given time.
Just as importantly, if not more so, withdrawal limits are a security feature. By limiting daily withdrawals, banks help protect their customers against unauthorized access. Even if someone gets your debit card and PIN number, there’s a limit to the damage they can do.
There are three main categories of withdrawal limits:
ATM Withdrawals
This is by far the most common use of the term “withdrawal limit.” Your bank’s ATM withdrawal limit is the maximum amount of physical cash you can take out of an ATM in one 24-hour period. For example, many banks have a $500 limit, which means you can’t take out more than $500 in cash during a single 24-hour period.
Typically banks apply the ATM limit cumulatively, across all ATM transactions in a single 24-hour period. This means that it is not a limit on how much you can withdraw at once, but rather a limit on how much you can withdraw from ATMs altogether over the course of a day.
While your bank sets a limit on ATM withdrawals, individual ATM operators can do so as well. This limits how much money you can take out of that operator’s machines over the course of a single day. For example, say your bank has a $1,000 withdrawal limit and you use an ATM with a $600 limit. This means that you can withdraw up to $600 from that ATM operator’s machines in a single day, but you can withdraw an additional $400 from other ATMs before hitting your bank’s limit.
If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Cashier/Teller Withdrawals
This is the maximum amount of physical cash that you can take out of your bank account in a 24-hour period by going into a branch and making a withdrawal in person. For example, your bank may limit cashier transactions to no more than $20,000 in physical cash each day.
This differs from an ATM withdrawal because you’re working directly with a teller, which obviates some of the security concerns. The branch will also have significantly more cash on hand than an ATM, which reduces liquidity concerns.
While banks will often have some sort of cash withdrawal limit, they will typically be much higher than ATM withdrawal limits. In some cases this will be a general limit on cash transactions, meaning that the same limit would also apply to transactions like redeeming a check for cash. Banks may also set their limits around immediate transactions, meaning that you can withdraw large amounts of cash but need to make your request in advance.
Debit Withdrawal Limit
This is the maximum amount that you can spend with your debit card in a 24-hour period. For example, your bank may have a maximum of $5,000 in debit card spending each day.
Banks treat debit card transactions as the electronic equivalent of a cash transfer. Since this is an electronic payment, a debit card doesn’t present any special liquidity issues. However, it does present the same security concerns as an ATM withdrawal. As a result, it’s not uncommon for banks to impose debit withdrawal limits. When they exist, however, these limits are virtually always higher than ATM withdrawal limits.
Legal and Savings Withdrawal Limits
For a standard depository account, there are no laws or legal limits to how much cash you can withdraw. Withdrawal limits are set by the banks themselves and differ across institutions. That said, cash withdrawals are subject to the same reporting limits as all transactions. If you withdraw $10,000 or more, federal law requires the bank to report it to the IRS in an effort to prevent money laundering and tax evasion.
Few, if any, banks set withdrawal limits on a savings account. The main restriction on a savings account is the transaction limit, which is a legal limit of no more than six transactions through a savings account each month. You also have less access to a savings account, since these typically don’t come with products like checkbooks or debit cards. However, within those limitations, you can generally move any amount of money that you please.
Checking Withdrawal Limits
Every bank has its own rules when it comes to daily withdrawal limits, and these terms can vary widely. Most, if not all, banks set the lowest limits on ATM withdrawals. They have higher limits for debit transactions and still higher limits for cashier transactions. Banks may also set different transaction limits based on your account. For example, a newer account, no-fee checking or student checking accounts may have low withdrawal limits. By contrast, a longstanding customer or one with a high-interest checking account may have a much higher withdrawal limit than usual.
While a comprehensive list of withdrawal fees is beyond the scope of this article, here is a representative sample of ATM and debit withdrawal limits at eight banks at the time of writing. Note that these are representative numbers only. Your specific limits at any given bank will depend on your account type and usage.
Bank Daily ATM Limit Daily Debit Limit Bank of America $1,000 or 60 individual bills $5,000 Capital One $5,000 for most accounts $5,000 for most accounts Chase $500-$3,000 $3,000 Citi $1,500-$2,000 $5,000-$10,000 PNC $500-$2,000 $2,000-$5,000 TD Bank Starts at $1,000 No specified limit U.S. Bank Starts at $500 Starts at $10,000 Wells Fargo Starts at $300 $600-$10,000
When you open a bank account, it’s important to learn what withdrawal limits come with it. In particular, make sure you ask about any debit limits. Your bank may not have debit limits, or at least not for all accounts, but they can be very important. For example, say your bank sets a $3,000 limit on debit spending in a 24-hour period. While you may not ordinarily need to think about that limit, on a day in which you pay for airfare or make some other large purchase you could be at risk of having your card declined.
The Bottom Line
An ATM withdrawal limit is the maximum amount of cash that your bank will let you take out of ATMs in a single day. Your debit spending limit, if any, is the most you can spend with your debit card in a single day.
Every bank has different rules around this, so make sure you understand your own account’s limits.
Tips on Banking
For any given bank account, your account limits will partially depend on the specific type of account you have. So the first step is making sure you have the right account for you.
A financial advisor can provide valuable insight and guidance as you make choices about types of banks to use. If you don’t have a financial advisor yet, finding one 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 interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Photo credit: ©iStock.com/dobok, ©iStock.com/AsiaVision, ©iStock.com/mladenbalinovac
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Banking & Finance
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The screens are seemingly everywhere — coffee shops, sports stadiums, online travel sites, even— asking customers if they and leaving shoppers confused about when to give.
Historically, tips were designed to reward, and sometimes ensure, good service, and were typically only expected in settings such as restaurants, salons and taxis, where gratuities can factor heavily into a worker's wages. But digital payment prompts to leave between 15% and 25% extra on even small purchases that require little or no customer service have become ubiquitous.
What's clear is business owners are increasingly comfortable asking customers for tips. Taking a dimmer view, some critics view the practice as employers effectively offloading their responsibility to pay employees a living wage onto consumers.
"Tipping has become the customary daily moment, as opposed to a situation like going into a restaurant and being expected to leave a tip," said Columbia Business School professor Stephen H. Zagor, who focuses on restaurants and food businesses. "Now you could go to a large department store and at checkout there's a space for a tip."
Lehigh University professor Holona LeAnne Ochs, author of two books on tipping, described businesses requesting tips as "constant and pervasive," while leaving consumers wondering when it's appropriate to show their appreciation.
Old rules are out
Even experts come down on different sides of the cultural flashpoint, while largely agreeing on one point: Theare dead, and there are no longer any hard and fast rules around when it's OK for a business to ask for a tip or for a consumer not to give.
"The nature of tipping is less about rewarding service providers for good service and more about social norms. Social norms have been distorted, so we don't know when to tip," Brian Warrener, associate professor of hospitality management at Johnson and Wales University, told CBS MoneyWatch.
He personally is comfortable not tipping when he doesn't believe it is merited.
"If I haven't had much of a service interaction or great service, I have no problem not leaving a gratuity. It's not warranted in this case. You didn't earn it, you don't deserve it in this case," Warrener said.
COVID-19 shattered norms
The pandemic had a major impact on tipping habits. Retail industry employees and other essential workers were seen as putting their own health, and even their lives, on the line to serve customers, more than earning an extra monetary reward.
"Tipping during COVID was like a donation that recognized that frontline service employees were out there doing difficult, dangerous work and we all appreciated it, so we all contributed a little bit extra to that charity," Warrener said.
While businesses are carrying that expectation forward, Warrener said it's acceptable for consumers to revert to their old tipping habits.
"It's perfectly reasonable to go back to what the norms were previously," he said. "I don't feel like I have to leave a 20% tip on top of a cup of coffee at the local Starbucks."
Josh Luger, co-founder of fast-casual food chain Capital Tacos, has no qualms about asking customers to tip workers at his restaurants. Luger's restaurants don't provide table service, so he lists out all the work that goes into preparing a meal in a place that's visible to customers.
"We run a scratch kitchen and we do a lot of hard work every day to deliver what we think is a unique and superior product," he told CBS MoneyWatch. "We do a lot in stores to make sure that's communicated to customers."
Luger notes that he sees nothing wrong with customers opting not to tack on a gratuity. Yet by the time someone places an order, he hopes that the considerable effort employees put in to deliver good service is clear.
"You've read the wall, seen the kitchen and the work that's being done, and we hope you have the context so we make the ask," he said. "No tip is required — you can sign the receipt and put nothing on there, but if you want to reward workers we think it's reasonable to make that ask."
Tips are distributed among employees, all of whom perform a mix of job functions. In some ways, it helps keep prices down and wages up for workers, Luger said. "What consumers generally want is a lower stated price point and the option to tip if they so choose. As long as it falls short of a requirement, I think everything is fair game."
"It's like extortion"
Zagor, the Columbia professor, sees two broad reasons to tip: Either to reward good service or to encourage it in the future.
"If you feel someone is doing something beneficial to you and you have empathy and compassion, tip 'em!" he said.
But when a commercial transaction involves no human interaction, such as buying something online or using an in-store kiosk or app, Zagor thinks tip prompts are inappropriate.
"It's like extortion. It's suggesting adding a charge on where you don't see where the charge is for or what its value is," he said.
Zagor's own approach to tipping is straightforward. He's generally inclined to tip people who provide services — not businesses or machines selling goods.
"I'm not going to tip a store I'm buying canned goods or ketchup from, but if someone provides service to me I always feel there's a reward for that level of concern or energy they put out," he explained.
Get over it, already
Technology has played a large role in changing the rules around tipping. Touch screens with tip prompts are increasingly replacing old-fashioned tip jars, which were easier to slip past and ignore. And on a screen, you have to actively reject the request.
"With a tip jar, you can simply ignore it if you don't put money in," said tipping expert William Michael Lynn, a professor of services marketing at the Cornell University School of Hotel Administration. "On a tablet you have to actively hit 'no tip,' so that's a sin of commission, and we feel worse about that."
Lynn said there's no right or wrong answer on when to either ask for or give a tip. Businesses can ask for gratuities, but shouldn't expect customers to show their generosity or express ill will if they don't. And customers should tip in line with their own values and motivation.
As for consumers who may feel a twinge of guilt when they skip past the tip screen, Lynn has another modest piece of advice: Just deal with it.
"They want you to give them money, there's no question, and they will be at the very least disappointed if you don't, but who cares?" he said. "Lots of people want money from me and I don't give it to them."
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Consumer & Retail
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Moving back into the parental home as an adult was once seen by many youngsters as a retrograde step and even something to be ashamed of. Now, a new study suggests that such a move actually improves the mental health of these “boomerang adults”, thanks in no small part to a stressful and increasingly expensive rental market.
The findings of of the first study in the UK to look at the mental health impact of moving home on the adult children surprised demographers at the Institute for Social and Economic Research (ISER), who were expecting to find it had the opposite effect on wellbeing.
Past research has found that parents experience a dip in mental health when their adult children return to live at the family home.
But the new study by ISER, part of the University of Essex, found that for their children it was associated with an improvement in mental health scores – despite losing independence.
“We expected that probably their mental health would get worse if they had to give up their independence and that they might feel that they were falling behind their peer group and going back might seem retrograde,” said professor of population science Emily Grundy, who co-authored the study with Dr Jiawei Wu. “So we were quite surprised to find that on the contrary their mental health seemed to improve.”
While previously moving out of the family home and living independently was seen by many as a mark of adulthood, the research shows how these signifiers are changing.
“The whole process of things that we think are important of transition to adulthood have rather shifted,” said Grundy. As well as rental costs, other factors she points to affecting young adults leaving home include people staying in education longer, getting partners and becoming parents later.
Nearly 5 million adults live with their parents, according to the 2021 UK census, a 14.7% increase on 2011.
‘Boomerang’ Moves and Young Adults’ Mental Well-being in the United Kingdom, published in Advances in Life Course Research, suggests that the so-called “boomerang generation” may find parental support beneficial – especially if it enables them to escape the stress of the private rental sector.
Between 2009 and 2020, it found, 15% of the 9,714 British adults aged between 21 and 35 they studied moved back in with their parents at least once.
The more liberal attitudes of parents could also play a role, said Grundy. “At one time people had to leave home if they wanted to have boyfriends or girlfriends, whereas parents may now be less restrictive about what their children can do.”
The potential implications of more adults moving in with their parents include multi-generational mortgages, such as those pioneered in Japan and greater differences between generations.
“They used to say ‘life begins at 40’ and the idea of that was that your children were independent by then,” said Grundy. “Whereas now, a lot of 40-year-olds have actually got quite young children.
“It also means that the spacing of generations has got much more variable and there may be some people whose children come back and other people who have still got children at nursery, the whole stages of life we maybe need to have a less rigid view about.”
But there are huge inequalities, she warned. “We looked at the people who returned home and changes in their mental health, but there are other people who perhaps can’t return home because their parents haven’t got the resources or space.”
Shelter said at least two in five 25-34-year-olds say that rising living costs have increased their fear of becoming homeless and almost half say that worries over rent is making them anxious or depressed.
Polly Neate, the housing charity’s chief executive, condemned the “chronic lack of decent affordable social homes” which she said is a “source of anxiety and depression for millions”. But she warned families should not be left to “fill the gap”, which can lead to overcrowding and even exacerbate homelessness.
“While moving in with your family and exiting the wild west of private renting may improve younger people’s mental health, it’s not a solution to the housing emergency. Not everyone has a family who can take them in, others need to move for work, or they may want to start a family of their own,” she said.
“Having more people under one roof, especially in overcrowded homes, adds extra pressure – in fact no longer being able to stay with family is a leading cause of homelessness.”
Generation Rent said renting in an increasingly unaffordable and competitive private rental market can have a “devastating impact” on mental health.
“Some have developed anxiety, depression or even PTSD from their experiences,” said Tilly Smith, the campaign’s campaigns and partnerships officer. “The constant threat of an unexpected and unfair eviction notice coming through the mail at any time creates a sense of fear amongst many private tenants.”
Case study: I’m sure I prefer my parents to strangers… luckily they have the space
The first time Ella Clarke moved out of her parents’ home was to go to university aged 18. Since then, the 27-year-old has moved back home three times – first after graduation, then during the pandemic and just over a year ago.
In November 2021, after nine months renting in London, she decided she was better off living rent-free with her parents Tim and Louise – even if she can feel she is reverting back to being a teenager.
“Now I’m waiting to earn enough to live by myself. because rent is so high it’s not really worth it,” said Clarke, who has started an upholstery and curtain business. “I’m lucky my parents have the space for me to live and work.”
In Colchester, where they live, renting a good quality one-bed flat would cost her around £750 a month, she said, and a flat share doesn’t appeal. “I’m sure I prefer my parents to strangers.”
She does worry about how long it will be until she can afford to move out. “As much as I’m happy and save money, I would very much like to have my own place.”
While she said the rising cost of living has a lot to do with changing generational priorities, there is also a stronger focus on career satisfaction. “A lot of people are sacrificing the traditional things of moving out and having their own house and a nice car in favour of following their passion.”
Her parents are happy with the arrangement, she said, but it helps that her older brother lives in Australia and that she is working towards a clear aim. “I’m sure if I’m here in 10 years’ time they might start asking some questions.”
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United Kingdom Business & Economics
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Fitch’s downgrade of US debt wasn’t a mistake — it was long overdue
On Aug. 1, Fitch Ratings downgraded U.S. government debt from AAA to AA+ and warned that the “rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance.”
Among the three major Western credit rating agencies (S&P, Fitch and Moody’s), only Moody’s still maintains a triple-A rating for U.S. sovereign credit. In fact, in a world drowning under a rising tide of public debt, only nine countries retain a triple-A rating from all three agencies.
Given its status as the world’s most liquid and important sovereign bond market, any significant change to the outlook or risk of U.S. Treasury securities matters enormously.
Some critiqued the odd timing and questioned the rationale behind the ratings downgrade announcement. Officials from the Biden administration vociferously condemned Fitch’s action, with Treasury Secretary Janet Yellen calling the downgrade “entirely unwarranted.”
Did Fitch err in its decision?
To the contrary, a ratings downgrade was probably long overdue.
The extent and nature of American political polarization (exacerbated by gerrymandering and highly polarized primaries), alongside declining confidence in American institutions, lend credence to the notion that the U.S. is suffering from an “erosion of governance” that goes far beyond the occasional debt-ceiling standoff.
Much-needed, bipartisan reforms to American welfare programs are unlikely in the current political environment, as is the needed overhaul of the overly-complicated tax system. Barring a fiscal crisis, the proverbial can will just keep getting kicked down the road.
A country can fall into a debt trap when its debt-to-GDP ratio rises persistently and reaches a level high enough to generate concerns about the government’s ability to refinance its debt. Large, persistent primary deficits (deficits excluding net outlays for interest) have been the primary driver of the growth in the U.S. debt-to-GDP ratio.
The absence of a bipartisan consensus on raising tax revenue and curtailing spending on popular but costly social insurance and welfare programs suggests that there will be no primary surplus any time soon. In fact, the aging of the population and the growing strategic competition with China and Russia suggest that budgetary outlays for Social Security, Medicare and national defense will only continue to climb in coming decades.
Until recently, interest payments on existing debt were relatively small. But we may be entering an era where rates remain elevated. CBO is conservatively projecting a doubling of annual net interest costs for the U.S. government over the coming decade.
Long-term debt sustainability crucially depends on whether the cost of refinancing the debt is persistently above or below the economic growth rate. In the aftermath of World War II, the U.S. relied on a combination of interest rate distortions (including financial repression), primary surpluses and relatively rapid economic growth to reduce its debt burden.
Given unfavorable demographics and subpar productivity growth, it is hard to imagine the U.S. replicating the 1948-1973 boom. CBO projects an annual real potential GDP growth rate of just 1.8 percent between 2023 and 2033.
Investors should not underestimate the potential for fiscal dominance of monetary policy. As Markus Brunnermeir recently noted, “Central banks would like to hike interest rates to rein in inflation, whereas governments hate higher interest expenses. They would prefer that central banks cooperate by monetizing their debt — that is, by purchasing government securities private investors won’t buy.”
Furthermore, there is substantial duration risk on the consolidated balance sheet of the Treasury Department and the Federal Reserve. Similar problems exist in the Euro Area, United Kingdom and Japan.
Raghuram Rajan recently observed that “long periods of low interest rates and high liquidity prompt an increase in asset prices and associated leveraging…. Central banks compounded the problem by buying government debt financed by overnight reserves, thus shortening the maturity of the financing of the government and central bank’s consolidated balance sheets. This means that as interest rates rise, government finances — especially for slow-growing countries with significant debt — are likely to become more problematic”.
Some have argued that the world faces a safe-asset shortage problem, and, consequently, foreign demand for Treasurys will remain robust. This notion has rightly been criticized. In fact, many foreign central banks are actively attempting to diversify their reserve holdings.
Previously, China and commodity-rich economies were willing to plough their current account surpluses into U.S. Treasurys. That is no longer the case. China has quietly been shifting its reserve holdings into gold. Growing wariness that Russia-style sanctions might cut them off from their assets has caused others to reexamine their dollar exposure.
More generally, overreliance on economic and financial sanctions by the foreign policy establishment and the ongoing geoeconomic fragmentation are actually threatening the viability of the dollar-centric global monetary order.
As Thomas Hoenig recently observed, “the fiscal projections for the U.S. are so stunning that reform must occur. The U.S. government must discipline itself and adjust its spending and tax programs. The monetary authorities must cease enabling the government’s excess spending. It is that simple and that difficult.”
Vivekanand Jayakumar is an associate professor of economics at the University of Tampa.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Interest Rates
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Future Retail Heads For Liquidation As Lenders Fail To Get Suitable Buyer
Future Retail, going through a corporate insolvency resolution process, has a debt of around Rs 30,000 crore and the company.
Future Retail Ltd., once the crown jewel of Kishore Biyani-led Future Group, is now heading for liquidation as its lenders could not get any reasonable buyer of the debt-ridden firm.
As the Committee of Creditors rejected the sole resolution plan submitted by Space Mantra after four extensions in the deadline to complete the corporate insolvency resolution process, the RP of the company has now approached NCLT to initiate liquidation of Future Retail.
"The resolution plan submitted by Space Mantra Private has not been approved by CoC of FRL, kindly note that, the Resolution Professional (RP) has filed an application, before the National Company Law Tribunal, Mumbai Bench, for initiation of liquidation of FRL," said a regulatory filing from FRL.
Last month FRL had informed that Rs 550 crore bid submitted by Space Mantra for FRL, failed to get the required number of votes in the e-voting process of the CoC.
The NCLT had granted four extensions to FRL for completion of CIRP and the last date was Sept. 30, 2023, and after that there was no extension in the time frame.
The insolvency proceedings against FRL were started by the tribunal on July 20, 2022.
The Insolvency & Bankruptcy Code mandates the completion of CIRP within 330 days, which includes time taken during litigations.
As per Section 12 (1) of the Code, the CIRP shall be completed within a period of 180 days from the date of initiation.
However, NCLT may grant a one-time extension of 90 days. The maximum time within which CIRP must be mandatorily completed, including any extension or litigation period, is 330 days.
Earlier, FRL had said it had received six bids from prospective buyers by May 15, which was the last date for submission of resolution plans.
The deadline for submission of resolution plans was May 15, 2023, for 48 companies, which were in the final list of 'Eligible Prospective Resolution Applicants'.
This has happened despite FRL lenders coming with revised Expressions of Interest and inviting fresh bids after dividing its assets into clusters.
Future Retail has a debt of around Rs 30,000 crore and the company is going through CIRP.
On March 23, 2023, creditors of FRL invited new EoIs, whereby prospective buyers can bid for the debt-ridden firm 'as a going concern or individual cluster or a combination of clusters of its assets', as it failed to attract a resolution plan in more than four months.
FRL operated multiple retail formats in both the hypermarket supermarket and home segments under brands such as Big Bazaar, Easyday, and Foodhall. At its peak, FRL was operating more than 1,500 outlets in nearly 430 cities.
It was part of the 19 Future group companies operating in the retail, wholesale, logistic and warehousing segments, which were supposed to be transferred to Reliance Retail as part of a Rs 24,713-crore deal announced in August 2020.
However, lenders had rejected the takeover of the 19 Future group companies, including FRL, by Reliance amid a legal challenge by Amazon.
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India Business & Economics
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Amazon is starting to warn consumers when products sold on its platform are regularly shipped back for returns. As reported by The Information, Amazon is rolling out a warning label on “frequently returned” products that will encourage consumers to check the item details and reviews before making their purchase, helping customers avoid misleading or low-quality products and reducing unnecessary returns.
Currently, Amazon’s return policy allows customers to return new and unused items up to 30 days after purchase, usually for free, unless the item is deemed nonreturnable. But returning a product is still a hassle and a bad experience for customers — and Amazon’s platform is rife with counterfeits and cheaply produced, low-quality, and sometimes deceptively marketed products bolstered with fake reviews. Having a visible warning that such items are usually returned not only deters consumers from buying them but also could encourage retailers to be honest about their listings or at least improve on issues that lead to higher product returns in the first place.
Products with high return rates and positive reviews could encourage consumers to research the item before they purchase
The returns warning has already appeared on a few third-party listings fulfilled by Amazon, such as the Pro-Ject Automat A1 record player and two dresses spotted by The Information. You may need to be logged in to an Amazon account to see the returns notifications. These three items have a reasonably high star rating, which may initially reassure prospective consumers, but glancing at the customer reviews indicates that the products are not true to size or have previously arrived damaged.
Those free returns also have an environmental cost, often hogging warehouse space until the items can be resold or disposed of in a landfill. Online retailers reported a surge in return rates during the covid pandemic, and returns still remain above pre-pandemic levels, which also results in higher costs for sellers facilitating storage and disposal. Receiving fewer returns means less money needs to be spent on processing said returns — good news for a company that’s cut 27,000 jobs in layoffs so far this year to slash operational costs.
“We’re currently showing return rate information on some product detail pages to help our customers make more informed purchase decisions,” Amazon spokesperson Betsy Harden said to The Information. The new warning label follows another tag released by Amazon earlier this month that publicly displays approximately how many units of a product have been sold.
Amazon has not revealed when the “frequently returned item” tag will be widely rolled out or what regions it will be available in outside of the US. (It doesn’t seem to be visible for UK-based consumers.) We have reached out to Amazon for clarification and will update this post should we hear back.
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Consumer & Retail
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Twitter’s ad-revenue sharing program for creators has officially launched — and it’s reportedly already begun paying eligible Blue subscribers. Elon Musk announced the initiative in February, but with scant details about how it would work, nobody knew quite what to expect. However, some high-profile users report today they’ve received notifications about incoming deposits — including one user claiming he’s set to receive over $24,000. The rewards are based on ads in replies to eligible users’ content.
The program incentivizes creators who contribute popular content that drives ads — rewarding accounts that help Twitter make money (while driving new Blue subscriptions). “This means that creators can get a share in ad revenue starting in the replies to their posts,” a Twitter help article published today reads. “This is part of our effort to help people earn a living directly on Twitter.” Musk tweeted today that payouts “will be cumulative from when I first promised to do so in February.”
Twitter just paid me almost $25,000. pic.twitter.com/oIJ2Ycymzb— Brian Krassenstein (@krassenstein) July 13, 2023
However, the bar is high to receive a transfer from the Musk-owned social media company. The support post says the revenue-sharing system applies to Twitter Blue or Verified Organizations subscribers with at least five million post impressions in each of the past three months. They’ll also need to pass a human review and adhere to the company’s Creator Subscriptions policies; Twitter will then pay eligible users using a Stripe account. The company says it will soon launch an application process, found under Monetization in account settings.
The move aims to make Twitter a more attractive platform for content creators. It may not be a coincidence that the program arrived about a week after Meta launched its Twitter rival Threads, which didn’t take long to gain traction — gaining over 100 million users in its first five days. That’s higher than previous record-holders ChatGPT and TikTok.
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Consumer & Retail
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An experience or a product: Which new purchase is more likely to elicit envy in other consumers?
Imagine browsing through your social media feed and finding out about two purchases made by your friends. One friend went on a vacation to a tropical island. Another friend bought a new, top-of-the-line TV.
Which friend—the one who purchased an experience or the one who purchased a material product—are you more likely to envy?
The answer to this question wasn't clear from the previous studies as some researchers argued one way while others argued the other way. A new paper by researchers at the University of Utah reconciles these findings and suggests that who we envy more depends on what we focus on as observers. The research will be published in the October issue of the Journal of Business Research.
Joowon Park, lead author and an assistant professor of marketing at the University of Utah's David Eccles School of Business, said, "When we focus on the people who made the purchase and think of how happy they are, we tend to envy experiential purchases more. When we focus on the products that were purchased and think of how great the products are, we tend to envy material purchases more."
Why do people envy experiential purchases of others more when they focus on the people? Experiential purchases such as vacation trips, sporting events and concerts are more integral to one's identity and have been shown to bring more happiness than material purchases. Thus, when observers focus on the people and their happiness, they envy experiential purchases more for the greater happiness they bring.
Why do people envy material purchases of others more when they focus on the product? Material purchases such as electronics and clothes are easier to compare on an objective basis than experiential purchases that are more subjective. Thus, when observers focus on the products and superiority of the products to their own, they envy material purchases more as they are easily comparable.
The researchers argue that naturally we, as social beings, tend to focus on the people aspect more often than product aspect.
"People will naturally engage in person-to-person comparisons online unless they are prompted otherwise to think more specifically about the purchase," said Tamara Masters, a co-author and professor at the David Eccles School of Business.
These findings have implications for businesses that try to build on the power of envy, a strong motivator of consumption.
"Envy is more likely to generate interest if your company sells experiences than materials," Park said. "See if you can highlight the experiential benefits your products bring to the consumers than merely listing the technical specs of your products in your marketing messaging."
More information: Joowon Park et al, Person vs. purchase comparison: how material and experiential purchases evoke consumption-related envy in others, Journal of Business Research (2023). DOI: 10.1016/j.jbusres.2023.114014
Journal information: Journal of Business Research
Provided by University of Utah
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Consumer & Retail
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- Halloween is the biggest day of the year for candy makers such as Mars.
- The National Retail Federation predicts consumers will spend $3.6 billion on Halloween candy this year.
- Mars' candy portfolio includes Snickers, Twix, Three Musketeers and M&M's.
For 11 months of the year, Tim LeBel is Mars Wrigley's president of sales. But for the month of October, he dons a new title: chief Halloween officer.
For decades, the fall holiday has been the biggest day of the year for candy makers. In recent years, Halloween has also stretched to become a three-month season for Mars and rivals such as Hershey, Ferrero and Mondelez, and the retailers who stock their candy.
The National Retail Federation predicts consumers will spend $3.6 billion on Halloween candy this year, up from $3.1 billion last year, even as many shoppers pull back spending elsewhere.
"We know that during difficult economic times, consumers are particularly interested in enjoying kind of the simple things in life … like Halloween," Hershey CEO Michele Buck told investors in July on the company's quarterly conference call.
Unlike Hershey, family-owned Mars doesn't report its financial results, but disclosed nearly $45 billion in annual revenue in 2021. While best known for a candy portfolio that includes M&M's, Snickers, Three Musketeers and Twix, Mars also makes ice cream, chewing gum and pet food.
With the stakes so high for Halloween, Mars starts planning for the holiday two years in advance. LeBel said he sits down with key retailers to discuss trends across flavors, packaging and sustainability.
"A lot of those things take two years to develop and execute to bring to market," LeBel told CNBC. "So the things we looked at in 2021, you're starting to see this year in 2023."
That's phase one of planning. The next stage happens in the three weeks of November after last Halloween. Mars once again sits down with retailers, this time for a post mortem on its candies' performance.
"What items did we not make enough of? What items maybe went off trend?" LeBel said.
This year, Mars has a couple of tricks up its sleeve, such as Skittles Shriekers. Each bag includes classic Skittles with a few sour-flavored ones that look the same as the rest of the bag.
The company is also leaning into online shopping. Last year, roughly a third of consumers bought Halloween items online. This year, Mars has teamed up with digital convenience store goPuff to make sure everyone has enough candy to pass out on Halloween. Consumers whose stash is running low can visit MarsWrigleyHalloween.com and receive a delivery of a free backup supply of Mars candy in under an hour in participating locations, while supplies last.
But Mars' Halloween plans will always include the classics, such as its Snickers bars, which are the second best-selling Halloween candy, trailing only Hershey's Reese's cups. Three of Mars' variety bags cracked the top 10 for most popular assortments, according to the company.
"[Retailers] realize that having our portfolio on display from August through October captures multiple consumer occasions," LeBel said.
Those moments include picking up a variety pack of candy during back-to-school shopping, snacking during spooky movie nights and the all-important trick-or-treating on Halloween.
Still, 48% of Halloween candy sales happen during the last week of October, according to LeBel. Those last-minute shoppers mean that candy manufacturers and retailers need to be ready to meet that demand.
All of Mars' planning has paid off this year. The company exceeded its production targets this Halloween season.
"I actually still have some in our warehouses, ready to ship," LeBel said.
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Consumer & Retail
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Rishi Sunak's government will consider tax cuts if it can meet its target of halving inflation by the end of the year, a Tory cabinet minister has said.
Robert Jenrick said the PM had the "right priorities" after his party suffered two heavy by-election losses.
There is disquiet over the results among Tory MPs, with some calling for tax cuts to shore up support.
But Mr Jenrick told discontented MPs in his party they "shouldn't read too much" into the by-election defeats.
When asked if the government was listening to those voices, the immigration minister told the BBC he understood Conservatives and the public "all want to cut taxes".
"But the first task has got to be bearing down on inflation," Mr Jenrick told the Sunday with Laura Kuenssberg programme.
Describing inflation - the rate at which prices rise - as a "great evil", Mr Jenrick said "if we can get that under control" then "of course we will consider what more we should do" on taxes.
Tax levels in the UK are at their highest since records began 70 years ago and are unlikely to come down soon, a leading think tank, the Institute for Fiscal Studies, said last month.
In January, Mr Sunak said halving inflation by the end of 2023 was one of the government's five key pledges.
Inflation was at 10.7% in the three-month period between October and December 2022, which means the government aims to reduce inflation to 5.3%.
The latest figures, published this week, showed the UK's overall rate of inflation held steady at 6.7%, ending a run of three consecutive monthly falls.
But the Bank of England has previously predicted inflation will drop to 5% by the end of 2023.
This week, the Bank of England governor, Andrew Bailey, said he expected a "noticeable drop" in inflation when October's figures are published next month.
The government has limited tools to reduce inflation. The Bank of England says raising interest rates, which it controls independently, is the best way to make sure inflation comes down.
But with a general election expected next year, Tory MPs would like to see the government do more to ease the financial burdens on households.
Their party is reeling after losing what were two safe seats to Labour in Mid Bedfordshire and Tamworth.
After overturning huge Conservative majorities in those constituencies, Labour leader Sir Keir Starmer said he felt his party could win anywhere in the UK.
Mr Sunak said the by-election results were "obviously disappointing", but some Tory MPs were more downcast.
"When we've got such a high tax burden people will just wonder what's the point of voting Conservative," one former Tory minister told the BBC, in the wake of the defeats.
The MP said that in order to get Conservative voters to the polling booth, the government needed to take action, such as slashing corporation tax.
The Conservative MP Craig Tracey, who helped run the by-election in Tamworth, said he felt too much focus was on rhetoric, rather than action.
"People need to feel better now," the MP said.
The MP suggested cutting income tax or national insurance would be the best way to do this, adding: "The thing they [voters] need to see is an immediate impact on their bottom line."
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United Kingdom Business & Economics
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Pipes, cigars and packets of cigarettes are neatly arrayed on oak shelves lining the walls of MW Ashton in Ipswich, where smokers have gone for 77 years to buy their tobacco.
Now the town’s last tobacconist is preparing to shut its doors for good on Saturday, the latest high street casualty of shifts in shopping habits and the wider economy
The shop’s manager, Shirley Debenham, says trading has been hit hard in recent times by falling numbers of smokers, lower footfall in the town centre and cash-strapped customers switching to cheaper contraband cigarettes, sold illegally “under the counter” elsewhere in the town.
Many former customers have given up the habit, amid greater awareness of the many health dangers from tobacco, as well as the increased cost from higher taxation. Debenham herself no longer smokes.
She cites the cost of living crisis as another factor hitting business, prompting consumers to tighten their belts and stay home. “People are not coming into Ipswich, they are not spending anything in our town centre because there’s hardly any shops. And people are a bit more wary of what they spend.”
MW Ashton’s striped exterior awning, wood panelling and net curtains may appear anachronistic in a modern town centre, yet it has traded uninterrupted on Lloyds Avenue in the Suffolk town since 1946. Back then, it was founded by Monty Ashton, whose name and original fittings have endured.
The closure also marks a sea change for Debenham, 57, who has managed the shop for her entire 42-year working life since joining straight out of school as an apprentice.
“It’s definitely sad,” she says. “We are seeing more people now, but we needed them before.”
Debenham, who is joined behind the counter for a few days each week by her sister Sharon Curtis, also points the finger at the availability of cheaper, smuggled tobacco. “People come in and ask: ‘How much is Golden Virginia?’ And you say, ‘£31,’ and they’ll turn around and say: ‘I can get it for £10.’”
Locals say word gets around about where cheaper cigarettes, brought in from abroad, are sold in the small town. The illicit trade continues despite the sizeable seizures and prosecutions made by Suffolk’s trading standards office.
Four men were convicted last year, two of whom were jailed, for selling illicit tobacco across multiple shops in Ipswich and Colchester, in a scheme thought to have evaded the payment of about £150,000 in excise duty, by bringing cigarettes and tobacco into the UK illegally.
The county council says it does not believe that Suffolk’s coastal location, nor the presence of large ports, such as Felixstowe, result in higher instances of illegal tobacco sales than elsewhere in the country.
There had been concerns that the government’s decision to abandon post-Brexit import checks on goods arriving from the EU could leave Britain more open to smuggled goods. However, councillor Andrew Reid, Suffolk’s cabinet member for public health and public protection, says there is no evidence that much has changed on that front. “There has been no detectable rise in illegal activity as a result of the UK leaving the EU,” he says.
A stream of regular customers passed through MW Ashton on the afternoon the Guardian visited, taking the opportunity to buy while they still had the chance, even as the stock ran low and humidors previously filled with Cuban cigars stood empty.
“Any place that sells single items, like an ironmonger or a tobacconist seems to be a dying trade,” says Kirsty Tallent. The 37-year-old says she regrets the closure of a shop she has spent a couple of decades visiting to buy rolling tobacco.
Seeing the closing down signs, Jacob Buckley called in to buy a pipe. “I’ve wanted one for years,” says the 25-year-old.
MW Ashton may be an Ipswich rarity, but retail closures in the town centre are increasingly common. The shop stands opposite the cavernous space once occupied by the town’s branch of the Debenhams department store, which has lain empty since the chain closed down for good in May 2021.
The pedestrianised high street is pockmarked with vacant premises and some locals say the closures seem to have picked up in recent weeks.
Among the latest to go was a branch of the fashion retailer Joules, one of the outlets not saved when the collapsed chain was rescued in December by clothing and homeware retailer Next. The local H&M has also gone, after the fashion chain abandoned Ipswich shortly before Christmas.
Staff at a town centre sandwich shop say trade is often “hit and miss” and they find it hard to predict whether they will be busy.
The Centre for Cities thinktank rated Ipswich as having “moderately weak” retail economy in its high streets recovery tracker, which rated how towns and cities recovered from Covid lockdowns from the start of the pandemic until May 2022. It found a fifth (21%) of high street outlets were vacant from June 2021, with a similar vacancy rate recorded by the local authority.
Footfall figures from Ipswich borough council speak to a similar truth: their numbers showed fewer shoppers visited the town centre in spring 2022, when there were no Covid restrictions, compared with a year earlier.
The town’s shop vacancy rate is higher than average, concedes Sophie Alexander-Palmer, chief executive of Ipswich Central, the town’s business improvement district. “It is a challenging period,” she says. “It is something we need to work on.”
She adds that a hospitality organisation has shown interest in redeveloping the Debenhams site, which would go some way to introducing more leisure venues to draw people in.
“Ipswich’s overarching plan is to have a connected town centre, with more residents living here and it being more service-led, adjusting the mix of retail to leisure and hospitality.”
Back at MW Ashton, Debenham is looking forward to some time off when the shop closes its doors next Saturday, and she does not intend to continue working in retail.
“I’ll avoid town, I want to work out of town,” she says. “I work every Saturday, I’ve done it for 42 years, and I won’t be doing that again.”
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United Kingdom Business & Economics
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Dick’s Sporting Goods warned Tuesday that retail theft is damaging its business and would lead to lower annual profits.
The sporting goods and athletic clothing seller reported second-quarter results Tuesday morning that included a 23% drop in profit, despite sales that rose 3.6% in the period. Shares of Dick’s (DKS) plunged nearly 22% Tuesday.
The company blamed shrink, the industry term for theft and damaged inventory, for its surprisingly poor earnings. Although other national retailers have also warned investors about growing theft, Dick’s is among the first to blame its lackluster quarterly financial report primarily on theft.
“Our [second-quarter] profitability was short of our expectations due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers,” CEO Lauren Hobart said in a statement. Retail “shrink” is a term that refers to merchandise that goes missing due to theft, fraud, damage, accounting errors or other reasons.
Looking ahead, the retailer said it now expects its earnings-per-share for the year to come in 12% below its initial forecast. The Pittsburgh-based retailer stuck to its full-year forecast for sales at stores open at least a year: flat to up 2%.
Retailers large and small say they are struggling to contain an escalation in store crimes — from petty shoplifting to organized sprees of large-scale theft that clear entire shelves of products. Target warned earlier this year that it was bracing to lose half a billion dollars because of rising theft.
It’s not clear that crime is growing significantly more serious. But industry watchers say that amid mixed signals on the health of the economy, plus persistent inflation and rising borrowing costs, shoplifting can become more prevalent.
Sinking sales at big retailers
Also on Tuesday, home improvement chain Lowe’s and department store chain Macy’s reported second-quarter results.
Lowe’s (LOW) posted quarterly sales that dropped 9.2% from a year ago and comparable sales that slipped 1.6% over the previous year.
At the same time, the retailer stuck with its full-year sale guidance for total sales of between $87 billion to $89 billion, citing improving sales in its home professionals business and the recent launch of initiatives such as same-day delivery nationwide.
That helped offset still-high lumber prices and softness in do-it-yourself home projects.
Macy’s (M) also reiterated its full-year forecast Tuesday for sales of between $22.8 billion and $23.2 billion. The retailer said it expected comparable sales to fall by between 6% and 7.5% from a year ago. For the quarter, Macy’s logged sales of $5 billion, down 8% from a year ago. Comparable sales fell 8.2% from the same period a year earlier.
The retailer said tighter inventory and greater markdowns and sales helped clear spring merchandise at its stores in the quarter, but warned that uncertainty about the economy remains an overhang on its business as budget-conscious households cut back on discretionary purchases.
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Consumer & Retail
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Mr Gove is the first senior Cabinet minister to back a new national flagship since the plans, which had been enthusiastically championed by Boris Johnson when he was prime minister, were shelved by Ben Wallace, the Defence Secretary, last autumn.
The project has been on hold when the Government decided to divert the funds to pay for two new ships to protect the UK’s sub-sea internet cables connecting the United States with the UK.
Speaking on the last ever Chopper’s Politics podcast, which you can listen to on the player above, Mr Gove said that he thought the UK should have a replacement royal yacht, but “now is not the time”.
He said: “I do think that the principle of having a national flagship, which can act both as a way of projecting our soft power, which can act as a floating embassy to encourage trade and investment, which can also be used, as has been suggested in the past, to provide young people with amazing training opportunities… I think there’s a lot there.
“Provided there is no cost to the taxpayer, I think that is a good idea. But at the moment, when there are so many other priorities that we need to address, I would leave it for another day.”
In April, Lord Johnson of Lainston, the investment minister, said he would be open to the idea of a privately funded national flagship to help win trade deals for the UK.
He told The Telegraph: “I am happy to encourage big ideas and ambitions that help sell the enormous benefits of trading with and investing in the UK.”
Ian Maiden, a millionaire former advertising tycoon who has campaigned for a Britannia replacement for the past 25 years, previously told The Telegraph that he could raise private funds for a new flagship if he could be certain of government support.
Also in the podcast, Mr Gove said that councils had to make sure staff worked five-day weeks.
He said: “Most recently, South Cambridgeshire District Council moved to a four-day week. I just think it’s wrong when you’ve got the people who are paying the council taxpayers for local services to see a Lib Dem council basically relaxing on its oars.”
He added that Lee Rowley, one of his junior ministers, had “told them where to get off”.
Mr Gove also denied that he had “surrendered on housing targets” in England, as critics have claimed.
He insisted: “What we have done is said that if a local authority recognises that either the green belt would have to be sacrificed or an area of outstanding natural beauty would have to be lost, then it can accommodate that into its plan.
“But no local authority can evade building homes. And if local authorities don’t adopt plans, then it will be the case that there will be teeth there in order to ensure that homes are built.”
And what of his support for new garden cities to avoid inappropriate new settlements on the edges of towns and villages? “Yes. Totally... That’s the future,” he said.
Boris ‘deserves to be judged in the round’
Mr Gove was generous about Mr Johnson, who sacked him when his administration imploded last summer.
“I worked alongside Boris during the time he was prime minister, and there are no shortage of people queuing up to criticise him. Some of those criticisms I think have some justification, but I don’t want to join that queue,” he added.
“It is the case that Boris, both amongst his supporters inspires loyalty, which sometimes makes them blind to want one or two of his faults, and amongst his detractors inspires a sense of rage that also means that they ignore his virtues.
“He deserves to be judged in the round.”
Listen to Christopher Hope interview Michael Gove, Sir Jacob Rees-Mogg, Sir Geoffrey Cox and comedian Matt Forde on the last ever Chopper’s Politics podcast on Apple podcasts, Spotify or wherever you get your podcasts.
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United Kingdom Business & Economics
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IREDA's Rs 2,150-Crore IPO Opens For Subscription: Should You Invest Or Not?
It plans to raise Rs 2,150 crore and has fixed its price band in the range of Rs 30–32 per equity share.
The Indian Renewable Energy Development Agency Ltd.'s maiden public issue will open on Tuesday for subscription and close a day later.
The company plans to raise Rs 2,150 crore and has fixed its price band in the range of Rs 30–32 per equity share for its initial public offering, which is a combination of fresh and offer-for-sale issue.
It will not receive any funds from the OFS portion. However, the fresh issue from the net proceeds will be used to augment the capital base of the company.
IREDA is a financial institution in the business of developing and extending assistance for new and renewable energy projects, and energy efficiency and conservation projects.
The Union government, which is a promoter in the firm, is participating in the OFS. After the issue, its stake will decline to 75% from 100%, while the public stake will increase from nil to 25%.
How Is The IPO Valued?
Looking at the valuation at the upper price band, the public issue presents an implied market capitalisation of Rs 8,601 crore, with a price-to-earnings ratio of 8.4 times.
To Invest Or Not?
It has a price-to-book value of 1 times and 1.1 times based on H1 FY24 book value at the lower and upper price band, respectively, on post-issue capital, according to analysts at SBI Securities.
The government's increased focus on renewable energy—aiming for 50% of energy needs to be met by renewables by 2030—serves as a pivotal driver for the sector and the company is poised to capitalise on this opportunity, the brokerage said.
With loan assets of around Rs 47,075 crore, IREDA is the largest pure-play green financing NBFC in India, according to Choice Equity Broking Pvt.
At a higher price band, IREDA is demanding a trailing 12-month P/B multiple of 1.2 times, which is at a discount to the peer average, it said. "Thus, we assign a 'subscribe' rating for the issue."
On the financial front, the company reported a turnover of Rs 3,482 crore in the last fiscal from Rs 2,860 crore in FY22. Its net profit rose to Rs 865 crore from Rs 634 crore during the period.
IREDA has posted healthy profitability over the past couple of years, strong growth outlook and experienced management team, according to Reliance Securities, which has also recommended a 'subscribe' tag to the issue.
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India Business & Economics
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Tata Technologies IPO Subscription: Day 2 Live Updates
The IPO has been subscribed 7.77 times, as of 10:21 a.m. on Thursday.
Tata Technologies Ltd.'s initial public offering, the first from Bombay House since Tata Consultancy Services Ltd. went public in 2004, was subscribed within 36 minutes of opening. The timing couldn’t have been more apt. The IPO was subscribed 6.54 times on day one.
Global spending on ER&D—the segment Tata Technologies operates in—is set to grow at a compounded annual growth rate of 10% over the next five years to $2.7 trillion, according to a Zinnov report. The automotive sector, which is the largest manufacturing ER&D vertical, is primed for a once-in-century disruption — courtesy the advent of Connected, Autonomous, Shared and Electrified (CASE) mobility. Global automakers, according to Zinnov, are likely to spend $1.2 trillion through 2030.
Tata Technologies Ltd. has raised Rs 791 crore from anchor investors ahead of its initial public offering.
The engineering services company allotted 1.58 crore shares at Rs 500 apiece to 67 anchor investors.
The marquee investors include Fidelity International, Nippon Life India, BNP Paribas, SBI Mutual Fund, HSBC, Kotak, DSP, Motilal Oswal, Edelweiss, and Goldman Sachs, among others.
SBI Multi Asset Allocation Fund secured 4.30% of the allocation, the highest in the list.
IPO Details
Issue opens: Nov. 22.
Issue closes: Nov. 24.
Fresh Issue: Not applicable.
Offer For Sale: 60,850,278 shares.
Total Issue Size: Rs 3,042 crore.
Price Band: Rs 475–500 per share.
Face Value: Rs 2 per share.
Lot size: 30 shares and multiples thereof.
Listing On: BSE and NSE.
The company will undertake a pre-IPO placement on Nov. 21.
Business Model
Founded in 1994, Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to original equipment manufacturers and their Tier-I suppliers. The company is primarily focused on the automotive industry and is currently engaged with seven out of the top 10 automotive ER&D spenders and five of the top 10 prominent new energy ER&D spenders.
The company operates two lines of business:
1. Services: The company provides outsourced engineering services and digital transformation services to global manufacturing clients to help them conceive, design, develop and deliver better products. The services line contributed Rs 3,531 crore and Rs 1,986 crore to revenue from operations in FY23 and H1 FY24, respectively. That’s 80% and 78.62% of the top line for the respective periods.
2. Technology solutions: This business is two-pronged.
Through its products business, Tata Technologies sells third-party software applications, primarily product lifecycle management software and solutions. It also provides value-added services such as consulting, implementation, system integration and support.
Through its education business, it provides “phygital” education solutions in manufacturing skills, including upskilling and reskilling public and private sector employees in the latest engineering and manufacturing technologies through its iGetIT platform.
The technology solutions segment contributed Rs 883 crore and Rs 540.3 crore to the company’s revenue from operations in FY23 and H1 FY24.
Subscription Status: Day 2
The IPO has been subscribed 7.77 times, as of 10:21 a.m. on Thursday.
Institutional investors: 4.10 times
Non-institutional investors: 13.69 times
Retail investors: 6.84 times
Employee Reserved: 1.46 times
Reservation Portion Shareholder: 11.40 times
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India Business & Economics
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The company behind many popular consumer brands including Marmite and Magnum ice creams has revealed a surge in profits, as the UK's competition regulator seeks evidence on whether shoppers are getting a raw deal at the tills.
Unilever, which also includes brands such as Domestos and Hellmann's in its stable, reported a 20% rise in net profits to €3.9bn (£3.4bn) over the first half of its financial year.
Underlying price growth for the second quarter was 9.4%, while underlying sales volumes fell by 0.2%, the company said.
It reported on its progress just days after the Competition and Markets Authority (CMA) cleared supermarkets of making excessive profits.
But the regulator said last week it had turned its attention to the supply chain instead, which would include companies such as Unilever.
Food and other producers have been raising prices largely since the end of the COVID pandemic, with leaps in costs largely reflecting higher energy, transport and commodity prices linked to Russia's invasion of Ukraine.
The question the CMA will be asking is whether suppliers to supermarkets have raised their prices too much, leading to excessive margins at the expense of consumers amid the wider cost of living crisis.
There have been several rows between supermarkets and branded goods firms in recent times, with chains refusing to stock some items temporarily over the prices they were being asked to swallow.
This included a very public spat between Tesco and Heinz last year.
Shoppers have responded to the leap in food inflation by buying supermarket own brands, which tend to be cheaper, as an alternative.
This trend is realised by the fall in sales volumes reported by Unilever, though it reported rising sales by value in each of its main business groups including nutrition and ice cream.
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United Kingdom Business & Economics
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Supermarkets have been hit by vegetable shortages again with some having to limit the sale of peppers to customers.
Morrisons has told Sky News it is restricting customers to two packs of peppers each, while Waitrose has run out of stock of many varieties online.
The shortage is being blamed on unseasonably cold weather in Spain, which means peppers are growing at a slower rate.
At the time of writing, Waitrose.com only had its 'Essential' green peppers available, with red, orange and yellow ones all sold out online.
UK farmers have been warning of stock shortages for the last few months because they say they aren't being paid enough to grow their produce.
A spokesperson for the British Retail Consortium (BRC) told Sky News: "We're working hard with our suppliers to get our full range back on our shelves and expect stock levels to stabilise in the coming weeks as we move into the UK season."
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Morrisons told Sky News it expects to lift the restriction in the next week or so as supply improves.
In February, supermarkets were forced to limit the amount of tomatoes and other popular vegetables customers could buy due to shortages.
Bad weather in Europe and Africa meant harvests were disrupted and suppliers were also hit by ferry cancellations, which affected lorry transport.
The UK relies on warmer countries such as Spain and Morocco for supplies of vegetables that are out of season here.
National Farmers' Union deputy president Tom Bradshaw warned earlier this year a reliance on imports has left the UK vulnerable to "shock weather events".
Soaring energy bills exacerbated by the war in Ukraine have also put off some UK vegetable growers, he added.
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United Kingdom Business & Economics
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A fringe group of red wall Tory MPs calling themselves the New Conservatives have launched a 12-point plan to tackle immigration as Rishi Sunak’s pledge to stop the boats makes slow progress.
The group of rebel Tory MPs, including deputy party chairman Lee Anderson and Devizes MP Danny Kruger, are suggesting the stricter measures to avoid “eroding public trust” over ever-greater immigration. The alternative manifesto is committed to bringing down the numbers from an all-time high of 606,000 to 226,000.
Their plans include raising the minimum salary requirements for immigrants arriving on the skilled worker visa from £26,200 to £38,000. They also suggest cracking down on foreign students bringing their families over as dependents and scrapping the graduate visa option which allows recently graduated students to stay in the country for two years without finding a job. Also in the alternative migration manifesto is a plan to ban the poorest-performing universities from accepting foreign students.
Political infighting is nothing new in the Conservative party and Sunak will have to quell it quickly before it spills over into other matters. But some on Sunak’s team are sympathetic to the New Conservatives’ point of view. It is expected that Suella Braverman and Robert Jenrick, the immigration minister, will give their support to the alternative manifesto. Braverman’s stricter immigration policies have been blocked before by Jeremy Hunt and this may be a way for her to exert some pressure on the PM and the chancellor.
It’s been said that Lee Anderson is unwell and won’t attend the launch of this manifesto – must have been the cat food. But Danny Kruger, son of the Great British Bake-Off’s Prue Leith, will be leading the charge. When asked why the New Conservatives were so focused on this subject, one of the authors of the plan, Ipswich MP Tom Hunt, told BBC Radio 4: “When I knock on doors, when I talk to constituents, immigration is a key issue that comes up time and time again.”
The launch of this manifesto comes as Liz Truss launches her own international task force aimed at fixing Britain’s economic stagnation. The Growth Commission doesn’t spell direct danger for Sunak like the New Conservatives, but it’s hardly a good look. No PM wants to have an international task force over his shoulder reminding him that all he is doing is managing decline – not least one led by his predecessor.
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United Kingdom Business & Economics
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The UK’s largest retailers have warned Rishi Sunak that his government risks prolonging the cost of living crisis by driving up the cost of doing business on the high street with Brexit red tape and higher taxes.
The British Retail Consortium (BRC) said a number of measures laid out by the chancellor, Jeremy Hunt, in last week’s autumn statement risked adding to inflation next year.
After soaring to a 41-year high last autumn, inflation has fallen back before this year’s pivotal Christmas shopping season. The BRC said its measure of annual shop price inflation eased for the sixth month in a row to 4.3% in November, down from 5.2% in October. The decline does not mean shop prices are going down, only that they are rising less rapidly.
However, the industry trade body warned that retailers were facing headwinds in 2024 from “government-imposed” measures – including tax increases and Brexit red tape – which risked fuelling inflation.
“Combining these with the biggest rise to the ‘national living wage’ on record will likely stall or even reverse progress made thus far on bringing down inflation, particularly in food,” said the BRC chief executive, Helen Dickinson.
Hunt argued last week the government had taken “difficult decisions” to meet Sunak’s primary target to halve inflation this year, while saying his economic plans would help inflation continue to fall next year. Official figures show inflation has fallen back from a peak of 11.1% in October 2022 to stand at 4.6% last month.
However, the BRC said the cost of several government measures confirmed in the autumn statement were likely to be passed on to consumers in the form of higher prices on the shelves.
It singled out an increase in business rates – paid by firms on the premises they occupy – from April, for adding more than £400m to retailers’ tax bills, despite Hunt making concessions for smaller firms and cheaper properties.
The cost of managing post-Brexit import checks and labelling rules, due to come into force next year, are also likely to be passed on to shoppers, it said.
The BRC also questioned whether Hunt approving an almost 10% increase in the national living wage to £11.44 an hour from next spring was sustainable, while saying the higher wage costs would be tough for retailers to stomach amid a slump in consumer spending and rising tax levels.
Figures released on Monday from the Confederation of British Industry show retail sales volumes fell year on year in November for a seventh consecutive month, as bosses warned they were anticipating a “disappointing” festive period.
Martin Sartorius, the principal economist at the CBI, said: “Retailers had hoped the chancellor’s autumn statement would offer a reprieve from next year’s hike in business rates. While prioritising relief for SMEs and key sectors is understandable, many retailers are being left to contend with another increase in costs at a time when they are least able to afford them.”
He said sales had languished in negative territory for much of 2023, reflecting the impact of strained household finances on the sector’s fortunes.
“Though sentiment has picked up slightly, firms do not feel that a revival in activity is imminent. Given the weakness in trading conditions, it’s little surprise that firms are scaling back on their investment ambitions.”
The Treasury said it was helping businesses by cutting taxes on investment and extending business rates relief for more than 1m business properties. “It is thanks to our action that we’ve achieved our target of halving inflation this year, but we are continuing to stay the course to get inflation all the way back down to 2%,” a spokesperson said.
“The OBR have confirmed that our policies will reduce inflation next year while boosting growth and rewarding people for their hard work.”
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United Kingdom Business & Economics
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(Reuters) - Royal Bank of Canada reported a rise in fourth-quarter profit on Thursday, as a strong performance in its corporate and investment banking unit offset a hit from bigger loan-default provisions.
A rebound in dealmaking helped the biggest Canadian bank's capital markets unit. Net income from the business jumped 36% to C$987 million, helped by strength in corporate and investment banking, the bank said.
It, however, built up its provisions for credit losses (PCLs) as a darkening economic outlook prompted further caution. PCLs at the bank surged to C$720 million from C$381 million a year earlier.
The Canadian economy has been teetering on the brink of a recession, underscoring the impact of the central bank's aggressive rate hikes.
RBC has also been shoring up liquidity at its U.S. unit, City National Bank. In a report filed with regulators last month, City National said RBC had injected about $2.95 billion into the bank this year.
The bank reported a net income of C$4.13 billion ($3.04 billion), or C$2.90 per share, for the three months ended Oct. 31, compared with C$3.88 billion, or C$2.74 per share, a year earlier.
($1 = 1.3603 Canadian dollars)
(Reporting by Niket Nishant in Bengaluru; Editing by Shinjini Ganguli)
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Banking & Finance
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The Liberal Democrat leadership has suffered an embarrassing blow as plans to scrap national housing targets were defeated.
After a fiery debate party members voted on Monday to keep a commitment to build 380,000 homes a year in an attempt to address the country's housing crisis. It came as the party's MP and former leader Tim Farron faced boos after he described the target as "pure Thatcherism" and an "electoral gift to the Tories".
Ed Davey's top team had sought to shift away from a 2019 election pledge on housing in favour of a vow to build 150,000 new council or social homes in England. But applause rung out as members passed a rebel amendment which stated: "Conference maintains its commitment to a national housing target of 380,000 new homes per year, to set a clear direction of travel and to indicate serious intent to address the housing crisis".
Leaflets circulating the conference had warned failing to pass the motion could result in the party losing the "youth vote for the second time in a decade", adding: "Don't let housing become our next tuition fees".
Before the vote, Mr Farron used a short speech at the conference to rally against the national target he claimed achieved "naff all". He told the party's conference hall: "If there was a credible amendment today to build 380,000 council houses a year, I would back it."
The MP for Westmorland and Lonsdale said: "Vague targets let and empower developers to build the houses that they want but never... the homes that we desperately need, especially that young people actually need. The authors of amendment one do not mean it, but it is pure Thatcherism."
Mr Farron also described it as an "electoral gift to the Tories", including in Mid-Bedfordshire where the Lib Dems are hoping to overturn a massive Conservative majority next month in a by-election triggered by the resignation of ex-MP Nadine Dorries. He said: "I will take the hit to stand up against nimbyism, but I will not take an electoral hit to fight the corner of corporate investors."
But Lib Dem London mayoral candidate Rob Blackie hit out at the proposed change, criticising Mr Farron directly. "Tim Farron, that speech was below you. Tim, you are better than that," he said.
During the debate Janey Little, the chair of the Young Liberals, which put forward the motion, said: "We as young people feel ignored and let down by those at the top of our party. This is not the first time we have had to plead our case." After the vote the former Tory Cabinet minister Simon Clarke congratulated the Young Liberals who had put forward the rebel amendment. He said: "On a cross-party, this is the right thing to have done. Unbelievable to see MPs like Tim Farron denouncing building homes".
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Real Estate & Housing
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Consumers know it’s fall when stores start offering Halloween candy and flu shots — and airwaves and mailboxes are filled with advertisements for Medicare options.
It’s annual open enrollment time again for the 65 million Americans covered by Medicare, the federal health program for older people and some people with disabilities.
From Oct. 15 to Dec. 7, enrollees in either the traditional program or Medicare Advantage plans, which are offered by private insurers, can change their coverage. (First-time enrollees generally sign up within a few months of their 65th birthday, whether that’s during open enrollment season or not.)
There are a few new features for 2024, including a lower out-of-pocket cost limit for some patients taking expensive drugs.
No matter what, experts say, it’s a good idea for beneficiaries to examine their current coverage because health and drug plans may have made changes — including to the pharmacies or medical providers in their networks and how much prescriptions cost.
“The advice is to check, check, and double-check,” said Bonnie Burns, a consultant with California Health Advocates, a nonprofit Medicare advocacy program.
But as anyone in the program or who helps friends or relatives with coverage decisions knows, it is complicated.
Here are a few things to keep in mind.
Know the Basics: Medicare vs. Medicare Advantage
People in traditional Medicare can see any participating doctor or hospital (and most do participate), while those in Medicare Advantage must select from a specified list of providers — a network — unique to that plan. Some Advantage plans offer a broader network than others. Always check to see if your preferred doctors, hospitals, and pharmacies are covered.
Because traditional Medicare doesn’t cover prescriptions, its members should also consider signing up for Part D, the optional drug benefit, which includes a separate premium.
Conversely, most Medicare Advantage plans include drug coverage, but make sure before enrolling because some don’t. These private plans are advertised heavily, often touting that they offer “extras” unavailable in traditional Medicare, such as dental or vision coverage. Read the fine print to see what limits, if any, are placed on such benefits.
Those 65 and older joining traditional Medicare for the first time can buy a supplemental, or “Medigap,” policy, which covers many out-of-pocket costs, such as deductibles and copays, which can be substantial. Generally, beneficiaries have a six-month window after they enroll in Medicare Part B to purchase a Medigap policy.
So, switching from Medicare Advantage back to traditional Medicare during open enrollment can raise issues for those who want to buy a supplemental Medigap policy. That’s because, with some exceptions, private insurers offering Medigap plans can reject applicants with health conditions, or raise premiums or limit coverage of preexisting conditions.
Some states offer beneficiaries more guarantees that they can switch Medigap plans without answering health questions, although rules vary.
Making all of this more confusing, there is a second open enrollment period each year, but it’s only for those in Medicare Advantage plans. They can change plans, or switch back to traditional Medicare, from Jan. 1 to March 31.
Drug Coverage Has Changed — For the Better
Beneficiaries who signed up for a Part D drug plan or get drug coverage through their Medicare Advantage plan know there are a lot of copays and deductibles. But in 2024, for those who require a lot of high-priced medications, some of these expenses will disappear.
President Joe Biden’s Inflation Reduction Act places a new annual limit on Medicare beneficiaries’ out-of-pocket costs for drugs.
“That policy is going to help people who have very expensive medications for conditions like cancer, rheumatoid arthritis, and hepatitis,” said Tricia Neuman, senior vice president and head of the KFF Medicare policy program.
The cap will greatly help beneficiaries who fall into Medicare’s “catastrophic” coverage tier — an estimated 1.5 million Americans in 2019, according to KFF.
Here’s how it works: The cap is triggered after patients and their drug plans spend about $8,000 combined on drugs. KFF estimates that, for many patients, that means about $3,300 in out-of-pocket spending.
Some people could hit the cap in a single month, given the high prices of many drugs for serious conditions. After reaching the cap, beneficiaries don’t have to pay anything out-of-pocket for their medicines that year, potentially saving them thousands of dollars annually.
It’s important to note that this new cap won’t apply to drugs that are infused into patients, generally at doctor’s offices, such as many chemotherapies for cancer. Those medicines are covered by Medicare Part B, which pays for doctor visits and other outpatient services.
Medicare next year is also expanding eligibility for some low-income beneficiaries to qualify for low- or zero-premium drug coverage that comes with no deductibles and lower copayments, according to the Medicare Rights Center.
Insurers offering Part D and Advantage plans might have also made other changes to drug coverage, Burns said.
Beneficiaries should check their plan’s “formulary,” a list of covered drugs, and how much they must pay for the medications. Be sure to note whether prescriptions require a copayment, which is a flat dollar amount, or coinsurance, which is a percentage of the drug cost. Generally, copayments mean lower out-of-pocket costs than coinsurance, Burns said.
Help Is Available
In many parts of the country, consumers have a choice of more than 40 Medicare Advantage plans. That can be overwhelming.
Medicare’s online plan finder provides details on the Advantage and Part D drug plans available by ZIP code. It allows users to drill down into details about benefits and costs and each plan’s network of health providers.
Insurers are supposed to keep their provider directories up to date. But experts say enrollees should check directly with doctors and hospitals they prefer to confirm they participate in any given Advantage plan. People concerned about drug costs should “check whether their pharmacy is a ‘preferred’ pharmacy and if it’s in network” under their Advantage or Part D plan, Neuman said.
“There can be a significant difference in out-of-pocket spending between one pharmacy and another, even in the same plan,” she said.
To get the fullest picture of estimated drug costs, Medicare beneficiaries should look up their prescriptions, the dosages, and their pharmacies, said Emily Whicheloe, director of education at the Medicare Rights Center.
“For people with specific drug needs, it’s also a good idea to contact the plan and say, ‘Hey, are you still covering this drug next year?’ If not, change to a plan that is,” she said.
Additional help with enrollment can be had for free through the State Health Insurance Assistance Program, which operates in all states.
Beneficiaries can also ask questions via a toll-free hotline run by Medicare: 1-800-633-4227, or 1-800-MEDICARE.
Insurance brokers can also help, but with a caveat. “Working with a broker can be nice for that personalized touch, but know they might not represent all the plans in their state,” said Whicheloe.
Whatever you do, avoid telemarketers, Burns said. In addition to TV and mail advertisements, telephone calls hawking private plans bombard many Medicare beneficiaries.
”Just hang up,” Burns said.
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Personal Finance & Financial Education
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The Prince of Wales has said his children "will definitely be exposed" to homelessness as he prepares to launch a new project on the issue.
In a Sunday Times interview, Prince William revealed he wanted them to know "some of us need a helping hand".
The prince said he has been thinking about the right time to take them to a homeless shelter, like his mother Princess Diana did with him aged 11.
He is set to launch a new five-year project tackling the issue this month.
The interview comes as a new portrait of the Prince pictured smiling with his three children has been released by Kensington Palace to mark Father's Day.
In his first newspaper interview as Prince of Wales, he told the Sunday Times he had spoke to his children, Prince George, Prince Louis and Princess Charlotte, during the school run about people they could see sitting outside supermarkets.
He said: "When I left this morning, one of the things I was thinking was when is the right time to bring George or Charlotte or Louis to a homeless organisation?'
"I think when I can balance it with their schooling, they will definitely be exposed to it. On the school run, we talk about what we see.
"When we were in London, driving backwards and forwards, we regularly used to see people sitting outside supermarkets and we'd talk about it.
"I'd say to the children, 'Why are they there? What's going on?' I think it's in all our interests, it's the right thing to do, to expose the children, at the right stage in the right dialogue, so they have an understanding," he explained.
"They [will] grow up knowing that actually, do you know what, some of us are very fortunate, some of us need a little bit of a helping hand, some of us need to do a bit more where we can to help others improve their lives."
The prince would be following in the footsteps of his mother, Diana, Princess of Wales, who took him and his brother in 1993 to visit a London homeless shelter run by the Passage, an organisation of which he is now the patron.
Earlier this year he recalled the experience and said: "My mother introduced me to the cause of homelessness from quite a young age, and I'm really glad she did.
"I think she would be disappointed that we are still no further on, in terms of tackling homelessness and preventing it, than when she was interested and involved in it."
Later this month the prince will launch "a really big project" from his and his wife's charity, the Royal Foundation. He is hoping it will provide "living conditions up and down the country that improve people's lives who need that first rung of the ladder".
It will be a new advocacy for the prince who primarily campaigned and spoken up on the issue of mental health in recent years.
He says he is particularly concerned about youth homelessness, and part of his project will be about preventing that. The number of 16 to 24-year-olds homeless or at risk of homelessness was 122,000, according to Centrepoint's freedom of information requests to councils.
"For me, 122,000 is a figure that's way too high," he said. "We need to get ahead of the curve to stop this becoming more and more fixed."
The prince also revealed when asked there are "absolutely" plans for social housing on the Duchy of Cornwall - the estate given to the heir of the throne, which provides him with an income.
The royal spoke to the newspaper after opening a homelessness-charity project for young people in work or apprenticeships who need help finding affordable housing.
Prince William, who is also patron of homeless charity Centrepoint, previously made headlines sleeping rough in Blackfriars, London, for one night to highlight the plight of homelessness.
He has also donned the red tabard worn by Big Issue vendors to sell the magazines in the capital.
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Nonprofit, Charities, & Fundraising
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Fedbank Financial Services IPO Allotment: Date, Where To Check Allotment Status, Subscription Details
IPO subscription closed at an oversubscription rate of 2.19 times, with interest from institutional & non-institutional investors.
Fedbank Financial Services Initial Public Offering (IPO) concluded its subscription period witnessing a robust demand on its last day. The IPO closing at an oversubscription rate of 2.19 times. Institutional investors subscribed 3.51 times, non-institutional investors at 1.45 times, while retail investors showed strong interest at 1.81 times the offered shares.
Fedbank Financial Services IPO Allotment Date
The allotment of shares of Fedbank Financial Services Limited is expected to finalise on Thursday, November 30, 2023.
*This is a tentative date and is subject to change
Fedbank Financial Services IPO Listing Date
Shares of Fedbank Financial Services Limited are expected to list on both BSE and NSE, on Tuesday, December 5.
*This is a tentative date and is subject to change
Where to check Fedbank Financial Services IPO allotment status?
Investors can check the Fedbank Financial Services IPO allotment status on the official website of registrar for IPO, Link Intime Pvt Ltd and on the official website of BSE
Fedbank Financial Services IPO Timeline Subscription Status
Subscription Day 3
Total subscription: 2.20 times
Institutional investors: 3.51 times
Non-institutional investors: 1.45 times
Retail investors: 1.82 times
Employee Reserved: 1.34 times
Subscription Day 2
Total Subscription: 0.90 times
Institutional investors: 0.56 times
Non-institutional investors: 0.52 times
Retail investors: 1.26 times
Employee Reserved: 0.78 times
Subscription Day 1
Total Subscription: 0.38 times
Institutional investors: 0.0 times
Non-institutional investors: 0.21 times
Retail investors: 0.67 times
Employee Reserved: 0.37 times
Fedbank Financial Services IPO Timeline (Tentative Schedule)
IPO Open Date: Wednesday, November 22
IPO Close Date: Friday, November 24
Basis of Allotment: Thursday, November 30
Initiation of Refunds: Friday, December 1
Credit of Shares to Demat: Monday, December 4
Listing Date: Tuesday, December 5
Fedbank Financial Services IPO Issue Details
Total Issue Size: Rs 1,092.26 Crores
Face Value: Rs 10 per share
Fresh Issue Size: Rs 600.77 Crores
Shares for Fresh Issue: 42,912,087 shares
Offer for Sale Size: Rs 492.26 Crores
Shares for Offer for Sale: 35,161,723 shares
Price Band: Rs 133 to Rs 140 per share
Lot Size: 107 Shares
About Fedbank Financial Services Limited
Fedbank Financial Services Limited, a subsidiary of The Federal Bank Limited, specializes in providing Gold Loans, Home Loans, Loan Against Property (LAP), and Business Loan Services. The company, with a robust presence in 191 districts across 16 states and union territories, focuses on retail loan products with a collateralized lending model targeting individuals and the emerging MSME sector.
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Banking & Finance
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The price of a packet of cigarettes rose hours after the Budget while drinkers will see tax on alcohol go up by 10.1% in August, in line with inflation.
The only alcohol not to see a rise was draught beer where duty will be frozen.
Chancellor Jeremy Hunt said this was to help "the great British pub".
The change to tobacco products came into effect at 18:00 GMT on Wednesday and sees the cost of an average pack of 20 cigarettes increase to £14.39.
In the Budget, the chancellor revealed the duty rates on all tobacco products would increase by the Retail Price Index (RPI) of 10.1%, plus 2%. This means an increase of about 12%.
The RPI is a measure of inflation which came down to 10.1% in January.
According to the Office for National Statistics, the average price for a packet of 20 cigarettes in January 2023 was £12.84.
The increase in duty rates announced in the Budget means an average packet of 20 cigarettes would increase to £14.39 at 18:00 GMT on Wednesday.
The rate on all hand-rolling tobacco products will increase by RPI, plus 6% and the minimum excise tax will increase by RPI plus 3%.
This is the first rise in tobacco duty since October 2021.
As part of a bid to help people with the rising cost of living, Mr Hunt announced a freeze on the duty tax for draught pints to help "the great British pub".
The new rule, which will also apply to Northern Ireland, will see alcohol duty 11p lower on pulled pints compared to supermarket sales from 1 August.
In the Commons, Mr Hunt said: "Madam Deputy Speaker, British ale may be warm, but the duty on a pint is frozen."
However, drinkers will see tax on other alcohol soar by 10.1% in August in line with inflation when a new system is introduced.
In December, the government extended a freeze on alcohol duty for six months, but this will end in August.
Scotland's whisky industry has accused the chancellor of delivering an "historic blow".
The Scottish Whisky Association (SWA) said the 10.1% increase was the "the wrong decision at the wrong time".
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Inflation
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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.