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Tag: economic indicators

  • Saudis aren’t weaponizing oil like Americans claim, top official says | CNN Business

    Saudis aren’t weaponizing oil like Americans claim, top official says | CNN Business

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    CNN
     — 

    Saudi Minister of State for Foreign Affairs Adel al-Jubeir said his country partnered with Russia to slash oil production in order to stabilize markets and denied that there were political motives behind the decision, which has enraged US leaders and sparked calls to rethink ties with Riyadh.

    “We’re trying to make sure we don’t have erratic swings in prices,” al-Jubeir, one of Saudi Arabia’s top diplomats, told CNN’s Becky Anderson on Wednesday. “Our track record has been clear – we have always worked assiduously to maintain stability in the oil markets.”

    Last week, OPEC+, the oil cartel led by Saudi Arabia and Russia, agreed to slash production by 2 million barrels per day, twice as much as analysts had predicted, in the biggest cut since the Covid-19 pandemic.

    The move came despite an intense pressure campaign from the United States, which had warned Arab allies that such a move would increase prices and help Russian President Vladimir Putin continue to fund his war in Ukraine. Experts also fear that continued high oil prices could make it more difficult for the US to tamp down inflation, which has already skyrocketed this year.

    Al-Jubeir, who is also the country’s climate minister, denied that there were any political motives to the decision and said the production cut was made to avoid major swings in the price of oil, which can affect consumers worldwide, and pointed to the fact that the price of oil has gone down since the reduction was announced last week.

    “Saudi Arabia is not siding with Russia,” he told CNN. “Saudi Arabia is taking the side of trying to ensure the stability of the oil markets.”

    “Saudi Arabia does not politicize oil. We don’t see oil as a weapon. We see oil as our commodity. Our objective is to bring stability to the oil market,” al-Jubeir said.

    US President Joe Biden told CNN on Tuesday that Washington must now “rethink” its relationship with Riyadh following the cut. The decision was a particular affront for Biden because of his efforts over the summer to repair ties with Saudi Arabia, despite the kingdom’s woeful human rights record and the role of Saudi Crown Prince Mohammed bin Salman in the murder of dissident journalist Jamal Khashoggi. Bin Salman denied involvement in the murder, which captured international headlines in part due to the lurid details of the killing.

    “I am in the process, when the House and Senate gets back, they’re going to have to – there’s going to be some consequences for what they’ve done with Russia,” Biden said.

    Watch the full exclusive interview with President Joe Biden

    On Wednesday, US national security adviser Jake Sullivan said Biden would examine all aspects of US ties with Saudi Arabia, including arms sales, as administration officials begin quiet discussions with members of Congress and congressional aides about how the US could impose consequences on the kingdom following the oil output cut.

    “There is a range of interests and values that are implicated in our relationship with that country,” Sullivan told reporters. “The President will examine all of that. But one question he’s going to ask is: Is the nature of the relationship serving the interest and values of the United States and what changes would make it better serve the interests and values?”

    Saudi Energy Minister Prince Abdulaziz bin Salman al-Saud said in an interview with Saudi TV earlier Wednesday that OPEC+ needed to be proactive as central banks in the West moved to tackle inflation with higher interest rates, a move that could raise prospects of a global recession, which could in turn reduce demand for oil and drive its price down. Cutting production would ensure a smaller supply of oil, keeping its price higher. While that would protect the Saudi economy by ensuring it receives a steady flow of income from oil sales, it would force consumers across the world to pay more for energy and gas, further fueling inflation.

    Saudi officials have insisted that the production cut is being done to protect the country’s economic interests. Because of its heavy dependence on oil revenues, the Saudi economy has a history of falling victim to boom and bust cycles in the oil market, where high prices bring in a flow of cash followed by downturns.

    In the United States, however, the cut could have massive political ramifications ahead of next month’s midterm elections. After reaching highs over the summer, gas prices in the United States had been steadily decreasing, providing Biden and his top aides a potent talking point in the lead-up to the elections.

    But a combination of factors, including rising demand and maintenance at some US refineries, has caused prices to begin ticking back up. The OPEC+ decision is likely to aggravate those factors.

    The decision set off bipartisan fury in Washington when it was first announced last week. Saudi Arabia is now being accused of filling the Kremlin’s coffers with oil revenues just days after President Putin’s regime began carrying out large-scale missile attacks on civilian targets across Ukraine

    “What Saudi Arabia did to help Putin continue to wage his despicable, vicious war against Ukraine will long be remembered by Americans,” tweeted Senate Majority Leader Chuck Schumer, a Democrat, on Friday.

    Democratic Sen. Richard Blumenthal of Connecticut on Wednesday called for immediate action on his bill that would stop US arm sales to Saudi Arabia.

    “The Saudis actions aid and abet a murderous and brutal criminal invasion by Russia,” Blumenthal said.

    When asked about growing calls in Washington to limit ties with Saudi Arabia, al-Jubeir said he hoped that such talk was motivated by domestic politics ahead of the midterms.

    Al-Jubeir said the relationship between the US and Saudi Arabia remains “robust.”

    “The Kingdom of Saudi Arabia and the US have had a very strong relationship for eight decades … and we look forward to this relationship continuing for the next eight decades,” he added.

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  • The Fed only cares about inflation. That’s bad news for you | CNN Business

    The Fed only cares about inflation. That’s bad news for you | CNN Business

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    New York
    CNN Business
     — 

    Jerome Powell and other members of the Federal Reserve are obsessed with choking off inflation once and for all, even if the Fed’s series of aggressive rate hikes slow the economy to a crawl. That could be bad news for consumers, investors and Corporate America.

    What’s more, many market experts and economists note that the rate of inflation, while still uncomfortably high, is falling and should continue to decline – but there is a noted lag effect. Fed vice chair Lael Brainard admitted as much in a speech Monday, saying that “policy actions to date will have their full effect on activity in coming quarters.”

    Still, the Fed isn’t done raising rates. Investors are pricing in the strong probability of a fourth consecutive three-quarters of a percentage point hike at the Fed’s next meeting on November 2. And the chances of a fifth straight hike of that magnitude at the Fed’s December 14 meeting are also on the rise.

    It seems that Powell wants to atone for his mistake of repeatedly calling inflation “transitory” for much of last year. So the Fed is going to keep raising rates to prove that it is taking inflation seriously, even if that leads to a bigger pullback in stocks…and tipping the economy into a recession.

    Needless to say, that’s a problem. Especially since the Fed has two mandates: price stability and maximum employment. That means the jobs market might get hit due to the Fed’s laser-like focus on inflation.

    “My concern is that the Fed is tightening so quickly and so significantly without knowing what it means for the economy,” said Brian Levitt, global market strategist with Invesco.

    Keep in mind that the Fed’s series of rate hikes are unprecedented in the “modern” era of central banking, i.e. after Alan Greenspan became Fed chair in 1987 and the Fed became far more transparent.

    The Fed was far more opaque before Greenspan, and the market didn’t pick apart every speech, policy move and economic forecast the way Wall Street does now. Inflation in the 1970s and early 1980s was also a much different animal, due largely to an oil price shock that lasted years because of a supply shortage.

    The current inflation crisis stems from more temporary (we won’t say transitory) supply chain issues tied to the pandemic as well as the rapid reopening of the global economy following a brief recession.

    But the economy is now showing cracks. Long-term bond yields have surged, and mortgage rates have popped, cooling off the housing market. The stock market has deflated as well, wringing even more excess from the economy.

    “We’re more cautious because the Fed is tightening into a weakening economy,” said Keith Lerner, co-chief investment officer and chief market strategist with Truist Advisory Services. “These supersized hikes are the most aggressive in decades. But the Fed has scar tissue from inflation.”

    As painful this current bout of inflation is for Americans, it’s nothing compared to what people lived through in the early 1980s before then Fed chair Paul Volcker squashed inflation with a series of massive rate hikes.

    Unless pricing pressures pick up again, it appears the year-over-year increase for the consumer price index (CPI) peaked at 9% in June. That’s a big move from about 2.3% in February 2020 just before the pandemic shutdown. But 9% is still a far cry from the CPI high during the Volcker years of 14.6% in early 1980.

    And with consumer and wholesale prices already edging lower, some experts worry that the continued uber-hawkish stance by the Fed will do more harm than good for the economy.

    “The speed at which the Fed is increasing rates will certainly have some unintended consequences,” said Michael Weisz, president of Yieldstreet, an investment firm that specializes in so-called alternative assets such as real estate, private equity, venture capital and art.

    Weisz said the surge in interest rates could lead to a “consumer credit crunch being more pronounced,” in which loans beyond mortgages might become more expensive and harder to get.

    Rate hikes raise the costs for companies to pay down their debt, increasing the possibility of corporate bankruptcies and defaults on commercial loans. It may even potentially lead to stagflation…the double whopper of stagnant growth and continued inflation. In other words, prices may remain high and the job market will probably be worse.

    “The Fed runs a real risk of over-tightening, as the impacts of the restrictive policy may not flow through inflation and unemployment data until it’s too late,” Weisz added.

    As long as inflation remains the bigger issue for the economy, the Fed is going to focus more on getting prices under control. After all, the unemployment rate is at 3.5%, a half-century low.

    “The Fed has made it clear their number one priority right now is price stability,” said Dustin Thackeray, chief investment officer of Crewe Advisors. “Until the Fed sees sustained evidence their monetary policy is having a material impact on…the job market, they will maintain their persistent efforts in reining in inflationary pressures.”

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  • Made in America is back, leaving US factories scrambling to find workers | CNN Business

    Made in America is back, leaving US factories scrambling to find workers | CNN Business

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    New York
    CNN Business
     — 

    US factories are humming, and manufacturers are scrambling to find workers as the pace of hiring hits levels not seen in decades.

    Friday’s September jobs report showed US manufacturers added another 22,000 workers in September, increasing employment in the sector by nearly 500,000 over the course of the last 12 months.

    The nearly 13 million workers employed in US factories make up the industry’s largest workforce since the Great Recession caused employment in the sector to plunge more than a dozen years ago. Since April, manufacturing employment has been growing at about a 4% annual rate, the fastest sustained pace of growth since 1984, when the sector had more than twice as large a share of US jobs.

    And employers say they now are scrambling to fill even more jobs. The sector has had about 800,000 openings for most of the last year, despite the hiring binge, according to the Labor Department’s report.

    With supply chains causing problems throughout the global economy, many US companies that depended on overseas suppliers have been shifting their focus to sources of parts and goods much closer to home.

    “It was taking months for parts to not only get manufactured but come across and they decided they were willing to pay US manufacturing pricing to get that much faster,” said Hayden Jennison, production manager for Jennison Corporation, a Carnegie, Pennsylvania, company that makes everything from fire fighting equipment to construction machinery. He said there’s enough demand for his goods to staff an entire additional shift at the factory. But even though he’s paying $20 to $30 an hour he can’t find the workers he needs.

    “Hiring has been a problem since 2020,” Jennison said. “Hiring experienced candidates that understand the industry, and understand what they’re doing, has been very difficult.”

    Typically factory jobs and output take a hit during economic downturns, as they did during the Great Recession. But even with fears of a recession rising now, industry experts don’t expect factory jobs to default to their familiar boom-to-bust cycle this time.

    “I think we’re in uncharted territory,” said Jay Timmons, CEO of the National Association of Manufacturers. “For every 100 jobs openings in the sector we only have 60 people who are looking. I think it’ll take quite a while to fill that pipeline.”

    Timmons said that pay in the sector is up 5% over the course of the last year, and he expects it to keep rising as manufacturers scramble for skilled labor.

    Experts say one of the biggest problems manufacturers face in attracting workers is their perception of the nature of the job.

    “We often take a look at the images of manufacturing and we see the sparks flying and a welding environment and perhaps it’s a little bit dingy, dark. But by and large our manufacturing jobs today are high tech,” said Eric Esoda, CEO of a not-for-profit providing consulting and training services to small- and mid-size manufacturers in Northeast Pennsylvania.

    One group employers are looking to for more help: women. Manufacturing remains a male-dominated industry, with only 30% of hourly factory jobs held by women, according to NAM. But that’s up from 27% only two years ago, and the Manufacturing Institute, an education and workforce development arm of NAM, has various programs aimed at raising the share of women workers on factory floors to 35% by 2030.

    Today less than 10% of private sector jobs are in manufacturing, compared to more than 40% at the end of World War II. But it is still a key sector of the economy, one that pays much better than many others. The Labor Department reports the average weekly wage for manufacturing jobs is $1,250, or $65,000 annually — 11% more than private sector jobs overall, and 81% more than retail jobs.

    Correction: An earlier version of this story misstated Hayden Jennison’s job title.

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  • White-collar workers are feeling the brunt of the Fed’s rate hikes. Here’s why | CNN Business

    White-collar workers are feeling the brunt of the Fed’s rate hikes. Here’s why | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN Business
     — 

    September’s hotly anticipated jobs data ended up cooling markets on Friday. Stocks fell sharply as investors evaluated the report, which showed more jobs than expected were added to the US economy and indicated that more pain-inflicting interest rate hikes from the Federal Reserve lie ahead.

    But a breakdown of the numbers shows that the Fed’s plans to weaken the labor market to fight persistent inflation may already be working, just not for everybody.

    White-collar office workers appear to be feeling the brunt of the Fed’s actions: The financial and business sector saw a large decline in employment last month. Legal and advertising services also experienced drops. Service and construction workers, meanwhile, are still thriving.

    What’s happening: The US economy added 263,000 jobs in September, higher than analyst estimates of 250,000. The unemployment rate came in at 3.5%, down from 3.7% in August.

    Leading the gain in jobs was the leisure and hospitality industry, which added 83,000 jobs in September — and employment in food services and drinking places made up 60,000 of those jobs alone. Manufacturing and construction also came in hot, adding 22,000 and 19,000 jobs, respectively.

    The largest non-governmental losses in jobs came from the financial industry, which shed 8,000 between August and September. Large banks hire in cycles, extending offers to recent graduates in the early fall months. That makes this September’s drop particularly significant.

    Business support services — such as telemarketing, accounting and administrative and clerical jobs — are also bleeding jobs. The sector lost 12,000 in September. Meanwhile, legal services lost 5,000 jobs, and advertising services also dropped 5,000 jobs.

    What it means: The Federal Reserve’s hawkish policy appears to be cooling certain parts of the economy, but not others. Finance workers are likely beginning to worry as their industry depends on stock and lending markets which have been particularly hard hit by Fed actions.

    Friday’s numbers indicate that we’re beginning to see that impact in the employment data.

    What remains to be seen is whether the Fed can cool the economy just by loosening employment in white-collar industries or if these losses will trickle down to other industries, hurting lower-income workers.

    Coming up: Earnings season begins in earnest this week with big banks like JPMorgan, Citigroup

    (C)    , Morgan Stanley

    (MS)     and BlackRock

    (BLK)     reporting. Investors will be watching closely for any guidance on hiring and layoff plans.

    Two key inflation indicators, PPI and CPI are also set to be released. Expect markets to react poorly if inflation comes in hot.

    A panel of top US economists just released its economic outlook for the next year, and it’s not great.

    The panel of 45 forecasters, led by the National Association for Business Economics (NABE), said they expected slower growth, higher inflation, higher interest rates, and weakening employment in both 2022 and 2023 than they previously expected.

    Most of the worries come down to the Federal Reserve’s interest rate policy.

    “More than three-quarters of respondents believe the odds are 50-50 or less that the economy will achieve a ‘soft landing’,” said NABE Vice President Julia Coronado. “More than half the panelists indicate that the greatest downside risk to the U.S. economic outlook is too much monetary tightness.”

    NABE panelists downgraded their median forecast for real GDP for the fourth quarter of 2022 to a 0.1% increase, compared to a 1.8% increase in the May 2022 survey. The vast majority of respondents placed more than a 25% probability of a recession occurring in 2023, with the most likely start date in the first quarter.

    The latest report comes as a growing number of economists are predicting that recession is imminent. Former US Treasury Secretary Larry Summers told CNN on Thursday that it’s “more likely than not” the US will enter a recession, calling it a consequence of the “excesses the economy has been through.”

    Friday’s jobs report showed that the share of workers telecommuting or working from home because of the pandemic ticked lower — falling to just 5.2% in September from 6.5% in August.

    Fully remote work in the United States, which many predicted would remain the norm long after the pandemic, appears to be edging away, especially as the job market loosens for white collar workers and employees have less leverage.

    Last week, a KPMG survey of US-based CEOs found that two-thirds believed in-office work would be the norm within the next three years.

    Still, it may not be enough to help an ailing commercial real estate market, where the outlook is dire. New York City office properties declined by nearly 45% in value in 2020 and are forecast to remain 39% below their pre-pandemic levels long-term as hybrid policies continue, according to a recent study from the National Bureau of Economic Research.

    Looking forward: The Bureau of Labor Statistics has noted that while hybrid work may still be popular, Covid-19 is no longer fueling work from home trends. The October report will rephrase its telework questions to remove references to the pandemic.

    Since May 2020, each jobs report has asked: “At any time in the last four weeks, did you telework or work at home for pay because of the Coronavirus pandemic?”

    In May 2020, 35.4% answered yes.

    Starting next month, the question will be revised. “At any time in the last week did you telework or work at home for pay?” it will ask, limiting the timeline and eliminating any reference to the pandemic.

    The US bond market is closed for Columbus Day/Indigenous Peoples’ Day.

    Coming later this week:

    ▸ Third quarter earnings season begins. Expect reports from big banks like JPMorgan Chase

    (JPM)    , Wells Fargo

    (WFC)    , Citigroup

    (C)    , Morgan Stanley

    (MS)    , PNC

    (PNC)     and US Bancorp

    (USB)     and consumer staples like Pepsi

    (PEP)    , Walgreen

    (WBA)    s and Domino’s

    (DMPZF)    . 

    ▸ CPI and PPI, two closely watched measures of inflation in the US are also due to be released. 

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  • Biden has a big oil problem. Here’s what you need to know about the recent OPEC+ decision. | CNN Politics

    Biden has a big oil problem. Here’s what you need to know about the recent OPEC+ decision. | CNN Politics

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    A version of this story appeared in CNN’s What Matters newsletter. To get it in your inbox, sign up for free here.


    Washington
    CNN
     — 

    With just weeks to go until the November midterms, four letters are haunting President Joe Biden and the Democrats: OPEC.

    Last week, the Organization of Petroleum Exporting Countries (OPEC) and its allies, led by Saudi Arabia and Russia, said that it will slash oil production by 2 million barrels per day, the biggest cut since the start of the pandemic, in a move that threatens to push gasoline prices higher just weeks before US midterm elections.

    The group announced the production cut following its first meeting in person since March 2020. The reduction is equivalent to about 2% of global oil demand.

    The Biden administration criticized the decision in a statement, calling it “shortsighted” and saying that it’s harmful to some countries already struggling with elevated energy prices the most.

    The production cuts will start in November. OPEC+, which combines OPEC countries and allies such as Russia, will meet again in December.

    For one perspective on the OPEC+ decision and to better understand how it affects everyone, we turned to Hossein Askari, who teaches international business at The George Washington University.

    Our conversation, conducted over the phone and lightly edited for flow and brevity, is below.

    WHAT MATTERS: Can you walk us through this recent OPEC decision? What’s happening exactly?

    ASKARI: So when the war in Ukraine started, sorry to tell your audience, but the United States was not very well prepared in what it was going to do. It sanctioned Russia for this and for that. And so the price of oil started going up. And at the same time, the United States actually put sanctions on Russian oil, not on gas, on oil. And so there was less Russian oil in the Western markets.

    Russia actually started selling its oil more and more to China and to India and cutting its prices to those countries. So they would buy Russian oil, but there was a shortage of oil.

    Another reason why the shortage had developed was America basically sanctions like a mad cowboy, if I may say that. It has sanctioned Venezuela for many years.

    But Saudi Arabia, with the new effective ruler who’s known as MBS, he has cozied up to Putin. And so when President Biden went and saw him a few months back and kind of asked him to increase oil production – I’m sorry to say this, I have to throw in this bit of politics – I think America really shamed itself by doing that.

    Of course, MBS did not respond positively. But now he, in fact, has gone over the top. He has agreed within OPEC – and of course he’s the main spokesman in OPEC with Russia – that they will cut back.

    WHAT MATTERS: What does the OPEC decision mean for the average American?

    ASKARI: From where we are now, crude oil prices by the end of the year, my guess, maximum, they’ll go up by $5 a barrel. Now, a lot of people think they’re gonna go up more than that. I don’t believe that, because I think the world economy is going to grow less and I think that we are going to see some Venezuelan oil come on the market, and I think we may see some deals made so some more Iranian oil may come on the market.

    For gasoline, I think Americans can see maybe prices going up from where they are today, if nothing else happens, by about another 30 to 50 cents a gallon.

    However, there is also another problem for Americans that is home heating oil, and that can also go up. So for the average American, they’re going to pay, no matter what, something more per gallon of gasoline at the pump. And I think there’s going to be more of an impact, actually, on the fuel oil that they heat their houses with. So it’s gonna put on the squeeze on the average American. There’s no two ways about it.

    WHAT MATTERS: What should the US do now?

    ASKARI: I think the United States should be much, much tougher with Saudi Arabia because we have bent over backward to accommodate them in every way. And we have looked the other way with what they’ve done. And now it’s the time to be tough. They’ve been tough with us. I think the President of the United States should be tough with Saudi Arabia.

    WHAT MATTERS: What else can the US do in terms of helping with oil prices in the immediate term?

    ASKARI: I think undoubtedly this administration has very bad rapport with US oil companies and energy companies. I think that there should be more behind-the scenes cooperation with the oil companies and the administration because you really need them now to cooperate.

    I know a lot of people don’t believe in fracking, but maybe it’s time to do some more fracking. Maybe it’s time to increase output. They can increase output elsewhere too. I think that would be extremely, extremely helpful.

    And I think the US oil companies – and I’m not a backer of oil companies, please don’t misunderstand – but I think they feel that the administration basically just wants to drive them out business.

    WHAT MATTERS: Anything else you’d like to add?

    ASKARI: Some people think that OPEC decisions are purely economic. Some people think purely political. It has always been both, especially for Saudi Arabia.

    It is really Saudi Arabia and the United Arab Emirates driving OPEC’s decision. I think Americans should understand it’s not the other members, it’s not Nigeria or Iran. I feel Americans should understand who are our friends and who are not our friends.

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  • Opinion: Biden’s eye-opening warning | CNN

    Opinion: Biden’s eye-opening warning | CNN

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    Editor’s Note: Sign up to get this weekly column as a newsletter. We’re looking back at the strongest, smartest opinion takes of the week from CNN and other outlets.



    CNN
     — 

    “Can you tell me where we’re headin’?” Bob Dylan asks in his 1978 song “Señor.”

    Is it “Lincoln County Road or Armageddon? Seems like I been down this way before. Is there any truth in that, señor?”

    Yes, we’ve been here before, at least if you take President Joe Biden at his word. At a fundraiser in New York City Thursday, Biden said, “First time since the Cuban missile crisis, we have a direct threat of the use (of a) nuclear weapon if in fact things continue down the path they are going.” Referring to Russian President Vladimir Putin’s threat to go nuclear in his war with Ukraine, the President observed, “I don’t think there’s any such thing as the ability to easily (use) a tactical nuclear weapon and not end up with Armageddon.”

    As historian Julian Zelizer wrote, “Those were unsettling words for a nation to hear from the commander in chief.” Biden referred to “the Cuban missile crisis in October 1962, when the world seemed to teeter on the brink of nuclear war as the US and the Soviet Union faced off over missiles in Cuba.”

    “Some planned escape routes from major cities while others stocked up on transistor radios, bottled water and radiation kits for their families. Although nobody knew it at the time, the danger was even greater than most thought as the leaders didn’t have full control of the situation. In the end, diplomacy won out, a deal was reached and disaster was averted.”

    Nick Anderson/Tribune Content Agency

    But the prospect of annihilating humanity in a nuclear exchange is so great that such brinksmanship should never be allowed to happen again. Surely Presidents Ronald Reagan and Mikhail Gorbachev were right when they agreed in 1985 that “a nuclear war cannot be won and must never be fought.”

    US national security officials privately said there was no new intelligence to indicate that Putin is moving to carry out his threat and couldn’t explain why Biden made the extraordinary statement. But its implications were clear, Zelizer argued. “This historic moment in the war between Russia and Ukraine is an important reminder that the US has let nuclear arms control fall from the agenda, and the consequences are dangerous.”

    Putin’s back is against the wall as Ukraine continues to retake territory from the Russians. Peter Bergen wrote that Putin is “facing growing criticism from Russians on both the left and the right, who are taking considerable risks given the draconian penalties they can face for speaking out against his ‘special military operation’ in Ukraine.”

    “With even his allies expressing concern, and hundreds of thousands of citizens fleeing partial mobilization, an increasingly isolated Putin has once again taken to making rambling speeches offering his distorted view of history.”

    One lesson of history is that military defeat endangers dictatorial leaders. “Putin’s gamble may lead to a third dissolution of the Russian empire, which happened first in 1917 as the First World War wound down, and again in 1991 after the fall of the Soviet Union,” Bergen noted. “It could unfold once more as Putin’s dream of seizing Ukraine seems to be coming to an inglorious end.”

    It’s striking to recall, as Frida Ghitis did, that “seven months ago, some viewed Putin as something of a genius. That myth has turned to dust. The man who helped suppress uprisings, entered wars and tried to manipulate elections across the planet now looks cornered.”

    In Ukraine, “Russia’s trajectory looks like a trail of war crimes, with hundreds of bombed hospitals, schools, civilian convoys, and mass graves filled with Ukrainians. And still Ukraine is pushing ahead, is doing very well in fact, and very possibly winning this war,” wrote Ghitis.

    06 opinion column 1008

    Lisa Benson/GoComics.com

    Biden took heat this summer for deciding to meet Saudi Crown Prince Mohammed bin Salman and walking away with little commitment from the Saudis to expand oil production. And then last week, the Saudi regime was instrumental in OPEC+’s decision to actually cut oil production in a move that benefits it and other oil-producing states including Russia.

    “So much for cozying up to the Saudis – President Joe Biden’s much-hyped fist bump with Mohammed bin Salman during a trip to the Middle East back in July has turned into something of a slap across the face from the crown prince,” wrote David A. Andelman.

    In the US, gasoline prices have started rising after weeks of declines, adding to the burdens Democrats face in trying to hold onto control of Congress in the midterm elections a month from now.

    07 opinion column 1008

    Clay Jones

    “The OPEC production cutbacks could – indeed, should – backfire for Saudi Arabia and its complicit partners,” wrote Andelman. “There is growing sentiment in Congress to reevaluate America’s wider relationship with Saudi Arabia and especially the vast arms sales to the kingdom.”

    Higher oil prices come on top of Europe’s emerging energy crisis, with Russia sharply reducing its export of natural gas to the continent. As a result, Germany is among the nations that have instituted tough new curbs on energy use, wrote Paul Hockenos.

    “Step into my Berlin office today and you’ll find everybody is wearing sweaters – I wear two, with wool socks and occasionally a scarf. … At home, my little family has sworn off baths (swift showers please), and lights are on only in the rooms we’re occupying. We’ve invested in a wool curtain inside our apartment’s front door to keep out the draft.”

    “My friend Bill … hasn’t turned his heating on yet this year – no one I know has – and wears a sweater at home. He also has a new method of showering: one minute under warm water, turns it off, lathers up, and then rinses off.”

    “Timing is everything,” said Garrett Hedlund in the 2011 song of that name.

    “When the stars line up

    And you catch a break

    People think you’re lucky

    But you know it’s grace…”

    It works in reverse too. Just ask Linda Stewart, a New Mexico educator in her 60s who decided to retire one year into the pandemic lockdown. “Finances would be a little tight for a while, but some outside projects would supplement my income, so I felt confident I would be able to handle it,” she wrote in a new CNN Opinion series, “America’s Future Starts Now,” which explores the key issues in the midterm campaigns.

    But, Stewart added, “by the end of the second year of lockdown, inflation started taking a toll and money was getting uncomfortably tight. Soon I was in the red each month, just trying to keep up. The usual suspects were groceries and gas, which meant cutting back on some of the more expensive food items and cooking meals at home.”

    “I stopped driving for anything other than essentials. And with the continuing drought here in the Southwest, utility bills went through the ceiling. I cut back on watering my garden and turned the furnace down a few degrees in the winter and the air conditioning up a few in the summer. I switched to washing clothes mostly in cold water and only running the dishwasher once a week.”

    The economy is the issue Americans are most concerned about, and there are no quick, easy solutions to the inflation spike. The second part of CNN Opinion’s new series was a roundup of views on how to help people cope with higher costs.

    03 opinion column 1008

    Scott Stantis/Tribune Content Agency

    The Federal Reserve Bank is raising interest rates at a rapid pace to conquer inflation. The “tight labor market – and the rapid wage growth it has spurred – is causing inflation to become more entrenched,” wrote economist Gad Levanon for CNN Business Perspectives. To curb the rise in prices, “the Federal Reserve is likely to drive the economy into a recession in 2023, crushing continued job growth.”

    05 opinion column 1008

    Dana Summers/Tribune Content Agency

    At least 131 people have died due to Hurricane Ian. Why was it so deadly?

    The storm’s course veered south as it approached Florida and rapidly intensified, Cara Cuite and Rebecca Morss noted. “Emergency managers typically need at least 48 hours to successfully evacuate areas of southwest Florida. However, voluntary evacuation orders for Lee County were issued less than 48 hours prior to landfall, and for some areas were made mandatory just 24 hours before the storm came ashore. This was less than the amount of time outlined in Lee County’s own emergency management plan.”

    “While the lack of sufficient time to evacuate was cited by some as a reason why they stayed behind, there are other factors that may also have suppressed evacuations in some of the hardest hit areas.” Few people are aware of their evacuation zone, and some websites carrying that information crashed in the leadup to the storm’s arrival, Cuite and Morss wrote.

    “People need time to decide what to do, pack belongings, find a place to go and arrange how to get there, often in the midst of heavy traffic and other complications and obstacles.” Other factors: “In addition to a false sense of security from prior near-misses among some residents, others who were in the areas of Florida hardest hit by Hurricane Ian may not have had any personal experience with such powerful storms. This is likely true for the millions of people who have moved to Florida over the past few decades…”

    For more:

    Adam H. Sobel: Where the hurricane risk is growing

    Geoff Duncan, a Republican and the current lieutenant governor of Georgia, is unsure about Herschel Walker’s prospects in the upcoming election. The Republican Senate candidate has denied reports alleging he paid for a girlfriend’s abortion in 2009.

    “The October surprise,” Duncan wrote, “has upended the political landscape, throwing one of the nation’s closest midterm races into turmoil five weeks before Election Day, but it never had to be this way. Just as there should not be two Democrats representing a center-right state like Georgia in the US Senate, the Republican Party should not have found its chance of regaining a Senate majority hanging on an untested and unproven first-time candidate.”

    “Walker won his Senate primary not because of his political chops or policy proposals. He trounced his opponents because of his performance on the football field 40 years ago and his friendship with former President Donald Trump – neither of which are guaranteed tickets to victory anymore.”

    02 opinion column 1008

    Drew Sheneman/Tribune Content Agency

    For more on politics:

    SE Cupp: Herschel Walker’s ‘October Surprise’ won’t matter

    Tim Kane: What the Biden administration is getting wrong on immigration

    Nicole Hemmer: The Onion is right about the future of democracy

    Dean Obeidallah: The single-minded goal of Trump-loving Republicans

    Organic chemistry is a famously difficult course and a traditional prerequisite for students who want to go on to medical school. Maitland Jones Jr., a master of the field and textbook author, taught the course at NYU – until 82 of the 350 students taking it “signed a petition because, they said, their low scores demonstrated that his class was too hard,” Jill Filipovic noted.

    Then the university fired him.

    An NYU spokesman “told the (New York) Times in defense of their decision to terminate Jones’s contract that the professor had been the target of complaints about ‘dismissiveness, unresponsiveness, condescension and opacity about grading.’ It’s worth noting that according to the Times, students expressed surprise that Jones was fired, which their petition did not call for.”

    Some of the student complaints may have been valid, noted Filipovic, but she added that the case “raises important questions, chief among them how much power students, who universities seem to increasingly think of as consumers (and some of whom think of themselves that way), should have in the hiring, retention and firing of professors…”

    “There are real consequences … to making higher education primarily palatable to those paying tuition bills – particularly when it comes to courses like organic chemistry, which are intended to be difficult. Future medical students do in fact need a rigorous science background in order to be successful doctors someday. Whether or not Jones was an effective teacher for aspiring medical students is up for debate, but in firing him, NYU is effectively dodging questions about the line between academic rigor and student well-being with potentially life-and-death matters at stake.”

    Kim Kardashian 0924

    Alessandro Garofalo/Reuters

    The Securities and Exchange Commission fined Kim Kardashian nearly $1.3 million for failing to disclose she was paid to promote a crypto asset, EthereumMax, noted Emily Parker.

    “This case reflects a much larger problem in the crypto industry: Celebrities are using their influence to promote cryptocurrencies, a notoriously complex and risky asset class, which can lead people to invest in coins or projects that they may not understand,” Parker observed.

    “New coins and projects are constantly popping up, sometimes without sufficient warnings about the risks of investing … In such a fast-changing and confusing market, how do you distinguish winners from losers? It’s easy to imagine how a confident tweet by a celebrity could have a significant impact on a new investor.”

    In agreeing to the fine, Kardashian “did a favor for the cryptocurrency industry. Such a high-profile example could cause other celebrities to think twice before shilling a token on social media.”

    04 opinion column 1008

    Bill Bramhall/Tribune Content Agency

    Alejandro Mayorkas: The security risk Congress needs to take seriously

    Danae Wolfe: Stomping alone won’t wipe out the spotted lanternfly

    Victoire Ingabire Umuhoza: Inside the prison where sunlight ceases to exist

    Jeremi Suri and William Inboden: A generation of the world’s best leaders has died

    Sara Stewart: ‘Dahmer’ debate is finally saying the quiet part about true crime out loud

    Elisa Massimino: It’s time to shut down Guantanamo

    Pete Brown: What ‘fancy a pint?’ really means

    AND…

    01 Trevor Noah file

    Rich Fury/Getty Images/FILE`

    Until recently, the late-night television formula ruled, as Bill Carter noted. “On the air after 11 p.m. with a charismatic host, some comedy, a desk, a guest or two, maybe a band and then ‘Good night, everybody!’” Late-night shows seemed to be holding their own despite the rise of cord-cutting and the move to streaming.

    But that’s changing, as Trevor Noah’s decision to give up hosting “The Daily Show” suggested. Carter wrote, “What many people watch now is not television: It’s whatever-vision, entertainment by any means on any device. What’s on late night is now often seen on subscriptions – and not late at night.”

    Noah is leaving on a high note “after a seven-year run, marked by an impressive body of comedy work and growing acclaim,” Carter observed. In succeeding Jon Stewart as the show’s host, Noah “had a different beat in his head from the start. He wanted to refashion the show with a wider comedy vision, one looking more out at the world, instead of purely in at the United States, all informed by Noah’s South African-born global perspective.”

    “It was a wise choice. Following Stewart was always going to be a potentially crippling challenge. Noah took it on and remade the show to his own specifications. One major sign of that was how strikingly diverse the show became.”

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  • US Postal Service proposes new prices ‘to offset’ inflation | CNN Politics

    US Postal Service proposes new prices ‘to offset’ inflation | CNN Politics

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    CNN
     — 

    The US Postal Service on Friday proposed increased prices “to offset the rise in inflation,” according to a statement from the agency.

    The price hikes, which have been approved by the Governors of the U.S. Postal Service, include a three-cent increase to purchase a stamp and a four-cent increase to mail a postcard. The changes amount to a 4.2% price increase for first class mail, according to USPS.

    The proposal must now be reviewed by the Postal Regulatory Commission.

    The announcement from the US Postal Service comes as consumers around the nation continue to grapple with rising prices for groceries, gas and other necessities. The US Postal Service has publicly struggled financially in recent years, and President Joe Biden signed a law earlier this year to overhaul the USPS’ finances and allow the agency to modernize its service.

    “As operating expenses continue to rise, these price adjustments provide the Postal Service with much needed revenue to achieve the financial stability sought by its Delivering for America 10-year plan,” US Postal Service said on Friday. “The prices of the U.S. Postal Service remain among the most affordable in the world.”

    Unlike other government agencies, the USPS generally does not receive taxpayer funding, and instead must rely on revenue from stamps and package deliveries to support itself.

    The Postal Service is also looking to increase fees for P.O. Box rentals, money orders and the cost to purchase insurance when mailing an item.

    If approved by the Postal Regulatory Commission the changes would take effect January 22, 2023, after midnight.

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  • Opinion: The Fed doesn’t have a choice anymore. Get ready for a recession | CNN Business

    Opinion: The Fed doesn’t have a choice anymore. Get ready for a recession | CNN Business

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    Editor’s Note: Gad Levanon is the chief economist at the Burning Glass Institute. He’s the former head of The Conference Board’s Labor Market Institute. The opinions expressed in this commentary are his own.

    To many economists and analysts, the US economy has represented a paradox this year. On the one hand, GDP growth has slowed significantly, and some argue, even entered a recession. On the other hand, overall employment growth has been much stronger than normal.

    While GDP declined at an annualized rate of 1.1% in the first half of 2022, the US economy added 2.3 million jobs in the last six months, far more than in any other six-month period in the 20 years prior to the pandemic.

    This tight labor market – and the rapid wage growth it has spurred – is causing inflation to become more entrenched. The Consumer Price Index, which measures a basket of goods and services, was 8.3% year-over-year in August. That’s lower than the 40-year high of 9.1% in June, but still painfully high. To address it, the Federal Reserve is likely to drive the economy into a recession in 2023, crushing continued job growth.

    Why has employment growth remained so strong? First, the US economy is holding on better than many expected. The Atlanta Fed’s GDPNow estimate for real GDP growth in the third quarter of 2022 is 2.3%, suggesting that while the economy is now growing much more slowly than it did last year, we are still not in a recession. When the demand for goods and services strengthens, so does the demand for workers producing these goods and services.

    Second, despite the slowing of the economy and the growing fears of recession, layoffs are still historically low. Initial claims for unemployment insurance, an indicator highly correlated with layoffs, were 219,000 for the week ended October 1 – higher than the week prior, but still one of the lowest readings in recent decades. After years of increasingly traumatic labor shortages, many employers are reluctant to significantly reduce the number of workers even as their businesses are slowing. That’s because companies are worried that they will have trouble recruiting new workers when they start expanding again.

    Third, many industries are growing faster than normal because they are still recovering from the pandemic. Convention and trade show organizers, car rental companies, nursing homes and child day care services, among others, are all growing fast because they are still well below pre-pandemic employment levels.

    Fourth, just as some industries are growing because they are still catching up, others are experiencing high growth as they adjust to a new normal of higher demand. Demand for data processing and hosting services, semiconductor manufacturing, mental health services, testing laboratories, medical equipment and pharmaceutical manufacturing is higher than before the pandemic. And it’s likely that these represent structural changes to buying patterns that will keep demand high.

    Fifth, during the pandemic, corporate investments in software and R&D reached unprecedented levels, which drove a rapid increase in new STEM jobs. Because these workers are especially well paid, they have had plenty of disposable income to spend on goods and services, which has supported job growth throughout the economy.

    These factors are spurring positive momentum that will not disappear overnight. Employment growth is likely to slow down from its historically high rates, but it will still remain solid in the coming months. ManpowerGroup’s Employment Outlook Survey shows that the hiring intentions for the fourth quarter are still very high, despite dropping from the previous quarter.

    Next year, however, will look very different. Many of the industries that are still recovering from the pandemic will have reached pre-pandemic employment levels. With demand saturated, those industries may revert to slower hiring. But this alone is unlikely to push job growth into negative territory. What will do that is monetary policy.

    There are two ways to rein in the labor market: Either reduce demand for workers or increase the labor supply. But it’s hard to engineer a boost in labor supply. That takes the kind of legislative action needed to increase immigration, drive people into the labor force or grow investment in workforce training. This is likely to prove elusive in today’s polarized political environment.

    The only option that leaves the Fed is to engineer a recession by continuing to raise interest rates. Expect to see that happen in 2023.

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  • Amazon debuts new shopping portal for customers on government assistance | CNN Business

    Amazon debuts new shopping portal for customers on government assistance | CNN Business

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    New York
    CNN Business
     — 

    Amazon on Monday launched a new shopping portal called Amazon Access that is designed for shoppers receiving government assistance.

    The shopfront features SNAP EBT on Amazon, information about the Amazon Layaway program that all shoppers can use to pay for their orders over time and spotlights discounts and coupons for any customer on essential grocery items.

    Amazon already offers some services for low-income customers, such as discounted Amazon Prime membership. It also accepts Supplemental Nutrition Assistance Program or SNAP benefits for groceries purchased through Amazon Grocery, Amazon Fresh and Whole Foods. The company said the new portal is meant to be a centralized hub that puts these individual benefits all in one place.

    “Given the tough economic climate with many facing rising costs on essential needs, we want our customers to know about all the accessible offerings available on Amazon, no matter their circumstances,” said Nancy Dalton, head of community partnerships for Amazon Access.

    Amazon

    (AMZN)     also announced it has renamed its discounted Prime membership to Prime Access. Eligible customers can sign up for the service on Amazon

    (AMZN)     Access.

    Neil Saunders, retail analyst and managing director at GlobalData Retail, said the new portal could be useful for lower-income shoppers.

    “It is something positive Amazon can point to, which shows it is helping hard-pressed consumers during a more difficult economic period,” said Saunders, adding that Amazon “should be able to generate some incremental sales out of consolidating the benefits into a new shopfront.”

    At the same time, he didn’t think Amazon Access would help boost Prime membership numbers significantly.

    “Amazon sees this as a way of growing Prime at a time when it is near to saturation in the US, as there are still many lower income consumers who do not have access to the program,” said Saunders. Former Amazon CEO Jeff Bezos said in an April 2021 letter to shareholders that the company has more than 200 million Prime members worldwide.

    Earlier this year, Amazon said the price of its annual Prime subscriptions would increase from $119 to $139 per year in the United States and its monthly subscription would also increase from $12.99 to $14.99.

    The company said it was increasing the cost because of “expanded Prime membership benefits,” such as added Prime Video content and expanded free same-day shipping, as well to compensate for the rising costs of labor and transportation in its distribution network.

    –CNN’s Clare Duffy contributed to this report.

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  • Mortgage rates take a breather after rising for several weeks in a row | CNN Business

    Mortgage rates take a breather after rising for several weeks in a row | CNN Business

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    After rising for six weeks in a row, mortgage rates retreated last week.

    The 30-year fixed-rate mortgage averaged 6.66% in the week ending October 5, down from 6.70% the week before, according to Freddie Mac.

    Mortgage rates have more than doubled since the start of this year as the Federal Reserve continues its unprecedented campaign of hiking interest rates in order to tame soaring inflation. But uncertainty about the possibility of a recession and the impact of rate hikes on the economy have made mortgage rates more volatile.

    “Mortgage rates decreased slightly this week due to ongoing economic uncertainty,” said Sam Khater, Freddie Mac’s chief economist. “However, rates remain quite high compared to just one year ago, meaning housing continues to be more expensive for potential homebuyers.”

    The average mortgage rate is based on a survey of conventional home purchase loans for borrowers who put 20% down and have excellent credit, according to Freddie Mac. But many buyers who put down less money upfront or have less than perfect credit will pay more.

    Investors and analysts have been scrutinizing each piece of economic data, searching for clues about the Fed’s next steps and the future of the US and global economies, said Danielle Hale, Realtor.com’s chief economist.

    The Fed does not set the interest rates borrowers pay on mortgages directly, but its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasury bonds. As investors see or anticipate rate hikes, they often sell government bonds, which sends yields higher and mortgage rates rise.

    Over the past month, yields on 10-year Treasuries soared from 3.25% to nearly 4% before falling back around 3.75% this week.

    Hale likened investors’ actions to a driver navigating a road in dense fog, prone to over-correcting at each turn.

    “Signs that we are closer to the end of the tightening cycle – such as a surprisingly steep decline in job openings – tend to cause rates to slip, while rates bounce higher on signals like robust activity in the services sector,” Hale said.

    Even though rates dipped slightly this week, the average interest rate for a 30-year, fixed-rate loan is still more than double what it was at this time last year.

    A year ago, a buyer who put 20% down on a $390,000 home and financed the rest with a 30-year, fixed-rate mortgage at an average interest rate of 2.99% had a monthly mortgage payment of $1,314, according to calculations from Freddie Mac.

    Today, a homeowner buying the same-priced house with an average rate of 6.66% would pay $2,005 a month in principal and interest. That’s $691 more each month.

    As rates have been rising over the last several weeks, fewer people have been applying for mortgages said Bob Broeksmit, president and CEO of the Mortgage Bankers Association.

    Ongoing economic uncertainty together with Hurricane Ian’s devastation in Florida resulted in a 14% decline in mortgage applications last week from the week before, he said.

    MBA also found that an increasing number of borrowers are applying for adjustable rate mortgages, or ARMs. Applications for ARMs climbed to nearly 12% of all applications last week.

    The average rate for the ARM tracked by Freddie Mac (a 5-year Treasury-indexed hybrid ARM) was 5.36%, more than a percentage point lower than the 30-year fixed rate.

    “While rate increases are needed to tame inflation and alleviate the burden it places on household budgets, higher borrowing costs have caused consumers to think twice about major purchases like homes and cars,” said Hale.

    With more prospective buyers sitting on the sidelines, those still looking to buy have a little more breathing room.

    Correction: “Today’s home shoppers have more choices, but for many, the increased cost of financing and higher home prices mean fewer affordable options,” Hale said. “As challenging as it may be to set and stick to a budget in this environment of rising prices and rates, it’s more important than ever to do so.”
    A previous version of this story misstated the number of weeks mortgage rates have been rising. Rates rose for six consecutive weeks before falling this week.

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  • The bond market is crumbling. That’s bad for Wall Street and Main Street | CNN Business

    The bond market is crumbling. That’s bad for Wall Street and Main Street | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN Business
     — 

    The global bond market is having a historically awful year.

    The yield on the 10-year US Treasury bond, a proxy for borrowing costs, briefly moved above 4% on Wednesday for the first time in 12 years. That’s a bad omen for Wall Street and Main Street.

    What’s happening: This hasn’t been a pretty year for US stocks. All three major indexes are in a bear market, down more than 20% from recent highs, and analysts predict more pain ahead. When things are this bad, investors seek safety in Treasury bonds, which have low returns but are also considered low-risk (As loans to the US government, Treasury notes are seen as a safe bet since there is little risk they won’t be paid back).

    But in 2022’s topsy-turvy economy, even that safe haven has become somewhat treacherous.

    Bond returns, or yields, rise as their prices fall. Under normal market conditions, a rising yield should mean that there’s less demand for bonds because investors would rather put their money into higher-risk (and higher-reward) stocks.

    Instead markets are plummeting, and investors are flocking out of risky stocks, but yields are going up. What gives?

    Blame the Fed. Persistent inflation has led the Federal Reserve to fight back by aggressively hiking interest rates, and as a result the yields on US Treasury bonds have soared.

    Economic turmoil in the United Kingdom and European Union has also caused the value of both the British pound and the euro to fall dramatically when compared to the US dollar. Dollar strength typically coincides with higher bond rates as well.

    So while we’d normally see a rising 10-year yield as a signal that US investors have a rosy economic outlook, that isn’t the case this time. Gloomy investors are predicting more interest rate hikes and a higher chance of recession.

    What it means: Portfolios are aching. Vanguard’s $514.5 billion Total Bond Market Index, the largest US bond fund, is down more than 15% so far this year. That puts it on track for its worst year since it was created in 1986. The iShares 20+ Year Treasury bond fund

    (TLT)     (TLT) is down nearly 30% for the year.

    Stock investors are also nervously eyeing Treasuries. High yields make it more expensive for companies to borrow money, and that extra cost could lower earnings expectations. Companies with significant debt levels may not be able to afford higher financing costs at all.

    Main Street doesn’t get a break, either. An elevated 10-year Treasury return means more expensive loans on cars, credit cards and even student debt. It also means higher mortgage rates: The spike has already helped push the average rate for a 30-year mortgage above 6% for the first time since 2008.

    Going deeper: Still, investors are more nervous about the immediate future than the longer term. That’s spurred an inverted yield curve – when interest rates on short-term bonds move higher than those on long-term bonds. The inverted yield curve is a particularly ominous warning sign that has correctly predicted almost every recession over the past 60 years.

    The curve first inverted in April, and then again this summer. The two-year treasury yield has soared in the last week, and now hovers above 4.3%, deepening that gap.

    On Monday, a team at BNP Paribas predicted that the inverted gap between the two-year and 10-year Treasury yields could grow to its largest level since the early 1980s. Those years were marked by sticky inflation, interest rates near 20% and a very deep recession.

    What’s next: The bond market may face fresh volatility on Friday with the release of the Federal Reserve’s favored inflation measure, the Personal Consumption Expenditure Price Index for August. If the report comes in above expectations, expect bond yields to move even higher.

    The Bank of England held an emergency intervention to maintain economic stability in the UK on Wednesday. The central bank said it would buy long-dated UK government bonds “on whatever scale is necessary” to prevent a market crash.

    Investors around the globe have been dumping the British pound and UK bonds since the government on Friday unveiled a huge package of tax cuts, spending and increased borrowing aimed at getting the economy moving and protecting households and businesses from sky-high energy bills this winter, reports my colleague Mark Thompson.

    Markets fear the plan will drive up already persistent inflation, forcing the Bank of England to push interest rates as high as 6% next spring, from 2.25% at present. Mortgage markets have been in turmoil all week as lenders have struggled to price their loans. Hundreds of products have been withdrawn.

    “This repricing [of UK assets] has become more significant in the past day — and it is particularly affecting long-dated UK government debt,” the central bank said in its statement.

    “Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability. This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy.”

    Many final salary, or defined-benefit, pension funds were particularly exposed to the dramatic sell-off in longer dated UK government bonds.

    “They would have been wiped out,” said Kerrin Rosenberg, UK chief executive of Cardano Investment.

    The central bank said it would buy long-dated UK government bonds until October 14.

    Steep drops in bond prices may be signaling doom and gloom for the economy, but some analysts say short-term bonds are still looking more attractive than equities right now.

    “Record low yields have kept fixed income in the shadow of equities for decades,” said analysts at BNY Mellon Wealth Management in a research note. “But the aggressive shift in Fed policy is beginning to change this.”

    Central banks around the globe have responded to elevated inflation by hiking interest rates– and bond yields have increased alongside them. The two-year US Treasury bond is currently yielding nearly 4%. That’s still a relatively low return, but better than the S&P 500’s dividend yield of around 1.7%.

    “For the first time in several years, bonds are attractive investment options. In addition to providing diversification versus equities…you now get paid for owning them,” wrote Barry Ritholtz of Ritholtz Wealth Management on Wednesday.

    Consider the alternative: the S&P is down more than 20% year to date.

    The US Bureau of Economic Analysis releases its third estimate for Q2 GDP and US weekly jobless claims.

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  • White House says Biden’s Saudi trip wasn’t a waste as he lambastes OPEC+’s ‘shortsighted’ decision to cut oil output | CNN Politics

    White House says Biden’s Saudi trip wasn’t a waste as he lambastes OPEC+’s ‘shortsighted’ decision to cut oil output | CNN Politics

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    CNN
     — 

    President Joe Biden is “disappointed” the Saudi-led OPEC+ oil cartel agreed to cut output by 2 million barrels per day, the White House said Wednesday, as the threat of rising gas prices looms weeks ahead of critical midterm elections.

    The decision by the grouping of major oil producers rebuffed heavy lobbying from US administration officials and prompted Biden to say he was concerned about the move. It reversed a small increase in output OPEC+ announced shortly after Biden visited Saudi Arabia for a conference in July.

    Still, the White House insisted that visit was not a “waste of time,” even as it sharply criticized the decision to cut production.

    “The President is disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine,” said two of Biden’s top aides, national security adviser Jake Sullivan and National Economic Council Director Brian Deese, in a statement.

    “At a time when maintaining a global supply of energy is of paramount importance, this decision will have the most negative impact on lower- and middle-income countries that are already reeling from elevated energy prices,” the two advisers wrote.

    The administration will “consult with Congress on additional tools and authorities to reduce OPEC’s control over energy prices,” the statement read, without specifying which actions are under consideration dampen the oil cartel’s sway.

    Slashing oil production just ahead of November’s midterm elections poses a potential political problem for the President, who has touted this summer’s decreasing gas prices as he works to promote his agenda. The average gas price has been rising nationally again in recent days, according to AAA.

    Earlier this year, Biden announced a major release of barrels from the Strategic Petroleum Reserve in an effort to alleviate pump prices. On Tuesday, the White House said it was not considering additional releases beyond the 180 million previously announced.

    But after OPEC+ announced its decision on Wednesday, the White House said Biden would “continue to direct SPR releases as necessary,” apparently cracking open the door again to potential releases.

    Departing the White House on Wednesday, Biden said he was concerned about the possibility of a significant cut to production.

    “I need to see what the detail is. I am concerned, it is unnecessary,” he said in response to a question about the OPEC+ decision as he departed the White House for Florida, where he was set to tour storm damage.

    The international cartel of oil producers held a critical meeting Wednesday, where energy ministers decided to slash production by 2 million barrels per day, the biggest cut since the start of the pandemic.

    For the past several days, Biden’s senior-most energy, economic and foreign policy officials had been lobbying their foreign counterparts in Middle Eastern allied countries including Kuwait, Saudi Arabia and the United Arab Emirates to vote against cutting oil production.

    When he visited Saudi Arabia in July, Biden sought to make clear it wasn’t solely to ask the oil-rich kingdom to increase its oil output. After decrying the regime’s human rights record as a candidate, Biden fist-bumped the powerful Crown Prince Mohammed bin Salman, who US intelligence has said masterminded the murder of Saudi journalist and US resident Jamal Khashoggi.

    Speaking on Fox News shortly after the decision was announced, National Security Council communications coordinator John Kirby said the oil cartel was “adjusting back their numbers down a little bit” after making a small increase after Biden’s visit.

    “OPEC+ has been saying and telling the word they’re actually producing 3.5 million more barrels than they actually are. So in some ways this announced decrease really gets them back into more align with actual production,” Kirby said, noting there hadn’t yet been dramatic shifts in the price of oil. 

    “We have to see how it plays out over the long term,” he said.

    Kirby said Biden’s visit to Jeddah, Saudi Arabia, for a regional conference “was not about oil.”

    “It was about larger national strategic and national interest goals throughout the region to try to foster more integrated cooperative region,” he said.

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  • OPEC announces the biggest cut to oil production since the start of the pandemic | CNN Business

    OPEC announces the biggest cut to oil production since the start of the pandemic | CNN Business

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    London
    CNN Business
     — 

    OPEC+ said Wednesday that it will slash oil production by 2 million barrels per day, the biggest cut since the start of the pandemic, in a move that threatens to push gasoline prices higher just weeks before US midterm elections.

    The group of major oil producers, which includes Saudi Arabia and Russia, announced the production cut following its first meeting in person since March 2020. The reduction is equivalent to about 2% of global oil demand.

    The price of Brent crude oil rose 1.5% to more than $93 a barrel on the news, adding to gains this week ahead of the gathering of oil ministers. US oil was up 1.7% at $88.

    The Biden administration criticized the OPEC+ decision in a statement on Wednesday, calling it “shortsighted” and saying that it will hurt low and middle-income countries already struggling with elevated energy prices the most.

    The production cuts will start in November, and the Organization of Petroleum Exporting Countries (OPEC) and its allies will meet again in December.

    In a statement, the group said the decision to cut production was made “in light of the uncertainty that surrounds the global economic and oil market outlooks.”

    Global oil prices, which soared in the first half of the year, have since dropped sharply on fears that a global recession will depress demand. Brent crude is down 20% since the end of June. The global benchmark hit a peak of $139 a barrel in March after Russia’s invasion of Ukraine.

    OPEC and its allies, which control more than 40% of global oil production, are hoping to preempt a drop in demand for their barrels from a sharp economic slowdown in China, the United States and Europe.

    Western sanctions on Russian oil are also muddying the waters. Russia’s production has held up better than predicted, with supply being diverted to China and India. But the United States and Europe are now working on ways to implement a G7 agreement to cap the price of Russian crude exports to third countries.

    The oil cartel came under intense pressure from the White House ahead of its meeting in Vienna as President Biden tried to secure lower energy prices for US consumers. Senior Biden administration officials were lobbying their counterparts in Kuwait, Saudi Arabia, and the United Arab Emirates (UAE) to vote against cutting oil production, according to officials.

    The prospect of a production cut was framed as a “total disaster” in draft talking points circulated by the White House to the Treasury Department on Monday, which CNN obtained. “It’s important everyone is aware of just how high the stakes are,” one US official said.

    With just a month to go before the critical midterm elections, US gasoline prices have begun to creep up again, posing a political risk the White House is desperately trying to avoid.

    Rising oil prices could mean inflation remains higher for longer, and add to pressure on the Federal Reserve to hike interest rates even more aggressively.

    But the impact of Wednesday’s cut, while a bullish signal for oil prices, may be limited as many smaller OPEC producers were struggling to meet previous production targets.

    “An announced cut of any volume is unlikely to be fully implemented by all countries, as the group already lags 3 million barrels per day behind its stated production ceiling,” Rystad Energy analyst Jorge Leon said in a note.

    Rystad Energy estimates that the global oil market will be oversupplied between now and the end of the year, dampening the effect of production cuts on prices.

    — Alex Marquardt, Natasha Bertrand, Phil Mattingly, Mark Thompson and Betsy Klein contributed to this report.

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  • White House launches last ditch effort to dissuade OPEC from cutting oil production to avoid a ‘total disaster’ | CNN Politics

    White House launches last ditch effort to dissuade OPEC from cutting oil production to avoid a ‘total disaster’ | CNN Politics

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    Washington
    CNN
     — 

    The Biden administration has launched a full-scale pressure campaign in a last-ditch effort to dissuade Middle Eastern allies from dramatically cutting oil production, according to multiple sources familiar with the matter.

    The push comes ahead of Wednesday’s crucial meeting of OPEC+, the international cartel of oil producers that is widely expected to announce a significant cut to output in an effort to raise oil prices. That in turn would cause US gasoline prices to rise at a precarious time for the Biden administration, just five weeks before the midterm elections.

    For the past several days, President Joe Biden’s senior-most energy, economic and foreign policy officials have been enlisted to lobby their foreign counterparts in Middle Eastern allied countries including Kuwait, Saudi Arabia, and the UAE to vote against cutting oil production.

    Members of the Saudi-led oil cartel and its allies including Russia, known as OPEC+, are expected to announce production cuts potentially up to more than one million barrels per day. That would be the largest cut since the beginning of the pandemic and could lead to a dramatic spike in oil prices.

    Some of the draft talking points circulated by the White House to the Treasury Department on Monday that were obtained by CNN framed the prospect of a production cut as a “total disaster” and warned that it could be taken as a “hostile act.”

    “It’s important everyone is aware of just how high the stakes are,” said a US official of what was framed as a broad administration effort that is expected to continue in the lead up to the Wednesday OPEC+ meeting.

    The White House is “having a spasm and panicking,” another US official said, describing this latest administration effort as “taking the gloves off.” According to a White House official, the talking points were being drafted and exchanged by staffers and not approved by White House leadership or used with foreign partners.

    In a statement to CNN, National Security Council spokesperson Adrienne Watson said, “We’ve been clear that energy supply should meet demand to support economic growth and lower prices for consumers around the world and we will continue to talk with our partners about that.”

    For Biden, a dramatic cut in oil production could not come at a worse time. The administration has for months engaged in an intensive domestic and foreign policy effort to mitigate soaring energy prices in the wake of Russia’s invasion of Ukraine. That work appeared to pay off, with US gasoline prices falling for almost 100 days in a row.

    But with just a month to go before the critical midterm elections, US gasoline prices have begun to creep up again, posing a political risk the White House is desperately trying to avoid. As US officials have moved to gauge potential domestic options to head off gradual increases over the last several weeks, the news of major OPEC+ action presents a particularly acute challenge.

    Watson, the NSC spokesperson declined to comment on the midterms, saying instead, “Thanks to the President’s efforts, energy prices have declined sharply from their highs and American consumers are paying far less at the pump.”

    Amos Hochstein, Biden’s top energy envoy, has played a leading role in the lobbying effort, which has been far more extensive than previously reported amid extreme concern in the White House over the potential cut. Hochstein, along with top national security official Brett McGurk and the administration’s special envoy to Yemen Tim Lenderking, traveled to Jeddah late last month to discuss a range of energy and security issues as a follow up to Biden’s high-profile visit to Saudi Arabia in July.

    Officials across the administration’s economic and foreign policy teams have also been involved with reaching out to OPEC governments as part of the latest effort to stave off a production cut.

    The White House has asked Treasury Secretary Janet Yellen to make the case personally to some Gulf state finance ministers, including from Kuwait and the UAE, and try to convince them that a production cut would be extremely damaging to the global economy. The US has argued that in the long-run a cut in oil production would create more downward pressure on prices – the opposite of what a significant cut would be designed to accomplish. Their logic is that “cutting right now would increase risks of inflation,” lead to higher interest rates and ultimately a greater risk of recession.

    “There is great political risk to your reputation and relations with the United States and the west if you move forward,” the White House draft talking points suggested Yellen communicate to her foreign counterparts.

    A senior US official acknowledged that the administration has been lobbying the Saudi-led coalition for weeks to try to convince them not to cut oil production.

    It comes less than three months after President Joe Biden traveled to Saudi Arabia and met with Crown Prince Mohammed bin Salman on a trip that was driven in part by a desire to convince Saudi Arabia, the de facto leader of OPEC, to increase oil production which would help bring down the then-skyrocketing gas prices.

    President Joe Biden (L) and Saudi Crown Prince Mohammed bin Salman (R) arrive for the family photo during the Jeddah Security and Development Summit (GCC+3) at a hotel in Saudi Arabia's Red Sea coastal city of Jeddah on July 16, 2022.

    When OPEC+ agreed a few weeks later to a modest 100,000 barrel increase in production, critics argued Biden had gotten little out of the trip.

    The trip was billed as a meeting with regional leaders about issues critical to US national security, including Iran, Israel and Yemen. It was criticized for its lack of results and for rehabbing the image of the crown prince who had been directly blamed by Biden for orchestrating the killing of Washington Post columnist Jamal Khashoggi.

    In the months leading up to the meeting, Biden’s top aides for the Middle East and energy, McGurk and Hochstein, shuttled between Washington and Saudi Arabia planning and coordinating the visit.

    One diplomatic official in the region described the US campaign to block production cuts as less of a hard sell, and more of an effort to underscore a critical international moment given the economic fragility and ongoing war in Ukraine. Though another source familiar with the discussions told CNN it was described by a diplomat from one of the countries approached as “desperate.”

    A source familiar with the outreach says a call was planned with the UAE but the effort was rebuffed by Kuwait. Kuwait’s embassy in Washington did not immediately respond to a request for comment. Neither did Saudi Arabia’s. The UAE embassy declined to comment.

    Publicly, the White House has cautiously avoided weighing in on the possibility of a dramatic oil production cut.

    “We are not members of OPEC+, and so I don’t want to get ahead of what could potentially come out of that meeting,” White House press secretary Karine Jean-Pierre told reporters Monday. The US focus, Jean-Pierre said, remains “taking every step to ensure markets are sufficiently supplied to meet demand for a growing global economy.”

    OPEC+ members are weighing a more dramatic cut due to what has been a precipitous decline in prices, which have dropped sharply to below $90 per barrel in recent months.

    Hanging over Wednesday’s OPEC+ meeting in Vienna will also be the looming oil price cap that European nations intend to impose on Russian oil exports as punishment for Russia’s invasion of Ukraine. Many OPEC+ members, not only Russia, have expressed unhappiness with the prospect of a price cap because of the precedent it could set for consumers, rather than the market, to dictate the price of oil.

    Included in the White House talking points to Treasury was a US proposal that if OPEC+ decides against a cut this week the US will announce a buyback of up to 200 million barrels to refill its Strategic Petroleum Reserve (SPR), an emergency stockpile of petroleum that the US has been tapping into this year to help lower oil prices.

    The administration has made it clear to OPEC+ for months, the senior US official said, that the US is willing to buy OPEC’s oil to replenish the SPR. The idea has been to convey to OPEC+ that the US “won’t leave them hanging dry” if they invest money in production, the official said, and therefore, that prices won’t collapse if global demand decreases.

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  • The 10 Senate seats most likely to flip in 2022 | CNN Politics

    The 10 Senate seats most likely to flip in 2022 | CNN Politics

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    CNN
     — 

    The race for the Senate is in the eye of the beholder less than six weeks from Election Day, with ads about abortion, crime and inflation dominating the airwaves in key states as campaigns test the theory of the 2022 election.

    The cycle started out as a referendum on President Joe Biden – an easy target for Republicans, who need a net gain of just one seat to flip the evenly divided chamber. Then the US Supreme Court’s late June decision overturning Roe v. Wade gave Democrats the opportunity to paint a contrast as Republicans struggled to explain their support for an abortion ruling that the majority of the country opposes. Former President Donald Trump’s omnipresence in the headlines gave Democrats another foil.

    But the optimism some Democrats felt toward the end of the summer, on the heels of Biden’s legislative wins and the galvanizing high court decision, has been tempered slightly by the much anticipated tightening of some key races as political advertising ramps up on TV and voters tune in after Labor Day.

    Republicans, who have midterm history on their side as the party out of the White House, have hammered Biden and Democrats for supporting policies they argue exacerbate inflation. Biden’s approval rating stands at 41% with 54% disapproving in the latest CNN Poll of Polls, which tracks the average of recent surveys. And with some prices inching back up after a brief hiatus, the economy and inflation – which Americans across the country identify as their top concern in multiple polls – are likely to play a crucial role in deciding voters’ preferences.

    But there’s been a steady increase in ads about crime too as the GOP returns to a familiar criticism, depicting Democrats as weak on public safety. Cops have been ubiquitous in TV ads this cycle – candidates from both sides of the aisle have found law enforcement officers to testify on camera to their pro-police credentials. Democratic ads also feature women talking about the threat of a national abortion ban should the Senate fall into GOP hands, while Republicans have spent comparatively less trying to portray Democrats as the extremists on the topic.

    While the issue sets have fluctuated, the Senate map hasn’t changed. Republicans’ top pickup opportunities have always been Nevada, Georgia, Arizona and New Hampshire – all states that Biden carried in 2020. In two of those states, however, the GOP has significant problems, although the states themselves keep the races competitive. Arizona nominee Blake Masters is now without the support of the party’s major super PAC, which thinks its money can be better spent elsewhere, including in New Hampshire, where retired Army Brig. Gen. Don Bolduc is far from the nominee the national GOP had wanted. But this is the time of year when poor fundraising can really become evident since TV ad rates favor candidates and a super PAC gets much less bang for its buck.

    The race for Senate control may come down to three states: Georgia, Nevada and Pennsylvania, all of which are rated as “Toss-up” races by Inside Elections with Nathan L. Gonzales. As Republicans look to flip the Senate, which Minority Leader Mitch McConnell has called a “50-50 proposition,” they’re trying to pick up the first two and hold on to the latter.

    Senate Democrats’ path to holding their majority lies with defending their incumbents. Picking off a GOP-held seat like Pennsylvania – still the most likely to flip in CNN’s ranking – would help mitigate any losses. Wisconsin, where GOP Sen. Ron Johnson is vying for a third term, looks like Democrats’ next best pickup opportunity, but that race drops in the rankings this month as Republican attacks take a toll on the Democratic nominee in the polls.

    These rankings are based on CNN’s reporting, fundraising and advertising data, and polling, as well as historical data about how states and candidates have performed. It will be updated one more time before Election Day.

    Incumbent: Republican Pat Toomey (retiring)

    Sarah Silbiger/Pool/Getty Images

    The most consistent thing about CNN’s rankings, dating back to 2021, has been Pennsylvania’s spot in first place. But the race to replace retiring GOP Sen. Pat Toomey has tightened since the primaries in May, when Republican Mehmet Oz emerged badly bruised from a nasty intraparty contest. In a CNN Poll of Polls average of recent surveys in the state, Democrat John Fetterman, the state lieutenant governor, had the support of 50% of likely voters to Oz’s 45%. (The Poll of Polls is an average of the four most recent nonpartisan surveys of likely voters that meet CNN’s standards.) Fetterman is still overperforming Biden, who narrowly carried Pennsylvania in 2020. Fetterman’s favorability ratings are also consistently higher than Oz’s.

    One potential trouble spot for the Democrat: More voters in a late September Franklin and Marshall College Poll viewed Oz has having policies that would improve voters’ economic circumstances, with the economy and inflation remaining the top concern for voters across a range of surveys. But nearly five months after the primary, the celebrity surgeon still seems to have residual issues with his base. A higher percentage of Democrats were backing Fetterman than Republicans were backing Oz in a recent Fox News survey, for example, with much of that attributable to lower support from GOP women than men. Fetterman supporters were also much more enthusiastic about their candidate than Oz supporters.

    Republicans have been hammering Fetterman on crime, specifically his tenure on the state Board of Pardons: An ad from the Senate Leadership Fund features a Bucks County sheriff saying, “Protect your family. Don’t vote Fetterman.” But the lieutenant governor is also using sheriffs on camera to defend his record. And with suburban voters being a crucial demographic, Democratic advertising is also leaning into abortion, like this Senate Majority PAC ad that features a female doctor as narrator and plays Oz’s comments from during the primary about abortion being “murder.” Oz’s campaign has said that he supports exceptions for “the life of the mother, rape and incest” and that “he’d want to make sure that the federal government is not involved in interfering with the state’s decisions on the topic.”

    Incumbent: Democrat Catherine Cortez Masto

    02 democrat immigration legislation 0717

    CNN

    Republicans have four main pickup opportunities – and right now, Democratic Sen. Catherine Cortez Masto’s seat looks like one of their best shots. Biden carried Nevada by a slightly larger margin than two of those other GOP-targeted states, but the Silver State’s large transient population adds a degree of uncertainty to this contest.

    Republicans have tried to tie the first-term senator to Washington spending and inflation, which may be particularly resonant in a place where average gas prices are now back up to over $5 a gallon. Democrats are zeroing in on abortion rights and raising the threat that a GOP-controlled Senate could pass a national abortion ban. Former state Attorney General Adam Laxalt – the rare GOP nominee to have united McConnell and Trump early on – called the 1973 Roe v. Wade ruling a “joke” before the Supreme Court overturned the decision in June. Democrats have been all too happy to use that comment against him, but Laxalt has tried to get around those attacks by saying he does not support a national ban and pointing out that the right to an abortion is settled law in Nevada.

    Incumbent: Democrat Raphael Warnock

    Sen Raphael Warnock 10 senate seats

    Megan Varner/Getty Images

    The closer we get to Election Day, the more we need to talk about the Georgia Senate race going over the wire. If neither candidate receives a majority of the vote in November, the contest will go to a December runoff. There was no clear leader in a recent Marist poll that had Democratic Sen. Raphael Warnock, who’s running for a full six-year term, and Republican challenger Herschel Walker both under 50% among those who say they definitely plan to vote.

    Warnock’s edge from earlier this cycle has narrowed, which bumps this seat up one spot on the rankings. The good news for Warnock is that he’s still overperforming Biden’s approval numbers in a state that the President flipped in 2020 by less than 12,000 votes. And so far, he seems to be keeping the Senate race closer than the gubernatorial contest, for which several polls have shown GOP Gov. Brian Kemp ahead. Warnock’s trying to project a bipartisan image that he thinks will help him hold on in what had until recently been a reliably red state. Standing waist-deep in peanuts in one recent ad, he touts his work with Alabama GOP Sen. Tommy Tuberville to “eliminate the regulations,” never mentioning his own party. But Republicans have continued to try to tie the senator to his party – specifically for voting for measures in Washington that they claim have exacerbated inflation.

    Democrats are hoping that enough Georgians won’t see voting for Walker as an option – even if they do back Kemp. Democrats have amped up their attacks on domestic violence allegations against the former football star and unflattering headlines about his business record. And all eyes will be on the mid-October debate to see how Walker, who has a history of making controversial and illogical comments, handles himself onstage against the more polished incumbent.

    Incumbent: Republican Ron Johnson

    Sen Ron Johnson 10 senate seats

    Leigh VogelPool/Getty Images

    Sen. Ron Johnson is the only Republican running for reelection in a state Biden won in 2020 – in fact, he broke his own term limits pledge to run a third time, saying he believed America was “in peril.” And although Johnson has had low approval numbers for much of the cycle, Democrats have underestimated him before. This contest moves down one spot on the ranking as Johnson’s race against Democratic Lt. Gov. Mandela Barnes has tightened, putting the senator in a better position.

    Barnes skated through the August primary after his biggest opponents dropped out of the race, but as the nominee, he’s faced an onslaught of attacks, especially on crime, using against him his past words about ending cash bail and redirecting some funding from police budgets to social services. Barnes has attempted to answer those attacks in his ads, like this one featuring a retired police sergeant who says he knows “Mandela doesn’t want to defund the police.”

    A Marquette University Law School poll from early September showed no clear leader, with Johnson at 49% and Barnes at 48% among likely voters, which is a tightening from the 7-point edge Barnes enjoyed in the same poll’s August survey. Notably, independents were breaking slightly for Johnson after significantly favoring Barnes in the August survey. The effect of the GOP’s anti-Barnes advertising can likely be seen in the increasing percentage of registered voters in a late September Fox News survey who view the Democrat as “too extreme,” putting him on parity with Johnson on that question. Johnson supporters are also much more enthusiastic about their candidate.

    Incumbent: Democrat Mark Kelly

    Mark Kelly AZ 1103

    Courtney Pedroza/Getty Images

    Democratic Sen. Mark Kelly, who’s running for a full six-year term after winning a 2020 special election, is still one of the most vulnerable Senate incumbents in a state that has only recently grown competitive on the federal level. But Republican nominee Blake Masters is nowhere close to rivaling Kelly in fundraising, and major GOP outside firepower is now gone. After canceling its September TV reservations in Arizona to redirect money to Ohio, the Senate Leadership Fund has cut its October spending too.

    Other conservative groups are spending for Masters but still have work to do to hurt Kelly, a well-funded incumbent with a strong personal brand. Kelly led Masters 51% to 41% among registered voters in a September Marist poll, although that gap narrowed among those who said they definitely plan to vote. A Fox survey from a little later in the month similarly showed Kelly with a 5-point edge among those certain to vote, just within the margin of error.

    Masters has attempted to moderate his abortion position since winning his August primary, buoyed by a Trump endorsement, but Kelly has continued to attack him on the issue. And a recent court decision allowing the enforcement of a 1901 state ban on nearly all abortions has given Democrats extra fodder to paint Republicans as a threat to women’s reproductive rights.

    Incumbent: Republican Richard Burr (retiring)

    Sen Richard Burr 10 senate seats

    Demetrius Freeman/Pool/Getty Images

    North Carolina slides up one spot on the rankings, trading places with New Hampshire. The open-seat race to replace retiring GOP Sen. Richard Burr hasn’t generated as much national buzz as other states given that Democrats haven’t won a Senate seat in the state since 2008.

    But it has remained a tight contest with Democrat Cheri Beasley, who is bidding to become the state’s first Black senator, facing off against GOP Rep. Ted Budd, for whom Trump recently campaigned. Beasley lost reelection as state Supreme Court chief justice by only about 400 votes in 2020 when Trump narrowly carried the Tar Heel state. But Democrats hope that she’ll be able to boost turnout among rural Black voters who might not otherwise vote during a midterm election and that more moderate Republicans and independents will see Budd as too extreme. One of Beasley’s recent spots features a series of mostly White, gray-haired retired judges in suits endorsing her as “someone different” while attacking Budd as being a typical politician out for himself.

    Budd is leaning into current inflation woes, specifically going after Biden in some ads that feature half-empty shopping carts, without even mentioning Beasley. Senate Leadership Fund is doing the work of trying to tie the Democrat to Washington – one recent spot almost makes her look like the incumbent in the race, superimposing her photo over an image of the US Capitol and displaying her face next to Biden’s. Both SLF and Budd are also targeting Beasley over her support for Democrats’ recently enacted health care, tax and climate bill. “Liberal politician Cheri Beasley is coming for you – and your wallet,” the narrator from one SLF ad intones, before later adding, “Beasley’s gonna knock on your door with an army of new IRS agents.” (The new law increases funding for the IRS, including for audits. But Democrats and the Trump-appointed IRS commissioner have said the intention is to go after wealthy tax cheats, not the middle class.)

    Incumbent: Democrat Maggie Hassan

    Sen Maggie Hassan 10 senate seats

    Erin Scott/Getty Images

    A lot has been made of GOP candidate quality this cycle. But there are few states where the difference between the nominee Republicans have and the one they’d hoped to have has altered these rankings quite as much as New Hampshire.

    Retired Army Brig. Gen. Don Bolduc, who lost a 2020 GOP bid for the state’s other Senate seat, won last month’s Republican primary to take on first-term Democratic Sen. Maggie Hassan. The problem for him, though, is that he doesn’t have much money to wage that fight. Bolduc had raised a total of $579,000 through August 24 compared with Hassan’s $31.4 million. Senate Leadership Fund is on air in New Hampshire to boost the GOP nominee – attacking Hassan for voting with Biden and her support of her party’s health care, tax and climate package. But because super PACs get much less favorable TV advertising rates than candidates, those millions won’t go anywhere near as far as Hassan’s dollars will.

    A year ago, Republicans were still optimistic that Gov. Chris Sununu would run for Senate, giving them a popular abortion rights-supporting nominee in a state that’s trended blue in recent federal elections. Bolduc told WMUR after his primary win that he’d vote against a national abortion ban. But ads from Hassan and Senate Majority PAC have seized on his suggestion in the same interview that the senator should “get over” the abortion issue. Republicans recognize that abortion is a salient factor in a state Biden carried by 7 points, but they also argue that the election – as Bolduc said to WMUR – will be about the economy and that Hassan is an unpopular and out-of-touch incumbent.

    Hassan led Bolduc 49% to 41% among likely voters in a Granite State Poll conducted by the University of New Hampshire Survey Center. The incumbent has consolidated Democratic support, but only 83% of Republicans said they were with Bolduc, the survey found. Still, some of those Republicans, like those who said they were undecided, could come home to the GOP nominee as the general election gets closer, which means Bolduc has room to grow. He’ll need more than just Republicans to break his way, however, which is one reason he quickly pivoted on the key issue of whether the 2020 election was stolen days after he won the primary.

    Incumbent: Republican Rob Portman (retiring)

    Sen Rob Portman 10 senate seats

    TING SHEN/AFP/POOL/Getty Images

    Ohio – a state that twice voted for Trump by 8 points – isn’t supposed to be on this list at No. 8, above Florida, which backed the former President by much narrower margins. But it’s at No. 8 for the second month in a row. Republican nominee J.D. Vance’s poor fundraising has forced Senate Leadership Fund to redirect millions from other races to Ohio to shore him up and attack Rep. Tim Ryan, the Democratic nominee who had the airwaves to himself all summer. The 10-term congressman has been working to distance himself from his party in most of his ads, frequently mentioning that he “voted with Trump on trade” and criticizing the “defund the police” movement. Vance is finally on the air, trying to poke some holes in Ryan’s image.

    But polling still shows a tight race with no clear leader. Ryan had an edge with independents in a recent Siena College/Spectrum News poll, which also showed that Vance – Trump’s pick for the nomination – has more work to do to consolidate GOP support after an ugly May primary. Assuming he makes up that support and late undecided voters break his way, Vance will likely hold the advantage in the end given the Buckeye State’s solidifying red lean.

    Incumbent: Republican Marco Rubio

    Sen Marco Rubio 10 senate seats

    DREW ANGERER/AFP/POOL/Getty Images

    Democrats face an uphill battle against GOP Sen. Marco Rubio in an increasingly red-trending state, which Trump carried by about 3 points in 2020 – nearly tripling his margin from four years earlier.

    Democratic Rep. Val Demings, who easily won the party’s nomination in August, is a strong candidate who has even outraised the GOP incumbent, but not by enough to seriously jeopardize his advantage. She’s leaning into her background as the former Orlando police chief – it features prominently in her advertising, in which she repeatedly rejects the idea of defunding the police. Still, Rubio has tried to tie her to the “radical left” in Washington to undercut her own law enforcement background.

    Incumbent: Democrat Michael Bennet

    Sen Michael Bennett 10 senate seats

    DEMETRIUS FREEMAN/AFP/POOL/Getty Images

    Democratic Sen. Michael Bennet is no stranger to tough races. In 2016, he only won reelection by 6 points against an underfunded GOP challenger whom the national party had abandoned. Given GOP fundraising challenges in some of their top races, the party hasn’t had the resources to seriously invest in the Centennial State this year.

    But in his bid for a third full term, Bennet is up against a stronger challenger in businessman Joe O’Dea, who told CNN he disagreed with the Supreme Court’s decision to overturn Roe v. Wade. His wife and daughter star in his ads as he tries to cut a more moderate profile and vows not to vote the party line in Washington.

    Bennet, however, is attacking O’Dea for voting for a failed 2020 state ballot measure to ban abortion after 22 weeks of pregnancy and arguing that whatever O’Dea says about supporting abortion rights, he’d give McConnell “the majority he needs” to pass a national abortion ban.

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  • Wages are the most important number to watch in the jobs report | CNN Business

    Wages are the most important number to watch in the jobs report | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.


    New York
    CNN Business
     — 

    Investors, economists and members of the Federal Reserve will be poring over the September jobs report on Friday morning for clues about the health of the economy. But one figure may matter more than most…and it’s not the number of jobs added or the unemployment rate. It’s wage growth.

    Inflation is not just a function of the price of oil and other commodities and production costs like manufacturing and shipping. How much workers take home in their paychecks is also a big part of the inflation picture.

    When people have more money in their wallets (virtual or good old-fashioned leather ones), they tend to be more willing to spend it. That gives companies additional flexibility to raise prices.

    Average hourly wages rose 5.2% over the past 12 months according to the August jobs report. That’s down from a 2022 peak growth rate of 5.6% in March.

    So how aggressively will the Fed need to raise rates going forward? A lot will depend on whether wage growth continues to slow.

    Companies can’t raise prices as much if workers are making less or they risk big destruction in demand.

    The problem is that wage growth above 5% is still historically high. Before the pandemic, wages typically rose just 3% year-over-year. But labor shortages, due to Covid-19 and people dropping out of the workforce, shifted power from employers to employees when it came to worker pay.

    That’s another reason why companies have continued to raise prices: To offset rising costs.

    The government reported Friday that its preferred inflation metric, personal consumption expenditures (PCE), rose 6.2% from a year ago in August. That was lower than July’s reading.

    But the so-called core PCE figure, which excludes food and energy prices, rose 4.9% through August, up from a 4.7% increase in July.

    What’s more, the Fed typically is looking for just a 2% growth rate in the headline PCE number as a sign of price stability. That’s not going to happen anytime soon. In fact, the Fed’s latest forecasts suggest that the central bank thinks PCE will rise 5.4% this year, up from projections of 5.2% in June.

    “I don’t see anything in the near-term to give the Fed tons of comfort that inflation is on the trajectory to 2%,” said David Petrosinelli, senior trader with InspireX. “Wages will remain elevated and that will keep the Fed in a pickle.”

    But there’s another concern. Wages, while still rising, are not actually keeping pace with the increase in consumer prices. You don’t need to be a math genius to realize that 5.2% is less than 6.2%.

    “Wages are a real pain point. People are paying more but not making more,” said Marta Norton, chief investment officer of the Americas with Morningstar Investment Management. With that in mind, Norton said there is a “higher probability of stagflation.”

    Stagflation is the nasty economic combination of stagnant growth and persistent inflation.

    Retail sales have held up relatively well despite inflation pressures, but Norton warns that can’t last forever. American shoppers would eventually reach their breaking point and just start buying essentials. A slowdown in consumption will inevitably lead to lower prices…but also slower economic growth.

    “Inflation is its own cure. Consumers have the power to spend or not spend,” she said.

    The third quarter is mercifully over. It’s been another doozy for the market. September in particular was bleak. It was the worst month for the Dow since the start of the pandemic in March 2020.

    But even though we’re seemingly in a bear market for everything as bonds, gold and bitcoin have all tumbled this year as well, there are some hopeful signs for the next few months.

    The fourth quarter is typically a festive time on Wall Street. Investors tend to buy stocks in anticipation of robust consumer shopping during the holidays. Businesses typically spend more as well to flush out those yearly budgets. And major companies also often give rosy guidance in October about earnings expectations for the coming year.

    “October has been a turnaround month—a ‘bear killer’ if you will,” said Jeff Hirsch, editor-in-chief of the Stock Trader’s Almanac, in a recent blog post.

    Hirsch added that a dozen bear markets since World War II have ended in the month of October. And of those twelve, seven market bottoms happened during midterm election years.

    Traders will definitely be keeping close tabs on Washington this fall to see if Republicans gain control of the House. That could lead to more gridlock in DC, which investors tend to like.

    Whether or not Corporate America and investors are going to be so bullish this October is up for debate given the concerns about inflation, interest rates and the global economy. After all, October is also famous for huge crashes, most recently in 2008 but also in 1987 and, of course, 1929.

    So stocks definitely could take another turn for the worse. But experts are hopeful that the end of the bear market is in sight.

    “We’re nearer to a bottom,” said Christopher Wolfe, chief investment officer of First Republic Private Wealth Management. “A lot of quality companies are on sale. It’s a time to be patient and reposition.”

    Monday: US ISM manufacturing; China stock markets closed all week

    Tuesday: US job openings and labor turnover (JOLTS); Japan inflation; Australia interest rate decision

    Wednesday: US ADP private sector jobs; US ISM services; OPEC+ meeting

    Thursday: US weekly jobless claims; earnings from ConAgra

    (CAG)    , Constellation Brands

    (STZ)    , McCormick

    (MKC)     and Levi Strauss

    (LEVI)

    Friday: US jobs report; Germany industrial production; earnings from Tilray

    (TLRY)

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  • UK PM Liz Truss admits mistakes on controversial tax cuts plan, but doubles down on it anyway | CNN

    UK PM Liz Truss admits mistakes on controversial tax cuts plan, but doubles down on it anyway | CNN

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    London
    CNN
     — 

    British Prime Minister Liz Truss admitted mistakes had been made with her government’s controversial “mini-budget” announced last week – which sent the pound to historic lows and sparked market chaos – but stood by her policies.

    Speaking to the BBC’s Laura Kuenssberg on Sunday morning Truss said: “I do accept we should have laid the ground better and I’ve learned from that, and I’ll make sure I’ll do a better job of laying the ground in the future.”

    She said that she wanted “to tell people I understand their worries about what happened this week and I stand by the package we announced and I stand by the fact we announced it quickly.”

    Last week, Truss’ government announced that they would cut taxes by £45 billion ($48 billion) in a bid to get the UK economy moving again, with a package that includes scrapping the highest rate of income tax for top earners from 45% to 40% and a big increase in government borrowing to slash energy prices for millions of households and businesses this winter.

    Many leading economists described the unorthodox measures as a reckless gamble, noting that the measures came a day after the Bank of England warned that the country was already likely in a recession.

    Truss said the reforms were not agreed by her cabinet, but were a decision made by Chancellor Kwasi Kwarteng. “It was a decision the chancellor made,” she told the BBC.

    She doubled down on that decision however, saying that her government made the “right decision to borrow more this winter to face the extraordinary consequences we face,” referring to the energy crisis caused by the war in Ukraine. She claimed that the alternative would be for people to pay up to £6,000 in energy bills, and that inflation would be 5% higher.

    “We’re not living in a perfect world, we are living in a very difficult world, where governments around the world are taking tough decisions,” Truss said.

    Regarding the rising cost of living in the UK, namely the rise of mortgage rates, Truss said that is mostly driven by interest rates and is “a matter for the independent Bank of England.”

    The Bank of England said Wednesday it would buy UK government debt “on whatever scale is necessary” in an emergency intervention to halt a bond market crash that it warned could threaten financial stability.

    Meanwhile, Credit Suisse said that UK house prices could “easily” fall between 10% and 15% over the next 18 months if the Bank of England aggressively hikes interest rates to keep inflation in check.

    The fallout could make it harder for people to get approved for mortgages, and encourage prospective buyers to delay their purchases. A drop in demand would lead to falling prices.

    Truss defended her government’s policies to the BBC as the Conservative party’s annual conference kicked off in in Birmingham.

    The party is bitterly divided, with its poll ratings sinking lower than they were even under the disgraced leadership of Boris Johnson.

    On Sunday, that chill was evident, as Nadine Dorries, the former culture secretary who backed Truss to be prime minister, accused Truss of throwing Chancellor Kwasi Kwarteng “under a bus” in her BBC interview, when she said the tax cut decision were made by him and not the Cabinet.

    “One of @BorisJohnson faults was that he could sometimes be too loyal and he got that. However, there is a balance and throwing your Chancellor under a bus on the first day of conference really isn’t it. [Hope] things improve and settle down from now,” Dorries said on Twitter.

    Conservative members of parliament fear the combination of tax cuts along with huge public spending to help people cope with energy bills, rising inflation, rising interest rates and a falling pound are going to make winning the next general election impossible.

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  • How Spam became cool again | CNN Business

    How Spam became cool again | CNN Business

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    New York
    CNN Business
     — 

    Spam is cool.

    The 85-year-old canned block of meat has undergone a cultural reinvention.

    Hormel

    (HRL)     has sold a record amount of Spam for seven straight years, and 2022 is on pace for another such milestone. The conglomerate behind Skippy and Jennie-O turkey says it can’t make Spam fast enough and is increasing production capacity.

    Spam is a trending ingredient on TikTok and on the menu at fine-dining restaurants in coastal cities. In 2019, a limited-edition Spam pumpkin spice flavor sold out in minutes. (You can still buy it on Ebay, where it goes for up to $100 per can.)

    What is behind this phenomenon? Why does this slab of cooked pork that has long been stigmatized as fake meat, linked to wartime rations and hilariously spoofed on Monty Python now have cachet with foodies?

    Spam’s popularity in Hawaiian, Asian and Pacific Island cuisine has influenced its growth in the United States. As more immigrants came to the United States and fusion dishes and ethnic cuisines entered the cultural mainstream, Spam has reached new, younger foodies, say Hormel, food analysts and researchers.

    Edgy and clever advertising campaigns also have helped Spam attract a broader customer range than the Baby Boomers who grew up eating it, sometimes reluctantly.

    “Spam has undergone a reputation makeover,” said Robert Ku, an associate professor of Asian and Asian American studies at Binghamton University and the author of “Dubious Gastronomy: Eating Asian in the USA.” “A lot of celebrity chefs have been Asian and Asian American, and reintroduced Spam to a new audience.”

    More than 100,000 visitors stream into the Spam museum every year in Austin, Minnesota, with stories to tell about Spam and recipes to share, said Savile Lord, the manager of the museum in the brand’s hometown. Visitors most often ask her and other museum “Spambassadors” how Spam got its name and what the heck is in it.

    Spam first hit shelves in 1937 as a 12-ounce, 25-cent, convenient and long-lasting protein in a tin can during the lean years of the Great Depression. Spam contained nothing but pork shoulder, chopped ham, water, sugar and sodium.

    It was a concoction of George Hormel and his son, Jay, meatpackers in Austin. The Hormels had been working on the “problem of canning a nonperishable pork product for a good many years and at last we solved it,” Jay told The New Yorker in 1945.

    They offered a $100 prize for the best name for the food. It needed to be short for display purposes and to fit on one-column newspaper advertisements. It also had to pronounceable in any language.

    The brother of a corporate executive threw out “Spam,” a combination of “spice” and “ham,” at a party, and Hormel “knew then and there that the name was perfect.”

    From the beginning, Spam was marketed as a time-saver and a food for any meal: Spam and eggs. Spam and pancakes. Spam and beans, spaghetti, macaroni and crackers. Spamwiches.

    A pie made with Spam-brand canned meat, potatoes, scallions, and cream of mushroom soup during the 1950s or 1960s.

    “Never have you imagined a meat could turn into so many interesting uses. Morning, noon or night – cold or hot – Spam hits the spot!” read one early advertisement. Spam was a “miracle meat,” the company told consumers in newspaper spots and radio ads.

    And then came the United States’ entrance into World War II in 1941, the decisive moment in Spam’s growth.

    At many Pacific outposts, which had little refrigeration or local sources of meat, American and Allied troops relied on the canned meat that could be stored away for months and eaten on the go.

    Hormel says more than 100 million pounds of Spam were shipped overseas to help feed the troops during the war. Uncle Sam became known as Uncle Spam, much to the dismay of troops forced to eat it every single day.

    “During World War II, of course, I ate my share of Spam along with millions of other soldiers,” Dwight D. Eisenhower later wrote to Hormel’s president. “I’ll even confess to a few unkind remarks about it – uttered during the strain of battle.”

    For the citizens of conflict-wracked countries in the Pacific struggling with hunger and famine during the war and rebuilding years, however, Spam was a symbol of access to American goods and services. Sometimes, it was the only protein source available. After US troops left, Spam remained, becoming an ingredient in local dishes.

    “Spam became part of Asian culture,” said Ayalla Ruvio, a consumer behavior researcher at Michigan State University who studies identity and consumption habits. “It represented a piece of America. It’s like Coca-Cola or McDonald’s.”

    American troops also introduced Spam in Korea during the Korean War in the early 1950s, and Budae Jjigae (Army Stew) became a popular Korean dish. Spam also remains a common ingredient in dishes almost anywhere US soldiers were stationed, such as Guam, the Philippines and Okinawa, Japan.

    In Hawaii, where the US military has long been a major presence, more Spam is consumed per person than any other state. It’s stacked on a block of rice and wrapped in seaweed to make Spam musubi and sold at fast-food chains like McDonald’s in Hawaii. There’s even an annual Waikiki Spam Jam festival.

    Many US soldiers returning from World War II vowed never to eat Spam again, and the brand became linked to rationing and economic hardship. But Spam has appealed to new consumers in the United States in recent years.

    Spam musubi, a common Japanese lunch dish that was created in Hawaii.

    “When I first started getting into the brand, we started to notice this transition to a stronger multicultural set of consumers,” said Brian Lillis, who has been product’s brand manager for six years. “They brought with them the traditions of utilizing the product in their home country or where maybe their ancestors came from.”

    Hormel has worked with chefs at Korean, Taiwanese and Vietnamese restaurants to get Spam on menus. As more people have been introduced to these dishes, they go home and try to make their own versions, Lillis said.

    Spam highlights its versatility in dishes on social media and TV advertisements. There are ads for Spam and eggs, as well as Spam fried rice, Spam musabi, yakitori, and poke.

    Spam has made a comeback in the United States because Asian and Asian American chefs such as Chris Oh have tried to reinvent it in their own ways, said Ku, the Binghamton University professor. “They brought some of the culinary influences of Asia and the Pacific and upscaled it.”

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  • US officials troubled by controversial UK tax cut plan | CNN Business

    US officials troubled by controversial UK tax cut plan | CNN Business

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    New York
    CNN
     — 

    US officials are increasingly troubled by the United Kingdom’s proposal to slash taxes at a time of crushing inflation, a plan that has ignited turbulence in financial markets.

    UK Prime Minister Liz Truss’s tax-cut plan has drawn criticism from economists and investors and prompted the Bank of England to calm panicked markets with an emergency intervention on Wednesday.

    The Biden administration, including the Treasury Department, is concerned by the UK’s tax-cut plan, an administration official familiar with the matter told CNN Thursday.

    The risk for the United States is that any trouble on the other side of the Atlantic could spill over to the global financial system and world economy.

    US Commerce Secretary Gina Raimondo criticized Truss’s plan Wednesday, pointing out that the British pound has “plummeted” since the proposal was unveiled.

    “The policy of cutting taxes, and simultaneously increasing spending, isn’t one that is going to fight inflation in the short term or put you in good stead for long-term economic growth,” Raimondo said in response to a question at an event held by The Hamilton Project at the Brookings Institution.

    Raimondo sought to contrast the UK’s approach with that of the Biden administration.

    “We’re pursuing a different strategy … We’re taking inflation seriously, letting the Federal Reserve do its job, watching deficit spending,” she said. “Investors, businesspeople want to see world leaders taking inflation very seriously. And it’s hard to see that out of this new government.”

    Biden officials have conveyed their worries about the UK plan through the International Monetary Fund, according to Bloomberg News, which previously reported on the concerns of US officials.

    The United States is the largest shareholder in the IMF, which issued a rare criticism of the UK plan this week and urged the country’s officials to “reevaluate” the tax cuts.

    “Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy,” an IMF spokesperson said earlier this week.

    Truss defended her tax plan, telling CNN’s Jake Tapper last week that her government is incentivizing businesses to invest and helping ordinary people with their taxes.

    Some US officials have been careful not to directly criticize their UK counterparts.

    US Treasury Secretary Janet Yellen on Tuesday declined to comment directly on the UK economic plan, though she noted the UK is dealing with “significant inflation problems” — just like the United States.

    Asked if she is concerned about disorderly markets, Yellen said “markets are functioning well” and she hasn’t seen liquidity problems emerge.

    Yet the large swings in bond and currency markets raise questions about just how well markets are functioning.

    A day after Yellen’s comments, the Bank of England announced an emergency intervention. The central bank promised to buy UK government debt “on whatever scale is necessary” to prevent a bond market crash and ease “dysfunction” in financial markets.

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  • The UK is gripped by an economic crisis of its own making | CNN Business

    The UK is gripped by an economic crisis of its own making | CNN Business

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    London
    CNN Business
     — 

    A week ago, the Bank of England took a stab in the dark. It raised interest rates by a relatively modest half a percentage point to tackle inflation. It couldn’t know the scale of the storm that was about to break.

    Less than 24 hours later, the government of new UK Prime Minister Liz Truss unveiled its plan for the biggest tax cuts in 50 years, going all out for economic growth but blowing a huge hole in the nation’s finances and its credibility with investors.

    The pound crashed to a record low against the US dollar on Monday after UK finance minister Kwasi Kwarteng doubled-down on his bet by hinting at more tax cuts to come without explaining how to pay for them. Bond prices collapsed, sending borrowing costs soaring, sparking mayhem in the mortgage market and pushing pension funds to the brink of insolvency.

    Financial markets were already in a febrile state because of the rising risk of a global recession and the gyrations caused by three outsized rate increases from a US central bank on the warpath against inflation. Into that “pressure cooker” stumbled the new UK government.

    “You need to have strong, credible policies, and any policy missteps are punished,” said Chris Turner, global head of markets at ING.

    After verbal assurances by the UK Treasury and Bank of England failed to calm the panic — and the International Monetary Fund delivered a rare rebuke — the UK central bank pulled out its bazooka, saying Wednesday it would print £65 billion ($70 billion) to buy government bonds between now and October 14 — essentially protecting the economy from the fallout of the Truss’ growth plan.

    “While this is welcome, the fact that it needed to be done in the first place shows that the UK markets are in a perilous position,” said Paul Dales, chief UK economist at Capital Economics, commenting on the bank’s intervention.

    The emergency first aid stopped the bleeding. Bond prices recovered sharply and the pound steadied Wednesday against the dollar. But the wound hasn’t healed.

    The pound tumbled 1%, falling back below $1.08 early Thursday. UK government bonds were under pressure again, with the yield on 10-year debt climbing to 4.16%. UK stocks fell 2%.

    “It wouldn’t be a huge surprise if another problem in the financial markets popped up before long,” Dales added.

    The next few weeks will be critical. Mohamed El-Erian, who once helped run the world’s biggest bond fund and now advises Allianz

    (ALIZF)    , said that the central bank had bought some time but would need to act again quickly to restore stability.

    “The Band-Aid may stop the bleeding, but the infection and the bleeding will get worse if they do not do more,” he told CNN’s Julia Chatterley.

    The Bank of England should announce an emergency rate hike of a full percentage point before its next scheduled meeting on November 3. The UK government should also postpone its tax cuts, El-Erian said.

    “It is doable, the window is there, but if they wait too long, that window is going to close,” he added.

    The UK government has previewed rolling announcements in the coming weeks about how it plans to change immigration policy and make it easier to build big infrastructure and energy projects to boost growth, culminating in a budget on November 23 at which it has promised to publish a detailed plan for reducing debt over the medium term.

    But it shows no sign of backing away from the fundamental policy choice of borrowing heavily to fund tax cuts that will mainly benefit the rich at a time of high inflation. And the UK Treasury says it won’t bring forward the November announcement.

    Truss, speaking publicly for the first time since the crisis erupted, blamed global market turmoil and the energy price shock from Russia’s invasion of Ukraine for this week’s chaos.

    “This is the right plan that we’ve set out,” she told local radio on Thursday.

    One big problem identified by investors, former central bankers and many leading economists is that her government only set out half a plan at best. It went ahead without an independent assessment from the country’s budget watchdog of the assumptions underlying the £45 billion ($48 billion) annual tax cuts, and their longer term impact on the economy. It fired the top Treasury civil servant earlier this month.

    Charlie Bean, former deputy governor at the Bank of England, told CNN Business that the government was guilty of “really stupid” decisions. His former boss at the bank, Mark Carney, accused the government of “undercutting” UK economic institutions, saying that had contributed to the “big knock” suffered by the country’s financial system this week.

    “This is an economic crisis. It is a crisis… that can be addressed by policymakers if they choose to address it,” he told the BBC.

    British newspapers have started to speculate that Truss will have to fire Kwarteng, her close friend and political soulmate, if she wants to regain the political initiative and prevent her government’s dire poll ratings from plunging even further.

    “Every single problem we have now is self-inflicted. We look like reckless gamblers who only care about the people who can afford to lose the gamble,” one former Conservative minister told CNN.

    But for now she’s trying to tough it out, and cling onto the Reaganite experiment.

    “Raising, postponing, or abandoning tax cuts will be avoided by Truss at all costs as such a reversal would be humiliating and could leave her looking like a lame duck prime minister,” wrote Mujtaba Rahman and Jens Larson at political risk consultancy Eurasia Group.

    The only alternative left to balance the books would be to slash government spending, and that would prove equally politically difficult as the country enters a recession with its public services under enormous strain and a restive workforce that has shown it’s ready to strike in large numbers over pay.

    “Truss and Kwarteng are now facing a severe economic crisis as the world’s financial markets wait for them to make policy changes that they and the Conservative party will find unpalatable,” the Eurasia analysts wrote.

    The foreign investors who keep the British economy solvent are left scratching their heads for another eight weeks, leaving plenty of time for doubts to surface again about the UK government’s commitment to responsible fiscal policymaking.

    “The message of financial markets is that there is a limit to unfunded spending and unfunded tax cuts in this environment and the price of those is much higher borrowing costs,” Carney said.

    That leaves the Bank of England in a tight spot. A week ago it was pressing the brakes on the economy to take the heat out of price increases, even as the government tried to juice growth. The task got even harder this week when it was forced to dust off its crisis playbook and bail out the government.

    It may not be long before it has to intervene again, this time with an emergency rate hike.

    “[Wednesday’s] intervention is designed to stabilize UK government bond prices, keep the bond market liquid and prevent financial instability but that won’t necessarily stop sterling falling further, with its attendant inflationary consequences,” Bean, the former central banker, told CNN Business.

    “I think there is still a good chance they will need to act ahead of the November meeting,” he added.

    — Julia Horowitz, Luke McGee, Anna Cooban, Rob North, Livvy Doherty and Morgan Povey contributed to this article.

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