Tag: economic indicators

There’s a 98% chance of a global recession, research firm warns | CNN Business

[ad_1]

New York
CNN Business
—

Warning lights are flashing in the global economy as high inflation, drastic rate hikes and the war in Ukraine take their toll.

There is currently a 98.1% chance of a global recession, according to a probability model run by Ned Davis Research.

The only other times that recession model was this high has been during severe economic downturns, most recently in 2020 and during the global financial crisis of 2008 and 2009.

“This indicates that the risk of a severe global recession is rising for some time in 2023,” economists at Ned Davis Research wrote in a report last Friday.

As central banks ramp up their efforts to get inflation under control, economists and investors are growing gloomier.

Seven out of 10 economists surveyed by the World Economic Forum consider a global recession at least somewhat likely, according to a report published Wednesday. Economists dialed back their forecasts for growth and expect inflation-adjusted wages to keep falling the rest of this year and next.

Given surging food and energy prices, there are concerns that the high cost of living could lead to pockets of unrest. Seventy-nine percent of the economists surveyed by the World Economic Forum expect rising prices to trigger social unrest in low-income countries, compared to a 20% expectation in high-income economies.

Investors are also getting more concerned, with the Dow Jones Industrial Average sinking into a bear market Monday for the first time since March 2020.

“Our central case is a hard landing by the end of ’23,” billionaire investor Stanley Druckenmiller said at the CNBC Delivering Alpha Investor Summit Wednesday. “I will be stunned if we don’t have a recession in ’23.”

Even Federal Reserve officials have conceded there is a growing risk of a downturn.

Still, there are clearly bright spots, especially in the United States, the world’s largest economy.

The US jobs market remains historically strong, with the unemployment rate sitting near the lowest levels since 1969. Consumers continue to spend money and corporate profits are sturdy.

There are also hopes that the worst US inflation in 40 years will cool off in the coming months as supply catches up with demand.

The Ned Davis researchers said that although recession risks are rising, its US recession probability model is “still at rock-bottom levels.”

“We do not have conclusive evidence that the US is currently in recession,” the researchers wrote in the report.

[ad_2]

Source link

September 28, 2022
Out of the spotlight, Mark Meadows wields quiet political power amid Trump legal woes | CNN Politics

[ad_1]

Washington
CNN
—

In January, as Kevin McCarthy fought to win the House speakership through 15 rounds of grinding votes and late-night sessions at the Capitol, a few blocks away a group of right-wing holdouts huddled with a familiar but surprising source – former White House chief of staff Mark Meadows.

A founding member of the hardline House Freedom Caucus, Meadows spent years in the House agitating against GOP leadership, trying to move his party increasingly to the right. Now, Meadows was counseling a new batch of Republican rebels, advising them on specific demands to make and gaming out how McCarthy would react to their maneuvering, according to multiple GOP lawmakers who were part of the planning sessions.

The group was so taken by Meadows, at one point they considered nominating him for speaker. Meadows ultimately rejected the suggestion, telling lawmakers he preferred to operate behind the scenes.

“We talked to him about being speaker. We asked would he mind if we put his name up,” Rep. Ralph Norman, one of the McCarthy holdouts, confirmed to CNN. “That’s not something he thought he could win. His best use is doing what he does now. He can freelance and offer advice.”

Sources tell CNN that in recent weeks Meadows has also been advising right-wing lawmakers on negotiations over the nation’s debt ceiling, where McCarthy’s right-flank may try to stand in the way of any concessions made in a compromise with President Joe Biden and congressional Democrats.

The former chief’s hands-on role in both the debt fight and the speaker’s battle – details of which have not been previously reported – underscores how Meadows has managed to stay politically relevant even as he covertly navigates potential criminal exposure for his role in Donald Trump’s attempt to overturn the 2020 election.

Meadows is viewed as a critical first-hand witness to the investigations of both special counsel Jack Smith and Georgia’s Fulton County District Attorney Fani Willis. He’s been ordered to testify before the grand jury in both investigations, and to provide documents to the special counsel after a judge rejected Trump’s claims of executive privilege.

The special counsel’s criminal investigation into January 6 and Trump’s mishandling of classified documents appear to be barreling toward a conclusion. There’s been a flurry of grand jury activity, as anticipation builds for any sign that Meadows is cooperating.

It is unclear whether Meadows has responded to the special counsel’s requests or appeared in front of that grand jury in Washington. In front of the grand jury in Georgia, Meadows declined to answer questions, one of the grand jurors revealed in February.

While Meadows has faded from the public spotlight, interviews with more than a dozen Republican lawmakers and aides, Trump allies and political activists in Meadows’ home state of North Carolina show how he has quietly worked to shape conservative policy and wield influence with MAGA-aligned lawmakers — even as his relationship with Trump remains fraught.

Meadows has maintained a lucrative perch in the conservative world as a senior partner at the Conservative Partnership Institute, the pro-Trump think tank that pays him more than $500,000 and has seen its revenues soar to $45 million since Meadows joined in 2021, according to the group’s tax filings.

Rep. Jim Jordan, one of Meadows’ closest confidants when they served in Congress together, said he still considers Meadows one of his “best friends” and talks to him “at least” once a week. But when it comes to legal matters, Jordan said: “We make a point not to talk about that.”

A spokesman for Meadows declined to make him available for an interview and declined comment for this story.

A source close to Trump’s legal team said Trump’s lawyers have had no contact with Meadows and his team and are in the dark on what Meadows is doing in the investigation, fueling speculation about whether Meadows is cooperating with the special counsel’s probe – or if Meadows himself is a target of the investigation.

The silence from Meadows has irked lawyers representing other defendants aligned with Trump who have been more open, according to several sources familiar with the Trump-aligned legal teams. In particular, they point to a $900,000 payment Trump’s Save America political action committee paid to the firm representing Meadows, McGuireWoods, at the end of last year.

“We’ve all heard the same rumors,” one Trump adviser told CNN. “No one really knows what he’s doing though.”

The Justice Department decided not to charge Meadows with a crime for refusing to testify before the House January 6 committee. In its final report last year, the January 6 House select committee said that Meadows appeared to be one of several participants in a criminal conspiracy as part of Trump’s attempt to delay and overturn the results of the 2020 election. The report paints Meadows as an integral part of that effort, as documented by the more than 2,000 text messages Meadows turned over to the committee before he stopped cooperating.

Meadows was also the key point of contact for dozens of people trying to get through to the president as the attack was unfolding, and the special counsel’s investigation has been trying to comb over many of those interactions.

A lawyer for Meadows declined to comment.

Despite silence on the legal front, Meadows remains in touch with members of Trump’s inner circle on political matters. He was actively involved in securing Trump’s endorsement in 2021 for now-US Sen. Ted Budd ahead of what was a contentious Republican primary in North Carolina. While less-and-less frequently since Trump left office, Meadows has been known to attend fundraisers and events at the former president’s Mar-a-Lago estate in Palm Beach, Florida, where he also helped organize a donor retreat for CPI last year.

“[Meadows] still checks in,” said the Trump adviser, who has spoken to the former chief of staff in recent months. The adviser stressed that Meadows had not indicated any desire to join the Trump campaign team. “He still wants to talk about the politics.”

Allies say Meadows – who fashioned himself as a savvy political operator during his time in Congress and the White House – is motivated by a desire to help steer the direction of the country. But some people who worked closely with him are more skeptical, and think Meadows is driven by a desire for power.

“He is all about getting information so he can be seen as important to donors, other members, the media,” said a senior GOP source close to Trump world, who used to work for a Freedom Caucus member. “People don’t trust him.”

One source close to Meadows suggested that he has not expressed interest in running for office again, but could be open to a job in a future Trump administration – an idea a source close to the former president scoffed at, hinting that Meadows’ direct relationship with the former president had run its course.

“I think he enjoys what he’s doing,” Jordan said of Meadows’ current gig. But the Ohio Republican added: “I’m sure he misses certain aspects of the job as well. You know how involved Mark was.”

After leaving the White House in 2021, Meadows joined CPI, a “MAGA”-centric advocacy group headquartered just blocks from the Capitol that has become a clubhouse for conservative lawmakers, staffers and activists.

Members of the Freedom Caucus hold their weekly meetings at CPI. During the speaker’s race, CPI was home to some consequential strategy sessions involving Meadows.

Sources who attended those meetings say Meadows pushed for concessions like the ability for a single lawmaker to force a vote on ousting the sitting speaker, which McCarthy ultimately agreed to after initially calling it a red line.

Meadows also encouraged them to push for a committee on the “weaponization” of the federal government, which Jordan now helms as chair of the Judiciary Committee.

Five months later, some of those same Republicans say they are once again turning to Meadows as they ramp up for a brawl over the debt limit. Meadows has been encouraging the far-right flank of the House caucus to stick together in insisting on spending cuts and other demands in exchange for lifting the nation’s borrowing limit.

“You’re talking about one of the founding members of the Freedom Caucus,” Rep. Byron Donalds, a Florida Republican, said of Meadows.

“He obviously wants it to continue to be successful. I think it has been. And so I think his role at CPI is to make sure that occurs,” Donalds said, adding that he had not personally spoken to Meadows about the debt limit debate.

When Meadows is in town, he will occasionally pop into Freedom Caucus meetings at CPI or huddle with members of the group beforehand. Norman said Meadows also recently helped him with a fundraiser in North Carolina. And Meadows is also known to dial up members frequently to talk shop.

“He called me today and he said that he wanted me to convey to Alexandria Ocasio-Cortez that he really appreciated her working with me and others on the stock bill,” Rep. Matt Gaetz, a staunch Trump ally, said earlier this month of legislation to restrict lawmakers from trading stocks.

Aside from outreach to lawmakers, Meadows and CPI have also helped congressional offices find and train conservative staffers, particularly when it comes to conducting oversight, multiple sources familiar with the group’s work told CNN. That issue has been a top priority for the right now that Republicans are in the majority, and it’s also an area of expertise for Meadows, who was previously the top Republican on the House Oversight Committee.

“Mark’s in the middle of all that,” Jordan said.

Meadows has helped usher in a groundswell of fundraising for CPI over the past two years and has been personally involved in a lot of the organizing fundraisers and courting donors, according to sources familiar with the matter.

According to the non-profit’s tax filings, CPI’s revenues jumped from $7 million in 2020 to more than $45 million in 2021, the year Meadows was brought in as a senior partner to help run the organization with former Republican Sen. Jim DeMint, who founded CPI in 2017. DeMint was previously ousted from the Heritage Foundation amid tensions with the board.

Among the donations to CPI: $1 million from Trump’s Save America PAC in 2021.

Sources familiar with CPI described Meadows as the working head of the advocacy group, which has spent millions of dollars purchasing several buildings just steps from the Capitol over the past two years. The goal, sources say, is to create a community for Trump-aligned “MAGA” conservatives.

“[CPI] wants Trump conservatives to have a home in Washington,” one source familiar with the organization said, adding that the buildings would be used for a variety of purposes, including for retreats and staff trainings. “Establishment Democrats and the Mitch McConnells have that and it keeps them here. [CPI] wants to keep [Trump Republicans] here.”

The buildings, purchased under limited liability corporations affiliated with CPI, are just down the street from the group’s current headquarters, blocks from the Capitol. Among the new real estate acquisitions, which were first reported by Grid News, are two storefronts on Pennsylvania Avenue surrounding a Heritage Foundation office, including the space of the old Capitol Lounge bar popular with congressional staffers of both parties.

There’s even a television studio at CPI so members can do cable TV interviews from the space – Jordan recently did an interview with Fox News from the studio, where he talked about Republican-led investigations into the Biden administration.

“There’s a real demand for what (CPI) provides to members. A lot of members like to go over there. I just wish I could get over there more,” said Donalds.

CPI did not respond to requests for comment.

Yet even as Meadows maintains close connections in Washington through his perch at CPI, the same can’t be said when it comes to the congressional district he once represented.

In North Carolina’s 11th district, conservative political activists say the once-beloved local congressman has lost his luster and made enemies after he waded into both the primary to replace him and the contentious 2022 Republican Senate primary, where Budd defeated former North Carolina Rep. Mark Walker.

“I used to joke it was Jesus and then Mark Meadows in the 11th. He was just a couple rungs below Jesus in western North Carolina. He would arrive and it was like Elvis,” said one Republican activist, who requested anonymity to speak candidly about the political environment there. “Now I think he’s just kind of a non-factor if you were to talk to anyone in western North Carolina.”

Meadows has also decamped from his former congressional district to a home in South Carolina, where he splits his time along with his work in Washington, DC, according to sources.

After the 2020 election, Meadows got into hot water over his voter registration in North Carolina. The state investigated Meadows over registering to vote at a mobile home in Macon County where he had allegedly never lived or even visited, though the state’s Justice Department said in December there wasn’t sufficient evidence to pursue charges.

Meadows is now registered to vote in South Carolina, a county election official confirmed to CNN.

“He disconnected his 828 (area code) number,” the activist said. “Lots of us who had Mark Meadows on speed dial, that was just cut off, boom.”

[ad_2]

Source link

April 12, 2021
‘Verified’ Twitter accounts share fake image of ‘explosion’ near Pentagon, causing confusion | CNN Business

[ad_1]

CNN
—

A fake image purporting to show an explosion near the Pentagon was shared by multiple verified Twitter accounts on Monday, causing confusion and leading to a brief dip in the stock market. Local officials later confirmed no such incident had occurred.

The image, which bears all the hallmarks of being generated by artificial intelligence, was shared by numerous verified accounts with blue check marks, including one that falsely claimed it was associated with Bloomberg News.

“Large explosion near the Pentagon complex in Washington DC. – initial report,” the account posted, along with an image purporting to show black smoke rising near a large building.

The account has since been suspended by Twitter. It was unclear who was behind the account or where the image originated. A spokesperson for Bloomberg News said the account is not affiliated with the news organization.

Under owner Elon Musk, Twitter has allowed anyone to obtain a verified account in exchange for a monthly payment. As a result, Twitter verification is no longer an indicator that an account represents who it claims to represent.

Twitter did not respond to a request for comment.

The false reports of the explosion also made their way to air on a major Indian television network. Republic TV reported that an explosion had taken place, showing the fake image on its air and citing reports from the Russian news outlet RT. It later retracted the report when it became clear the incident had not taken place.

“Republic had aired news of a possible explosion near the Pentagon citing a post & picture tweeted by RT,” the outlet later posted on its Twitter account. “RT has deleted the post and Republic has pulled back the newsbreak.”

In a statement Tuesday, the RT press office said, “As with fast-paced news verification, we made the public aware of reports circulating and once provenance and veracity were ascertained, we took appropriate steps to correct the reporting.”

In a post on the Russian social media platform VKontakte Tuesday, RT tried to make light of its apparent error.

“Is the Pentagon on fire? Look, there’s a picture and everything. It’s not real, it’s just an AI generated image. Still, this picture managed to fool several major news outlets full of clever and attractive people, allegedly,” a post from RT read.

In the moments after the image began circulating on Twitter, the US stock market took a noticeable dip. The Dow Jones Industrial Average fell about 80 points between 10:06 a.m. and 10:10 a.m., fully recovering by 10:13 a.m. Similarly, the broader S&P 500 went from up 0.02% at 10:06 a.m. to down 0.15% at 10:09 a.m.. By 10:11 a.m., the index was positive again.

The building in the image does not closely resemble the Pentagon and, according to experts, shows signs it may have been created using AI.

“This image shows typical signs of being AI-synthesized: there are structural mistakes on the building and fence that you would not see if, for example, someone added smoke to an existing photo,” Hany Farid, a professor at the University of California, Berkeley, and digital forensic expert told CNN.

The fire department in Arlington, Virginia, later responded in a tweet, stating that it and the Pentagon Force Protection Agency were “aware of a social media report circulating online about an explosion near the Pentagon. There is NO explosion or incident taking place at or near the Pentagon reservation, and there is no immediate danger or hazards to the public.”

– CNN’s David Goldman contributed reporting.

[ad_2]

Source link

April 12, 2021
Inside the Treasury Department team monitoring early economic warning signs as default threat looms | CNN Politics

[ad_1]

CNN
—

Nearly five months before the US was projected to hit the debt ceiling, a small team inside the Treasury Department began alerting top officials to early effects already being felt in the US financial system.

The cost of insuring US debt, as measured by the price of credit-default swaps, was rising – a sign that investors were beginning to view US bonds and other securities as increasingly risky.

That early warning – and subsequent ones over the last month as the swaps pricing has surged – came out of the Treasury Department’s Markets Room and its eponymous team of nine financial analysts who are responsible for monitoring and analyzing global financial markets to inform the policy work of top Treasury Department and White House officials.

As the US rapidly approaches a potential default date in early June, top US officials are increasingly relying on the Markets Room to monitor for signs of disruption in the financial markets.

“In the same way that a doctor wants to understand the vital signs of a patient as they’re thinking about how to treat them, at Treasury keeping abreast of understanding the various ways in which the economy is healthy or unhealthy. And part of that is understanding the market,” Deputy Treasury Secretary Wally Adeyemo told CNN in an interview.

“So, we’re spending a lot of time with them better understanding what the costs are today, in order to make sure that we’re in a position to share that information with Congress, in order to prevent us from getting into a position where for the first time in our history, we’re unable to pay all of our obligations on time.”

That work begins each day before dawn, when staffers take turns waking up around 3:30 a.m. ET to compile data about overnight market developments and begin making calls to contacts working in European and Asian markets.

At around 7 a.m. ET, those data and insights land in the inboxes of top policymakers at the White House and Treasury Department.

At 9 a.m. ET, before the US markets open, Treasury Secretary Janet Yellen and her senior leadership team huddle virtually with the Markets Room and other key Treasury Department aides for a briefing on the state of the financial markets and issues to watch for that day.

“Almost every American is influenced by what’s happening around the globe and global markets either through your 401(k), or your attempt to borrow money for your small business or for your home. So, this team of individuals, every morning, provides us a briefing and an update on what’s happening around the world,” Adeyemo said.

In recent weeks, that daily briefing has heavily focused on reverberations of the debt limit standoff, from updates on auctions of Treasury bills to market reactions and commentary from market analysts and economists.

Much of the rest of the day is spent monitoring developments in the financial markets and fielding inquiries from top policymakers at Treasury and the White House for analysis on those developments.

And at the end of the day, the Markets Room also helps policymakers digest the biggest developments in the financial markets with another widely read one-page memo delivered after the US markets close and before the Asian markets open.

Beyond the Treasury Department, a White House spokesperson said the unit’s twice-daily memos are “a valuable asset” for officials at the National Economic Council and Council of Economic Advisers.

“Those offices also rely on the Markets Room’s real-time updates – either in memos or meetings – when more regular monitoring is warranted,” the spokesperson said.

Officials say the Markets Room is focused on monitoring the global economy’s recovery from the pandemic-induced recession, lingering inflation and the trajectory of the global economy.

Albert Lee, the Markets Room director, described the unit as an early warning system on the global financial system for top US policymakers.

In the early days of the coronavirus pandemic, the team was among the first to sound alarm bells inside the federal government about early shocks in pockets of the financial system and predicting rate cuts from the Federal Reserve.

The team also played a critical role during the banking crisis earlier this year, tracking the sharp selloff of stock and outflows of deposit at Silicon Valley Bank that ultimately triggered the bank’s collapse.

As the Treasury Department acted to address the second-largest bank failure in US history and prevent any spillover effects in the banking sector, top Treasury Department officials leaned on the Markets Room team to track the feedback of their policy actions.

“It was critically important for us to understand how markets were interpreting the actions that we took that made clear to the American people that your deposits were safe,” Adeyemo said. “We were monitoring signs of distress in the banking sector.”

With one week until the government can potentially no longer pay its bills, the US stock market is only just beginning to show signs of concern about a potential default and Treasury officials say the team is focused on tracking further reactions from the stock market as well as the Treasury securities market.

The stock market’s reaction has, up until now, been relatively muted – especially as compared to the 17% drop the S&P 500 suffered amid the 2011 debt ceiling crisis. But Treasury officials say volatility in the securities market is already affecting the federal government, raising the cost to borrow.

Yields on short-term Treasury securities have surged and recent auctions for securities are leaving a heftier price tag for the federal government, which Adeyemo said recently incurred $80 million in additional costs for a recent auction of Treasury bills.

“So, the cost of borrowing has already gotten more expensive when it comes to us borrowing in the short term for the US government,” Adeyemo said. “So as the debt limit manufactured crisis goes on, and costs go up for the government, it also means that costs will go up for the American people as well.”

Adeyemo declined to disclose what contingencies are being prepared should the US default. But when the US faced a similar standoff on the debt in 2011, Federal Reserve officials and Treasury Department officials quietly prepared a plan to prioritize payments on US debt and delay paying other government bills and obligations, like Social Security and payments to veterans, according to transcripts of a central bank meeting released in 2017.

“The most important thing for the American people, for our country, for our credibility, not only with our creditors, but with the American people is to pay all of our bills on time. That’s what our system is built to do,” Adeyemo said. “I’ve spent a good part of a decade working here at the Treasury Department. What I can tell you is that there’s no plan that would allow us to meet all of our commitments other than Congress, raising the debt limit.”

[ad_2]

Source link

April 12, 2021
Putin’s ruthless power play may not preclude a revival of Ukraine grain deal | CNN Politics

[ad_1]

CNN
—

Russian President Vladimir Putin just reminded the world that he has the capacity to apply pain far beyond the excruciating torment he’s inflicting on Ukraine.

Russia’s suspension of a deal allowing the export of Ukrainian grain from a region fabled as the world’s bread basket threatens to cause severe food shortages in Africa and send prices spiraling in supermarkets in the developed world. In the United States, it represents a political risk for President Joe Biden, who is embarking on a reelection campaign and can hardly afford a rebound of the high inflation that hounded US consumers at its peak last year.

Russia’s decision looked at first sight like a face-saving reprisal for an attack claimed by Ukraine on a bridge linking the annexed Crimean peninsula to the Russian mainland. The bridge was a vanity project for Putin and the apparent assault represented another humiliation for the Russian leader in a war that has gone badly wrong.

The Black Sea grain deal, agreed last year and brokered by Turkey and the United Nations, was a rare diplomatic ray of light during a war that has shattered Russia’s relations with the US and its allies and has had global reverberations.

By refusing to renew it, Putin appears again to be seeking to impose a cost on the West, in return for the sanctions strangling the Russian economy. He may reason that a food inflation crisis might help splinter political support in NATO nations for the prolonged and expensive effort to save Ukraine. And grain shortages afflicting innocent people in the developing world could exacerbate international pressure for a negotiated end to a war that has turned into a disaster for Russia.

The United States and other Western powers reacted to Russia’s announcement that the deal had been “terminated” with outrage, mirroring Ukrainian President Volodymyr Zelensky’s warning that Putin was trying to “weaponize hunger.”

Secretary of State Antony Blinken warned that Russia was trying to use food as a tool in its war on Ukraine, adding that the tactic would make “food harder to come by in places that desperately need it and have prices rise … The bottom line is, it’s unconscionable. It should not happen.”

Singling Russia out as a moral transgressor might be understandable given the horror it has visited on Ukraine and may rally fury over Putin’s move in the West and the developing world. But humanitarian arguments won’t sway a Russian president who launched an unprovoked onslaught on a sovereign neighbor and is accused of presiding over brutal war crimes.

Still, Russia’s rhetoric after canceling the deal and the reactions from key players elsewhere in Eurasia suggest that the agreement may not be quite as terminated as the Kremlin claims. There’s a chance Putin sees a grain showdown as a way to improve his dire position.

In a clear sign of diplomatic maneuvering, Russia justified its cancellation of the agreement by saying that it was not getting its share of the benefits. noting that it had faced obstacles with its own food exports. Kremlin spokesman Dmitry Peskov hinted, however, that Moscow might allow the return of exports from Ukraine’s Black Sea ports once its objectives were achieved.

But UN Secretary General António Guterres underscored how difficult it might be to return to the deal with a categorical repudiation of Russia’s points in a letter to Putin, arguing that under the agreement, the Russian grain trade had reached high export volumes and fertilizer markets were nearing full recovery with the return of Russian produce. Guterres said that he’d sent Russia proposals to keep the grain deal alive but that he was “deeply disappointed” that his efforts went unheeded.

The UN chief’s comments reinforced a view that, for now, Russia sees a point of leverage in refusing to renew the Black Sea grain deal. The decision comes against a complicated geopolitical backdrop following last week’s NATO summit at which G7, nations pledged to offer Ukraine the means of its self-defense for years to come.

It may also represent the latest chess move in a shady double game of great power geopolitics being waged by a pair of Machiavellian autocrats — Putin and Turkish President Recep Tayyip Erdogan, who are due to meet in August.

Erdogan won prestige and the gratitude of his fellow NATO leaders and developing nations for brokering the original grain deal. But he has angered Russia in recent days, despite keeping open channels with Putin during the war. It’s conceivable the Russian leader could be sending a shot across the bows of his Turkish partner by canceling out his achievement.

Russia was infuriated last week when Turkey sent a group of captured Ukrainian military commanders back to Zelensky despite a previous agreement they would not go home until after the war. Erdogan also risked his relationship with Putin by dropping opposition to Sweden’s entry into NATO, a move that significantly weakened Russia’s strategic position in Europe.

But it was noticeable that Erdogan, who has a reputation for cannily playing his cards to enhance his own and Turkey’s influence, referred to Putin as his “friend” on Monday and suggested that the Russian leader might want to keep the “humanitarian bridge” of grain exports open.

If he could somehow engineer a return to the deal, Erdogan could again bolster his place at the hinge of Eurasian great power politics. He’d also boost his goal of emerging as a leader among developing world nations and do a favor for Western leaders fearing an inflationary spike.

Michael Kimmage, who served on the policy planning staff at the State Department between 2014 and 2016 and is now a professor at Catholic University of America in Washington, argues that Turkey is in a unique position, since it possesses considerable leverage inside NATO but also has robust relationships with both Ukraine and Russia.

“I think it’s very possible that even before the Putin-Erdogan meeting there could be a resumption of the grain deal because that keeps Russia to a degree in the good graces of the international community,” Kimmage said.

Reviving the grain deal would show that Russia, in its isolation, retains some Turkish support, Kimmage added, but the episode also demonstrates to the rest of the world that “when Russia wants, it can turn off the grain deal and be an enormous pain in the neck in the Black Sea.”

First video of damage to Crimean bridge surfaces after reported strike

While the war in Ukraine has consumed Russia’s foreign policy, Moscow has also made intense efforts to carve out its own influence in Africa and elsewhere in opposition to the United States. So it may risk damaging its own priorities by triggering widespread food shortages, especially since much of Ukraine’s grain is used in World Food Programs to alleviate famine in Africa.

While the White House is fueling a sense of moral outrage over Russia’s move, it quickly dismissed another potential response – an attempt to bust a Russian blockade in the Black Sea.

“That’s not an option that’s being actively pursued,” John Kirby, the coordinator for strategic communications at the National Security Council, said Monday in a comment that was in line with Biden’s goal of avoiding any direct NATO clash with Russia, a nuclear superpower.

While the end of the grain deal would cause significant global hardship, its worst effects may be weeks away – so there could be time for diplomacy to work.

Nicolay Gorbachov, the President of the Ukrainian Grain Association, told Isa Soares on CNN International on Monday that exports by road, rail and river could mitigate the most damaging effects of the collapse of the deal for two or three weeks, even if such transportation methods lacked the volume of shipborne cargoes.

But he also warned that ultimately, if Ukraine could not export its grain – “all of us, in developed countries, in developing countries, will face food inflation.”

“In my opinion, the international community, the developed countries have to find the leverage to move grain from Ukraine to the world market,” he said.

[ad_2]

Source link

April 12, 2021
Apple is now worth $3 trillion, boosted by the Nasdaq’s best start in 40 years | CNN Business

[ad_1]

New York
CNN
—

Apple’s stock ended trading Friday valued at $3 trillion, the only company ever to reach that milestone. It has been riding a Big Tech stock wave that has given the Nasdaq its best first half gain in 40 years.

Shares of Apple rose more than 2% Friday at a record $193.97. With 15.7 billion shares outstanding, that stock price pushed Apple to its historic market value.

Apple has been here once before: On January 3, 2022, Apple hit the $3 trillion mark during intraday trading, but it failed to close there.

The company’s stock closed Thursday at a record high share price for the third-straight day, but it merely budged 0.2% higher. Apple easily surpassed the $190.73 level it needed to break $3 trillion at Friday’s market open.

The sky-high valuation for the tech giant comes on the heels of its risky launch of the Apple Vision Pro earlier this month and a stronger-than-expected quarterly earnings report in May – even though sales and profit slumped.

The Vision Pro, which will go on sale next year, impressed tech journalists who got an early preview of the augmented reality device. But it is entering a nascent market with little mainstream consumer adoption. Apple plans to charge a hefty $3,499 for its headset, which currently has limited apps and experiences, and requires users to stay tethered to a battery pack the size of an iPhone.

Apple’s

(AAPL) stock has skyrocketed 49% this year, boosted by a broader surge in Big Tech stocks as investors have jumped onto the AI bandwagon. Nvidia

(NVDA) leads the S&P 500 with a 190% jump this year, followed by Meta

(META) at 138%.

The Nasdaq grew by 31.7% in the first half of the year, notching its largest first half percentage gain since 1983.

This year’s stock market success for Apple comes in sharp contrast to 2022. At the start of 2023, Apple’s market cap fell below $2 trillion in trading for the first time since early 2021.

Wall Street ended the first half of 2023 on a positive note as the tech rally led markets to close higher for both the month and second quarter of the year.

The S&P 500 gained 6.5% in June, its best monthly performance since January. It also notched its third consecutive quarter of growth, up 8.3% in the second quarter. The S&P 500 is about 15.9% higher so far this year, its best half since 2019.

[ad_2]

Source link

April 12, 2021
Britain’s ‘profound economic crisis’ gives Rishi Sunak only unpleasant choices | CNN Business

[ad_1]

London
CNN Business
—

Rishi Sunak, Britain’s third prime minister in seven weeks, took office on Tuesday with a pledge to fix the “mistakes” of predecessor Liz Truss and tackle a “profound economic crisis.”

The task won’t be an easy one, he acknowledged.

“This will mean difficult decisions to come,” Sunak said in his first speech from No. 10 Downing Street.

The United Kingdom was already sliding towards a recession when Truss took office in September, as soaring energy bills ate into spending. Now, Sunak has another headache: He must restore the government’s credibility with investors after Truss’ unfunded tax cuts sparked a bond market revolt, forcing the Bank of England to intervene to prevent a financial meltdown. Borrowing costs, including mortgage rates, shot higher.

Accomplishing this goal will require delivering a detailed plan to put public finances on a more sustainable path. (A government watchdog warned in July that without major action, debt could reach 320% of the UK’s gross domestic product in 50 years.)

The problem? There’s little appetite for government spending cuts after years of austerity in the wake of the 2008 global financial crisis. Plus, failing to help households deal with surging living costs could prove politically devastating and further weigh on the economy.

“It’s not a particularly pleasant economic hand to be dealt [as] a new prime minister,” said Ben Zaranko, a senior research economist at the Institute for Fiscal Studies.

Finance minister Jeremy Hunt got the ball rolling last week when he reversed £32 billion ($37 billion) in tax cuts that formed the bedrock of Truss’ plan to boost growth.

Yet Sunak and Hunt — who will stay in his job — still need to find between £30 billion and £40 billion in savings to bring down public debt as a share of the economy in the next five years, according to calculations by IFS, an influential think tank.

“It is going to be tough,” Hunt said in a tweet. “But protecting the vulnerable — and people’s jobs, mortgages and bills — will be at the front of our minds as we work to restore stability, confidence and long-term growth.”

Sunak and Hunt won’t have the option of going light on the details. If investors don’t buy into their plan and borrowing costs shoot up again, getting the situation under control would only become trickier, as interest payments on government debt rise.

“If markets don’t [see] the plans as credible, then filling the fiscal hole could become even harder,” said Ruth Gregory, senior UK economist at Capital Economics.

One area Sunak may be tempted to tap is the social welfare budget. Questions have swirled about whether the Conservative government may try to avoid boosting state benefits in line with inflation, as is customary. (American recipients of Social Security will receive the biggest cost-of-living adjustment in more than four decades next year.)

Most UK working-age benefits would typically go up by 10.1% next April based on inflation data. But there’s speculation the increase could be linked instead to average earnings, which are growing at a much slower rate than inflation. That could save £7 billion ($8 billion) in 2023-24, according to IFS.

Such a move would prove controversial, however — especially since benefits have not kept up with rampant inflation in 2022.

“I would like to see if we could find a way to increase benefits by inflation, but what I will say is that trade-offs are involved,” former Conservative cabinet minister Sajid Javid told ITV this week.

A more palatable option, at least for households, would be extracting more taxes from corporations.

Hunt has already said that corporate taxes will rise from 19% to 25% next spring. The Financial Times has reported that Hunt could also target earnings from oil and gas companies by extending a windfall tax on profits.

In an interview with the BBC earlier this month, Hunt said he was “not against the principle” of windfall taxes and that “nothing is off the table.” Higher taxes on the financial sector are also under consideration, according to the Financial Times.

Industry groups are already circling the wagons. Banking trade association UK Finance said its members already pay “a higher rate of taxation overall than any other sector,” and urged the government not to “risk the competitiveness of the UK’s banking and finance industry.”

Sunak could also walk back Truss’ commitment to boosting defense spending to 3% of the economy by 2030, though that carries its own political risks given Russia’s war in Ukraine. Other countries in the region, such as Germany, have said they will ramp up military investments, and the United Kingdom may be loath to fall behind, Zaranko said.

Investors and economists expect that the government will announce a mixture of tax increases and spending cuts shortly. Hunt is due to reveal his plans in greater depth on October 31.g

“Despite the fiscal U-turns, the government will still need to show a fiscally credible path next week in the budget to balance the books,” Sonali Punhani, an economist at Credit Suisse, said in a note to clients this week.

That could exacerbate the country’s downturn. The Bank of England has projected that the United Kingdom is already in a recession, and a gauge of business activity in October slumped to its lowest level in 21 months.

“We are seeing quite a dramatic shift in the fiscal outlook from being much looser than we expected just a few weeks ago to being much tighter than we expected,” Gregory of Capital Economics said. “I think the risk is that the recession is deeper or longer than we expect.”

A weaker economy would present its own complications.

No one wants to repeat the errors of the brief Truss era, when her gamble that unfunded tax cuts would jumpstart growth backfired spectacularly.

But business groups are warning that completely abandoning the objective of boosting Britain’s anemic economic growth would create problems, too.

The austerity of the 2010s produced “very low growth, zero productivity and low investment,” Tony Danker, head of the Confederation of British Industry, told the BBC on Tuesday.

“The country could end up in a similar doom loop where all you have to do is keep coming back every year to find more tax rises and more spending cuts, because you’ve got no growth.”

[ad_2]

Source link

December 31, 1969