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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


    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



    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

    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


    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


    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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  • Why the ghost of 2008 still haunts us in 2022 | CNN Business

    Why the ghost of 2008 still haunts us in 2022 | CNN Business

    This story is part of CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free, here.


    New York
    CNN Business
     — 

    All week, there have events in the news that have come in under of the banner of “this hasn’t happened since 2007/2008.”

    Yields on the 10-year Treasury briefly surpassed 4%, a level not seen since 2008. That movement helped push mortgage rates to their highest level, 6.7%, since — wait for it — July 2007. Across the pond, where the UK bond market crashed earlier this week, one seemingly frazzled London banker told the Financial Times: “At some point this morning I was worried this was the beginning of the end. It was not quite a Lehman moment. But it got close.”

    The timing of all these events is indeed a bit spooky: Today, September 29, marks 14 years to the day that stock markets around the world cratered, ushering in the worst global financial crisis since the Great Depression.

    With all that gloom, it’s natural to wonder whether history is about to repeat itself.

    To be clear: The market ended up recovering completely — though it took years. And in so many ways, the economic and financial angst playing out around the world is absolutely not a repeat of the run-up to the Great Recession. It’s a whole different beast now.

    But it is precisely because of those 2008 scars, still potent memories for many, that economists and analysts become nervous when things go as haywire as they have in recent weeks.

    Right now, the prevailing mood is fear. Economies hobbled by inflation and soaring borrowing costs are vulnerable to economic shocks — whether those shocks come from a catastrophic hurricane, or a superpower declaring war on a neighbor, or a radical unfunded tax scheme. Or, heaven forbid, a resurgent pandemic.

    All of that means there aren’t many good places for investors to put their money right now. Stocks and bonds are both in bear territory, and many analysts say the market could remain volatile until inflation gets under control (which, if we crash into a recession, could happen pretty soon… not a great silver lining, I know.)

    If there’s a lesson to hold onto from the Great Recession, it’s not to panic. Per my colleague Jeanne Sahadi:

    Let’s say you’d invested $10,000 at the start of 1981 in the S&P 500. That money would have grown to nearly $1.1 million by the end of March 2021. But had you missed just the five best trading days during those 40 years, it would only have grown to roughly $676,000.

    In other words: Hold on tight, friends, and try to avoid looking at your 401(k) balance for the foreseeable future.

    Stocks fell Thursday, giving up Wednesday’s big gains and plunging the Dow back into a bear market.

    The S&P 500, one of the broadest measures of the health of Corporate America, fell 2.1%, hitting a new low for the year. The Dow and S&P 500 are once again not far from their lowest levels since November 2020.

    Heckuva way to wrap up the third quarter, eh? The stock market actually had a promising start to the quarter in July. But fears about inflation, rate hikes, rising bond yields and recession returned with a vengeance in August and September.

    Continuing a grand tradition of Corporate Rebranding Nonsense, Johnson & Johnson is putting all of its consumer health products under a newly formed parent company.

    Soon, Band-Aid, Tylenol, Benadryl and Johnson’s baby powder will all be sold under the umbrella brand identity “Kenvue.”

    That’s pronounced “Ken,” like the doll, “view.”

    Here’s the deal: Johnson & Johnson, the owner of these labels, is in the process of splitting into two companies — one focused on medical devices and medications, the other on consumer health products, my colleague Nathaniel Meyersohn reports.

    J&J is keeping its recognizable name for its larger pharmaceutical business, but it needed something new for the smaller consumer arm.

    The company said Wednesday that it landed on Kenvue, a combination of “Ken,” an English word for knowledge primarily used in Scotland, and “vue,” a reference to sight.

    “Kenvue” is the winning moniker that a small team from J&J, working with a naming agency, landed on. The goal was to be memorable. And, crucially, to clear trademarks in more than 100 markets and “pass linguistic and cultural screenings in 89 languages and dialects.”

    The company also released Kenvue’s new logo — white letters against a green background, the limbs of the letter “K” resembling a sideways heart.

    What does it mean? Absolutely nothing, and that is the point.

    Corporations gravitate to names that are squeaky clean. There’s no possibility for a negative connotation, because it’s a made-up word. It doesn’t, as far as I can tell, sound like it might resemble a swear word in some other language. Kenvue is inoffensive. Bloodless. It is the tofu of corporate branding.

    “It’s really just a holding company behind all these other brands,” one expert told Nathaniel. “They want a name that will disappear in the background and the brands will stick out.”

    (Mission accomplished. I’ve already forgotten the new name and I just typed it 40 seconds ago.)

    MY TWO CENTS

    The best review I can give of the new brand is that it’s forgettable. Other companies have famously (infamously?) failed to stick the landing with new names.

    Netflix, back in 2011, quickly backtracked after trying to rechristen its DVD mailing service as “Qwikster.” More recently, Fiat Chrysler and PSA Group merged in 2020 under the collective name “Stellantis,” which is still the company’s name, but I still think it sounds like something you should ask your doctor about if you have signs of seasonal depression.

    Enjoying Nightcap? Sign up and you’ll get all of this, plus some other funny stuff we liked on the internet, in your inbox every night. (OK, most nights — we believe in a four-day work week around here.)

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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


    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


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

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


    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.

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  • Seagate to pay $300 million penalty for shipping Huawei hard drives in violation of US export control laws | CNN Business

    Seagate to pay $300 million penalty for shipping Huawei hard drives in violation of US export control laws | CNN Business



    Reuters
     — 

    Seagate Technology has agreed to pay a $300 million penalty in a settlement with US authorities for shipping over $1.1 billion worth of hard disk drives to China’s Huawei in violation of US export control laws, the Department of Commerce said on Wednesday.

    Seagate

    (STX)     sold the drives to Huawei between August 2020 and September 2021 despite an August 2020 rule that restricted sales of certain foreign items made with US technology to the company. Huawei was placed on the Entity List, a US trade blacklist, in 2019 to reduce the sale of US goods to the company amid national security and foreign policy concerns.

    The penalty represents the latest in a string of actions by Washington to keep sophisticated technology from China that may support its military, enable human rights abuses or otherwise threaten US security.

    Seagate shipped 7.4 million drives to Huawei for about a year after the 2020 rule took effect and became Huawei’s sole supplier of hard drives, the Commerce Department said.

    The other two primary suppliers of hard drives ceased shipments to Huawei after the new rule took effect in 2020, the department said. Though they were not identified, Western Digital

    (WDC)     and Toshiba

    (TOSBF)     were the other two, the US Senate Commerce Committee said in a 2021 report on Seagate.

    The companies did not respond to requests for comment.

    Even after “its competitors had stopped selling to them … Seagate continued sending hard disk drives to Huawei,” Matthew Axelrod, assistant secretary for export enforcement at the Commerce Department’s Bureau of Industry and Security said in a statement. “Today’s action is the consequence.”

    Axelrod said the administrative penalty was the largest in the history of the agency not tied to a criminal case.

    Seagate’s position was that its foreign-made drives were not subject to US export control regulations, essentially because they were not the direct product of US equipment.

    “While we believed we complied with all relevant export control laws at the time we made the hard disk drive sales at issue, we determined that … settling this matter was the best course of action,” Seagate CEO Dave Mosley said in a statement.

    In an order issued on Wednesday, the government said Seagate wrongly interpreted the foreign product rule to require evaluation of only the last stage of its manufacturing process rather than the entire process.

    Seagate made drives in China, Northern Ireland, Malaysia, Singapore, Thailand and the United States, the order said, and used equipment, including testing equipment, subject to the rule.

    In August, the US Department of Commerce sent the company a “proposed charging letter,” warning the company that it may have violated export control laws. The letter kicked off some eight months of negotiations.

    Seagate’s $300 million penalty is due in installments of $15 million per quarter over five years, with the first payment due in October. It also agreed to three audits of its compliance program, and is subject to a five-year suspended order denying its export privileges.

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

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


    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.

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  • White House escalates political pressure on GOP as McCarthy unveils debt limit proposal | CNN Politics

    White House escalates political pressure on GOP as McCarthy unveils debt limit proposal | CNN Politics



    CNN
     — 

    White House officials have spent weeks engaged in skirmishes with House Republicans over the looming debt ceiling battle.

    Those skirmishes have now expanded into an all-out war.

    President Joe Biden’s economic speech in Maryland on Wednesday, which leveled a series of policy and political attacks at House Republicans, serves as a critical marker for a White House moving quickly to escalate the political pressure on House Republicans as the calendar moves closer to the deadline to raise the nation’s borrowing limit.

    Months of messaging and rapid response efforts to counter nascent House GOP debt limit proposals evolved this week into a full-scale effort to undercut Speaker Kevin McCarthy’s spending cut and debt ceiling proposal at the moment of its inception.

    Biden’s remarks, though planned for several weeks, provided a window into the trigger for the escalation.

    “Just two days ago the speaker of the House Kevin McCarthy went to Wall Street to describe the MAGA economic vision for American,” Biden said in reference to McCarthy’s speech Monday at the New York Stock Exchange.

    McCarthy’s high-profile remarks, which broadly outlined the Republican push for steep spending cuts in exchange for a debt ceiling increase, set in motion the House Republican push to pass a proposal and shift the entrenched political dynamics.

    “American debt is a ticking time bomb that will detonate unless we take serious, responsible action,” McCarthy said in his New York speech, which previewed a proposal that was made public Wednesday.

    Biden’s remarks, at a union hall in Maryland, served as a clear response.

    “Massive cuts in programs you count on,” Biden said of the outlines of McCarthy’s proposal. “The threat of defaulting on America’s debt for the first time in 230 years.”

    The positions of the two sides remain unchanged – and completely incompatible. Biden and his top advisers say unequivocally they will not negotiate over a debt ceiling increase and will only accept a clean proposal to raise the nation’s borrowing limit. McCarthy and House Republicans have labeled that position a non-starter and are demanding significant spending cuts in order to sign on to any increase.

    The irreconcilable positions underscore the central importance of winning the political and messaging battle that is set to dramatically intensify. With no pathway to reconcile the respective positions, both sides are pointing to the political pressure – and potentially catastrophic economic consequences that would result in a failure to a find a resolution – as critical to crack their opposition.

    Biden’s speech was crafted to crystallize a clear political contrast and detail the legislative wins of Biden’s first two years in office and his agenda’s priorities for the years ahead.

    But the speech was also tailored to directly attack McCarthy and the broad outlines of the California Republican’s forthcoming proposal at the same moment behind the scenes efforts to keep Democrats unified and escalate outside pressure.

    “Folks, it’s the same old trickle-down dressed up in MAGA clothing,” Biden said of McCarthy’s proposal in his remarks. “Only worse.”

    White House officials quietly circulated messaging and polling memos touting Biden’s budget and tax proposal earlier this week. Biden spoke by phone with Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries Tuesday in what people familiar with the call framed as a discussion that was equal parts ensuring total alignment and mapping out the policy and political strategy ahead.

    “President Biden, Leader Schumer, and Leader Jeffries agree that we won’t negotiate over default and Republicans should pass a clean bill like they did three times in the previous administration,” the White House said in a readout of the call Tuesday night.

    Outside advocacy groups aligned with the White House are also set to ramp up their efforts to highlight Biden’s agenda while attacking the outlines of McCarthy’s proposal.

    The tightly coordinated messaging and political escalation reflects a deadline that is growing closer, officials said. But it also underscores an understanding that McCarthy and his leadership team face their own critical intraparty moment as they attempt to coalesce around their own proposal ahead of a vote next week.

    That House Republican plan, should McCarthy whip the votes to pass it, is dead on arrival in the Senate. White House officials view the proposal less as a tangible way to shift the entrenched political dynamics and more as an opportunity to launch a whole new array of policy attacks, officials say.

    Republicans have made clear, however, they view the opposite as true. A House-passed bill should force Biden to the table and serve as a demonstration of Republican unity and resolve.

    “President Biden and Senator Schumer have no right to play politics with the debt ceiling,” McCarthy said on the House floor Wednesday, calling on Biden and Democrats to enter negotiations.

    McCarthy has insisted he can marshal the votes to pass his proposal. White House officials have privately been skeptical that’s the case given the fractious dynamics of the conference.

    But at a critical moment in a fight that is set to envelope Washington in the months ahead, White House officials are intent on making McCarthy’s job as difficult as possible.

    “The American people should know about the competing economic visions of the country that are really at stake right now,” Biden said.

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  • Biden’s second debt limit meeting with congressional leaders postponed | CNN Politics

    Biden’s second debt limit meeting with congressional leaders postponed | CNN Politics



    CNN
     — 

    President Joe Biden’s anticipated meeting originally scheduled for Friday with congressional leaders aimed at discussing a deal to avert a default on the national debt has been postponed, a White House spokesperson said.

    Friday’s meeting would have been the second time in less than a week that congressional leaders met with Biden at the White House in an effort to reach a solution to avoid default. Instead, the spokesperson told CNN on Thursday, staff will continue to meet and the leaders will come together again next week.

    “I don’t think there’s enough progress for the leaders to get back together,” McCarthy said on Thursday, adding that he expects a meeting on debt limit next week with the four congressional leaders and the White House.

    “The White House didn’t cancel the meeting – all of the leaders decided it’s probably in the best of our interest to let the staff meet again before we get back together,” McCarthy said.

    A source familiar with the meetings insisted the delay was a “positive development” and that “meetings are progressing.”

    White House officials and aides to McCarthy and House Minority Leader Hakeem Jeffries all thought postponing the meeting was a good idea, according to another source familiar with the negotiations. The general consensus, they said, is that allowing more time for staff-level talks will ensure the leaders’ meeting would be “more productive.”

    In a sign of contention, however, McCarthy slammed the “seriousness” of the White House in debt negotiations on Thursday, saying, “it seems like they want a default.”

    The ongoing conversations between the two federal branches come at a critical moment.

    Treasury Secretary Janet Yellen recently warned that the United States could default on its obligations as soon as June 1 if Congress doesn’t find a solution addressing the debt limit. And McCarthy has said Congress will need to reach a deal in principle by next week in order to move the deal through the gears of Congress ahead of that potential default deadline.

    After an initial meeting on Tuesday in the Oval Office, those involved acknowledged that a concrete path forward to avoid default had not been secured.

    Staff for each of the offices involved have met daily since Tuesday’s meeting, relaying areas they see as red lines for each of their parties.

    House Republicans have wanted to attach spending reductions to a debt ceiling increase and have passed a debt limit plan that does just that. But Biden and congressional Democrats have insisted on passing a clean increase on the debt limit before addressing a framework for spending.

    But even as the president continues to insist he will not negotiate over raising the debt ceiling, he has said he is willing to negotiate spending levels and his staff is now racing to reach a spending agreement with Republicans before the US faces default as early as June 1.

    The White House has conveyed to congressional negotiators that Biden’s most recent legislative accomplishment, the Inflation Reduction Act, is off the table as the two sides begin to eye potential spending cuts, two sources familiar with the matter told CNN. The law, which makes historic investments in combating climate change, was targeted as part of House Republicans’ bill to cut spending alongside a debt ceiling increase.

    Among the White House’s other non-starter items: rolling back student debt forgiveness – a key campaign promise that remains tied up in litigation that was also targeted in House Republicans’ bill last month – and Medicaid and SNAP benefits.

    Inside the West Wing, there is a growing acknowledgment that the White House will have to accept spending cuts, even as the president argues the spending negotiations are not linked to raising the debt ceiling.

    And negotiators are also beginning to discuss permitting reform, which could be a part of an eventual deal, two sources said.

    Sources familiar with the matter said the White House is willing to entertain a cap on future spending, but for a far shorter period of time than the 10-year spending cuts agreed to as part of the 2011 debt ceiling standoff.

    And in early conversations, White House officials have also indicated a debt ceiling increase will need to last more than the one year, to avoid this scenario playing out again next year.

    Louisiana Rep. Garret Graves, who is helping lead GOP negotiations on the debt ceiling, on Thursday outlined four areas where he thinks there could be agreement: permitting reform, clawing back unspent Covid relief funds, work requirements and spending caps.

    Graves acknowledged that the White House indicated they “don’t like” repealing any portions of the IRA. On the length of the debt ceiling hike, Graves signaled that Republicans would be open to a two-year hike but said that would require the White House to put “more savings on the table.”

    While Biden had suggested earlier this week that he’d be open to a short-term extension, Graves ruled out the idea, saying, “As far as we’re concerned right now, it’s absolutely off the table.”

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  • ‘You’re wrong’: McCarthy answers his critics as he faces blowback from GOP hardliners | CNN Politics

    ‘You’re wrong’: McCarthy answers his critics as he faces blowback from GOP hardliners | CNN Politics



    CNN
     — 

    Senate Majority Leader Chuck Schumer in February made a bold prediction about the GOP and the debt ceiling, asserting: “We don’t believe they have a plan that can pass with Republican votes in the House.”

    He later insisted that the White House would not negotiate with House Speaker Kevin McCarthy on a debt ceiling increase and that ultimately Congress would lift the borrowing limit without any conditions at all.

    “Clean, clean, clean,” he told CNN in April, referencing the push for a clean debt ceiling resolution.

    But McCarthy ultimately passed a bill in April on GOP votes alone. He then later forced President Joe Biden to negotiate a debt limit suspension with spending cuts. And Wednesday night, the House passed the McCarthy-Biden deal by a 314-177 vote, even winning the backing of 149 House Republicans, more than half of his conference, and the support of 165 Democrats. The Senate passed the bill late Thursday night, and it now goes to Biden’s desk for his signature.

    “You’re wrong,” an ebullient McCarthy said when asked about critics underestimating him.

    After one of the longest speaker’s races in history, winning the gavel after an ugly 15-ballot fight, McCarthy has managed to navigate his ideologically divided conference and bring to an end the debt limit standoff – even to the surprise of some of his sharpest critics.

    “I have been thinking about this day since before my vote for speaker because I knew the debt ceiling was coming,” McCarthy said at a news conference following the vote Wednesday night. “I wanted to make history.”

    When asked if he underestimated the speaker, Schumer didn’t answer directly.

    “No. 1, we avoided default – our number one goal, which we’ve been talking about from day one,” Schumer said. “No. 2, it is a far, far cry from where the Republicans started out.”

    Democrats say if the speaker surprised them in the fiscal fight, it’s because they didn’t think he would hold the specter of the first-ever US default over the White House until Biden agreed to negotiate on his terms.

    “I think the Republican House caucus is willing to go to default,” said Rep. Ted Lieu, a California Democrat. “When dealing with folks like that, it’s really hard to negotiate at all.”

    But it didn’t come without a cost.

    After the debt limit deal passed, Republican Rep. Ken Buck of Colorado told CNN that House conservatives will be having discussions about ousting McCarthy “in the next week or two,” although he didn’t commit to following through with that threat.

    A fired-up Buck, who opposed the debt limit deal, told reporters that he has received calls from constituents about removing McCarthy from the speakership. “My constituents are furious and you know what’s so interesting about the calls in the district? They are not only ‘vote against this bill,’ but they are ‘take McCarthy out.’ That’s what the calls are coming in,” he said.

    The same Republicans who held out their votes for McCarthy’s speakership bid in January hated the deal he struck, arguing that it failed to curtail spending or provide conservatives with key policy wins. Several have publicly talked about moving to oust him for the agreement.

    Rep. Chip Roy, the Texas Republican who has vocally slammed the deal, promised a “reckoning” earlier this week after the agreement was reached. And Rep. Dan Bishop, the North Carolina Republican who publicly vowed to target the speaker and potentially oust him from his job, said of his confidence in McCarthy: “None. Zero. What basis is there for confidence?”

    Still, there haven’t been signs yet that the hardline conservatives will actually move to oust the speaker.

    During a House Freedom Caucus conference call Tuesday night, when the motion to vacate was briefly brought up, Chairman Scott Perry, a Pennsylvania Republican, dismissed the idea as “premature” and the conversation quickly moved on, according to a source on the call.

    The source said that there have been private, “independent” discussions about the motion to vacate among some of McCarthy’s fiercest critics, but not among the Freedom Caucus as a whole, where there is far less appetite to go that route.

    After facing an all-consuming debt limit battle for the last several months, McCarthy is ready for the next act of his young speakership – and he’s taking steps that can win over the far-right furious at him over his debt ceiling deal with the White House.

    To win some of his critics back, he’s promising his members that he wants to set up a bipartisan commission to rein in sky-high deficits while also privately vowing to hold the line in the government funding fights to come.

    Rep. Ralph Norman, a South Carolina Republican who said McCarthy has lost “some trust” by cutting the debt deal, told CNN that the speaker had promised that leadership would be “actively” involved in the appropriations process, saying that’s where “the next big debate” will be.

    While the debt limit and spending has bitterly divided the GOP conference, McCarthy is now free to turn toward more unifying measures – and to go on the attack against the Biden administration instead of cutting a deal with the president. It’s one reason why McCarthy was OK with agreeing to the White House’s demand to suspend the debt limit until January 2025, ensuring the divisive issue won’t be litigated before the 2024 elections.

    Asked what’s next now that the debt crisis is behind them, McCarthy told reporters: “We’ve got a number of things.”

    “We’ve got to do appropriations,” he said. “We’ve got a lot of oversight work to do. I don’t know if you’ve followed … FBI Director Wray, not following through on our subpoena. Now he says he would let us look at the document,” McCarthy told reporters.

    The focus internally is already shifting.

    On Wednesday, House Oversight Chairman James Comer said his committee would begin contempt proceedings as early as next week against Wray, in a move that would serve up red meat to the right flank of the GOP conference.

    Comer has demanded that the FBI turn over an internal law enforcement document related to an unverified allegation against Biden, and he said Wednesday that the FBI’s proposed accommodation to allow Comer to view the document would not be sufficient to stop contempt proceedings.

    Another target for far-right Republicans is Alejandro Mayorkas, the Homeland Security secretary whom conservatives want to impeach over problems at the border.

    Rep. Marjorie Taylor Greene, a far-right Georgia Republican who backed McCarthy’s speakership in January, told reporters that she is willing to swallow the debt ceiling deal but said would like to see a “dessert” to go along with it – and specifically named the idea of impeaching Mayorkas or Wray.

    This story has been updated to reflect the bill’s passage in the Senate.

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  • Nvidia says US curbs on AI chip sales to China would cause ‘permanent loss of opportunities’ | CNN Business

    Nvidia says US curbs on AI chip sales to China would cause ‘permanent loss of opportunities’ | CNN Business


    Hong Kong
    CNN
     — 

    Nvidia warned Wednesday that if the United States imposes new restrictions on the export of AI chips to China, it would result in a “permanent loss of opportunities” for US industry.

    The company’s chief financial officer, Colette Kress, said she didn’t anticipate any “immediate material impact” but tighter curbs would impact earnings in the future.

    US officials plan to tighten export curbs announced in October to restrict the sale of some artificial-intelligence chips to China, according to multiple media reports, including the Wall Street Journal and Financial Times. Washington has ramped up efforts to cut China off from key technologies that can support its military.

    The US Department of Commerce has not replied to a CNN request for comment.

    The rules, as reported, could make it harder for companies like Nvidia

    (NVDA)     to sell advanced chips to China. Fueled by a boom in demand for its AI chips, the company briefly hit a market capitalization of $1 trillion in late May.

    “We are aware of reports that the US Department of Commerce is considering further controls that may restrict exports of our A800 and H800 products to China,” Kress told an investment conference.

    “Over the long-term, restrictions prohibiting the sale of our datacenter GPUs to China, if implemented, would result in a permanent loss of opportunities for US industry to compete and lead in one of the world’s largest markets and impact on our future business and financial results,” she said.

    GPUs refer to graphics processing units, which are chips or electronic circuits capable of rendering graphics for display on electronic devices.

    “Given the strength of demand for our products worldwide, we do not anticipate that such additional restrictions, if adopted, would have an immediate material impact on our financial results. We do not anticipate any immediate material impact on our financial results,” Kress added.

    Last October, the Biden administration unveiled a sweeping set of export controls that ban Chinese companies from buying advanced chips and chip-making equipment without a license.

    The new move is aimed in part at Nvidia’s A800 chip, which the US-based company created following the introduction of last year’s curbs in order to continue to sell to China, Bloomberg reported.

    China is a key market for Nvidia. Revenues from mainland China and Hong Kong accounted for 22% of the company’s revenue last year, according to its financial statements.

    On Wednesday, shares of Nvidia slumped as much as 3.2%, before recouping some of the losses. It ended down 1.8%. Chinese AI stocks suffered much heavier losses.

    Inspur Electronic Information Industry fell by 10%, the maximum allowed, on Wednesday in Shenzhen. It dropped again by 5.3% on Thursday. Chengdu Information Technology of Chinese Academy of Sciences slid 12% on Wednesday. Baidu

    (BIDU)    , which is developing a rival to ChatGPT, sank 4.4% on Thursday in Hong Kong.

    “The US could ruin China’s AI party,” Jefferies analyst said in a research note. Local chipsets do not have Nvidia’s GPU ecosystem, thus every update may require reworking, resulting in lower efficiency and higher costs.

    The Biden administration’s chip curbs would be “much more effective” in limiting China’s advances in military power driven by AI than rules restricting US investment in China’s tech sector, the analysts added.

    China has strongly criticized US restrictions on tech exports, saying earlier this year that it “firmly opposes” such measures.

    In May, Beijing banned Chinese operators of critical information infrastructure from buying products from Micron Technology

    (MU)    , in apparent retaliation against sanctions imposed by Washington and its allies on the country’s chip sector.

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  • McCarthy tells Republicans he’s ‘nowhere near’ a debt limit deal with Biden as deadline nears | CNN Politics

    McCarthy tells Republicans he’s ‘nowhere near’ a debt limit deal with Biden as deadline nears | CNN Politics



    CNN
     — 

    House Speaker Kevin McCarthy told Republicans during a closed-door meeting on Tuesday that he’s not close to a bipartisan deal with President Joe Biden to avoid a first-ever default on the nation’s debt.

    “We are nowhere near a deal,” McCarthy told Republicans. “I need you all to hang with me.”

    As each day passes without a deal, the clock is ticking closer to a looming deadline for default – which could be catastrophic for the global economy and have financial effects on countless Americans.

    Treasury Secretary Janet Yellen reaffirming in a letter to McCarthy on Monday that it is “highly likely” that the US Treasury will not be able to pay all of its bills in full and on time as soon as June 1. But several Republicans, including House Majority Leader Steve Scalise, have suggested that they do not believe Yellen’s estimate of June 1 as the so-called X-date for potential default and called on her to testify before Congress.

    While McCarthy has maintained that both parties could still obtain a deal by the June 1 deadline, he is also now accusing the president of trying to “disrupt” negotiations by bringing proposals involving Medicare and Social Security back “into the fold.”

    Republican Study Committee Chairman Kevin Hern said McCarthy told members during Tuesday morning’s meeting they should go home and work their districts if a deal isn’t reached by the White House and Republican negotiators by Memorial Day weekend. Members can always be called back, but Hern told reporters that this is a deal that has to be reached between a few key people.

    “The negotiations are with the speaker and his team and the White House and their team. And so the rest of us being here, just waiting around, doesn’t do any good for anyone,” Hern said.

    McCarthy’s continued optimism about securing a deal before next month follows a meeting at the White House with Biden on Monday evening, where he had underscored that both parties are united in their goal of reaching an agreement to raise the nation’s debt limit before the country defaults.

    “I felt we had a productive discussion. We don’t have an agreement yet, but I did feel the discussion was productive in areas that we have differences of opinion,” McCarthy said outside the West Wing, adding that the “tone” of Monday’s meeting was also “better than any other time we’ve had discussions.”

    Monday evening’s meeting at the White House came after negotiations hit a snag and were put on pause Friday, and representatives of each side spent most of the next two days criticizing the other while defending their own positions. But the parties appeared to smooth things over to resume negotiations when Biden and McCarthy spoke over the phone as the president was aboard Air Force One returning to Washington after a trip to Japan.

    Biden, in a statement, called Monday’s discussion in the Oval Office productive while acknowledging that areas of disagreement persist.

    “We reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement,” Biden wrote. “While there are areas of disagreement, the Speaker and I, and his lead negotiators … and our staffs will continue to discuss the path forward.”

    On Monday evening, McCarthy maintained that both he and the president “agree we want to be able to come to an agreement.”

    McCarthy’s team and White House negotiators have been meeting daily in an effort to come to a consensus on the budget and the debt ceiling. Negotiators also met through the night on Monday and reconvened Tuesday morning.

    The speaker on Monday also acknowledged that he does not plan to waive the House’s three-day rule – which requires that legislation be posted for at least three days to allow House members to study it before it can be voted on.

    McCarthy has repeatedly warned that the White House and House GOP must reach a deal this week to avoid default. And if negotiations drag on, waiving the three-day rule could allow the legislation to pass more quickly. However, there are concerns that expediting the legislative process by waiving the rule may lead to members voting to support something they aren’t fully informed on.

    The speaker said he “would give everybody 72 hours, so everybody knows what they’re voting for.”

    Despite continued talks, House members on both sides of the aisle appear remain divided over the approach to debt ceiling discussions.

    House Democratic Leader Hakeem Jeffries said Monday evening asserted that talks are moving in the “wrong direction.”

    At a hastily called news conference on the steps of the Capitol, Jeffries attacked the GOP for rejecting a White House compromise – to freeze domestic spending at the current levels. Republicans instead want to roll back spending to previous years’ levels and write into law that spending would be capped for several years.

    “They’ve rejected the fact that President Biden is willing to consider freezing spending. It will reduce the deficit by a trillion dollars. This is what the extreme MAGA Republicans say that they want. They rejected. They rejected an unwillingness to not put the country through this again,” the New York Democrat said. He also repeatedly refused to say if House Democrats would accept a spending cut, as McCarthy has demanded.

    Jeffries’ position is critical because McCarthy will almost certainly need House Democratic support to pass any deal cut with the White House.

    During Tuesday’s closed-door meeting with Republicans, at least one hardline member – Rep. Chip Roy of Texas – complained about Republicans seeking a compromise that water downs what they passed in the House, according to a source in the room. Roy said it’s about saving the country, not seeking a deal.

    Still, a number of Republicans – even some who haven’t always backed McCarthy – said they are standing by the speaker and are happy with how he’s negotiated up until this point.

    “I am very confident in Kevin McCarthy as our speaker,” Rep. Nancy Mace, a Republican from South Carolina told CNN. “I don’t want Speaker McCarthy’s job. That’s a very tough job … he’s got the five families to deal with and a caucus of one right here. He’s doing a great job of pulling people together.”

    “I do not envy his position. I would not want it. He’s had a lot of success in bringing a lot of different factions together within the party and that is no small feat, and it’s not easy,” Mace said.

    Rep. Tim Burchett, who voted against the House’s GOP debt ceiling plan said that “McCarthy is very good at deal cutting. I trust him.”

    “If he says it’s going to start snowing in Knoxville tomorrow, I am running down … and buying a new sled,” Burchett added.

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  • How every senator voted on the debt ceiling bill | CNN Politics

    How every senator voted on the debt ceiling bill | CNN Politics



    CNN
     — 

    The Senate voted late Thursday on a bill to suspend the country’s debt limit through January 1, 2025 following weeks of contentious negotiations on the legislative deal between the White House and Republicans.

    The bill is now on its way to President Joe Biden for approval, and once signed, it will avert what could have been an economic catastrophe and the first time the US would have defaulted on its debt. (Biden is scheduled to address the nation about the legislation Friday night.)

    The Senate vote was 63 to 36. Take a look at how every member of the Senate voted on its final passage.

    Members of the Democratic Caucus

    1. Sen. Tammy Baldwin of Wisconsin

    2. Sen. Michael Bennet of Colorado

    3. Sen. Richard Blumenthal of Connecticut

    4. Sen. Cory Booker of New Jersey

    5. Sen. Sherrod Brown of Ohio

    6. Sen. Maria Cantwell of Washington

    7. Sen. Ben Cardin of Maryland

    8. Sen. Tom Carper of Delaware

    9. Sen. Bob Casey of Pennsylvania

    10. Sen. Chris Coons of Delaware

    11. Sen. Catherine Cortez Masto of Nevada

    12. Sen. Tammy Duckworth of Illinois

    13. Sen. Dick Durbin of Illinois

    14. Sen. Dianne Feinstein of California

    15. Sen. Kirsten Gillibrand of New York

    16. Sen. Maggie Hassan of New Hampshire

    17. Sen. Martin Heinrich of New Mexico

    18. Sen. John Hickenlooper of Colorado

    19. Sen. Mazie Hirono of Hawaii

    20. Sen. Tim Kaine of Virginia

    21. Sen. Mark Kelly of Arizona

    22. Sen. Angus King of Maine

    23. Sen. Amy Klobuchar of Minnesota

    24. Sen. Ben Ray Luján of New Mexico

    25. Sen. Joe Manchin of West Virginia

    26. Sen. Bob Menendez of New Jersey

    27. Sen. Chris Murphy of Connecticut

    28. Sen. Patty Murray of Washington

    29. Sen. Jon Ossoff of Georgia

    30. Sen. Alex Padilla of California

    31. Sen. Gary Peters of Michigan

    32. Sen. Jack Reed of Rhode Island

    33. Sen. Jacky Rosen of Nevada

    34. Sen. Brian Schatz of Hawaii

    35. Sen. Chuck Schumer of New York

    36. Sen. Jeanne Shaheen of New Hampshire

    37. Sen. Kyrsten Sinema of Arizona

    38. Sen. Tina Smith of Minnesota

    39. Sen. Debbie Stabenow of Michigan

    40. Sen. Jon Tester of Montana

    41. Sen. Chris Van Hollen of Maryland

    42. Sen. Mark Warner of Virginia

    43. Sen. Raphael Warnock of Georgia

    44. Sen. Peter Welch of Vermont

    45. Sen. Sheldon Whitehouse of Rhode Island

    46. Sen. Ron Wyden of Oregon

    Members of the Republican Conference

    47. Sen. John Cornyn of Texas

    48. Sen. Kevin Cramer of North Dakota

    49. Sen. Joni Ernst of Iowa

    50. Sen. Charles Grassley of Iowa

    51. Sen. Mitch McConnell of Kentucky

    52. Sen. John Hoeven of North Dakota

    53. Sen. Markwayne Mullin of Oklahoma

    54. Sen. Jerry Moran of Kansas

    55. Sen. Mitt Romney of Utah

    56. Sen. Lisa Murkowski of Alaska

    57. Sen. Mike Rounds of South Dakota

    58. Sen. Todd Young of Indiana

    59. Sen. John Thune of South Dakota

    60. Sen. Thom Tillis of North Carolina

    61. Sen. John Boozman of Arkansas

    62. Sen. Shelley Moore Capito of West Virginia

    63. Sen. Susan Collins of Maine

    Members of the Democratic Caucus

    64. Sen. Ed Markey of Massachusetts

    65. Sen. Jeff Merkley of Oregon

    66. Sen. Elizabeth Warren of Massachusetts

    67. Sen. John Fetterman of Pennsylvania

    68. Sen. Bernie Sanders of Vermont

    Members of the Republican Conference

    69. Sen. John Barrasso of Wyoming

    70. Sen. Marsha Blackburn of Tennessee

    71. Sen. Mike Braun of Indiana

    72. Sen. Katie Britt of Alabama

    73. Sen. Ted Budd of North Carolina

    74. Sen. Bill Cassidy of Louisiana

    75. Sen. Tom Cotton of Arkansas

    76. Sen. Mike Crapo of Idaho

    77. Sen. Ted Cruz of Texas

    78. Sen. Steve Daines of Montana

    79. Sen. Deb Fischer of Nebraska

    80. Sen. Lindsey Graham of South Carolina

    81. Sen. Josh Hawley of Missouri

    82. Sen. Cindy Hyde-Smith of Mississippi

    83. Sen. Ron Johnson of Wisconsin

    84. Sen. John Kennedy of Louisiana

    85. Sen. James Lankford of Oklahoma

    86. Sen. Mike Lee of Utah

    87. Sen. Cynthia Lummis of Wyoming

    88. Sen. Roger Marshall of Kansas

    89. Sen. Rand Paul of Kentucky

    90. Sen. Pete Ricketts of Nebraska

    91. Sen. Jame Risch of Idaho

    92. Sen. Marco Rubio of Florida

    93. Sen. Eric Schmitt of Missouri

    94. Sen. Rick Scott of Florida

    95. Sen. Tim Scott of South Carolina

    96. Sen. Dan Sullivan of Alaska

    97. Sen. Tommy Tuberville of Alabama

    98. Sen. JD Vance of Ohio

    99. Sen. Roger Wicker of Mississippi

    Not Voting

    100. Republican Sen. Bill Hagerty of Tennessee

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  • China just played a trump card in the chip war. Are more export curbs coming? | CNN Business

    China just played a trump card in the chip war. Are more export curbs coming? | CNN Business


    Hong Kong
    CNN
     — 

    A trade war between China and the United States over the future of semiconductors is escalating.

    Beijing hit back Monday by playing a trump card: It imposed export controls on two strategic raw materials, gallium and germanium, that are critical to the global chipmaking industry.

    “We see this as China’s second, and much bigger, counter measure to the tech war, and likely a response to the potential US tightening of [its] AI chip ban,” said Jefferies analysts. Sanctioning one of America’s biggest memory chipmakers, Micron Technology

    (MU)    , in May was the first, they said.

    Here’s what you need to know about gallium and germanium, how they could play into the chip war and whether more countermeasures could be coming.

    Last October, the Biden administration unveiled a set of export controls banning Chinese companies from buying advanced chips and chip-making equipment without a license.

    Chips are vital for everything from smartphones and self-driving cars to advanced computing and weapons manufacturing. US officials have talked about the move as a measure to protect national security interests.

    But it didn’t stop there. For the curbs to be effective, Washington needed other key suppliers, located in the Netherlands and Japan, to join. They did.

    China eventually retaliated. In April, it launched a cybersecurity probe into Micron before banning the company from selling to Chinese companies working on key infrastructure projects. On Monday, Beijing announced the restrictions on gallium and germanium.

    Gallium is a soft, silvery metal and is easy to cut with a knife. It’s commonly used to produce compounds that are key materials in semiconductors and light-emitting diodes.

    Germanium is a hard, grayish-white and brittle metalloid that is used in the production of optical fibers that can transmit light and electronic data.

    The export controls have drawn comparisons with China’s reported attempts in early 2021 to restrict exports of rare earths, a group of 17 elements for which China controls more than half of the global supply.

    Gallium and germanium do not belong to this group of minerals. Like rare earths, they can be expensive to mine or produce.

    This is because they are usually formed as a byproduct of mining more common metals, primarily aluminum, zinc and copper, and processed in countries that produce them.

    China is the world’s leading producer of both gallium and germanium, according to the US Geological Survey. The country accounted for 98% of the global production of gallium, and 68% of the refinery production of germanium.

    “The economies of scale in China’s extensive and increasingly integrated mining and processing operations, along with state subsidies, have allowed it to export processed minerals at a cost that operators elsewhere can’t match, perpetuating the country’s market dominance for many critical commodities,” analysts from Eurasia Group said on Tuesday.

    Shares of Chinese producers of the two raw materials surged by 10% on Tuesday.

    Beyond China, Australian rare earths producers also advanced, as investors expected Beijing might extend export curbs to that group of strategically important minerals. Lynas Rare Earths

    (LYSCF)     rose 1.5%.

    The United States is dependent on China for these the two critical elements. It imported more than 50% of the gallium and germanium it used in 2021 from the country, the US Geological Survey showed.

    Eurasia Group analysts described China’s export controls as a “warning shot.”

    “It is a shot across the bow intended to remind countries including the United States, Japan, and the Netherlands that China has retaliatory options and to thereby deter them from imposing further restrictions on Chinese access to high-end chips and tools,” Eurasia Group said in a research note.

    Chinese authorities may also intend to use its control over these niche metals as a possible bargaining chip in discussions with US Treasury Secretary Janet Yellen, who is scheduled to visit Beijing later this week.

    Jefferies analysts said the timing of the announcement was unlikely to be a casual decision.

    “It gives the US at least two days to digest and come up with a well-considered response,” they said.

    However, the move is not considered “a death blow” to the United States and its allies.

    China may be the industry leader, but there are alternative producers, as well as available substitutes for both minerals, the Eurasia Group analysts pointed out.

    The United States also imports a fifth of its gallium from the United Kingdom and Germany and buys more than 30% of its germanium from Belgium and Germany.

    That’s definitely possible, a former senior Chinese official has warned.

    The curbs announced this week are “just the start,” Wei Jianguo, a former deputy commerce minister, told the official China Daily on Wednesday, adding China has more tools in its arsenal with which to retaliate.

    “If the high-tech restrictions on China become tougher in the future, China’s countermeasures will also escalate,” he was quoted as saying.

    Analysts believe this too. Rare earths, which are not difficult to find but are complicated to process, are also critical in making semiconductors, and could be the next target.

    “If this action doesn’t change the US-China dynamics, more rare earth export controls should be expected,” Jefferies analysts said.

    However, analysts from Eurasia Group warned that restricting exports is a “double-edged sword.”

    Past attempts by China to leverage its dominance in rare earths have reduced availability and raised prices. Higher prices have spurred greater competition by making mining and processing ventures outside of China more cost-competitive, they said.

    China cut its rare earths export quota in 2010 amid tensions with the United States.

    That resulted in greater efforts by companies outside of the country to produce the metals. US data showed that China’s global market share dropped from 97% in 2010 to about 60% in 2019.

    “Imposing export restrictions risks reducing market dominance,” the Eurasia Group analysts said.

    CNN’s Hanna Ziady and Xiaofei Xu contributed to reporting.

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  • Here’s how the 14th Amendment factors into the debt ceiling debate | CNN Politics

    Here’s how the 14th Amendment factors into the debt ceiling debate | CNN Politics



    CNN
     — 

    As the stalemate over addressing the debt ceiling continues and the threat of default looms larger, President Joe Biden has resurfaced the controversial idea of using the 14th Amendment as a way to lift the borrowing cap without Congress.

    How could a 145-year-old change to the US Constitution that gave citizenship to former slaves serve as a path out of the debt ceiling drama? Government officials and legal authorities are divided over whether it does.

    Some experts, including Laurence H. Tribe of Harvard Law School, point to Section 4 of the amendment as the basis of their argument that the president has the authority to order the nation’s debts be paid regardless of the debt limit Congress put in place more than 100 years ago.

    “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned,” reads the section, which refers to the debt incurred by the Union to fight the Civil War.

    Lawmakers who crafted the amendment are very strongly saying that once the US borrows money, it has to pay it back, said Garrett Epps, a constitutional law professor at the University of Oregon. The section was designed to remove debt payments from potential post-war partisan bickering between the North and South, but it also applies to the wide divide between Democrats and Republicans today.

    “The federal government is required to pay the debt on time in full,” said Epps, who has long supported using this option in the event Congress refuses to raise the debt ceiling.

    Were Biden to invoke the 14th Amendment to allow Treasury to borrow above the debt ceiling to pay the nation’s obligations, it would almost certainly prompt a constitutional crisis and swift legal action. The president acknowledged as much, saying that he doesn’t think it would solve the current problem.

    “I’ll be very blunt with you, when we get by this, I’m thinking about taking a look at, months down the road, as to see whether what the court would say about whether or not it does work,” Biden said Tuesday after meeting with congressional leaders about the impasse.

    Treasury Secretary Janet Yellen, who has warned lawmakers that the government may default on its obligations as soon as June 1, also poured cold water on the idea.

    “There would clearly be litigation around that. It’s not a short-run solution,” Yellen said at a news conference Thursday when asked about the 14th Amendment. “It’s legally questionable whether or not that’s a viable strategy.”

    She declined to rank where invoking the 14th Amendment would fall in the list of options if Congress failed to act.

    “There are choices to be made, if we got into that situation,” she said. “But as you think about each possible thing that we could do, the answer is there is no good alternative that will save us from catastrophe. The only reasonable thing is to raise the debt ceiling and to avoid the dreadful consequences that will come if we have to make those choices.”

    Prior administrations also considered invoking the 14th Amendment but deemed it unworkable. They never had to pursue it since Congress always acted in time.

    Doing so, however, would not avoid calling into question the safety of US Treasury securities and would put the nation at risk, former Treasury Secretary Jack Lew, who served in the Obama administration, said at a Council on Foreign Relations event last month.

    “It was not meant to be a broad grant of power,” he said. “Whether you could come up with a theory that you could convince a court was legitimate, I think it’s just a risky thing to do.”

    Invoking the 14th Amendment would also open the door to potential abuse of presidential power by allowing the executive branch to circumvent Congress, said Philip Wallach, senior fellow at the right-leaning American Enterprise Institute. And it could forever end the ability of lawmakers to negotiate with the president over the debt ceiling.

    “Every time you take these actions that empower the president at the expense of Congress and at the expense of the political process, you need to ask yourself, am I going to be happy about the consequences of this the next time, when the other side’s party is sitting in the White House?” Wallach said.

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  • Biden addresses nation after avoiding catastrophic default: ‘The stakes could not have been higher’ | CNN Politics

    Biden addresses nation after avoiding catastrophic default: ‘The stakes could not have been higher’ | CNN Politics


    Washington
    CNN
     — 

    President Joe Biden declared bipartisanship alive and well during his first ever Oval Office address on Friday, pointing to the compromise measure that raises the federal borrowing limit and avoids a catastrophic default as evidence his sometimes-mocked views of Washington are not a thing of the past.

    Addressing the nation from behind the Resolute Desk, Biden sought to harness the vintage presidential setting to make the case for a style of governing he insisted was not only still relevant but essential to avoiding disaster.

    Encouraging Americans to “treat each other with dignity and respect” and to “stop shouting,” he said the package he brokered with Republicans ensures economic progress going forward and amounts to a “crisis averted” – even though it sparked fury from some in his own party.

    And he vowed to continue working toward priorities that were left out – including raising taxes on the wealthy – in an implicit reelection message.

    “Passing this budget agreement was critical. The stakes could not have been higher,” he said.

    It’s been several years since Americans have witnessed the type of seated, direct-to-camera speech Biden delivered Friday. Past presidents have employed the Oval Office to deliver statements during moments of crisis, like after the terror attacks on 9/11 or when the space shuttle Challenger exploded.

    Biden was speaking not amid a crisis but having avoided one. Yet by evoking a style of speech used by presidents for decades, he seemed to also harken to an era of government that did not look down on attempts at compromise.

    “I know bipartisanship is hard and unity is hard, but we can never stop trying, because at moments like this one, the ones we just faced where the American economy and the world economy is at risk of collapsing, there is no other way,” he said in his speech.

    The decision to speak in the most formal of presidential settings came after weeks of fraught negotiations over the borrowing limit. The deal ultimately struck between Biden and House Speaker Kevin McCarthy raises the debt ceiling for two years, freezes domestic spending, imposes some new work requirements on food stamps and alters certain energy permitting rules.

    Biden had intentionally avoided declaring victory after brokering the agreement, partly in the hopes of securing the necessary Republican votes for the bill to pass.

    That tactic appeared to work; the measure cleared the House and Senate in bipartisan fashion. Biden said he planned to sign the bill Saturday and called the engagements with his Republican interlocutors “respectful.”

    He began his evening address by underscoring his efforts to work across the aisle to secure a positive outcome – an objective he noted had been met with intense skepticism.

    “When I ran for president, I was told that the days of bipartisanship is over and Democrats and Republicans could no longer work together. I refuse to believe that,” Biden said. “The only way American democracy can function is through compromise and consensus.”

    The president said neither Republicans nor Democrats “got everything they wanted but the American people got what they needed.”

    “We averted an economic crisis and an economic collapse,” he said.

    The Treasury Department has said it will run out of cash to pay its bills in full and on time on Monday. Economists had warned of severe consequences of a national default.

    Despite the bill’s passage, the legislation known as the Bipartisan Budget Agreement had detractors on both the left and right. Many liberals and conservatives voted against it, and the most right-wing lawmakers have raised the prospect of trying to oust McCarthy from his leadership role for what they say were insufficient spending cuts.

    On the left, progressive Democrats balked at some of the new work requirements added to the bill, though an analysis by the nonpartisan Congressional Budget Office showed the measure would likely keep the number of Americans on food stamps at roughly the same levels. The bill lifted work requirements for veterans and those experiencing homelessness.

    Democratic critics have also voiced outrage at approval included in the bill of a natural gas pipeline through West Virginia and Virginia.

    Biden and his aides have argued they were successfully able to stave off the most extreme Republican positions to arrive at a bill that ultimately avoided economic disaster.

    Through it all, some Democrats have grumbled at the president’s approach to the situation. While Biden initially said he would not negotiate over raising the debt ceiling, demanding only a “clean increase,” he ultimately entered into talks with McCarthy that tied the borrowing limit to budget cuts.

    Others encouraged Biden to use the 14th Amendment, which states the US debt “shall not be questioned,” to unilaterally raise the debt ceiling. Biden said it was possible to explore that option in the future, but it was too risky to deploy with the imminent threat of default.

    “Nothing would have been more catastrophic” than a default, Biden said in his remarks.

    This headline and story have been updated with additional developments.

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