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  • Israel, US announce Lebanon sea deal, but questions remain

    Israel, US announce Lebanon sea deal, but questions remain

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    JERUSALEM — President Joe Biden on Tuesday said the U.S. has brokered a “historic breakthrough” between Israel and Lebanon that would end a dispute over their shared maritime border, pave the way for natural gas production and reduce the risk of war between the enemy countries.

    The agreement, coming after months of U.S.-mediated talks, would mark a major breakthrough in relations between Israel and Lebanon, which formally have been at war since Israel’s establishment in 1948. But the deal still faces some obstacles, including legal and political challenges in Israel.

    Israel welcomed the deal even ahead of Biden’s announcement. Lebanese leaders made no formal announcement, but indicated they would approved the agreement.

    In Washington, Biden said that Israel and Lebanon had agreed to “formally end” their maritime dispute. He said he had spoken to the leaders of both countries and been told they were ready to move ahead.

    The agreement “will provide for the development of energy fields for the benefit of both countries, setting the stage for a more stable and prosperous region,” Biden said. “It is now critical that all parties uphold their commitments and work towards implementation.”

    Lebanon and Israel both claim some 860 square kilometers (330 square miles) of the Mediterranean Sea. At stake are rights over exploiting undersea natural gas reserves. Lebanon hopes gas exploration will help lift its country out of its spiraling economic crisis. Israel also hopes to exploit gas reserves while also easing tensions with its northern neighbor.

    Israeli Prime Minister Yair Lapid called the deal a “historic achievement that will strengthen Israel’s security, inject billions into Israel’s economy, and ensure the stability of our northern border.”

    Under the agreement, the disputed waters would be divided along a line straddling the strategic “Qana” natural gas field.

    Israeli officials involved in the negotiations said Lebanon would be allowed to produce gas from that field, but pay royalties to Israel for any gas extracted from the Israeli side. Lebanon has been working with the French energy giant Total on preparations for exploring the field, though actual production is likely years away.

    The agreement would also leave in place an existing “buoy line” that serves as a de facto border between the two countries, the officials said.

    The officials, speaking on condition of anonymity because they were discussing behind the scenes negotiations, said the deal would include American security guarantees, including assurances that none of the gas revenues reach Hezbollah.

    Many leading Israeli security figures, both active and retired, have hailed the deal because it could lower tensions with Lebanon’s Hezbollah militant group, which has repeatedly threatened to strike Israeli natural gas assets elsewhere in the Mediterranean.

    With Lebanon now having a stake in the region’s natural gas industry, experts believe the sides will think twice before opening up another war.

    “It might help create and strengthen the mutual deterrence between Israel and Hezbollah,” said Yoel Guzansky, a senior fellow at Israel’s Institute for National Security Studies. “This is a very positive thing for Israel.”

    Israel and Hezbollah fought a monthlong war in 2006, and Israel considers the heavily armed Iranian-backed group to be its most immediate military threat.

    The agreement will be brought before Israel’s caretaker government for approval this week ahead of the Nov. 1 election, when the country goes to the polls for the fifth time in under four years.

    An Israeli official said Lapid’s Cabinet is expected to approve the agreement in principle on Wednesday, while sending it to parliament for a required two-week review. After the review, the government would give final, official approval, the official said, speaking on condition of anonymity to discuss government strategy. It remains unclear if parliament needs to approve the agreement, or merely review it.

    Approval is not guaranteed. Former Prime Minister Benjamin Netanyahu has said the caretaker government has no authority to sign such an important agreement and has vowed to cancel the deal if re-elected. On Tuesday, he accused Lapid of caving in to Hezbollah threats.

    “This is not a historic agreement. It’s a historic surrender,” Netanyahu said in a Facebook video.

    The Kohelet Policy Forum, an influential conservative think tank, already has filed a challenge with the Supreme Court trying to block the deal.

    But Yuval Shany, an expert on international law at the Israel Democracy Institute, another prominent think tank, said it is customary, but not mandatory, to seek Knesset approval for such agreements.

    “Peace agreements are usually brought to the Knesset, but this is not a peace agreement. It’s a border and limitation agreement,” he said.

    Senior U.S. energy envoy Amos Hochstein, whom Washington appointed a year ago to mediate talks, delivered a modified proposal of the maritime border deal to Lebanon on Monday night, according to local media and officials.

    There was no formal response from Lebanon. But the office of President Michel Aoun said the latest version of the proposal “satisfies Lebanon, meets its demands, and preserves its rights to its natural resources,” and will hold consultations with officials before making an announcement.

    A senior official involved in the talks told The Associated Press that Aoun, Prime Minister Najib Mikati, and Speaker Nabih Berri were all satisfied. The official spoke on condition of anonymity in line with regulations.

    Hezbollah’s leader, Hassan Nasrallah, was noncommital in a speech late Tuesday. He praised his group’s “resistance” against Israel and insisted that Lebanon is not afraid of another war against Israel. But he said Hezbollah would “wait” to issue its position on the agreement. Previously he has said the group would endorse the government’s position.

    He said any agreement would require cooperation and unity among Lebanon’s fractured political leadership. “The upcoming hours are decisive,” he said.

    ———

    Associated Press correspondent Eleanor Reich contributed reporting from Jerusalem.

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  • IMF cuts global growth forecast for next year, warns ‘the worst is yet to come’

    IMF cuts global growth forecast for next year, warns ‘the worst is yet to come’

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    The International Monetary Fund predicts global growth will slow.

    OLIVIER DOULIERY / Contributor / Getty Images

    The International Monetary Fund predicts global growth will slow to 2.7% next year, 0.2 percentage points lower than its July forecast, and anticipates 2023 will feel like a recession for millions around the world.

    Aside from the global financial crisis and the peak of the Covid-19 pandemic, this is “the weakest growth profile since 2001,” the IMF said in its World Economic Outlook published Tuesday. Its GDP estimate for this year remained steady at 3.2%, which was down from the 6% seen in 2021.

    “The worst is yet to come, and for many people 2023 will feel like a recession,” the report said, echoing warnings from the United Nations, the World Bank and many global CEOs.

    More than a third of the global economy will see two consecutive quarters of negative growth, while the three largest economies — the United States, the European Union and China — will continue to slow, the report said.

    “Next year is going to feel painful,” Pierre-Olivier Gourinchas, the IMF’s chief economist told CNBC Tuesday on the back of the report. “There’s going to be a lot of slowdown and economic pain,” he said.

    ‘Volatile conditions’

    In its report, the IMF laid out three major events currently hindering growth: Russia’s invasion of Ukraine, the cost-of-living crisis and China’s economic slowdown. Together, they create a “volatile” period economically, geopolitically and ecologically.

    The war in Ukraine continues to “powerfully destabilize the global economy,” according to the report, with its impacts causing a “severe” energy crisis in Europe, along with destruction in Ukraine itself.

    The price of natural gas has more than quadrupled since 2021, as Russia now delivers less than 20% of 2021 levels. Food prices have also been pushed up as a result of the conflict.

    There would be a cost for the rest of the world if the U.S. fails to tackle inflation, IMF chief economist says

    The IMF anticipates global inflation will peak in late 2022, increasing from 4.7% in 2021 to 8.8%, and that it will “remain elevated for longer than previously expected.”

    Global inflation will likely decrease to 6.5% in 2023 and to 4.1% by 2024, according to the IMF forecast. The agency noted the tightening of monetary policy across the world to combat inflation and the “powerful appreciation” of the U.S. dollar against other currencies.

    China’s “zero-Covid policy” — and its resulting lockdowns — continue to hamper its economy. Property makes up around one fifth of China’s economy, and as the market struggles the ramifications continue to be felt globally.

    For emerging markets and developing economies, the shocks of 2022 will “re-open economic wounds that were only partially healed following the pandemic,” the report said.

    The IMF also spoke of a “deteriorated” economic outlook in its Global Financial Stability Report, released Tuesday just after its World Economic Outlook. “The global environment is fragile with storm clouds on the horizon,” the report said.

    Policymakers around the world are facing an “unusually challenging financial stability environment” where further shocks “may trigger market illiquidity, disorderly sell-offs, or distress,” the report added.

    Speaking at the 2022 Annual Meetings of the International Monetary Fund and the World Bank Group, Axel Van Trotsenburg, the World Bank’s managing director of operations, echoed the sentiment in both reports.

    World Bank's Axel van Trotsenburg: We see very clearly the global economy is slowing significantly

    “We see extreme poverty again increasing … The number of people living on $7 … That’s 47% of the world population [who are living] in poverty. So this is very clear, people are hurting,” van Trotsenburg told CNBC’s Geoff Cutmore Tuesday.

    World economy is ‘historically fragile’

    The IMF also highlighted that the risk of monetary, fiscal, or financial policy “miscalibration” had “risen sharply,” while the world economy “remains historically fragile” and financial markets are “showing signs of stress.”

    The report comes as analysts debate whether the Federal Reserve acted fast enough on inflation in the U.S. The European Central Bank, meanwhile, has recently entered positive rate territory for the first time since 2014 and the Bank of England has had to announce additional measures this week to stabilize the British economy and a unwanted surge in bond yields.

    The report Tuesday suggested “front-loaded and aggressive monetary tightening” is needed, but that a “large” downturn is not “inevitable,” citing tight labor markets in the U.S. and U.K.

    The U.S. is remarkably strong in the labor market, says IMF Managing Director Kristalina Georgieva

    The organization also highlighted that “fiscal policy should not work at cross purposes with monetary authorities’ efforts to quell inflation.” Those comments reflect the rare statement issued late last month by the IMF after U.K. Prime Minister Liz Truss laid out a series of tax cuts. The IMF suggested Truss should “re-evaluate” the fiscal package.

    When asked if the U.K. was a “poster child for economic illiteracy,” Gourinchas said “certainly not.”

    “We’ve welcomed the recent development, the fact that the government has announced a fiscal event at the end of the month and the OBR [Office for Budget Responsibility] is going to be involved in evaluating the proposals,” he said.

    “I think all of this is going in the direction of ‘let’s have a three-sixty on fiscal plans and make sure we’re all pointing in the right direction’,” Gourinchas told CNBC.

    Winter 2022 will be challenging, but 2023 ‘will likely be worse’

    The energy crisis is also weighing heavily on the world’s economies, particularly in Europe, and it “is not a transitory shock,” according to the report.

    “The geopolitical re-alignment of energy supplies in the wake of Russia’s war against Ukraine is broad and permanent,” the report added. “Winter 2022 will be challenging for Europe, but winter 2023 will likely be worse,” the IMF said.

    Europe’s approach to the energy crisis has had a mixed response.

    U.S. Sen. Chris Murphy criticized Europe’s overreliance on Russian energy, saying it was a mistake for Europe “to have been welded to Russia when it comes to energy” in an interview with CNBC’s Hadley Gamble at the Warsaw Security Forum in Poland on Oct. 4.

    U.S. should pump more oil to avert war-level energy crisis, says JPMorgan's Jamie Dimon

    JPMorgan Chase CEO Jamie Dimon told CNBC the crisis was “pretty predictable” and that the U.S. should have been producing more oil and gas.

    “America needs to play a real leadership role. America is the swing producer, not Saudi Arabia. We should have gotten that right starting in March,” he said, referring to Russia’s invasion of Ukraine on Feb. 24.

    Polish Prime Minister Mateusz Morawiecki said Europe’s current energy issues were “consequences of a very wrong policy, disastrous policy, which was led by Germany.”

    “Lack of gas, very expensive prices of gas and electricity all over Europe – this is the real price of the agreement between Germany and Russia,” Morawiecki told CNBC’s Charlotte Reed in an exclusive interview.

    IMF's Tobias Adrian: We're seeing pockets of dysfunction

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  • Iran escalates brutal crackdown on protesters

    Iran escalates brutal crackdown on protesters

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    Iran escalates brutal crackdown on protesters – CBS News


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    Anti-government protests are now targeting the lifeblood of Iran’s economy — oil and gas production. Some oil and gas workers have joined the protests as activists say the government’s crackdown is getting more brutal. Roxana Saberi reports.

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  • Jamie Dimon says UK government deserves benefit of the doubt after sparking market turmoil

    Jamie Dimon says UK government deserves benefit of the doubt after sparking market turmoil

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    Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co. says the new U.K. government should be “given the benefit of the doubt.”

    Al Drago | Bloomberg | Getty Images

    JPMorgan Chase CEO Jamie Dimon said new governments “always have issues” and U.K. Prime Minister Liz Truss should be “given the benefit of the doubt” following a turbulent first month in office.

    “It’ll take time to execute the policies and kind of drive growth and what’s important … [but] there’s a lot of things the U.K. has going for it and proper strategies to get it growing faster … then it can accomplish some of the other objectives it wants to accomplish too,” Dimon told CNBC’s Julianna Tatelbaum on Monday, speaking at the JPM Techstars conference in London.

    “I would like to see the new prime minister, the new chancellor, be successful,” he said.

    Dimon’s comments come after a rocky few weeks for Truss’s administration. Finance Minister Kwasi Kwarteng announced a raft of fiscal measures in a “mini-budget” on Sept. 23, including unfunded cuts to income tax and canceling a planned increase in corporation tax.

    Sterling plummeted and yields on U.K. government bonds, or “gilts,” were sent through the roof and have yet to return to their pre-announcement levels.

    The government then opted to reverse the decision to abolish the highest income tax bracket — a 45% rate for those earning more than £150,000 — just 10 days later.

    ‘Every government should be focusing on growth’

    Growth should be an objective for every nation, according to JPMorgan’s Dimon.

    “I think every government should be focusing on growth — I would love to hear that out of their mouth every time a president or prime minister speaks,” Dimon said.

    “Growth comes from proper tax policies, from proper investment policies, consistency of law … being attractive to foreign investment, being attractive to companies and having strategy around industries,” he said.

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  • Large rail union rejects deal, renewing strike possibility

    Large rail union rejects deal, renewing strike possibility

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    OMAHA, Neb. — The U.S.’s third largest railroad union rejected a deal with employers Monday, renewing the possibility of a strike that could cripple the economy. B oth sides will return to the bargaining table before that happens.

    Over half of track maintenance workers represented by the Brotherhood of Maintenance of Way Employes Division who voted opposed the five-year contract despite 24% raises and $5,000 in bonuses. Union President Tony Cardwell said the railroads didn’t do enough to address the lack of paid time off — particularly sick time — and working conditions after the major railroads eliminated nearly one-third of their jobs over the past six years.

    “Railroaders are discouraged and upset with working conditions and compensation and hold their employer in low regard. Railroaders do not feel valued,” Cardwell said in a statement. “They resent the fact that management holds no regard for their quality of life, illustrated by their stubborn reluctance to provide a higher quantity of paid time off, especially for sickness.”

    The group that represents the railroads in negotiations said they were disappointed the union rejected the agreement, but emphasized that no immediate threat of a strike exists because the union agreed to keep working for now.

    Four other railroad unions have approved their agreements with freight railroads including BNSF, Union Pacific, Kansas City Southern, CSX and Norfolk Southern, but all 12 unions representing 115,000 workers must ratify their contracts to prevent a strike. Another union, the International Association of Machinists and Aerospace Workers, initially rejected its deal but has since renegotiated a new contract. Voting will be completed in mid-November.

    President Joe Biden pressured the railroads and unions to reach a deal last month ahead of a mid-September deadline to allow a strike or walkout. Many businesses also urged Congress to be ready to intervene in the dispute and block a strike if an agreement wasn’t reached because so many companies rely on railroads to deliver their raw materials and finished products.

    In general, the deals the unions agreed to closely follow the recommendations a special panel of arbitrators that Biden appointed made this summer. That Presidential Emergency Board recommended what would be the biggest raises rail workers have seen in more than four decades, but it didn’t resolve the unions’ concerns about working conditions. Instead it said the unions should pursue additional negotiations or arbitration that can take years with each railroad individually.

    The Brotherhood of Maintenance of Way union said it agreed to delay any strike until five days after Congress reconvenes in mid November to allow time for additional negotiations.

    Quality of life issues took center stage at the end of these negotiations, with unions representing conductors and engineers holding out until the end for three unpaid leave days a year for medical appointments and a promise that railroads will negotiate further about giving those employees regularly scheduled days off when they aren’t on call. Engineers and conductors have complained that strict attendance policies make it hard to take any time off.

    Track maintenance workers in the BMWED generally have more regular schedules than engineers and conductors, but all the rail unions have objected to the lack of paid sick time in the industry — particularly after working to keep trains moving throughout the pandemic.

    Rutgers University professor Todd Vachon, who teaches labor relations classes, said he’s not entirely surprised the contract was rejected given how emboldened union members feel to fight for better working conditions amidst the current worker shortage.

    “The biggest sticking issue is quality of life — especially access to paid time off and paid sick time. If the railroads can make some movement in that area, it will likely go a long way with rail workers who currently feel they are not being respected by their employers,” Vachon said. “Wages and resource allocation are one important part of contract negotiations, but feeling respected by one’s employer remains one of the top reasons that workers form and join unions.”

    Although a strike is now possible, Vachon said he’s not too worried yet because both sides have more than a month to reach a new agreement.

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  • Twitter, Instagram block Kanye West over anti-Semitic posts

    Twitter, Instagram block Kanye West over anti-Semitic posts

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    Kanye West once suggested slavery was a choice. He called the COVID-19 vaccine “the mark of the beast”. Earlier this month, he was criticised for wearing a “White Lives Matter” T-shirt to his collection at Paris Fashion Week.

    Now the rapper who is legally known as Ye is again embroiled in controversy — locked out of Twitter and Instagram over anti-Semitic posts the social networks said Sunday violated their policies. In one post on Twitter, Ye said he would soon go “death con 3 on JEWISH PEOPLE”, according to internet archive records, making an apparent reference to the United States defence-readiness condition scale known as DEFCON.

    “You guys have toyed with me and tried to black ball anyone whoever opposes your agenda,” he said in the same tweet posted late Saturday, which was removed by Twitter.

    The comment drew a sharp rebuke from the Anti-Defamation League, which called the tweet “deeply troubling, dangerous, and antisemitic, period”.

    “There is no excuse for his propagating of white supremacist slogans and classic antisemitism about Jewish power, especially with the platform he has,” a statement said.

    Representatives for Ye did not return requests for comment.

    Ye has alienated even ardent fans in recent years, teasing and long tinkering with albums that have not been met with the critical or commercial success of his earlier recordings. Those close to him, like ex-wife Kim Kardashian and her family, have ceased publicly defending him after the couple’s bitter divorce and his unsettling posts about her recent relationship with comedian Pete Davidson.

    But the social media lockouts cap a whirlwind week for Ye, even by his standards. On October 3 he wore a “White Lives Matter” T-shirt while debuting his latest fashion line in Paris, prompting harsh criticism. According to the Southern Poverty Law Center, which tracks hate groups, White Lives Matter is a neo-Nazi group.

    Rapper Sean “Diddy” Combs posted a video on Instagram saying he did not support the shirt and urged people not to buy it. On Instagram, Ye posted a screenshot of a text conversation with Diddy and suggested he was controlled by Jewish people, according to media reports.

    Adidas said Thursday it was placing its lucrative sneaker deal with Ye under review. And on Saturday, Instagram locked out posts by the rapper-entrepreneur over content violations. His Twitter account was locked Sunday, just a day after he returned to the platform following a nearly two-year hiatus — and was welcomed back by Elon Musk.

    “Welcome back to Twitter, my friend,” posted Musk, who last week renewed his $44bn offer to buy Twitter following a months-long legal battle with the company. The billionaire and Tesla CEO has said he would remake Twitter into a free speech haven and relax restrictions, although it is impossible to know precisely how he would run the influential network if he were to take over.

    The social media policies for Twitter and Instagram prohibit posting offensive language.

    Ye’s Twitter account is still active but he cannot post until the lockout ends. Sanctions by Meta, which owns Facebook and Instagram, may include temporary restrictions on posting, commenting or sending direct messages. Such muzzles can last as little as 12 hours or for days, depending on how serious the violation was or how many other times the account broke the rules.

    While a step below a full account suspension, enough of these restrictions can eventually lead to a person being kicked off the social media platforms — temporarily or, in rare circumstances, permanently.

    As of Monday afternoon, neither account had posted anything, indicating Ye is still restricted. Neither Twitter nor Meta would say how long they will restrict Ye’s accounts, or how close he might be to becoming suspended or even permanently booted.

    Controversial years

    Ye has earned a reputation less for his music and more for stirring up controversy since 2016 when he was hospitalised in Los Angeles because of what his team called stress and exhaustion. It was later revealed he had been diagnosed with bipolar disorder.

    That year, he ended a show in Sacramento, California, after just four songs but not before a 10-minute tirade about Beyoncé, Jay-Z, Hillary Clinton, Mark Zuckerberg, the radio and MTV. West soon decided to scrap the entire tour.

    Since then he has regularly made headlines: Running for president, continuing his feud with Taylor Swift, causing an uproar when he suggested slavery was a choice, publicly defending R Kelly, and once inviting Marilyn Manson and DaBaby on stage with him as they faced sexual assault and anti-gay allegations, respectively.

    Ye’s involvement aside, social media restrictions like this incident have been largely routine for the platforms. Twitter took action on nearly 4.3 million accounts between July and December of 2021, according to the latest available data from a transparency report it publishes twice a year. About 1.3 million accounts were suspended in the same period.

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  • Large rail union rejects deal, making eventual strike possible

    Large rail union rejects deal, making eventual strike possible

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    The third largest railroad union rejected its deal with freight railroads Monday — renewing the possibility of a strike that could cripple the economy — but before that could happen, both sides will return to the bargaining table.

    About 56% of the voting track maintenance workers represented by the Brotherhood of Maintenance of Way Employes Division union opposed the five-year contract, which included 24% raises and $5,000 in bonuses. Union President Tony Cardwell said the railroads didn’t do enough to address worker concerns about the lack of paid time off — particularly sick time — and demanding working conditions after the major railroads eliminated nearly one-third of their jobs over the past six years.

    “Railroaders are discouraged and upset with working conditions and compensation and hold their employer in low regard. Railroaders do not feel valued,” Cardwell said in a statement. “They resent the fact that management holds no regard for their quality of life, illustrated by their stubborn reluctance to provide a higher quantity of paid time off, especially for sickness.” 

    Cardwell noted that the membership “voted in record numbers,” showing they are closely following the negotiations.

    The railroads didn’t immediately comment on the rejected contract.

    Four other railroad unions have approved their agreements with the freight railroads that include BNSF, Union Pacific, Kansas City Southern, CSX and Norfolk Southern, but all 12 unions that represent a total of 115,000 workers must ratify their contracts to prevent a strike. One other union, the International Association of Machinists and Aerospace Workers, initially rejected its deal but has since renegotiated a new contract. The voting won’t be completed until mid-November.

    President Joe Biden put pressure on the railroads and unions to reach a deal last month ahead of a mid-September deadline to allow a strike or walkout. Many businesses also urged Congress to be ready to intervene in the dispute and block a strike if an agreement wasn’t reached because so many companies rely on railroads to deliver their raw materials and finished products.

    In general, the deals the unions agreed to closely follow the recommendations a special panel of arbitrators appointed by President Biden made this summer. That Presidential Emergency Board recommended what would be the biggest raises rail workers have seen in more than four decades, but it didn’t resolve the unions’ concerns about working conditions. Instead, it said the unions should pursue additional negotiations or arbitration with each railroad individually — a process that can take years.

    The Brotherhood of Maintenance of Way union said it agreed to delay any strike until five days after Congress reconvenes in mid-November to allow time for additional negotiations.

    Quality of life issues took center stage at the end of these negotiations. The unions that represent conductors and engineers held out until the end to get three unpaid leave days a year to tend to medical appointments, along with a promise that railroads will negotiate further about giving those employees regularly scheduled days off where they aren’t on call. The engineers and conductors have complained that strict railroad attendance policies make it hard to take any time off.

    The track maintenance workers in the BMWED generally have more regular schedules than engineers and conductors, but all the rail unions have objected to the lack of paid sick time in the industry — particularly after working to keep trains moving throughout the pandemic.

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  • Ark’s Cathie Wood issues open letter to the Fed, saying it is risking an economic ‘bust’

    Ark’s Cathie Wood issues open letter to the Fed, saying it is risking an economic ‘bust’

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    Cathie Wood, Founder, CEO, and CIO of ARK Invest, speaks at the 2022 Milken Institute Global Conference in Beverly Hills, California, May 2, 2022.

    David Swanson | Reuters

    The Federal Reserve likely is making a mistake in its hard-line stance against inflation Ark Investment Management’s Cathie Wood said Monday in an open letter to the central bank.

    Instead of looking at employment and price indexes from previous months, Wood said the Fed should be taking lessons from commodity prices that indicate the biggest economic risk going forward is deflation, not inflation.

    “The Fed seems focused on two variables that, in our view, are lagging indicators –– downstream inflation and employment ––both of which have been sending conflicting signals and should be calling into question the Fed’s unanimous call for higher interest rates,” Wood said in the letter posted on the firm’s website.

    Specifically, the consumer price and personal consumption expenditures price indexes both showed inflation running high. Headline CPI rose 0.1% in August and was up 8.3% year over year, while headline PCE accelerated 0.3% and 6.2% respectively. Both readings were even higher excluding food and energy, which saw large price drops over the summer.

    On employment, payroll growth has decelerated but remains strong, with job gains totaling 263,000 in September as the unemployment rate fell to 3.5%.

    But Wood, whose firm manages some $14.4 billion in client money across a family of active ETFs, said falling prices for items such as lumber, copper and housing are telling a different story.

    Worries over a ‘deflationary bust’

    The Fed has approved three consecutive interest rate increases of 0.75 percentage point, mostly by unanimous vote, and is expected to OK a fourth when it meets again Nov. 1-2.

    “Unanimous? Really?” Wood wrote. “Could it be that the unprecedented 13-fold increase in interest rates during the last six months––likely 16-fold come November 2––has shocked not just the US but the world and raised the risks of a deflationary bust?”

    Inflation is bad for the economy because it raises the cost of living and depresses consumer spending; deflation is a converse risk that reflects tumbling demand and is associated with steep economic downturns.

    To be sure, the Fed is hardly alone in raising rates.

    Nearly 40 central banks around the world approved increases during September, and the markets have largely expected all the Fed’s moves.

    However, criticism has emerged recently that the Fed could be going too far and is at risk of pulling the economy into an unnecessary recession.

    “Without question, food and energy prices are important, but we do not believe that the Fed should be fighting and exacerbating the global pain associated with a supply shock to agriculture and energy commodities caused by Russia’s invasion of Ukraine,” Wood wrote.

    The Fed is expected to follow the November hike with a 0.5 percentage point rise in December, then a 0.25 percentage point move early in 2023.

    One area of the market known as overnight indexed swaps is pricing in two rate cuts by the end of 2023, according to Morgan Stanley.

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  • UAE president to meet Russia’s Vladimir Putin on Tuesday

    UAE president to meet Russia’s Vladimir Putin on Tuesday

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    Sheikh Mohammed bin Zayed al-Nahyan heads to Moscow for talks after OPEC+’s oil-production cut announcement and as the war in Ukraine rages.

    United Arab Emirates President Sheikh Mohammed bin Zayed al-Nahyan will travel to Russia on Tuesday to meet President Vladimir Putin with energy and war likely topping the agenda.

    The announcement on the UAE’s state news agency WAM on Monday came less than a week after OPEC+, a group of oil producers that includes the UAE and Russia, agreed to steep cuts in oil production in defiance of US pressure.

    It plans to slow production by two million barrels per day – its largest supply cut since 2020.

    The presidents will also meet as the Russian invasion of Ukraine threatens world energy supplies.

    “During his visit, His Highness Sheikh Mohammed will discuss with President Putin the friendly relations between the UAE and Russia along with a number of regional and international issues and developments of common interest,” the WAM report said.

    The oil production cut by Saudi-led OPEC and its Russia-led allies has further strained relations between Washington and its traditional Gulf allies in Riyadh and Abu Dhabi, sources say.

    The White House suggested last week that it was reviewing its relationship with Saudi Arabia as it seeks ways to reduce OPEC’s control over energy prices.

    UAE Minister of Energy Suhail al-Mazroui has said the production cut was “technical, not political”.

    US President Joe Biden’s administration had pushed hard to prevent it, hoping to keep a lid on petrol prices ahead of November’s elections, in which his Democratic Party could lose control of Congress.

    Biden flew to Jeddah, Saudi Arabia, in July for a Gulf summit to try to mend relations with Saudi Arabia but left without securing a deal for higher oil production. Ties have been strained between the kingdom and the Biden administration since it took office.

    Ukraine war

    The UAE has maintained a neutral stance towards Russia’s “special military operation” in Ukraine.

    Emirati presidential adviser Anwar Gargash said in March the Gulf state believes “taking sides would only lead to more violence”, and its priority was to “encourage all parties to resort to diplomatic action”.

    The UAE is a longtime US ally, and its stance on the Ukraine conflict reflects an attempt to balance relations in a new world order under which Moscow and Beijing are equally important to the Gulf state, analysts say.

    Meanwhile, the production cut by OPEC+ could spur a recovery in oil prices, which have dropped to about $90 a barrel from $120 months ago.

    Saudi Arabia and other members of OPEC+ have said they seek to prevent volatility rather than to target a particular oil price.

    US officials are considering the release 10 million barrels of oil from the country’s strategic petroleum reserve next month to “protect American consumers and promote energy security”.

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  • Nobel economics prize awarded to U.S.-based economists including Bernanke for work on financial crises

    Nobel economics prize awarded to U.S.-based economists including Bernanke for work on financial crises

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    Ben Bernanke, former chairman of the U.S. Federal Reserve, speaks during the American Economic Association and Allied Social Science Association Annual Meeting on Friday, Jan. 4, 2019. Bernanke is one of three winners of the 2022 Nobel prize in economics.

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    U.S.-based economists Ben Bernanke, Douglas Diamond and Philip Dybvig were awarded the Nobel prize in economic sciences for 2022 for their research on banks and financial crises.

    Bernanke was chairman of the Federal Reserve from 2006 to 2014 and is now at the Brookings Institute in Washington, D.C. Diamond is a professor at the University of Chicago Booth School of Business, and Dybvig is a professor at the Olin Business School of Washington University in St. Louis.

    The Nobel committee said their work in the early 1980s had “significantly improved our understanding of the role of banks in the economy, particularly during financial crises,” and in showing why it is vital to avoid bank collapses. They added this was “invaluable” during the 2008-09 financial crisis and the coronavirus pandemic.

    Bernanke’s analysis of the Great Depression in the 1930s showed how and why bank runs were a major reason the crisis was so long and severe. Diamond and Dybvig’s work, meanwhile, looked at the socially important role banks play in smoothing the potential conflict between savers wanting access to their money and the economy needing savings to be put into investments; and how governments can help prevent bank runs by providing deposit insurance and acting as a lender of last resort.

    The winners of the prize — officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel — receive 10 million Swedish krona ($883,000) each.

    The Royal Swedish Academy of Sciences select the winners from a list of candidates recommended by the Economic Sciences Prize Committee. This makes its selection from names submitted by around 3,000 professors, previous winners and academy members by invitation. People cannot nominate themselves.

    In a press conference following the announcement, Diamond was asked whether he had any warning for banks, institutions and governments given current rising interest rates and predictions of an economic slowdown.

    Diamond said: “Financial crises, in the way that Phil Dybvig and I think about them, become worse when people start to lose faith in the stability of the system. And that is all related to basically how profitable they think the banking sector is, in addition to being stable.”

    “So in periods when things happen unexpectedly, like I think people are surprised how quickly nominal interest rates have gone up around the world, that can be something that sets off some fears in the system. We saw some of this in the United Kingdom in their liability-driven sector of the insurance market.”

    “So I guess the best advice is to be prepared for making sure that your part of the banking sector is both perceived to be healthy and to stay healthy and to respond in a measured and transparent way to changes in monetary policy.”

    Asked about whether he foresaw another financial crisis, he said the world was “much better prepared” than in 2008, and regulatory improvements had made the system less vulnerable.

    “The banking sector itself is in very solid shape, good net worth, good risk management,” he said. “The problem is that these vulnerabilities of the fear of runs and dislocations and crises can show up anywhere, not just commercial banks.”

    The insight he and Dybvig had tried to provide, he said, was that it is crucial to be able to issue short-term, liquid liabilities, like deposits or shares, which are more liquid than underlying assets. He again cited the insurance sector in the U.K., when he said the “mismatch” came when there were calls for more collateral from insurance companies. The Bank of England has been forced to intervene to reduce market turmoil and protect pension funds following a controversial government budget.

    Last year, the economics prize was split three ways. It went to David Card, for his work on labor economics; and Joshua D. Angrist and Guido W. Imbens for their contributions to the analysis of causal relationships.

    Unlike the five other Nobel prizes, which have been handed out since 1901 and were bestowed in the will of Swedish inventor, chemist and engineer Alfred Nobel, the economics award was established in 1969 by Sweden’s central bank in his honor. It is the last to be announced each year.

    The renowned Nobel Peace Prize was awarded Friday to Belarusian human rights activist Ales Bialiatski, Russian human rights organization Memorial and the Ukrainian NGO Center for Civil Liberties.

    This year’s prize for physics went to Alain Aspect, John Francis Clauser and Anton Zeilinger, for discoveries in quantum mechanics. The Nobel committee said they had used “groundbreaking experiments” investigating particles in entangled states to begin a new era of quantum technology.

    The chemistry prize was split between Carolyn R. Bertozzi, for her work using click and bioorthogonal chemistry to map cells and develop more targeted cancer treatments; and Morten Meldal and K. Barry Sharpless, who the committee said “laid the foundations of click chemistry,” which involves connecting biocompatible molecules.

    The medicine prize was awarded to Svante Paabo “for his discoveries concerning the genomes of extinct hominins and human evolution.”

    The prize for literature went to French author Annie Ernaux.

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  • N. Korea confirms nuke missiles tests to ‘wipe out’ enemies

    N. Korea confirms nuke missiles tests to ‘wipe out’ enemies

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    SEOUL, South Korea — North Korea’s recent barrage of missile launches were tests of its tactical nuclear weapons to “hit and wipe out” potential South Korean and U.S. targets, state media reported Monday, as its leader Kim Jong Un signaled he would conduct more provocative tests.

    The North’s statement, released on the 77th birthday of its ruling Workers’ Party, is seen as an attempt to buttress a public unity behind Kim as he faces pandemic-related economic hardships, a security threat posed by the boosted U.S.-South Korean military alliance and other difficulties.

    “Through seven times of launching drills of the tactical nuclear operation units, the actual war capabilities … of the nuclear combat forces ready to hit and wipe out the set objects at any location and any time were displayed to the full,” the North’s official Korean Central News Agency said.

    KCNA said the missile tests were in response to recent naval drills between U.S. and South Korean forces, which involved the nuclear-powered aircraft carrier USS Ronald Reagan for the first time in five years.

    Viewing the drills as a military threat, North Korea decided to stage “the simulation of an actual war” to check and improve its war deterrence and send a warning to its enemies, KCNA said.

    North Korea considers U.S.-South Korean military drills as an invasion rehearsal, though the allies have steadfastly said they are defensive in nature. Since the May inauguration of a conservative government in Seoul, the U.S. and South Korean militaries have been expanding their exercises, which had been previously scaled back due to the pandemic and the now-dormant nuclear diplomacy between Pyongyang and Washington.

    The launches — all supervised by Kim — included a nuclear-capable ballistic missile launched under a reservoir in the northeast; other ballistic missiles designed to strike South Korean airfields, ports and command facilities; and a new-type ground-to-ground ballistic missile that flew over Japan, KCNA reported.

    North Korea has previously test-launched missiles from a submarine off its east coast. But the most recent was its first public test of a weapon from under an inland reservoir.

    Kim Dong-yub, a professor at Seoul’s University of North Korean Studies, said North Korea likely aims to diversify launch sites to make it difficult for its enemies to detect its missile liftoffs in advance and conduct preemptive strikes.

    KCNA said when the weapon launched from the reservoir was flying above the sea target, North Korean authorities confirmed the reliability of the explosion of the missile’s warhead, apparently a dummy one, at the set altitude.

    Kim, the professor, said the missile’s estimated 600-kilometer (370-mile) flight indicated the launch could be a test of exploding a nuclear weapon above South Korea’s southeastern port city of Busan, where the Reagan previously docked. He said the missile tested appeared to be a new version of North Korea’s highly maneuverable KN-23 missile, which was modeled on Russia’s Iskander missile.

    North Korea described the missile that flew over Japan as a new-type intermediate-range weapon that traveled 4,500 kilometers (2,800 miles). Some foreign experts earlier said North Korea likely tested its existing nuclear-capable Hwasong-12 missile, which can reach the U.S. Pacific territory of Guam. But Kim, the professor, said the missile appeared to be an improved version of the Hwasong-12 with a faraway target like Alaska or Hawaii.

    Worries about North Korea’s nuclear program deepened in recent months as the country adopted a new law authorizing the preemptive use of its bombs in certain cases and took reported steps to deploy tactical nuclear weapons along its frontline border with South Korea.

    This year, North Korea has also carried out a record number of weapons tests with more than 40 ballistic and cruise missiles.

    Some experts say Kim Jong Un would eventually aim to use his advanced nuclear arsenal to win a U.S. recognition of North Korea as a legitimate nuclear state, which Kim sees as essential in getting crippling U.N. sanctions on his country lifted.

    Kim Jong Un said the recent launches were “an obvious warning” to South Korea and the United States, informing them of North Korea’s nuclear response posture and attack capabilities. Kim also repeated that he has no intentions of resuming the disarmament diplomacy with the United States now and would rather focus on expanding his weapons arsenal, according to KCNA.

    “The U.S. and the South Korean regime’s steady, intentional and irresponsible acts of escalating the tension will only invite our greater reaction, and we are always and strictly watching the situation crisis,” KCNA said.

    Kim also expressed conviction that the nuclear combat forces of his military would maintain “their strongest nuclear response posture and further strengthen it in every way” to perform their duties of defending the North’s dignity and sovereign rights.

    South Korean officials recently said North Korea maintains readiness to perform its seventh nuclear test — its first such test in five years — while preparing to test a new liquid-fueled intercontinental ballistic missile as well as a submarine-launched ballistic missile.

    “North Korea has multiple motivations for publishing a high-profile missile story now,” said Leif-Eric Easley, a professor at Ewha University in Seoul. “Kim Jong Un’s public appearance after a month-long absence provides a patriotic headline to mark the founding anniversary of the ruling Workers’ Party.”

    “Pyongyang has been concerned about military exercises by the U.S., South Korea and Japan, so to strengthen its self-proclaimed deterrent, it is making explicit the nuclear threat behind its recent missile launches. The KCNA report may also be a harbinger of a forthcoming nuclear test for the kind of tactical warhead that would arm the units Kim visited in the field,” Easley said.

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  • UK mortgage rates are soaring: Here’s what you need to know as a first-time buyer

    UK mortgage rates are soaring: Here’s what you need to know as a first-time buyer

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    Uncertainty around the U.K. housing and mortgage market has spread among first-time buyers.

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    Mortgage products have been pulled, payments are doubling and lenders are backing out of agreed deals; concern and uncertainty among Brits trying to buy a home skyrocketed last month after Finance Minister Kwasi Kwarteng announced his “mini-budget.”

    His controversial plan foresees swooping tax cuts and more relaxed rules and regulations for businesses. While the cost-of-living crisis in the U.K. continues, Kwarteng argues his budget will boost growth. Critics say that it will mostly help the rich and make the U.K. more unequal.

    The mini-budget did have one positive for those trying to buy a home: Stamp duty, a tax many buyers have to pay when purchasing property, was reduced.

    Stamp duty cuts

    Only people whose property is worth more than a certain threshold pay stamp duty, and for first time buyers this was already set at a higher level than the average U.K. property price before the mini-budget came into effect. The changes therefore don’t impact a lot of first-time buyers.

    While the cuts will benefit some buyers, any gains might be erased by other rising costs, explains Paresh Raja, CEO of financial services firm Market Financial Solutions.

    “The cuts to stamp duty […] will definitely help. Unfortunately, a number of other factors are simultaneously making their lives harder: namely, inflation, interest rates and mortgage market disruption,” he told CNBC Make It.

    Francis Gill, a financial advisor at London-based firm Humboldt financial, has a similar opinion.

    “For people who were very close to being able to afford a purchase, but were still saving for stamp duty costs, this is a win and they should be able to bring forward their purchase date. However, what they have saved on SDLT [stamp duty] will likely be eaten up on higher mortgage rates pretty quickly,” he said.

    So, what about mortgage rates?

    The housing and mortgage sector has been especially affected, with lenders pulling hundreds of mortgage deals or pricing them at a much higher level after sovereign bond yields and Bank of England rate expectations both surged. This pushed up costs for borrowers as the BOE’s base rate helps price all sorts of loans and mortgages in Britain.

    According to Moneyfacts data, the average rate for a 2-year fixed mortgage surpassed 6% this week — up from 2.25% just a year ago. This could go up even further, Nicholas Mendes, a technical mortgage manager at mortgage broker and advisor John Charcol, believes.

    “With lenders costs increasing, volatile economic outlook, and factoring in service levels and future rate rises expect, we could be seeing average rate of 7% in the new year,” he said.

    Many borrowers and soon-to-be borrowers are already concerned that they will not be able to afford their mortgage payments, which are set to more than double in thousands of cases. Research and expert advice are therefore key for anyone looking for a mortgage deal right now, Gill explains.

    “Make sure your credit score is accurately reflected, make sure they speak to an independent broker, consider fixing for a period {…] and consider any Early Repayment Charges,” he suggests.

    “Speaking to someone who can expertly analyse their situation is key. Really, really consider if the rates are this high in 2/3 years, (however long they may be considering fixing for) whether the mortgage is affordable,” he adds.

    The market is pointing to a difficult 12 months

    Nicholas Mendes

    Technical mortgage manager at John Charcol

    What’s next for the housing market?

    Markets are expecting a “difficult 12 months,” Mendes explains. Lenders could increase rates further and the mortgage base rate could rise, while a recession and the cost-of-living crisis are likely to put pressure on homeowners, he says.

    But it might not all be doom and gloom as the next year unfolds.  

    “Property prices are expected to drop in 2023, likewise we are expecting rates to fall slightly from the highs they are today,” Mendes explains.

    Raja believes markets could stabilize, or at least be less of rollercoaster ride compared to the last two weeks. “The lending market will calm down after this particular turbulent period. We will not continue to see such fluctuations in rates or products being pulled,” he said.

    This would at least ease some of the uncertainty homeowners are currently facing.

    For people trying to get onto the property ladder, the chaos might even have some long-term silver linings as others are forced to leave the property market, Gill points out.

    “There may be an opportunity if a lot of buy2let landlords leave the market, for there to be an influx of properties for sale and prices come down, they may actually now be able to get on the ladder,” he believes.

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  • Face The Nation: MacFarlane, Killion, Baker Glasser, D’Agata, El-Erian

    Face The Nation: MacFarlane, Killion, Baker Glasser, D’Agata, El-Erian

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    Face The Nation: MacFarlane, Killion, Baker Glasser, D’Agata, El-Erian – CBS News


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    Missed the second half of the show? The latest on the trial of Oath Keepers’ founder Stewart Rhodes’ seditious conspiracy begins; how Donald Trump’s influence is playing out in 2022 midterm races; Russia launches deadly strikes in Ukraine after battlefield setbacks; and El-Erian on “unsettling volatility” in the market.

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  • Allianz Chief Economic Adviser El-Erian believes core inflation ‘is still going up’

    Allianz Chief Economic Adviser El-Erian believes core inflation ‘is still going up’

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    Ahead of the release of the latest consumer price index reading this week, Allianz Chief Economic Adviser Mohamed El-Erian told CBS’ “Face The Nation” Sunday that he predicts headline inflation “will probably come down to about 8%,” but that core inflation “is still going up.”

    Core inflation is what measures the drivers of inflation and how broad they are, so El-Erian said an increase in core inflation means “we still have an inflation issue.”

    Even if core inflation is still on the rise, however, El-Erian said it will eventually come down.

    “The question is, does it come down with a slowdown in the economy or a major recession?” he said on “Face the Nation.”

    The oil producer group OPEC+ announced its largest supply cut since 2020 on Wednesday, and El-Erian said this decision “does hurt the U.S.,” as it risks causing inflation to increase again. But he said the cut did not come as a surprise since the group is looking to protect oil prices in the face of declining demand.

    “That’s what they do,” he said. “But it’s certainly not good news for the U.S. economy.”

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  • El-Erian:

    El-Erian:

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    El-Erian: “We are in this incredible situation where good news for the economy is bad news for the markets” – CBS News


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    Mohamed El-Erian, Allianz Chief Economic Adviser, said the ” main drivers of inflation and how broad they are is still going up.” He joins “Face the Nation” to discuss the “unsettling volatility” of the market right now.

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  • Newsom to call special legislative session over gas prices

    Newsom to call special legislative session over gas prices

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    SACRAMENTO, Calif. — California Gov. Gavin Newsom said Friday he will call a special session of the state Legislature in December to pass a new tax on oil company profits to punish them for what he called “rank price gouging.”

    Gas prices soared across the nation this summer because of high inflation, Russia’s invasion of Ukraine and ongoing disruptions in the global supply chain.

    But while gas prices have recovered somewhat nationwide, they have continued to spike in California, hitting an average of $6.39 per gallon on Friday — $2.58 higher than the national average, according to AAA.

    California has the second-highest gas tax in the country and other environmental rules that increase the cost of fuel in the nation’s most populous state. Still, Newsom said there is “nothing to justify” a price difference of more than $2.50 per gallon between California’s gas and prices in other states.

    “It’s time to get serious. I’m sick of this,” Newsom said. “We’ve been too timid.”

    The oil industry has pointed to California’s environmental laws and regulations to explain why the state routinely has higher gas prices than the rest of the country. Kevin Slagle, vice president of the Western States Petroleum Association, said Newsom and state lawmakers should “take a hard look at decades of California energy policy” instead of proposing a new tax.

    “If this was anything other than a political stunt, the Governor wouldn’t wait two months and would call the special session now, before the election,” Slagle said. “This industry is ready right now to work on real solutions to energy costs and reliability — if that is what the Governor is truly interested in.”

    Several states chose to suspend their gas taxes this summer, including Maryland, New York and Georgia. Newsom and his fellow Democrats that control the state Legislature refused to do that, opting instead to send $9.5 billion in rebates to taxpayers — which began showing up in bank accounts this week.

    It’s unclear how the tax Newsom is proposing would work. Newsom said he is still working out the details with legislative leaders, but on Friday said he wants the money to be “returned to taxpayers,” possibly by using money from the tax to pay for more rebates.

    The state Legislature briefly considered a proposal earlier this year that would have imposed a “windfall profits tax” on oil companies’ gross receipts when the price of a gallon of gasoline was “abnormally high compared to the price of a barrel of oil.”

    That proposal would have required state regulators to determine the tax rate, making sure it recovered any oil companies’ profit margins that exceeded 30 cents per gallon. The money from the tax would then have been returned to taxpayers via rebates.

    Newsom did not comment on that proposal when it was introduced in March, and lawmakers quickly shelved it. It could, however, act as a blueprint for the new proposal being negotiated between Newsom and legislative leaders.

    The Legislature’s top two leaders — Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon — said in a joint statement that lawmakers “will continue to examine all other options to help consumers.”

    “A solution that takes excessive profits out of the hands of oil corporations and puts money back into the hands of consumers deserves strong consideration by the Legislature,” they said. “We look forward to examining the Governor’s detailed proposal when we receive it.”

    California Republicans — who do not control enough seats to influence policy decisions in the Legislature — have called the tax “foolhardy.”

    “Who here thinks that another tax is going to bring down your gas prices? Is going to bring down any costs in this state? It’s not going to happen,” Assembly Republican Leader James Gallagher told reporters on Wednesday.

    Last month, regulators at the California Energy Commission wrote a letter to five oil refiners — Chevron, Marathon Petroleum, PBF Energy, Phillips 66 and Valero — demanding an explanation for why gas prices jumped 84 cents over a 10-day period even as oil prices fell. The commission wrote that the oil industry had “not provided an adequate and transparent explanation for this price spike, which is causing real economic hardship to millions of Californians.”

    On Friday, Scott Folwarkow, Valero’s vice president for state government affairs, responded that “California is the most expensive operating environment in the country and a very hostile regulatory environment for refining.” He said that has caused refineries to close and tightened supply because California requires refineries to produce a specific fuel blend.

    He declined to provide details about the company’s operations based on the same anti-trust concerns. But he said the company makes appropriate arrangements to source supply when some refineries are down for maintenance.

    Newsom dismissed those arguments, saying that still doesn’t account for a $2.50 difference between California’s gas prices and those in the rest of the country.

    “These guys are playing us for fools. They have for decades,” Newsom said.

    The California Legislature usually meets between January and August, where they consider bills on a variety of topics. The governor has the power to call a special legislative session at any time by issuing a proclamation. When convened in a special session, lawmakers can only consider the issues mentioned in that proclamation.

    The last time a California governor called a special legislative session was in 2015, when then-Gov. Jerry Brown asked lawmakers to pass bills about health care and transportation.

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  • Newsom to call special legislative session over gas prices

    Newsom to call special legislative session over gas prices

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    SACRAMENTO, Calif. — California Gov. Gavin Newsom said Friday he will call a special session of the state Legislature in December to pass a new tax on oil company profits to punish them for what he called “rank price gouging.”

    Gas prices soared across the nation this summer because of high inflation, Russia’s invasion of Ukraine and ongoing disruptions in the global supply chain.

    But while gas prices have recovered somewhat nationwide, they have continued to spike in California, hitting an average of $6.39 per gallon on Friday — $2.58 higher than the national average, according to AAA.

    California has the second-highest gas tax in the country and other environmental rules that increase the cost of fuel in the nation’s most populous state. Still, Newsom said there is “nothing to justify” a price difference of more than $2.50 per gallon between California’s gas and prices in other states.

    “It’s time to get serious. I’m sick of this,” Newsom said. “We’ve been too timid.”

    The oil industry has pointed to California’s environmental laws and regulations to explain why the state routinely has higher gas prices than the rest of the country. Kevin Slagle, vice president of the Western States Petroleum Association, said Newsom and state lawmakers should “take a hard look at decades of California energy policy” instead of proposing a new tax.

    “If this was anything other than a political stunt, the Governor wouldn’t wait two months and would call the special session now, before the election,” Slagle said. “This industry is ready right now to work on real solutions to energy costs and reliability — if that is what the Governor is truly interested in.”

    Several states chose to suspend their gas taxes this summer, including Maryland, New York and Georgia. Newsom and his fellow Democrats that control the state Legislature refused to do that, opting instead to send $9.5 billion in rebates to taxpayers — which began showing up in bank accounts this week.

    It’s unclear how the tax Newsom is proposing would work. Newsom said he is still working out the details with legislative leaders, but on Friday said he wants the money to be “returned to taxpayers,” possibly by using money from the tax to pay for more rebates.

    The state Legislature briefly considered a proposal earlier this year that would have imposed a “windfall profits tax” on oil companies’ gross receipts when the price of a gallon of gasoline was “abnormally high compared to the price of a barrel of oil.”

    That proposal would have required state regulators to determine the tax rate, making sure it recovered any oil companies’ profit margins that exceeded 30 cents per gallon. The money from the tax would then have been returned to taxpayers via rebates.

    Newsom did not comment on that proposal when it was introduced in March, and lawmakers quickly shelved it. It could, however, act as a blueprint for the new proposal being negotiated between Newsom and legislative leaders.

    The Legislature’s top two leaders — Senate President Pro Tempore Toni Atkins and Assembly Speaker Anthony Rendon — said in a joint statement that lawmakers “will continue to examine all other options to help consumers.”

    “A solution that takes excessive profits out of the hands of oil corporations and puts money back into the hands of consumers deserves strong consideration by the Legislature,” they said. “We look forward to examining the Governor’s detailed proposal when we receive it.”

    California Republicans — who do not control enough seats to influence policy decisions in the Legislature — have called the tax “foolhardy.”

    “Who here thinks that another tax is going to bring down your gas prices? Is going to bring down any costs in this state? It’s not going to happen,” Assembly Republican Leader James Gallagher told reporters on Wednesday.

    Last month, regulators at the California Energy Commission wrote a letter to five oil refiners — Chevron, Marathon Petroleum, PBF Energy, Phillips 66 and Valero — demanding an explanation for why gas prices jumped 84 cents over a 10-day period even as oil prices fell. The commission wrote that the oil industry had “not provided an adequate and transparent explanation for this price spike, which is causing real economic hardship to millions of Californians.”

    On Friday, Scott Folwarkow, Valero’s vice president for state government affairs, responded that “California is the most expensive operating environment in the country and a very hostile regulatory environment for refining.” He said that has caused refineries to close and tightened supply because California requires refineries to produce a specific fuel blend.

    He declined to provide details about the company’s operations based on the same anti-trust concerns. But he said the company makes appropriate arrangements to source supply when some refineries are down for maintenance.

    Newsom dismissed those arguments, saying that still doesn’t account for a $2.50 difference between California’s gas prices and those in the rest of the country.

    “These guys are playing us for fools. They have for decades,” Newsom said.

    The California Legislature usually meets between January and August, where they consider bills on a variety of topics. The governor has the power to call a special legislative session at any time by issuing a proclamation. When convened in a special session, lawmakers can only consider the issues mentioned in that proclamation.

    The last time a California governor called a special legislative session was in 2015, when then-Gov. Jerry Brown asked lawmakers to pass bills about health care and transportation.

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  • Johnson, Barnes polished in 1st Wisconsin Senate debate

    Johnson, Barnes polished in 1st Wisconsin Senate debate

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    MADISON, Wis. (AP) — Republican Sen. Ron Johnson and his Democratic challenger Lt. Gov. Mandela Barnes stuck to their scripts — and their time limits — as they met for a debate Friday evening in a hotly contested race that could determine party control of the U.S. Senate.

    In battleground Wisconsin, it was a welcome chance for both candidates to clarify their positions on a variety of issues, and though they disagreed on most subjects, their comments were similar to those they’ve made on the campaign trail. Here are the key takeaways:

    THE ECONOMY

    Inflation is one of the issues most felt by voters this midterm, with noticeable increases in the prices of everyday expenses like groceries, rent and utilities. It’s also among the top issues Wisconsin voters are concerned about, recent polling has shown.

    Johnson was hesitant to commit to supporting increases in the minimum wage, saying he would “possibly consider it.” The incumbent also blamed Democrats for inflation, saying jobs and the economy were better under former President Donald Trump.

    Barnes reiterated his support for a $15 minimum wage as well as an approach to job creation that includes technical and trade education. Johnson questioned several references Barnes made to his working-class background, saying he was unaware of what experience the lieutenant governor has in the private sector other than his parents’ jobs as a schoolteacher and a factory worker.

    ABORTION

    Barnes, who has made support for abortion rights central to his campaign, said he would “absolutely vote to codify Roe v. Wade” into federal law as a senator.

    Johnson again voiced support for a statewide referendum on abortion — an option that seems unlikely after the state Legislature quickly ended a special session called by Democratic Gov. Tony Evers earlier this week to consider allowing ballot measures. Barnes accused Johnson of running from his record of supporting anti-abortion legislation, saying the senator knows a referendum won’t happen.

    A 173-year-old law bans abortions in Wisconsin except to save the life of the mother. Doctors stopped providing abortions after the Supreme Court handed down its decision overturning Roe v. Wade in June. Polling has shown that a majority of people in Wisconsin support abortion rights.

    CRIME

    A flurry of attack ads have from Johnson and other Republicans have branded Barnes as “dangerous” and displayed the lieutenant governor against footage of violent crime. Such ads are a likely reason the lead Barnes held over Johnson in midsummer has since eroded. Barnes supports ending cash bail, but he was clear Friday night that his plan would not allow dangerous offenders out of jail.

    “Senator Johnson may not have encountered a problem he can’t buy his way out of, but that’s not the case for the majority of people in Wisconsin,” said Barnes, sneaking a jab in at the incumbent, who is also a multimillionaire and former businessman.

    Johnson hit back by highlighting Barnes’ statements on police funding and accusing him of inciting riots during protests against racism in 2020. “He says it pains him to see fully funded police budgets,” said Johnson. Barnes doesn’t support defunding the police, but he has expressed support for redirecting police funding towards alternative community safety programs.

    The candidates also addressed gun control. “If gun control were the solution, it would’ve already been solved,” said Johnson, who pinned the blame for gun violence on a lack of social and religious values. Barnes, a Milwaukee native, took the opportunity to decry gun violence and talk about his personal connections to victims.

    CLIMATE CHANGE

    “The climate has always changed, always will change,” said Johnson, denying that climate change is an issue. The senator also said the federal government should worry less about carbon emissions and more about “real pollution” like the state’s ongoing issues with a group of chemicals known as PFAS.

    Barnes accused Johnson of protecting special interests in the fossil fuel industry and referenced his conversations with local farmers. Rural voters are a key group in Wisconsin that Barnes has been struggling to gain the support of.

    When speaking about renewable energy, Johnson said wind and solar energy “make our grid very unreliable” and instead suggested, “If you’re concerned about climate change, you should be supporting nuclear power.”

    JAN. 6 ATTACK

    The incumbent senator has downplayed the attack on the U.S. Capitol on Jan. 6, 2021, saying it “didn’t seem like an insurrection to me.” On Friday, Johnson also downplayed his role in attempting to deliver a slate of false electors to former Vice President Mike Pence after the 2020 election.

    “From my standpoint, this is a non-issue,” Johnson said, claiming he had no knowledge of an alternate slate of electors. Both candidates said they believed Pence did the right thing while certifying the results of the 2020 election.

    ____

    Harm Venhuizen is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues. Follow Venhuizen on Twitter.

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  • European countries face an air-conditioning Catch-22 after its red hot, record-breaking summer

    European countries face an air-conditioning Catch-22 after its red hot, record-breaking summer

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    Europe is facing a tough winter, as inflation and energy prices continue to rise. The continent also faces tough decisions following its scorching hot summer

    Heat waves in Europe broke records, sparked widespread wildfires and even damaged a busy runway at a London airport.

    Unlike the U.S., European countries don’t rely on air conditioning to cope with high temperatures. Fewer than 10% of households in Europe owned air conditioners as of 2016, according to the International Energy Agency.

    “If we were looking at the beginning of this summer, it was fairly quiet. We were getting typically 20 inquiries a day maybe for people interested in air conditioning,” said Richard Salmon, director of The Air Conditioning Co., which is based in central London.

    Demand for air conditioners spiked as temperatures crossed 100 degrees Fahrenheit in the United Kingdom.

    “I’ve been here for 15 years and I’ve never seen anything quite like it,” Salmon said.

    As countries around the globe rapidly adopt ways to cool their homes and businesses, it becomes more important to install cooling technology that doesn’t contribute to higher temperatures in the future via carbon emissions.

    “It is clear that if no effective mitigation strategies will be put in place on a global scale to cut emissions then this kind of summer and these kinds of events will become the new norm,” said Andrea Toreti, senior climate researcher at the European Commission, the executive body of the EU.

    Watch the video to learn more about why large parts of Europe don’t have air conditioning, how ACs contribute to climate change, and new kinds of efficient cooling technologies that can mitigate carbon emissions.

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  • Unemployment rate falls to 50-year low of 3.5%

    Unemployment rate falls to 50-year low of 3.5%

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    Unemployment rate falls to 50-year low of 3.5% – CBS News


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    Employers added a solid 263,000 jobs in September and the unemployment rate dropped to 3.5%. The strong jobs numbers were bad news for investors who fear the Federal Reserve will continue to raise interest rates.

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