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Tag: Economy

  • Exit poll: Center-right GERB party will win Bulgarian vote

    Exit poll: Center-right GERB party will win Bulgarian vote

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    SOFIA, Bulgaria — An exit poll in Bulgaria suggested Sunday that the center-right GERB party of ex-premier Boyko Borissov, a party blamed for presiding over years of corruption, will be the likely winner of Bulgaria’s parliamentary election.

    The poll conducted by Gallup International showed the GERB party earning 24.6% support, apparently edging out the reformist We Continue the Change pro-Western party of former Prime Minister Kiril Petkov, which is expected to capture 18.9%. Still, the predicted percentage won’t be enough for Borissov’s party to form a one-party government, and the chances for a GERB-led coalition are slim.

    The exit poll also predicted that eight parties could pass the 4% threshold to enter a fragmented parliament with populist and pro-Russia groups showing increased gains.

    The European Union nation’s fourth election in 18 months was marked by a raging war nearby, political instability and economic hardships in the bloc’s poorest member. A low turnout reflected voter apathy.

    Petkov conceded defeat late Sunday.

    “We lost the election, albeit by a small margin, and now GERB has the responsibility to form a coalition and govern the country,” he said.

    It could take days before the final official results are announced. If they confirm the exit poll, Borisov will be handed a mandate to form his fourth cabinet. It will be an uphill task for him to produce a stable governing coalition, however, since most political groups have in advance rejected any cooperation with his GERB party, which presided over years of corruption that hampered development.

    The early election came after a fragile coalition led by Petkov lost a no-confidence vote in June. He claimed afterward that Moscow had used “hybrid war” tactics to bring down his government after it refused to pay gas bills in rubles and ordered an expulsion of Russian diplomats from Bulgaria.

    The deputy chief of the European Council on Foreign Relations, Vessela Cherneva, said the predicted result could produce two types of coalitions: an anti-corruption coalition, in which GERB under Borissov would find no place, or a geopolitical coalition of the centrist parties, which would be possible only if Borissov resigns from leading his party.

    “The scenario under which there is no coalition possible would undermine parliamentary democracy in Bulgaria and will further tilt the balance towards the pro-Russian President (Rumen) Radev,” Cherneva said.

    After casting his vote Sunday, Borissov told reporters that Bulgaria needs to clearly position itself on Russia’s war in Ukraine.

    “With this aggression, with this war with a clear aggressor in the face of (Russian President Vladimir) Putin – (I have) nothing against the Russian people — with this farce with the referendums, Bulgaria must be very clear, categorical, and precise about its place in the European Union and NATO,” he said.

    He said getting Bulgaria into Europe’s 19-nation shared currency eurozone should be the next government’s most important task.

    Petkov ran on promises to continue efforts to eradicate corruption, but a European energy crisis sparked by Russia’s war on Ukraine was the dominant economic theme for voters.

    Many Bulgarians share pro-Russia sentiments, which provides fertile soil for aggressive Kremlin propaganda in the Balkan country.

    The pro-Russia party Vazrazhdane, riding on those feelings, captured 10.2% of the vote, up from 4.9% in the previous election, the exit poll predicted.

    Unlike the stance taken by the EU, which has fully condemned Russia’s war in Ukraine and slapped sanctions on Russia for it, Vazrazhdane leader Kostadin Kostadinov has urged “full neutrality” for Bulgaria in the war.

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  • Brazil holds historic election with Lula against Bolsonaro

    Brazil holds historic election with Lula against Bolsonaro

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    RIO DE JANEIRO — Brazilians were voting on Sunday in a highly polarized election that could determine if the country returns a leftist to the helm of the world’s fourth-largest democracy or keeps the far-right incumbent in office for another four years.

    The race pits incumbent President Jair Bolsonaro against his political nemesis, former President Luiz Inácio Lula da Silva. There are nine other candidates, but their support pales to that for Bolsonaro and da Silva.

    Recent opinion polls have given da Silva a commanding lead — the last Datafolha survey published Saturday found a 50% to 36% advantage for da Silva among those who intended to vote. It interviewed 12,800 people, with a margin of error of two percentage points.

    Agatha de Carvalho, 24, arrived to her local voting station in Rio de Janeiro’s working class Rocinha neighborhood shortly before it opened, hoping to cast her ballot before work, but found 100 others were already lined up. She said she would vote for da Silva, and called Bolsonaro “awful.”

    “A lot of people died because of him during the pandemic. If he hadn’t done some of the things he did, some of those deaths could have been avoided,” she said.

    Bolsonaro’s administration has been marked by incendiary speech, his testing of democratic institutions, his widely criticized handling of the COVID-19 pandemic and the worst deforestation in the Amazon rainforest in 15 years.

    But he has built a devoted base by defending traditional family values, rebuffing political correctness and presenting himself as protecting the nation from leftist policies that infringe on personal liberties and produce economic turmoil.

    Luiz Garcez, 49, in the southern city of Curitiba, said Bolsonaro’s presidency has been “among the best in history” because “he built a lot and helped the country.”

    A slow economic recovery has yet to reach the poor, with 33 million Brazilians going hungry despite higher welfare payments. Like several of its Latin American neighbors coping with high inflation and a vast number of people excluded from formal employment, Brazil is considering a shift to the political left.

    Gustavo Petro in Colombia, Gabriel Boric in Chile and Pedro Castillo in Peru are among the left-leaning leaders in the region who have recently assumed power.

    Da Silva could win in the first round, without need for a run-off on Oct. 30, if he gets more than 50% of valid votes, which exclude spoiled and blank ballots. Brazil has more than 150 million eligible voters, and voting is mandatory, but abstention rates can reach as high as 20%.

    An outright win by da Silva would sharpen focus on Bolsonaro’s reaction to the count. He has repeatedly questioned the reliability not just of opinion polls, but also of Brazil’s electronic voting machines. Analysts fear he has laid the groundwork to reject results.

    At one point, Bolsonaro claimed to possess evidence of fraud, but never presented any, even after the electoral authority set a deadline to do so. He said as recently as Sept. 18 that if he doesn’t win in the first round, something must be “abnormal.”

    The two frontrunners have key bases of support: evangelicals and white men for Bolsonaro, and women, minorities and the poor for da Silva.

    Da Silva, 76, was once a metalworker who rose from poverty to the presidency and is credited with building an extensive social welfare program during his 2003-2010 tenure that helped lift tens of millions into the middle class.

    But he is also remembered for his administration’s involvement in vast corruption scandals that entangled politicians and business executives.

    Da Silva’s own convictions for corruption and money laundering led to 19 months imprisonment, sidelining him from the 2018 presidential race that polls indicated he had been leading against Bolsonaro. The Supreme Court later annulled da Silva’s convictions on the grounds that the judge was biased and colluded with prosecutors.

    Marialva Santos Pereira, 47, said she would vote for the former president for the first time since 2002.

    “I didn’t like the scandals in his first administration, never voted for the Workers’ Party again. Now I will, because I think he was unjustly jailed and because Bolsonaro is such a bad president that it makes everyone else look better.”

    Speaking after casting his ballot in Sao Bernardo do Campo, the manufacturing hub in Sao Paulo state where he was a union leader, da Silva recalled that four years ago he was imprisoned and unable to vote.

    “I want to try to make the country return to normality, try to make this country again take care of its people,” he told reporters.

    Bolsonaro grew up in a lower-middle-class family before joining the army. He turned to politics after being forced out of the military for openly pushing to raise servicemen’s pay. During his seven terms as a fringe lawmaker in Congress’ lower house, he regularly expressed nostalgia for the country’s two-decade military dictatorship.

    His overtures to the armed forces have raised concern that his possible rejection of election results could be backed by top brass.

    Traditionally, the armed forces’ involvement in elections has been limited to carrying voting machines to isolated communities and beefing up security in violent regions. But this year, Bolsonaro suggested the military should conduct a parallel count of the ballots.

    While that didn’t materialize, the Defense Ministry said it will cross check results in over 380 polling stations across Brazil. Any citizen or entity is able to do the same, consulting a vote tally available at each station after ballot closure and online.

    On Saturday, Bolsonaro shared social media posts by right-leaning foreign politicians, including former U.S. President Donald Trump, who called on Brazilians to vote for him. Israel’s former Prime Minister Benjamin Netanyahu expressed gratitude for stronger bilateral relations and Hungarian Prime Minister Viktor Orbán also praised him.

    After voting Sunday morning, wearing a T-shirt with the green and yellow of Brazil’s flag, Bolsonaro told journalists that “clean elections must be respected” and that the first round would be decisive. Asked if he would respect results, he gave a thumbs up and walked away.

    Because the vote is conducted electronically, preliminary results are usually out within minutes, with the final result available a few hours later. This year, all polls will close at 5 p.m. Brasilia time (4 p.m. EDT; 2000 GMT).

    ———

    Savarese reported from Sao Bernardo do Campo. AP writer Daniel Politi reported from Curitiba.

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  • Bank of England intervention should be ‘sufficient’ to calm market chaos, says Dutch pension fund investor

    Bank of England intervention should be ‘sufficient’ to calm market chaos, says Dutch pension fund investor

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    The market chaos caused by the sell-off in U.K. government bonds should settle down following this week’s emergency intervention by the Bank of England, said Ronald Wuijster, chief executive of APG Asset Management, one of the largest pension investors in the world.

    On Wednesday, the BOE stepped up to buy long-term-bonds or gilts over the next two weeks, in a bid to shore up financial stability.

    The move came after the pound fell to an all-time low against the dollar and government bond prices slumped, in reaction to the new U.K. government’s fiscal policy announcements which included unfunded tax cuts.

    There was panic among some pension funds, and some of the bonds held within them quickly lost value.

    In order to top up the collateral on these bonds, some funds had to raise cash but due to the speed of this crisis, many funds were caught out and were forced to liquidate their next most liquid assets, long-term bonds or gilts, causing prices of bonds to fall even more.

    “The power of the central bank is sufficient, I think, to make it settle down,” Wuijster told CNBC’s Tanvir Gill at the Milken Asia Summit on Friday, adding there has been no panic for APG.

    How the Bank of England stabilized the bond markets

    “One can never exclude that with rising interest rates, these things happen but our situation is quite different. Our pension funds have interest rates swap positions as well.”

    “We do a lot of stress testing to see what could happen during this situation so we’re well prepared, we’re able to generate lots of liquidity to deal with a situation like that.”

    APG invests in gilts for its funds, but it does not have many gilt positions for liability hedging, Wuijster said. Liability hedging refers to reducing volatility in assets within funds such as pensions, and therefore minimizing risks to investment returns.

    Hedging is necessary to ensure pension plan beneficiaries get steady and guaranteed income.

    I think [the] worst hit are lower income people … so I think the compensation that was announced in the U.K. is not very much welcomed by market.

    Ronald Wuijster

    chief executive, APG Asset Management

    When asked if pension funds should reconsider using gilts, especially during times of economic uncertainty, Wuijster said that since a pension fund straddles a regular asset management and an insurance product, it is normal for half of the fund to be hedged using these instruments.

    A better solution for funds and investors to manage current macroeconomic risks is to be diversified, for example, by investing globally across a range of assets, Wuijster said.

    The CEO said it’s not likely the same thing could happen to European bonds.

    Compared to the U.K., European policy makers have been more moderate in managing their energy crisis and inflation and have been raising interest rates more gradually, Wuijster says, adding that he does not expect a situation like the U.K. to occur in Europe.

    Investec: Strength of LDI strategies coming under scrutiny in bond market chaos

    The U.K. government said the new tax policies would help boost growth at a time of rising inflation and soaring energy costs. But instead, they were accused of acting purely ideologically, with many economists predicting the cuts would fuel inflation and drive up government debt.

    “Mainly compensating a richer people is probably not the smartest idea,” he said referring to the U.K. policies.

    “I think [the] worst hit are lower income people — by this energy prices and crisis — so I think the compensation that was announced in the U.K. is not very much welcomed by market.”

    The Bank of England said it would commence buying up to £5 billion (about $5.6 billion) of long-dated gilts, or those with a maturity of more than 20 years, on the secondary market from Wednesday until Oct. 14. 

    Correction: This article has been updated to reflect that the interview took place at the Milken Asia Summit.

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  • Nobel season is here: 5 things to know about the prizes

    Nobel season is here: 5 things to know about the prizes

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    COPENHAGEN, Denmark — The beginning of October means Nobel Prize season. Six days, six prizes, new faces from around the globe added to the world’s most elite roster of scientists, writers, economists and human rights leaders.

    This year’s Nobel season kicks off Monday with the medicine award, followed by daily announcements: physics on Tuesday, chemistry on Wednesday and literature on Thursday. The 2022 Nobel Peace Prize will be announced on Friday and the economics award on Oct. 10.

    Here are five other things to know about the coveted prizes:

    WHO CREATED THE NOBEL PRIZES?

    The prizes in medicine, physics, chemistry, literature and peace were established by the will of Alfred Nobel, a wealthy Swedish industrialist and the inventor of dynamite. The first awards were handed out in 1901, five years after Nobel’s death.

    Each prize is worth 10 million kronor (nearly $900,000) and will be handed out with a diploma and gold medal on Dec. 10 — the date of Nobel’s death in 1896.

    The economics award — officially known as the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel — wasn’t created by Nobel, but by Sweden’s central bank in 1968.

    Between 1901 and 2021, the Nobel Prizes and the prize in economic sciences have been awarded 609 times.

    WHO KNOWS WHO WILL WIN AND WHY?

    The Nobel statutes prohibit the judges from discussing their deliberations for 50 years. So it’s probably going to be a while before we know for sure how judges made their picks for 2022 and who was on their short lists.

    The judges try hard to avoid dropping hints about the winners before the announcements, but sometimes word gets out. Bookies in Europe sometimes offer odds on possible peace prize and literature Nobel winners.

    WHO CAN NOMINATE A CANDIDATE?

    Thousands of people around the world are eligible to submit nominations for the Nobel Prizes.

    They include university professors, lawmakers, previous Nobel laureates and the committee members themselves.

    Although the nominations are kept secret for 50 years, those who submit them sometimes announce their suggestions publicly, particularly for the Nobel Peace Prize.

    WHAT ABOUT THE NORWEGIAN CONNECTION?

    The Nobel Peace Prize is presented in Norway while the other awards are handed out in Sweden. That’s how Alfred Nobel wanted it.

    His exact reasons are unclear but during his lifetime Sweden and Norway were joined in a union, which was dissolved in 1905. Sometimes relations have been tense between the Nobel Foundation in Stockholm, which manages the prize money, and the fiercely independent peace prize committee in Oslo.

    WHAT DOES IT TAKE TO WIN A NOBEL?

    Patience, for one.

    Scientists often have to wait decades to have their work recognized by the Nobel judges, who want to make sure that any breakthrough withstands the test of time.

    That’s a departure from Nobel’s will, which states that the awards should endow “those who, during the preceding year, shall have conferred the greatest benefit to mankind.” The peace prize committee is the only one that regularly rewards achievements made in the previous year.

    According to Nobel’s wishes, that prize should go to “the person who shall have done the most or the best work for fraternity between nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses.”

    ———

    Follow all AP stories about the Nobel Peace Prize at https://apnews.com/hub/nobel-prizes

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  • Stocks sink to new low for 2022, closing dismal month with mounting recession fears

    Stocks sink to new low for 2022, closing dismal month with mounting recession fears

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    Wall Street is at its worst levels in almost two years Friday as the end nears for what’s been a miserable month for markets around the world.

    The S&P 500 closed down 1.5%, at 3,585, after flipping between small losses and gains through the morning. It’s at its lowest level since the early 2020 coronavirus crash and its third straight losing quarter.

    The Dow Jones Industrial Average closed down 500 points, or 1.7%, and the Nasdaq composite was down 1.5%.


    Fed rate hike decision raises recession fears on Wall Street

    06:04

    Global inflation

    The main reason for this year’s struggles for financial markets has been fear of a possible recession, as interest rates soar in hopes of beating down the highest inflation in 30 years.

    The Federal Reserve has been at the forefront of the global campaign to slow economic growth and hurt job markets just enough to undercut inflation but not so much that it causes a recession. More data arrived Friday to suggest the Fed will keep its foot firmly on the brakes of the economy, raising the risk it will bring on a downturn.

    The Fed’s preferred measure of inflation showed it was worse last month than economists expected. That should keep the Fed on track to keep raising rates and hold them at high levels for some time, as it’s loudly and repeatedly promised to do.

    Vice Chair Lael Brainard was the latest Fed official on Friday to insist the central bank won’t pull back on rates prematurely, dashing Wall Street’s hopes for a “pivot” toward easier rates as the economy slows.

    “The Fed isn’t about to ‘pivot’ and there is more monetary tightening to come (both domestically and internationally),” said analyst Adam Crisafulli of Vital Knowledge in a research note.

    Crisafulli argued the Fed’s aggressive moves are working, and that prices are about to stabilize. “The disinflationary pressures already evident throughout the economy are growing more powerful,” Crisafulli said. “Housing, rents, shipping, commodities, apparel, autos, etc. – all these categories … are now witnessing intense disinflation (or outright deflation).

    Other analysts have a less positive outlook.

    “At this point, it’s not a matter of if we’ll have a recession, but what type of recession it will be,” said Sean Sun, portfolio manager at Thornburg Investment Management.


    Recession fears mount as U.S. stocks fall sharply

    03:01

    Double-whammy on stocks

    With the exception of financial companies such as banks, brokerages or mortgage companies, higher interest rates generally knock down stock prices. The other market lever that also looks to be under threat is earnings, as the slowing economy, high interest rates and other factors weigh on record-high corporate profits.

    Cruise ship operator Carnival dropped 21% for one of Wall Street’s worst losses after it reported a bigger loss for its latest quarter than analysts expected and revenue that fell short of expectations.

    Nike slumped 12.1% in what could be its worst day in two decades after it said its profitability weakened during the summer because of discounts needed to clear suddenly overstuffed warehouses. The amount of shoes and gear in Nike’s inventories swelled by 44% from a year earlier.

    The U.S. dollar’s powerful surge against other currencies also hurt Nike. Its worldwide revenue rose only 4%, instead of the 10% it would have if currency values had remained the same.

    Glimmers of hope

    Nike isn’t the only company to see its inventories balloon. So have several big-name retailers — but such bad news for businesses could actually mean some relief for shoppers if overstocks lead to more discounts. Friday’s report on the Fed’s preferred gauge of inflation had some glimmers of enocuragement — showing slowing inflation for goods, even as price gains accelerated for services.

    Another report on Friday also offered some good news. A measure of consumer sentiment showed U.S. expectations for future inflation came down in September. That’s crucial for the Fed because tightly held expectations for higher inflation can create a debilitating, self-reinforcing cycle that worsens it.

    Treasury yields eased a bit on Friday, letting off some of the pressure that’s built on markets.

    The yield on the 10-year Treasury fell to 3.75% from 3.79% late Thursday. The two-year yield, which more closely tracks expectations for Fed action, sank to 4.16% from 4.19%.

    Still, a long list of other worries continues to hang over global markets, including increasing tensions between much of Europe and Russia following the invasion of Ukraine. A controversial plan to cut taxes by the U.K. government also sent bond markets spinning recently on fears it could make inflation even worse. Bond markets calmed a bit only after the Bank of England pledged mid-week to buy however many U.K. government bonds are needed to bring yields back down.


    MoneyWatch: Value of British pound drops to historic low against the dollar

    05:12

    The stunning and swift rise of the U.S. dollar against other currencies, meanwhile, raises the risk of creating so much stress that something cracks somwhere in global markets.

    Stocks around the world were mixed after a report showed that inflation in the 19 countries that use Europe’s euro currency spiked to a record and data from China said that factory activity weakened there.

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  • UK’s Truss meets with fiscal watchdog amid economic crisis

    UK’s Truss meets with fiscal watchdog amid economic crisis

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    LONDON — British Prime Minister Liz Truss and her Treasury chief met with the independent Office of Budget Responsibility on Friday amid efforts to ease concerns about unfunded government tax cuts that have unleashed turmoil on financial markets.

    The meeting was significant because it was the government’s failure to publish the OBR’s analysis of its tax-cutting plans that spooked investors, sending the pound to a record low against the dollar earlier this week and forcing the Bank of England to intervene in the bond market to protect pension funds.

    The OBR promised an analysis by Oct. 7, far sooner than the date previously suggested — Nov. 23 — when the government releases more details on its economic plans. The oversight body promised that its forecast “will, as always, be based on our independent judgment about economic and fiscal prospects, and the impact of the government’s policies.”

    The chairman of the House of Commons’ Treasury committee said the meeting was an opportunity for the government to change course. Truss and Treasury chief Kwasi Kwarteng were likely to have “difficult” conversations with the OBR because investors want to see independent analysis showing that their plans won’t push government borrowing to unsustainable levels, said Mel Stride, a member of Truss’ Conservative Party.

    “The judgment so far of the markets, and indeed myself and many others, is that what was announced last Friday, unfortunately, doesn’t stack up fiscally and some changes are almost certainly going to need to be made,” Stride told the BBC.

    Truss defended her plan Thursday and shrugged off the market chaos, saying she was willing to make “controversial and difficult decisions” to get the U.K. economy growing. She said the problems facing the economy — namely high inflation driven by soaring energy prices — were global and spurred by Russia’s invasion of Ukraine.

    She got a piece of good news Friday, with revised figures showing the U.K. economy grew slightly in the three months through June, indicating the country isn’t technically in a recession, with two consecutive quarters of shrinking GDP being one definition.

    Her government’s economic stimulus program calls for 45 billion pounds ($48 billion) of tax cuts and no spending reductions, meaning a surge of borrowing would be used to pay for the cuts that many see as benefiting the wealthy. She also has capped energy bills for households and businesses that are driving a cost-of-living crisis, though prices are still going up Saturday as natural gas prices soar.

    Treasury minister Andrew Griffith had played down the significance of the meeting between the government and OBR, but nonetheless described it as a “very good idea.”

    “Just like the independent Bank of England, they have got a really important role to play,’’ Griffith said of the OBR during an interview with Sky News. “We all want the forecasts to be as quick as they can, but also as a former finance director, I also know you want them to have the right level of detail.”

    The decision to meet with the OBR also was welcomed by Conservative lawmakers and senior party figures, including former Chancellor George Osborne, who oversaw the creation of the independent spending watchdog in 2010.

    “Turns out the credibility of the institution we created 12 years ago to bring honesty to the public finances is more enduring than that of its critics,” Osborne said on Twitter.

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  • Britain’s Liz Truss to hold talks with budget watchdog as the pound stabilizes

    Britain’s Liz Truss to hold talks with budget watchdog as the pound stabilizes

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    Britain’s Prime Minister Liz Truss and Britain’s Chancellor of the Exchequer Kwasi Kwarteng.

    Dylan Martinez | Afp | Getty Images

    The IMF has since given a damning verdict of the measures laid out in the mini-budget, saying they will “likely increase inequality” and that the U.K. government should “consider ways to provide support that is more targeted and re-evaluate the tax measures, especially those that benefit high income earners.”

    A growing number of economists and investors have also slated the plans, including the founder of Bridgewater, one of the world’s largest hedge funds, Ray Dalio, who said the proposed measures suggest government “incompetence.”

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  • India raises interest rate to 5.90% to tame inflation

    India raises interest rate to 5.90% to tame inflation

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    FILE – Reserve Bank of India (RBI) Governor Shaktikanta Das gestures during a press conference after RBI’s bi-monthly monetary policy review meeting in Mumbai, India, on Feb. 6, 2020. India’s central bank on Friday, Sept. 30, 2022, raised its key interest rate by 50 basis points to 5.90% in its fourth hike this year and said the economies of developing countries were confronted with challenges of slowing growth, elevated food and energy prices, debt distress and currency depreciation. (AP Photo/Rajanish Kakade, File)

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  • Resilient US consumers spend slightly more in August | Long Island Business News

    Resilient US consumers spend slightly more in August | Long Island Business News

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    Consumers spent a bit more in August than the previous month, a sign the economy is holding up even as inflation lifts prices for food, rent, and other essentials.

    Americans boosted their spending at stores and for services such as haircuts by 0.4% in August, after it fell 0.2% in July, the Commerce Department said Friday. The government’s report also showed that an inflation gauge closely monitored by the Federal Reserve rose 0.3% last month, faster than July.

    The figures suggest that the economy is showing some resilience despite sharply rising interest rates, violent swings in the stock market, and high inflation. On Thursday the government confirmed that the economy shrank in the first six months of the year.

    Still, there were signs that rising prices are weighing on shoppers. Consumer spending, adjusted for inflation, rose at an annual rate of 2% in the April-June quarter. Yet July and August data indicate that spending is on track to slow to about 0.5% annual growth in the July-September quarter, economists said.

    Compared with a year ago, prices jumped 6.2%, down from a 6.4% annual gain in July. The figure is lower than the more widely-known consumer price index, released earlier this month, which reported an 8.3% price gain in August from a year earlier.

    The two indexes differ for several reasons. For example, the consumer price index puts much greater weight on rents and housing costs, which have been rising steadily, than the measure released Friday, known as the price index for personal consumption expenditures.

    Excluding the volatile food and energy categories, core prices rose 0.6%, much faster than July’s flat reading. They increased 4.9% from a year earlier, up from July’s figure of 4.6%.

    Adjusted for inflation, consumer spending ticked up 0.1% last month, after falling slightly in July.

    The inflation figures in Friday’s report echoed those released earlier this month, with core prices rising more quickly than headline inflation. Falling gas prices have reduced overall inflation, while stubbornly high costs for housing, cars, and services such as health care and hair cuts have pushed core prices higher.

    Even adjusted for inflation, consumer spending ticked up 0.1% last month, after falling slightly in July.

    Friday’s report also showed that personal income rose 0.3% in August for the second month in a row. Adjusted for price increases, disposable income — what is leftover after taxes — ticked up 0.1%, after a hefty 0.5% gain in July. Those income gains will help fuel spending.

    But over a longer time frame, incomes are trailing inflation. In the April-June quarter, inflation-adjusted disposable income fell 1.5% at an annual rate.

    The Federal Reserve is seeking to wrestle inflation under control with its most rapid series of interest rate hikes in four decades. It has pushed its benchmark short-term rate to a range of 3% to 3.25%, the highest since early 2008, up from nearly zero in March.

    Fed Chair Jerome Powell and other officials have repeatedly underscored the Fed’s determination to bring prices down, even if their rate hikes result in layoffs and a higher unemployment rate.

    The Fed intends its interest rate increases to slow borrowing and spending, which should in turn reduce inflation pressures in the economy.

    Inflation has spiked globally, contributing to economic and financial turmoil in the United Kingdom, Europe, and a slew of developing countries, from Turkey to Argentina.

    Also Friday, the 19 countries that use the euro currency reported that inflation spiked 10% from a year earlier, as prices for natural gas and electricity soared. European countries are struggling with an energy crunch in the aftermath of Russia’s invasion of Ukraine, as Russia has reduced its supplies of natural gas to the European Union.

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    The Associated Press

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  • India raises interest rate to 5.90% to tame inflation

    India raises interest rate to 5.90% to tame inflation

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    India’s central bank has raised its key interest rate to 5.90% and said developing economy were facing slowing growth, elevated food and energy prices, debt distress and currency depreciation

    NEW DELHI — India’s central bank on Friday raised its key interest rate by 50 basis points to 5.90% in its fourth hike this year and said developing economies were facing challenges of slowing growth, elevated food and energy prices, debt distress and currency depreciation.

    Reserve Bank of India Governor Shaktikanta Das projected inflation at 6.7% in the current fiscal year which runs to next March. June was the sixth consecutive month with inflation above the central bank’s tolerance level of 6%, he said in a statement after a meeting of the bank’s monitoring committee.

    He said the central bank will remain focused on the withdrawal of the accommodative monetary policy.

    The bank’s monetary committee slashed the real economic growth forecast to 7% for the current financial year from 7.2% forecast in August. The economic growth for the first quarter of the next financial year is expected around 6.7%.

    Das said the world has been confronted with one crisis after another, but India has withstood shocks from the coronavirus pandemic and the conflict in Ukraine.

    Das also said the Indian rupee has depreciated by 4% since April against 14% appreciation in the U.S. dollar. “The rupee has fared better than many other currencies” and the Reserve Bank Of India’s foreign exchange reserves umbrella remains strong, he said.

    The Indian rupee has plunged to an all-time low of 81.58 rupees to one U.S. dollar.

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  • U.S. stocks return to red as markets deal with aggressive rate hikes

    U.S. stocks return to red as markets deal with aggressive rate hikes

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    Stocks plunged on Wall Street Thursday as bond yields marched higher and put the squeeze back on markets.

    The S&P 500 dropped 79 points, or 2.1%, to 3,640. Nearly every stock in the benchmark index lost ground. The Dow Jones Industrial Average dropped 458 points, or 1.5%, to 29,225 and the Nasdaq fell 2.8%.

    The slide marked a reversal from Wednesday, when stocks jumped and bond yields tumbled in relief after the Bank of England moved forcefully to keep borrowing rates in the United Kingdom from spiking further. That relief was short-lived, however, with Wall Street still focused on the Federal Reserve’s push to ratchet up interest rates and cool inflation. 


    MoneyWatch: Value of British pound drops to historic low against the dollar

    05:12

    “The primary driver of today’s slump is the U.K. as [Prime Minister Liz] Truss defended her government’s fiscal agenda, calling it the ‘right plan’ and vowing to press forward with its implementation,” analyst Adam Crisafulli of Vital Knowledge said in a research note. “Not until Truss yields on her plans (or provides additional details) will gilts and the [British pound] truly settle,” he said.

    U.S. bond yields jumped. The yield on the 2-year Treasury, which tends to follow expectations for Federal Reserve action, fell to 4.23% from 4.14% late Wednesday. It is trading at its highest level since 2007. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.80% from 3.73%.

    Russia’s war in Ukraine

    “The situation with Russia remains a source of concern, too,” added Crisafulli. 

    Russia confirmed on Thursday it will formally annex parts of Ukraine where occupied areas held Kremlin-orchestrated “referendums” on living under Moscow’s rule.

    “The referendums could bring a stalemate to the fighting, but this isn’t necessarily a ‘positive’ as Europe’s energy crisis grows more acute,” Crisafulli said. 


    Russia’s war, inflation prompt major economies to bring back price controls

    04:22

    However, the United States and its Western allies have sharply condemned the votes as “sham referenda” and vowed never to recognize their results. German Foreign Minister Annalena Baerbock on Thursday joined other Western officials in denouncing the referendums.
     
    “Under threats and sometimes even (at) gunpoint people are being taken out of their homes or workplaces to vote in glass ballot boxes,” she said at a conference in Berlin.

    Recession fears bolstered by jobs report

    A better-than-expected government report on U.S. layoffs only bolstered expectations that the Fed will keep hiking interest rates and investors are worried that it could hit the brakes on the economy too hard and cause a recession.

    The U.S. economy has already contracted for two consecutive quarters, which is one informal measure of a recession. But, the employment market remains strong and consumers continue spending. That has helped bolster the economy and is making it more difficult to get inflation under control.

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  • Fewer people seek US unemployment aid amid solid hiring

    Fewer people seek US unemployment aid amid solid hiring

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    WASHINGTON — The number of Americans filing for jobless benefits dropped last week, a sign that few companies are cutting jobs despite high inflation and a weak economy.

    Applications for unemployment benefits for the week ending Sept. 24 fell by 16,000 to 193,000, the Labor Department reported Thursday. That is the lowest level of unemployment claims since April. Last week’s number was revised down by 4,000 to 209,000.

    Jobless aid applications generally reflect layoffs. The current figures are very low historically and suggest Americans are benefiting from an unusually high level of job security. A year ago this week, 376,000 people applied for benefits.

    The economy shrank in the first half of the year, the government said in a separate report Thursday on gross domestic product, the broadest measure of the economy’s output.

    Yet employers, who have struggled to rehire after laying off 22 million workers at the height of the pandemic, are still looking to fill millions of open jobs. There are currently roughly two open positions for every unemployed worker, near a record high.

    With companies desperate for workers, they are much more likely to hold onto their current staff.

    Employers are also offering higher pay and benefits to attract and keep employees. Those higher salaries are contributing to inflation pressures.

    The Federal Reserve is aiming to bring down inflation by rapidly raising its key interest rate, which is currently in a range of 3% to 3.25%. A little more than six months ago, that rate was near zero. The sharp rate hikes have pushed up mortgage rates and other borrowing costs. The Fed hopes that higher interest rates will slow borrowing and spending and drive inflation down towards its 2% target.

    Fed officials are increasingly warning that the unemployment rate will likely have to rise as part of their fight against rising prices. If the number of unemployment claims drops, as it did last week, it suggests the Fed may have to raise rates even higher than it plans to slow the economy.

    ———

    This has been corrected to show that the level of unemployment benefits applications is the lowest since April, rather than May.

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  • Bulgaria to hold election overshadowed by war in Ukraine

    Bulgaria to hold election overshadowed by war in Ukraine

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    SOFIA, Bulgaria — Bulgarians will go to the polls for the fourth time in less than two years in a general election overshadowed this time by the war in Ukraine, rising energy costs and galloping inflation.

    Pollsters expect that voters’ fatigue and disillusionment with the political system will result in low turnout and a fragmented parliament where populist and pro-Russia groups could increase their representation.

    The early election comes after a coalition led by pro-Western Prime Minister Kiril Petkov lost a no-confidence vote in June. He claimed that Moscow used “hybrid war” tactics to bring down his government after it refused to pay gas bills in rubles and ordered the expulsion of 70 Russian diplomatic staff from Bulgaria.

    The latest opinion polls suggest that up to seven parties could pass the 4% threshold to enter parliament in a contested vote on Sunday.

    Despite a decrease in support for the GERB party of ex-Prime Minister Boyko Borissov in previous elections, it is tipped now to finish first. Analysts explain that the shift is likely because of voters’ reluctance to accept change in times of crises and a preference to chose a party they are familiar with.

    Parvan Simeonov, a Sofia-based political analyst for Gallup International, said that the war in Ukraine has a strong influence on this election.

    “While at previous polls the division was for and against the model of governance of the last 10 years personified by GERB and Boyko Borissov, the main issues now are stabilization, keeping prices low and dealing with the consequences of the war,” Simeonov told The Associated Press.

    “The main division in the country now is between East and West on the political map, rather than between status quo and change,” he added.

    Still, the predicted percentage won’t be enough for Borissov’s party to form a one-party government, and the chances for a GERB-led coalition are slim as it is blamed for corruption by almost all other opponents.

    A recent Gallup International survey ranked GERB first with 25.9%, followed by its main rival — Petkov’s We Continue the Change party with 19.2%.

    Borissov, addressing party activists at the last campaign event in Sofia, was positive that GERB would score a convincing victory.

    “That’s the only solution for Bulgaria. We have the rare chance to have a stable government,” said the 63-year-old ex-premier, who is vying for a fourth term in office.

    His main rival, Kiril Petkov, is also confident that Sunday’s vote will yield positive results for his party.

    “I certainly expect us to be the first political power. The goal is to have a majority in the next parliament together with the other two parties — Democratic Bulgaria and the Socialist Party,” he told the AP.

    The war in Ukraine was among the main topics in the campaign and calls by the leader of the pro-Russia party Vazrazhdane, Kostadin Kostadinov, for “full neutrality” of Bulgaria in this war are attracting many voters as latest opinion polls predict that the group would gain 11.3% of the votes, up from 4.9% at the previous election.

    Deep conflicts between the main parties make it almost impossible to form a viable coalition government, which would prolong the political impasse and add more economic woes in the poorest European Union member country.

    Simeonov sees a possible solution in forming a Cabinet of experts with a limited term.

    “The other possible option would be no government and go to new elections,” he said.

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  • Porsche shares quick off the line in one of Europe’s largest ever IPOs

    Porsche shares quick off the line in one of Europe’s largest ever IPOs

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    Shares in luxury carmaker Porsche AG rose on their first day of public trading after German parent company Volkswagen raised 9.4 billion euros ($9.1 billion) for one of the largest initial public offerings in European history.

    Shares traded at 85.68 euros on the Frankfurt Stock Exchange on Thursday, above the initial offering price of 82.50 euros established Wednesday after Volkswagen lined up investors to buy shares for a minority stake in the maker of the 911 sports car and Cayenne SUV.

    Volkswagen plans to use use the money to invest in software and electric vehicles as global auto industry shifts its focus to the energy transition.

    The IPO was a venture into turbulent markets, as the war in Ukraine, inflation, rising interest rates and a global energy crunch have raised fears of recession in major economies such as Europe and the U.S. Europe’s Stoxx 600 index last week fell into bear market territory.

    Still, investors snapped up the shares at the top end of the initial offer range, attracted by Porsche’s strong profit margins and recession-resistant luxury business.

    The state investment funds of Qatar, Norway and Abu Dhabi took stakes, along with money manager T. Rowe Price.

    Wolfsburg-based Volkswagen, whose other auto brands include Audi, Lamborghini, SEAT and Skoda, will remain the majority shareholder in Porsche and the companies’ industrial cooperation will continue. The sale is intended, however, to give Porsche more autonomy.

    Volkswagen CEO Oliver Blume, who kept his earlier role as head of Porsche, will continue in that dual role.

    Under the offering, 12.5% of Porsche was sold to investors in the form of non-voting shares. As part of the transaction, another 12.5% plus one share in voting shares was bought at a 7.5% premium by Porsche Automobil Holding SE, representing the Porsche and Piech families, descendants of automotive pioneer Ferdinand Porsche. Their holding is also Volkswagen’s controlling shareholder with 53% of voting shares.

    Volkswagen’s plans

    Volkswagen took over Porsche in 2012 after Porsche made a failed bid for Volkswagen and wound up laden with debt.

    Total proceeds from the sales of the two blocks of shares totaled 19.5 billion euros. Of that amount, 49% will be paid out as a dividend to Volkswagen shareholders. The rest is left for VW to fund its investments in future technologies.

    Volkswagen can use that money to invest in new factories, technologies and lines of business as the global auto industry pivots to electric vehicles in line with a worldwide focus on curbing climate-changing greenhouse gas emissions and as software development plays an ever-growing role in that shift.

    The deal ranks high among Europe’s biggest share offerings — behind Italian electrical utility Enel in 1999, valued at $16.6 billion, and Deutsche Telekom in 1996, valued at $12.5 billion, according to figures compiled by financial market data provider Refinitiv.

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  • Live Updates: Russia-Ukraine War

    Live Updates: Russia-Ukraine War

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    KYIV, Ukraine — STOCKHOLM — A fourth leak to the Nord Stream pipelines conveying natural gas from Russia to Germany has been reported off southern Sweden.

    Earlier, three leaks had been reported on the two underwater pipelines. Seismologists detected two explosions were detected before reports of the leaks which officials believe were “deliberate actions.”

    Some experts have said Russia is likely to blame for any sabotage — it directly benefits from higher energy prices and economic anxiety across Europe.

    Sweden’s coast guards told Swedish news agency TT on Thursday that the fourth leak was off Sweden. All the leaks are in international waters.

    ———

    KEY DEVELOPMENTS:

    — Russia poised to annex occupied Ukrain e after sham vote

    — US: Focus new Russia sanctions on oil revenue, arms supplies

    — Europe ramps up energy security after suspected sabotage

    — Moscow tries to draft fleeing Russian men at the borders

    ———

    OTHER DEVELOPMENTS:

    KYIV — Authorities say Russian missile fire targeted the eastern Ukrainian city of Dnipro overnight, killing at least three people and wounded five others.

    Valentyn Reznichenko, the governor of the wider Dnipropetrovsk region, said fire damaged homes, a market, cars, buses and electrical lines.

    ——

    KYIV — Authorities say the hometown of Ukrainian President Volodymyr Zelenskyy has again been targeted by Russian missile fire.

    Ukrainian military officials said Thursday a Russian Kh-59 missile struck Kryvyi Rih on Wednesday night. The Russian fire struck a grain depot while others were shot down.

    Kryvyi Rih is some 350 kilometers (215 miles) southeast of Kyiv.

    ——

    KYIV — The Ukrainian military says it is sending undertrained fighters to the battle front as it tries to reinforce its positions in the eastern Ukrainian city of Lyman.

    The Ukrainian military’s general staff said Thursday that of seven Russian tanks sent to Lyman recently, Russian troops crashed two of them on the way there.

    It also said troops manning the tanks did not undergo training on how to use the vehicle’s weapons.

    The Ukrainian military did not elaborate on how it knew about the tank unit’s condition. But Ukraine’s intelligence services have played purportedly intercepted phone calls of Russian troops complaining about their conditions on the front line.

    ——

    KYIV — Britain’s military says the number of Russian military-age men fleeing the country likely exceeds the number of forces Moscow used to initially invade Ukraine in February.

    The British Defense Ministry made the estimate in its daily intelligence briefing Thursday amid a Russian push to mobilize more troops to replenish losses its forces have suffered in Ukraine.

    The ministry said those who are financially better off and better educated are over-represented amongst those attempting to leave Russia.

    It added that the economic impact from the call-up as a result of a loss of labor in combination with a ‘brain drain’ “is likely to become increasingly difficult.”

    ——

    KYIV — A Washington-based think tank says Ukrainian soldiers continue to advance around a key northeastern city occupied by Russian forces and may soon encircle it entirely.

    The Institute for the Study of War, citing Russian reports, said Thursday that Ukrainian forces have taken more villages around Lyman, a city some 160 kilometers (100 miles) southeast of Kharkiv, Ukraine’s second-largest city.

    Lyman had been a key node in Russia’s front-line operations in the region before Ukrainian forces retook vast swathes of territory in the northeast earlier this month.

    The institute said a possible collapse of the Lyman pocket would allow Ukrainian troops to “threaten Russian positions along the western Luhansk” region.

    The institute suggested additional Russian losses would further erode morale amid a call-up of hundreds of thousands of men — the country’s first since World War II.

    — Follow the AP’s coverage of the war at https://apnews.com/hub/russia-ukraine

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  • Taiwan announces end of quarantine for arrivals from October

    Taiwan announces end of quarantine for arrivals from October

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    Self-ruled island is among the last economies to reopen to the world after shutting its borders to keep out COVID-19.

    Taiwan will end its mandatory COVID-19 quarantine for arrivals from October 13 and welcome tourists back, the government has announced, completing a big step on its plan to reopen to the outside world.

    Taiwan had kept some of its entry and quarantine rules in place as large parts of the rest of Asia relaxed or lifted them completely, although in June it cut the number of days required in isolation for arrivals to three from seven previously.

    Taiwan has reported 6.3 million domestic cases since the beginning of the year, driven by the more infectious Omicron variant. With more than 99 percent of those showing no or only mild symptoms, the government has relaxed restrictions in its “new Taiwan model”.

    Cabinet spokesman Lo Ping-cheng told reporters on Thursday that with a well-vaccinated population and the pandemic under control at home, the time had come to reopen borders.

    Arrivals will still need to monitor their health for a seven-day period and take rapid tests, but tourists will be allowed to return, he added.

    The government had previously said it was aiming for an October 13 reopening.

    A series of other measures came into force on Thursday, including ending PCR tests for arrivals and resuming visa-free entry for citizens of all countries that previously had that status.

    Throughout the pandemic, Taiwanese citizens and foreign residents have not been prohibited from leaving and then re-entering, but have had to quarantine at home or in hotels for up to two weeks.

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  • Victims of Bernard Madoff’s Ponzi scheme to get another $372m

    Victims of Bernard Madoff’s Ponzi scheme to get another $372m

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    Bernie Madoff’s fraud, estimated as high as $64.8bn, went undiscovered for years until he confessed to his sons in December 2008.

    Bernard Madoff’s victims will soon receive another $372m to help cover their losses, nearly 14 years after the swindler’s capture for running a massive Ponzi scheme, the United States Department of Justice (DOJ) has said.

    The payout from the government’s Madoff Victim Fund will go to 27,219 victims, including more than 400 who had yet to recoup a penny from any source, the DOJ said on Wednesday.

    Following the payout, the fund will have distributed about $4.08bn in one or more payments to 40,454 individuals, schools, charities, pension plans and others.

    “People getting these cheques are not hedge funds,” Richard Breeden, the former US Securities and Exchange Commission chairman who oversees the government fund, said in an interview. “They’re real people, and it helps families around the world.”

    An additional $14.54bn has been recouped for customers of the former Bernard L Madoff Investment Securities LLC by Irving Picard, the trustee liquidating that firm in bankruptcy. That boosts the total payout to about $18.6bn.

    Madoff’s fraud, estimated as high as $64.8bn, went undiscovered for many years until he confessed to his sons in December 2008, one day after his firm’s annual Christmas party.

    After pleading guilty to 11 criminal counts, Madoff was sentenced to 150 years in prison. He died behind bars at age 82 in April 2021.

    Wednesday’s payout is the eighth from the government fund, with victims recouping an average 88.35 percent of their losses.

    Another 2,265 victims with valid claims have received nothing from the fund, but many have been made whole by Picard or other sources.

    The fund was created in 2013, mainly from settlements between the DOJ and Madoff’s former bank JPMorgan Chase & Co, and between Picard and the estate of former Madoff investor Jeffry Picower.

    It originally held $4.05bn, but has grown because the DOJ has recovered additional assets.

    Breeden said about $200m remains available, and a ninth payout next year will “almost certainly be the last”.

    He also cautioned investors not to let their guard down and chase higher returns, to combat falling stock prices and elevated inflation.

    “People start looking for alternatives, and that’s when fraudsters thrive,” he said. “People like Madoff are always happy to throw their lures in the water and offer deals too good to be true.”

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  • Biden looks to win over Pacific Island leaders at summit

    Biden looks to win over Pacific Island leaders at summit

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    WASHINGTON — President Joe Biden is hosting Pacific Island leaders for a two-day summit as the U.S. looks to counter China’s military and economic influence in the region. Pacific Island leaders, meanwhile, see an even more pressing concern: climate change.

    Secretary of State Antony Blinken kicked off the summit on Wednesday with a luncheon for the Pacific Island leaders and other senior officials from the region. U.S. climate envoy John Kerry will hold a climate roundtable with the leaders, and White House national security adviser Jake Sullivan will join them for a dinner hosted by the U.S. Coast Guard.

    Biden is set to address the leaders at the State Department on Thursday and will host them for a dinner at the White House. The leaders also are to meet with House Speaker Nancy Pelosi, Commerce Secretary Gina Raimondo and U.S. business leaders.

    Leaders from Fiji, the Marshall Islands, Micronesia, Palau, Papua New Guinea, Samoa, the Solomon Islands, Tonga, Tuvalu, Cook Islands, French Polynesia and New Caledonia are attending. Vanuatu and Nauru are sending representatives, and Australia, New Zealand and the secretary-general of the Pacific Island Forum sent observers, according to the White House.

    “This summit reflects our deep, enduring partnership with the Pacific Islands; one that’s underpinned by shared history, values, and enduring people-to-people ties,” Blinken told leaders as he opened the summit. Talks are expected to touch on climate change, the coronavirus pandemic and economic recovery, maritime security, environmental protection and the Indo-Pacific.

    The first-of-its-kind summit comes as the administration has sought to demonstrate that the U.S. remains committed to being a enduring player in the region.

    While the high-level gathering is welcomed by the region’s leaders as a signal of Biden’s commitment to the Pacific, there’s also a healthy skepticism about whether the United States will remain engaged for the longer term in the Pacific Islands. The area has received diminished attention from the U.S. in the aftermath of the Cold War and China has increasingly filled the vacuum, analysts say.

    The Solomon Islands has signaled it was unlikely to sign on to a joint statement that the U.S. hoped to have hashed out by the end of the summit, according to a diplomat familiar with summit planning.

    The diplomat, who was not authorized to comment publicly and spoke on the condition of anonymity, said the resistance is driven in part by the Solomon Islands’ tightening relationship with Beijing and in part is seen as an effort to press the U.S. for greater economic assistance.

    A senior Biden administration official who briefed reporters before the summit said discussions on the joint statement are still ongoing.

    For the Biden administration, stemming the growing influence of China is a high priority. But for many of the Pacific Island leaders, climate change is the existential crisis that demands attention above all else.

    Last week at the U.N. General Assembly, Prime Minister Kausea Natano of the tiny island of Tuvalu described how rising sea levels have affected everything from the soil that his people rely on to plant crops, to the homes, roads and power lines that get washed away. The cost of eking out a living, he said, eventually becomes too much to bear, causing families to leave and the nation to disappear.

    “This is how our islands will cease to exist,” Natano said.

    In June, Inia Seruiratu, Fiji’s minister for defense, said at the Shangri-La Dialogue that “machine guns, fighter jets, gray ships and green battalions are not our primary security concern.”

    “The single greatest threat to our very existence is climate change,” he said.

    Plans for the summit were announced earlier this month, just days after the Solomon Islands called on the U.S. and Britain not to send naval vessels to the South Pacific nation until approval processes are overhauled. The Solomons in April signed a new security pact with China — a moment that analysts say has created increased urgency for the Biden administration to put greater focus on the region.

    The United States and Britain are among countries concerned that a new security pact with Beijing could lead to a Chinese naval base being constructed less than 1,200 miles (2,000 kilometers) off Australia’s northeast coast.

    Darshana Baruah, a senior fellow at the Carnegie Endowment for International Peace, said Beijing has been more present in the region in the last decades.

    “The first questions from the islands to the United States are, ‘Is this going to last beyond the current tense cycle? Are you going to keep showing up,?’” Baruah said. “The second question is, ‘What kind of messaging is this sending across the Indo-Pacific? Are you mistakenly giving the impression that if you want Washington’s attention you must grab Beijing’s purse?’”

    In the leadup to the summit, Pacific Island leaders made clear that they want increased U.S. assistance on battling the impacts of climate change and help for their economies recovering from the COVID-19 pandemic, according to a senior Biden administration official.

    The official, who was not authorized to comment publicly and spoke on the condition of anonymity, acknowledged that the “lapse” in the U.S. efforts in the region comes up in “every meeting” with Pacific Island leaders. The White House plans to announce its first U.S. Pacific Island Strategy and announce that the Democratic president will appoint a U.S. envoy to the Pacific Islands Forum.

    The U.S. will also be seeking to mend relations with the Marshall Islands, which for decades has been a strong ally but which is in a bitter dispute over a treaty that’s up for renewal.

    Just last week, the Marshall Islands pulled out of a negotiating session with the U.S. over their Compact of Free Association, which expires next year. The Marshall Islands says the U.S. isn’t engaging in its claim for proper reparations from the legacy of U.S. nuclear testing in the islands.

    The Marshall Islands says there was extensive environmental and health damage from the dozens of tests in the 1940s and ’50s, which a settlement in the 1980s fell well short of addressing.

    The U.S. has treated the Marshall Islands, along with nearby Micronesia and Palau, much like territories since World War II, and observers worry that a weakening of those ties would play into the hands of China.

    The administration in recent months has sought to have greater presence in the region. In February, Blinken became the first U.S. secretary of state to visit Fiji in 37 years. And in recent months, the U.S. along with Australia, Japan, New Zealand and the U.K. created an informal group aimed at boosting economic and diplomatic ties with Pacific Island nations dubbed Partners in the Blue Pacific.

    During the Fiji visit, Blinken announced the U.S. would open an embassy in the Solomon Islands. The U.S. operated an embassy in the Solomons for five years before closing it in 1993. Since then, U.S. diplomats from neighboring Papua New Guinea have been accredited to the Solomons, which has a U.S. consular agency.

    Guadalcanal, the largest landmass in the Solomon Islands, was the site of the crucial battles between Allied forces and Japan early in World War II.

    Associated Press writers Matthew Lee in Washington and Nick Perry in Wellington, New Zealand, contributed reporting.

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  • Kansas race tests which matters more: Economy or abortion?

    Kansas race tests which matters more: Economy or abortion?

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    KANSAS CITY, Kan. (AP) — Republicans redrew Democratic Rep. Sharice Davids ′ suburban Kansas City, Kansas-area district this year to make a third term harder for her to win, adding rural areas where former President Donald Trump did well and removing urban areas that Davids had carried handily.

    But the dynamic changed in June, when the U.S. Supreme Court overturned Roe v. Wade. Kansas voters responded in August by overwhelmingly rejecting a ballot measure expected to lead to more restrictions or a ban on abortion.

    The magnitude of that vote has left Davids and other Democrats optimistic. That’s why she is spending the final stretch of the campaign focused on abortion, attempting to keep the same abortion-rights supporters who turned out to vote in August energized to do so again in November.

    It’s a delicate task, asking voters who may fault Democrats for rising housing and grocery prices to nonetheless support Davids for Congress.

    “I think this has more to do with control and limiting people’s rights,” said swing voter Tanner Klingzell, a 42-year-old from the suburb of Prairie Village who says he is fiscally conservative but socially progressive. He supports abortion rights and says, “I just don’t feel comfortable voting for Republicans.”

    The Supreme Court’s abortion ruling has rewritten the script in districts around the country, and both Davids and Republican challenger Amanda Adkins must win over independents and GOP moderates to win the one swing congressional district in an otherwise red state.

    Davids became the first lesbian Native American in Congress when she rode suburban anti-Trump sentiment to office in the 2018 election. Her background as a mixed martial arts fighter drew national interest, and Republicans initially tried to group her with “The Squad” of new liberal House members. Those efforts fell flat as she focused on such non-divisive issues as road projects, prescription drug prices and high-speed internet for rural areas.

    Adkins, a former corporate executive and Kansas GOP chair, is hitting Davids hard on pocketbook issues, a tactic Republicans nationally expect to carry them back to a House majority. She’s also started highlighting crime and border security. She held a news conference on those issues Monday, days after House Republican leader Kevin McCarthy released Republicans’ “Commitment to America” agenda, which promises to fight inflation but also to “protect the lives of unborn children.”

    The two have faced off before. Davids defeated Adkins in 2020 by 10 percentage points, but that was before redistricting after the 2020 census. While Democrat Joe Biden would have prevailed in the new district in 2020, his margin would have been roughly half the 10 percentage points he racked up in the old district — and that’s likely true for Davids as well. If Adkins’ percentage of the vote in the suburbs is a few points higher this year than in 2020, she can win.

    In suburban Overland Park, Andrea Calvo, a 33-year-old freight-company accounts manager, is hoping Republicans emerge a little stronger from the November election because, in her view, “they have proven to be able to handle the economy better.”

    While Calvo, a Republican, doesn’t see herself as a moderate, she voted in August against the proposed anti-abortion amendment to the Kansas Constitution. She sees Adkins’ support for it as “definitely a problem.” But it’s not a deal-breaker.

    “It’s all about the economy at the end of the day for me,” she said.

    The two campaigns, the parties and political groups are now on track to spend about $8 million on television ads.

    Davids’ ads attack Adkins for her long association with former Republican Gov. Sam Brownback, whose nationally notorious 2012-13 experiment in cutting taxes was followed by huge, persistent state budget shortfalls. Davids on Saturday launched an ad attacking Adkins on abortion that follows up on multiple Kansas Democratic Party mailings, including to Republicans.

    Davids and her backers are painting Adkins as an extremist for supporting the proposed amendment that voters rejected in August. It would have removed protections for abortion from the state Constitution, which would have allowed the state Legislature, dominated by abortion opponents, to greatly restrict or ban abortion.

    Davids’ strong, public opposition to the Kansas anti-abortion measure contrasts with three decades of Democratic candidates soft-pedaling their support for abortion rights in most areas of the state. Abortion has been a dominant issue in Kansas politics since the 1991 anti-abortion “Summer of Mercy” protests outside Dr. George Tiller’s clinic in Wichita. Tiller was among the few doctors known to perform abortions late in pregnancy and was shot to death in 2009 by an anti-abortion zealot. Anti-abortion groups have been powerful forces in state politics.

    Even with the 3rd District’s new, more Republican leanings, 67.5% of its voters opposed the Kansas anti-abortion measure in the August abortion referendum.

    “They were very engaged and sent a strong message about us not wanting to have politicians making our decisions for us,” Davids said.

    Adkins describes herself as a Catholic who has “always been pro-life” and “100% committed to protecting life at every stage.” But Adkins said she respects the August vote and opposes federal laws on abortion, saying the issue should be decided at the state level.

    “It should not be a federal issue, and Sharice Davids still is focusing on it as a federal issue,” Adkins said after a recent suburban meet-and-greet. Davids voted last year for a Democratic measure to guarantee abortion rights across the U.S. and override state restrictions.

    Adkins has not been specific about how far she thinks abortion law should go in Kansas, which bans most abortions at the 22nd week, but said Monday that she would favor any new, incremental state measures that would reduce the number of abortions.

    In the new, rural parts of the 3rd District, Democrats say the abortion ruling means volunteers are energized. But Republican state Rep. Samantha Poetter Parshall said that Davids is an “extremely hard sell,” especially with conservative farmers. Even Democrats tend to take more conservative positions on issues such as gun rights, she said.

    “Also, taxes — people are extremely upset with how high their taxes are right now,” she said.

    But about 85% of the district’s voters still live in the suburbs, where centrist and conservative Republicans have feuded for decades, and voters have been electing more Democrats in recent years.

    Former U.S. Rep. Kevin Yoder, the four-term GOP incumbent ousted by Davids in 2018, praised Adkins as a candidate, but he pointed to the dominance of those suburbs in the district as the reason the race remains challenging for the GOP.

    “It’s still a Biden district,” he said.

    _____

    Hollingsworth reported from multiple cities in Johnson County, Kansas.

    ___

    Follow John Hanna on Twitter: https://twitter.com/apjdhanna

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  • Fed officials call for more rate hikes to fight inflation

    Fed officials call for more rate hikes to fight inflation

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    WASHINGTON (AP) — The Federal Reserve will have to keep boosting its benchmark interest rate to a point that raises unemployment and gets inflation down from unusually high levels, two officials said in separate remarks Monday.

    Susan Collins, the new president of the Federal Reserve Bank of Boston, endorsed Fed projections released last week that signaled its benchmark interest rate would rise to 4.6% by next year, up sharply from about 3.1% now.

    Getting inflation down will “require slower employment growth and a somewhat higher unemployment rate,” Collins said in a speech to the Greater Boston Chamber of Commerce.

    Later Monday, Cleveland Fed President Loretta Mester said the Fed’s short-term rate would have to stay higher for longer than previously expected, regardless of the uncertainties surrounding the economy, such as Russia’s invasion of Ukraine and ongoing supply chain difficulties.

    “When there’s a lot of uncertainty, it can be better for policymakers to actually act more aggressively, because aggressive action and pre-emptive action can prevent the worst-case outcomes from happening,” she said.

    Mester also said she expects higher interest rates will raise unemployment, but disagreed with a forecast by Bank of America that the unemployment rate would rise to 5.5%.

    “I do expect the unemployment rate to rise, but not to that extent,” she said.

    The comments from both officials added to an ongoing debate about how badly the Federal Reserve’s rate hikes — the fastest in more than 40 years — will hurt the economy. By lifting its benchmark rate, the Fed is pushing up the cost of a wide range of consumer and business loans, including for mortgages, auto loans, and credit cards.

    Collins said that, while worries are rising about a recession, “the goal of a more modest slowdown, while challenging, is achievable.”

    Also Monday, stocks fell for the fifth straight day and longer-term interest rates rose amid growing fears of a global recession. The yield on the 10-year Treasury, which influences mortgage rates, jumped to 3.89% from 3.69%.

    Fed officials hope their rate hikes will achieve a “soft landing” by slowing consumer and business spending enough to bring down inflation but not so much as to cause a recession.

    Yet many economists are increasingly skeptical that such an outcome is likely. The Fed has lifted its key rate to a range of 3% to 3.25%, the highest in 14 years, even as the U.S. economy has already slowed. That could cause a recession in the U.S. next year, economists fear.

    In a question-and-answer session after her speech, Collins also said that inflation, which reached 9.1% in June from a year earlier and has since fallen to 8.3%, “perhaps may have peaked.”

    But Mester said she did not see any such signs.

    “Before I conclude that inflation has even peaked, I am going to have to see several months of declines in the readings,” she said.

    At a policy meeting last week, the Fed lifted its short-term rate by three-quarters of a point for the third straight time. Hikes typically are a more modest quarter-point. Fed Chair Jerome Powell, at a news conference after the meeting, said that “the chances of a soft landing are likely to diminish” as the Fed steadily raises borrowing costs.

    “No one knows whether this process will lead to a recession or, if so, how significant that recession would be,” Powell said.

    One challenge for the Fed is that last week it also released its quarterly economic and interest rate projections. They showed that Fed policymakers expect unemployment to reach 4.4% by the end of next year, up from 3.7% currently.

    According to a rule of thumb discovered by the economist Claudia Sahm, every time since World War II that unemployment has risen by a half-percentage point over several months, a recession has followed.

    Collins is one of 12 voting members of the Fed’s policymaking committee and is the first Black woman to serve as president of a regional Fed bank. She was sworn in July 1. Collins previously served as a provost and executive vice president at the University of Michigan and served on the board of directors for the Chicago Fed.

    Atlanta Fed President Bostic, in an interview Sunday on CBS News’ “Face the Nation,” also said “we need to have a slow down” to get inflation under control.

    “But I do think that we’re going to do all that we can at the Federal Reserve to avoid deep, deep pain,” he added.

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