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  • Asian shares mostly lower as Japan preps massive stimulus

    Asian shares mostly lower as Japan preps massive stimulus

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    Shares were mostly lower in Asia on Friday after a mixed session on Wall Street, where tech sector losses offset gains in other parts of the market.

    Tokyo’s benchmark slipped as the government was preparing about $490 billion in stimulus spending to help the world’s No. 3 economy cope with inflation. As expected, the Bank of Japan wrapped up a policy meeting by keeping its ultra-lax monetary policy unchanged even as it forecast higher inflation.

    The Nikkei 225 index lost 0.5% to 27,210.03 while the Hang Seng in Hong Kong sank 2.3% to 15,069.69. The Shanghai Composite index shed 0.8% to 2,958.25.

    The Kospi in Seoul declined 0.4% to 2,278.64. Australia’s S&P/ASX 200 dropped 0.8% to 6,788.00.

    The economic stimulus package due for approval Friday includes government funding of about 29 trillion yen ($200 billion) in subsidies and other measures to help soften the burden of costs from rising utility rates and food prices. It is also designed to help shore up support for Prime Minister Fumio Kishida, whose popularity has taken a beating due to a scandal over ties between the ruling Liberal Democratic Party and the South Korea-based Unification church.

    Thursday on Wall Street, the S&P 500 fell 0.6%, with about 44% of stocks within the benchmark index losing ground. It closed at 3,807.30.

    The tech-heavy Nasdaq fell 1.6% to 10,792.67, while the Dow Jones Industrial Average rose 0.6% to 32,033.28.

    Smaller company stocks held up better than the broader market. The Russell 2000 index added 0.1% to 1,806.32.

    Facebook’s parent company, Meta Platforms, plummeted 24.6% for the biggest drop in the S&P 500 after reporting a second straight quarter of revenue decline amid falling advertising sales and stiff competition from TikTok. It joined other tech and communications stocks, such as Google’s parent company, Alphabet, and Microsoft, in reporting weak results and worrisome forecasts over advertising demand. Alphabet fell 2.9% and Microsoft slid 2%.

    Amazon slid 19% in after-hours trading after the retail giant issued an estimate for sales in the last quarter of the year came in well below analysts’ forecasts. The stock fell 4.1% in regular trading before the release of its latest quarterly results.

    Construction equipment maker Caterpillar jumped 7.7% after it handily beat analysts’ third-quarter profit forecasts. The big gain helped boost the 30-company Dow.

    Another pullback in long-term Treasury yields helped support stocks in companies that weren’t reporting quarterly results. The yield on the 10-year Treasury, which influences mortgage rates, fell to 3.91% from 4.01% late Wednesday. The two-year yield fell to 4.30% from 4.42%.

    Excluding the Nasdaq, the major indexes are on pace for weekly gains. And the S&P 500 remains solidly on track to end October in the green.

    Markets got some encouraging economic news Thursday as the government reported the U.S. economy returned to growth last quarter, expanding 2.6%. That marks a turnaround after the economy contracted during the first half of the year.

    The economy has been under pressure from stubbornly hot inflation and the Federal Reserve’s efforts to raise interest rates in order to cool prices. The central bank is trying to slow economic growth through rate increases, but the strategy risks going too far and brining on a recession.

    The rising interest rates have made borrowing more difficult, particularly with mortgage rates. Average long-term U.S. mortgage rates topped 7% for the first time in more than two decades this week.

    Central banks around the world also have been raising interest rates in an effort to tame inflation. The European Central Bank piled on another outsized interest rate hike on Thursday. Markets in Europe were mixed.

    Wall Street has more earnings to review Friday, including Exxon Mobil, Chevron and Charter Communications.

    Meanwhile, S&P Dow Jones Indices said Thursday that insurer Arch Capital Group will replace Twitter in the S&P 500 index before the opening of trading on Tuesday. The move comes ahead of Elon Musk’s acquisition of Twitter in a transaction expected to close Friday.

    In other trading, the dollar fell to 146.20 yen from 136.31 late Thursday. The euro

    ___

    AP Business Writers Damian J. Troise and Alex Veiga contributed.

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  • EXPLAINER: How will we know if the U.S. is in recession?

    EXPLAINER: How will we know if the U.S. is in recession?

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    WASHINGTON — The U.S. economy grew faster than expected in the July-September quarter, the government reported Thursday, underscoring that the United States is not in a recession despite distressingly high inflation and interest rate hikes by the Federal Reserve.

    But the economy is hardly in the clear, and the solid growth reported for the third quarter did little to alter the growing conviction among economists that a recession is very likely next year.

    Higher borrowing rates and chronic inflation will almost certainly continue to weaken consumer and business spending. And likely recessions in the United Kingdom and Europe and slower growth in China will erode the revenue and profits of American corporations. Such trends are expected to cause a U.S. recession sometime in 2023.

    Still, there are reasons to hope that a recession, if it comes, will prove a relatively mild one. Many employers, having struggled to find workers to hire after huge layoffs during the pandemic, may decide to maintain most of their existing workforces even in a shrinking economy.

    In the July-September quarter, the economy accelerated to a 2.6% annual pace, after two quarters of contraction. Consumers spent more and exports jumped, offsetting a sharp slowdown in home sales and construction.

    Six months of economic decline is a long-held informal definition of a recession. Yet nothing is simple in a post-pandemic economy in which growth was negative in the first half of the year but the job market remained robust, with ultra-low unemployment and healthy levels of hiring. The economy’s direction has confounded the Fed’s policymakers and many private economists ever since growth screeched to a halt in March 2020, when COVID-19 struck and 22 million Americans were suddenly thrown out of work.

    By far the biggest threat to the economy remains inflation, which is still near its highest level in four decades. Even for workers who received sizable raises, their pay has dropped once it’s adjusted for inflation. The pain is being felt disproportionately by lower-income and Black and Hispanic households, many of whom are struggling to pay for essentials like food, clothes, and rent.

    High inflation has also become a central issue in Republican attacks on President Joe Biden and his fellow Democrats, who have been thrown on the defensive as they seek to maintain control of Congress in the midterm elections.

    So what is the likelihood of a recession? Here are some questions and answers:

    ————

    WHY DO MANY ECONOMISTS FORESEE A RECESSION?

    They expect the Fed’s aggressive rate hikes and persistently high inflation to overwhelm consumers and businesses, forcing them to slow their spending and investment. Businesses will likely also have to cut jobs, causing spending to fall further.

    The Fed is poised to keep raising its benchmark interest rate after having already hiked it five times this year, from near zero to a range of 3% to 3.25%. Fed officials have projected that their short-term rate, which affects borrowing costs for consumers and businesses, will reach about 4.6% next year, which would be the highest level since late 2007.

    Consumers have been remarkably resilient so far this year. Still, there are signs that high inflation and borrowing costs have begun taking a toll. Last quarter, consumer spending grew at just a 1.4% annual rate, according to Thursday’s government report, down from 2% in the second quarter and less than half its pace of a year ago.

    Thursday’s figures also showed that businesses are cutting back on investment in buildings and factories, and the housing market has been hammered by rising mortgage costs. Those trends are expected to intensify, leading to a likely recession.

    ———

    WHAT ARE SOME SIGNS THAT A RECESSION MAY HAVE BEGUN?

    The clearest signal, economists say, would be a steady rise in job losses and a surge in unemployment. Claudia Sahm, an economist and former Fed staff member, has noted that since World War II, an increase in the unemployment rate of a half-percentage point over several months has always resulted in a recession.

    Many economists monitor the number of people who seek unemployment benefits each week, which indicates whether layoffs are worsening. Weekly applications for jobless aid have increased in recent months, but not by very much. Instead, employers have added a robust average of 370,000 jobs in the past three months.

    ———

    ANY OTHER SIGNALS TO WATCH FOR?

    Many economists monitor changes in the interest payments, or yields, on different bonds for a recession signal known as an “inverted yield curve.” This occurs when the yield on the 10-year Treasury falls below the yield on a short-term Treasury, such as the 3-month T-bill. That is unusual. Normally, longer-term bonds pay investors a richer yield in exchange for tying up their money for a longer period.

    Inverted yield curves generally mean that investors foresee a recession that will compel the Fed to slash rates. Inverted curves often predate recessions. Still, it can take 18 to 24 months for a downturn to arrive after the yield curve inverts.

    Ever since July, the yield on the two-year Treasury note has exceeded the 10-year yield, suggesting that markets expect a recession soon. And just this week, the three-month yield also temporarily rose above the 10-year, an inversion that has an even better track record at predicting recessions.

    ———

    WHO DECIDES WHEN A RECESSION HAS STARTED?

    Recessions are officially declared by the obscure-sounding National Bureau of Economic Research, a group of economists whose Business Cycle Dating Committee defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”

    The committee considers trends in hiring as a key measure in determining recessions. It also assesses many other data points, including gauges of income, employment, inflation-adjusted spending, retail sales and factory output. It puts heavy weight on jobs and a measure of inflation-adjusted income that excludes government support payments like Social Security.

    Yet the NBER typically doesn’t declare a recession until well after one has begun, sometimes for up to a year.

    ———

    DON’T A LOT OF PEOPLE THINK WE”RE ALREADY IN A RECESSION?

    Yes, because many people now feel much more financially burdened. With wage gains trailing inflation for most people, higher prices have eroded Americans’ spending power.

    And the Fed’s rate hikes have helped send the average 30-year fixed mortgage rate surging above 7% this week, the highest level in two decades. It has more than doubled from about 3% a year ago, thereby making homebuying increasingly unaffordable.

    ———

    DOES HIGH INFLATION TYPICALLY LEAD TO A RECESSION?

    Not always. Inflation reached 4.7% in 2006, at that point the highest in 15 years, without causing a downturn. (The 2008-2009 recession that followed was caused by the bursting of the housing bubble).

    But when it gets as high as it has this year — it reached a 40-year peak of 9.1% in June — a downturn becomes increasingly likely.

    That’s for two reasons: First, the Fed will inevitably sharply raise borrowing costs when inflation gets that high. Higher rates then drag down the economy as consumers are less able to afford homes, cars, and other major purchases.

    High inflation also distorts the economy on its own. Consumer spending, adjusted for inflation, weakens. And businesses grow uncertain about the future economic outlook. Many of them pull back on their expansion plans and stop hiring, which can lead to higher unemployment as some people choose to leave jobs and aren’t replaced.

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  • Cost overruns lead to an unexpected deep loss for Boeing

    Cost overruns lead to an unexpected deep loss for Boeing

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    The planemaker is trying to emerge from the overlapping crises of COVID-19 and the grounding of its best-selling model.

    Boeing Co has unexpectedly reported a deeper loss in the third quarter of 2022 as cost overruns led to heavy losses at its ailing defence business, underscoring the challenge the company faces in turning around its fortunes.

    The planemaker, based in Virginia in the United States, is trying to emerge from overlapping crises: the COVID-19 pandemic and the grounding of its best-selling model after fatal crashes, which have left it with a pile of debt.

    However, a run-up in costs in Boeing’s defence contracts along with persistent supply-chain constraints and regulatory hurdles have made it tougher to shore up its fortunes.

    In the quarter through September, the company reported on Wednesday a $2.8bn charge on its Air Force One and refueling tanker programme, among others.

    The latest write-down came a day after Reuters reported Boeing has appointed senior troubleshooter Steve Parker to help turn around loss-making programmes in its defence unit.

    Rising cost pressures over the last few months have hampered fixed-price contracts for US aerospace and defence firms, prompting an industry body to ask the US Congress for inflationary relief.

    Since these contracts tend to have fixed prices, Boeing is required to absorb cost increases. Agency Partners estimates the company’s various fixed-price defence contracts have already resulted in $8.8bn of charges.

    “Every quarter, one hopes that the program specific bad news has come to an end, but then we get another installment – maybe this is It? Probably not,” analysts at Agency Partners said in a note.

    Boeing’s shares were down 1.7 percent at $144.55 in morning trading.

    Supply-chain delays

    The company further cut estimates for 737 MAX deliveries this year. It now expects to deliver 375 planes this year, lower than an earlier target of the “low 400s”.

    Chief Executive Dave Calhoun said he is confident the planemaker will get an extension from the US Congress of a key deadline to get the MAX 7 and MAX 10 certified.

    The company said while demand for commercial planes remains strong, supply-chain constraints continue to challenge the industry.

    It singled out delays in jet engine deliveries as the primary constraint in stabilising and increasing production rates for 737 jets. It called the supply chain “a key watch item” in the near term for the production and deliveries of 787 jets.

    Boeing expects its supply chain to remain challenged over the course of 2023. To ramp up production, the company said it has added more than 10,000 employees this year and is investing in training and development to improve productivity.

    It retained its forecast of generating cash this year after reporting a free cash flow of $2.9bn in the September quarter, higher than the $1.02bn expected by analysts in a Refinitiv survey.

    Adjusted loss per share in the third quarter widened to $6.18 from $0.60 a year ago. Quarterly revenue rose 4 percent to $15.96bn.

    Demand at the global services business that provides spare parts and services such as jet conversions was a bright spot in the quarter through September, with revenue rising 5 percent.

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  • Sunak to become UK leader at meeting with King Charles III

    Sunak to become UK leader at meeting with King Charles III

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    LONDON — Rishi Sunak is due to be installed as Britain’s third prime minister of the year by King Charles III on Tuesday, before appointing a Cabinet that will have to wrestle with the U.K.’s economic and political crises.

    Sunak, the U.K.’s first leader of color, was selected as leader of the governing Conservative Party on Monday as it tries to stabilize the economy, and its own plunging popularity, after the brief, disastrous term of Liz Truss.

    Truss will depart after making a brief public statement outside 10 Downing St., seven weeks to the day after she was appointed prime minister by Queen Elizabeth II. The queen died two days later. Now her son will take over the ceremonial role of accepting Truss’ resignation at Buckingham Palace before asking Sunak to form a government.

    Sunak — at 42 the youngest British leader for more than 200 years — must try to shore up an economy sliding toward recession and reeling after his predecessor’s experiment in libertarian economics, while also attempting to unite a demoralized and divided party that trails far behind the opposition in opinion polls.

    His top priorities will be appointing Cabinet ministers, and preparing for a budget statement that will set out how the government plans to come up with billions of pounds (dollars) to fill a fiscal hole created by soaring inflation and a sluggish economy, and exacerbated by Truss’ destabilizing economic experiments.

    The statement, set to feature tax increases and spending cuts, is currently due to be made in Parliament on Monday by Treasury chief Jeremy Hunt — if Sunak keeps him in the job.

    Sunak, who was Treasury chief himself for two years until July, said Monday that Britain faces “a profound economic challenge.”

    Sunak becomes prime minister in a remarkable reversal of fortune just weeks after he lost to Truss in a Conservative election to replace former Prime Minister Boris Johnson. Party members in the summer chose her tax-cutting boosterism over his warnings that inflation must be tamed.

    Truss conceded last week that she could not deliver on her plans — but only after her attempts triggered market chaos and worsened inflation at a time when millions of Britons were already struggling with soaring borrowing costs and rising energy and food prices.

    The party is now desperate for someone to right the ship after months of chaos under Truss and Johnson, who quit in July after becoming mired in ethics scandals.

    Sunak was chosen as Conservative leader after becoming the only candidate to clear the hurdle of 100 nominations from fellow lawmakers to run in the party election. Sunak defeated rival Penny Mordaunt, who may get a job in his government, and the ousted Johnson, who dashed back from a Caribbean vacation to rally support for a comeback bid but failed to get enough backing to run.

    As well as stabilizing the U.K. economy, Sunak must try to unite a governing party that has descended into acrimony as its poll ratings have plunged.

    Conservative lawmaker Victoria Atkins, a Sunak ally, said the party would “settle down” under Sunak.

    “We all understand that we’ve now really got to get behind Rishi — and, in fairness, that’s exactly what the party has done,” she told radio station LBC.

    ———

    Follow all AP’s reporting on British politics at https://apnews.com/hub/british-politics

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  • Ukrainian woman’s quest to retrieve body of prisoner of war

    Ukrainian woman’s quest to retrieve body of prisoner of war

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    CHUBYNSKE, Ukraine — In the last, brief conversations Viktoria Skliar had with her detained boyfriend, the Ukrainian prisoner of war was making tentative plans for life after his release in an upcoming exchange with Russia.

    The next time Skliar saw Oleksii Kisilishin, he was dead — one of several bodies in a photo of people local authorities said were killed when blasts ripped through a prison in a part of Ukraine’s Donetsk region controlled by Moscow-backed separatists.

    For months, Skliar had held out hope she would reunite with her partner, who had been one of the defenders of the Azovstal steel plant, the last redoubt of Ukrainian fighters in the besieged city of Mariupol.

    Now, she has retrained her focus on getting his body back. Against enormous odds, Ukraine has now received the remains of dozens of prisoners who were held at the prison in Olenivka. But with experts still needing months to identify all the bodies — and no guarantee Kisilishin is among them — Skliar’s quest is far from over.

    That she even knows her boyfriend is dead is remarkable. She recognized his tattoos in a photo shared on social media following the July 29 blasts. It showed him laid out, semi-naked, on the ground in a line with eight other bodies.

    “When I saw the photo, my eyes did not go beyond Oleksii’s body,” Skliar told The Associated Press. “I didn’t have time to cry. I cried all my tears when they were in Azovstal. My first thought was to get the body back somehow.”

    Skliar said she contacted representatives with the International Committee of the Red Cross, told them about the photo and gave them his name in the hopes that they’d be able to arrange for him to be brought home. The humanitarian organization couldn’t tell her much — the group had to wait for official lists of prisoners and agreements from politicians before it could help repatriate any bodies.

    While she waited for word, Skliar feared her loved one would end up in a mass grave.

    Kisilishin, who died at 26, was called back to the Azov Regiment, part of the Ukrainian National Guard, where he’d served until 2016, two weeks before Russia’s invasion of Ukraine in February. The animal caregiver and activist had chosen to return to defend his hometown of Mariupol, rather than stay in Kyiv, where he’d met Skliar at an equestrian club a year before.

    When Kisilishin was holed up at the Azovstal steel mill during a three-month siege of the city, they spoke every day until Russian forces encircled the plant.

    In May, he was captured when the last Azovstal defenders were told by Ukraine’s military to turn themselves over to Russian forces.

    From captivity, Skliar continued to have phone calls from him, though they never lasted longer than a minute. Her boyfriend said little about himself, responding only “it’s OK” or “bearable” when she asked him how he was.

    Then, Skliar said she received a call from Kisilishin — and his voice was cheerful. “He said that they will be taken somewhere. He hoped for an exchange,” she said.

    She believes he was taken to Olenivka that day or soon after. Later, she said she heard from the Red Cross that he would be part of an upcoming prisoner exchange. But three weeks after that, he was dead.

    Authorities at the prison and Russian officials have said 53 Ukrainian POWs died in the blasts and another 75 were wounded. On a list of the victims released by Moscow and published in Russian media, Kisilishin was number 43.

    What exactly happened in Olenivka remains unknown.

    Russia claims Ukraine’s military hit the prison with rockets. The Ukrainian military denied launching any strikes and accused Russia of mining it. Kyiv alleges that the Kremlin’s forces tortured prisoners held in Olenivka — and that the blasts were meant to cover up any evidence of those crimes.

    The Office of the United Nations High Commissioner for Human Rights raised concerns recently about reports that prisoners in Olenivka and elsewhere were subjected to beatings, electrocution and other abuse.

    The Russian Defense Ministry did not respond to a request for comment on Ukrainian allegations of what happened in Olenivka.

    Russia and Ukraine agreed in August to a U.N. fact-finding mission, but U.N. deputy spokesman Farhan Haq said just over a week ago that the “appropriate security guarantees” were not in place for the work to start.

    When other Ukrainian POWs returned in September, the photos showed emaciated but smiling faces. Skliar believes Kisilishin was supposed to be among them.

    Instead, he probably returned to Ukraine in a bag labeled “Olenivka” — with 62 other bodies that were exchanged on Oct. 11. Relatives of soldiers have given DNA samples, and experts are now working to identify the remains, said the representative of the Patronage Service of the Azov Regiment, Natalia Bahrii.

    It’s not clear why there were more than 60 bodies in the exchange, even though authorities put the death toll from the blasts at just over 50.

    Kisilishin’s father, Oleksandr — who himself was captured as a POW and released — has given a sample.

    To honor his son, the father, working with the NGO UAnimals, plans to arrange grants for animal shelters — continuing the work that Kisilishin devoted his life to.

    The older Kisilishin and Skliar don’t talk much about their loved one. “We can’t have him back anyway,” Skliar recounted the father once said to her.

    Still, Skliar hopes she will one day be able to bury him.

    “He fought for the free people of a free country; he defended his city, Mariupol,” Viktoria said. “He is a warrior. And he has the right to be buried in the land he defended.”

    ———

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

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  • How major US stock indexes fared Friday 10/21/2022

    How major US stock indexes fared Friday 10/21/2022

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    Stocks closed higher on Wall Street Friday, notching sizable weekly gains for major indexes.

    The benchmark S&P 500 rose 2.4% Friday, while the Dow Jones Industrial Average and the Nasdaq also gained ground. Social media companies were broadly lower after Snapchat’s parent company issued a weak outlook and the Washington Post reported that Elon Musk plans to slash about three-quarters of the payroll at Twitter after he buys the company.

    The yield on the two-year Treasury note fell to 4.49% on hopes that the Federal Reserve might consider slowing down its future rate increases after making another big hike next month.

    On Friday:

    The S&P 500 rose 86.97 points, or 2.4%, to 3,752.75.

    The Dow Jones Industrial Average rose 748.97 points, or 2.5%, to 31,082.56.

    The Nasdaq rose 244.87 points, or 2.3%, to 10,859.72.

    The Russell 2000 index of smaller companies rose 37.85 points, or 2.2%, to 1,742.24.

    For the week:

    The S&P 500 is up 169.68 points, or 4.7%.

    The Dow is up 1,447.73 points, or 4.9%.

    The Nasdaq is up 538.33 points, or 5.2%.

    The Russell 2000 is up 59.84 points, or 3.6%.

    For the year:

    The S&P 500 is down 1,013.43 points, or 21.3%.

    The Dow is down 5,255.74 points, or 14.5%.

    The Nasdaq is down 4,785.26 points, or 30.6%.

    The Russell 2000 is down 503.07 points, or 22.4%.

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  • UK PM Truss vows to stay, but is on brink as minister quits

    UK PM Truss vows to stay, but is on brink as minister quits

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    LONDON — British Prime Minister Liz Truss described herself as “a fighter and not a quitter” Wednesday as she faced a hostile opposition and fury from her own Conservative Party over her botched economic plan. Within hours of the defiant statement, her government was teetering on the verge of collapse.

    A senior member of the government left her post with a fusillade of criticism at Truss, and a House of Commons vote descended into acrimony and accusations of bullying,

    Home Secretary Suella Braverman said she resigned after breaching rules by sending an official document from her personal email account. She used her resignation letter to lambaste Truss, saying she had “concerns about the direction of this government.”

    “The business of government relies upon people accepting responsibility for their mistakes,” she said. “Pretending we haven’t made mistakes, carrying on as if everyone can’t see that we have made them and hoping that things will magically come right is not serious politics.”

    Braverman is a popular figure on the Conservative Party’s right wing and a champion of more restrictive immigration policies who ran unsuccessfully for party leader this summer, a contest won by Truss.

    Braverman was replaced as home secretary, the minister responsible for immigration and law and order, by former Cabinet minister Grant Shapps. He’s a high-profile supporter of Rishi Sunak, the former Treasury chief defeated by Truss in the final round of the Conservative leadership race.

    Truss faced more turmoil in Parliament Wednesday evening on a vote over fracking for shale gas — a practice that Truss wants to resume despite opposition from many Conservatives.

    With a large Conservative majority in Parliament, an opposition call for a fracking ban was easily defeated by 326 votes to 230, but some lawmakers were furious that Conservative Party whips said the vote would be treated as confidence motion, meaning the government would fall if the motion passed.

    There were angry scenes in the House of Commons during and after the vote, with party whips accused of using heavy-handed tactics to gain votes. Labour lawmaker Chris Bryant said he “saw members being physically manhandled … and being bullied.”

    Some lawmakers reported that that Conservative Chief Whip Wendy Morton, who is responsible for party discipline, and her deputy had resigned. But Truss’ office later said both remained in their jobs.

    Conservative officials denied there had been manhandling, but in the chaos Truss herself failed to vote, according to the official record. Many Tory lawmakers were left despondent by the state of their party.

    Conservative lawmaker Charles Walker said it was “a shambles and a disgrace.”

    “I hope that all those people that put Liz Truss in (office), I hope it was worth it,” he told the BBC. “I hope it was worth it to sit around the Cabinet table, because the damage they have done to our party is extraordinary.”

    The dramatic developments came days after Truss fired her Treasury chief, Kwasi Kwarteng, on Friday after the economic package the pair unveiled Sept. 23 spooked financial markets and triggered an economic and political crisis.

    The plan’s 45 billion pounds ($50 billion) in unfunded tax cuts sparked turmoil on financial markets, hammering the value of the pound and increasing the cost of U.K. government borrowing. The Bank of England was forced to intervene to prevent the crisis from spreading to the wider economy and putting pension funds at risk.

    On Monday Kwarteng’s replacement, Treasury chief Jeremy Hunt, scrapped almost all of Truss’ tax cuts, along with her flagship energy policy and her promise of no public spending cuts. He said the government will need to save billions of pounds and there are “many difficult decisions” to be made before he sets out a medium-term fiscal plan on Oct. 31.

    Speaking to lawmakers for the first time since the U-turn, Truss apologized Wednesday and admitted she had made mistakes during her six weeks in office, but insisted that by changing course she had “taken responsibility and made the right decisions in the interest of the country’s economic stability.”

    Opposition lawmakers shouted “Resign!” as she spoke in the House of Commons.

    Asked by opposition Labour Party leader Keir Starmer, “Why is she still here?” Truss retorted: “I am a fighter and not a quitter. I have acted in the national interest to make sure that we have economic stability.”

    Official figures released Wednesday showed U.K. inflation rose to 10.1% in September, returning to a 40-year high first hit in July, as the soaring cost of food squeezed household budgets. While inflation is high around the world — driven up by Russia’s invasion of Ukraine and its effect on energy supplies — polls show most Britons blame the government for the country’s economic pain.

    With opinion polls giving the Labour Party a large and growing lead, many Conservatives now believe their only hope of avoiding electoral oblivion is to replace Truss. But she insists she is not stepping down, and legislators are divided about how to get rid of her.

    A national election does not have to be held until 2024. Truss appeared to rule out calling an early election, saying Wednesday that “what is important is we work together … to get through this winter and protect the economy.”

    Under Conservative Party rules, Truss technically is safe from a leadership challenge for a year, but the rules can be changed if enough lawmakers want it. There is fevered speculation about how many lawmakers have already submitted letters calling for a no-confidence vote, and tensions rose further on Wednesday evening.

    As yet, there is no front-runner to succeed her. Sunak, House of Commons leader Penny Mordaunt and popular Defense Secretary Ben Wallace all have supporters, as does Hunt, whom many see as the de facto prime minister already.

    Some even favor the return of Boris Johnson, who was ousted in the summer after becoming enmeshed in ethics scandals.

    ———

    Follow AP’s coverage of British politics at https://apnews.com/hub/liz-truss

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  • Wall Street wavers up and down as more earnings roll in

    Wall Street wavers up and down as more earnings roll in

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    NEW YORK — Stocks wavered between gains and losses in early trading on Wall Street, leaving indexes mixed as another batch of companies reported their latest quarterly results.

    Several companies including Netflix and United Airlines rose sharply while others, including Abbott Laboratories and M&T Bank, sank.

    The S&P 500 shook off an early slump and was little changed as of 10:23 a.m. Eastern. The Dow Jones Industrial Average rose 56 points, or 0.2%, to 30,582 and the Nasdaq fell 0.1%. Smaller companies fell more than the rest of the market.

    Stocks are coming off of two days of gains, but trading remains unsteady overall. Treasury yields rose back near multi-year highs. Crude oil prices rose slightly.

    Homebuilders and other companies tied to the industry fell following a disappointing report on the housing industry. Construction on new homes declined more than expected in September. Homebuilder Lennar fell 4.4% and home-improvement retailer Lowe’s shed 5.1%.

    The yield on the 10-year Treasury, which influences mortgage rates, rose to 4.08% from 4.02% late Tuesday. The yield on the two-year Treasury, which tends to track expectations for future Federal Reserve action, also rose to 4.52% from 4.43%.

    U.S. crude oil prices rose 1.2% and energy stocks made gains. Exxon Mobil rose 2.2%. The White House plans to announce another release of oil from the U.S. strategic reserve.

    Investors have been focusing on the latest round of corporate earnings this week. The latest results are being closely watched for clues about how companies are dealing with the hottest inflation in four decades and how they intend to operate through the rest of the year and into 2023.

    Netflix soared 14.7% after the company said it picked up 2.4 million subscribers during the July-September period, a comeback from a loss of 1.2 million customers during the first half of the year.

    United Airlines rose 7.2% after reporting strong third-quarter financial results. American Airlines will report its results on Thursday.

    Household goods giant Procter & Gamble rose 2.2% after also reporting strong financial results. It joined a growing list of companies, including Hasbro and Johnson & Johnson, warning investors about a strong U.S. dollar cutting into revenue. A strong dollar decreases the value of overseas sales after converting the currency. The U.S. currency is now worth more than a euro for the first time in 20 years.

    The U.S. dollar has gained strength versus currencies worldwide as inflation and recession concerns prompt investors to look for relatively stable investments. Central governments and banks worldwide are dealing with stubbornly hot inflation. British food prices rose at the fastest pace since 1980 last month, driving inflation back to a 40-year high.

    The U.S. faces its own potential recession as high prices on everything from food to clothing barely budge and the Fed raises interest rates to temper inflation.

    The Fed’s rate increases are meant to make borrowing more difficult and slow economic growth in an effort to tame inflation. The strategy risks stalling the already slowing U.S. economy and bringing on a recession.

    ——

    Joe McDonald and Matt Ott contributed to this report.

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  • UK leader in peril after Treasury chief axes ‘Trussonomics’

    UK leader in peril after Treasury chief axes ‘Trussonomics’

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    LONDON — The U.K.’s new Treasury chief ripped up the government’s economic plan on Monday, dramatically reversing most of the tax cuts and spending plans that new Prime Minister Liz Truss announced less than a month ago. The move raises more questions about how long the beleaguered British leader can stay in office, though Truss insisted she has no plans to quit.

    Chancellor of the Exchequer Jeremy Hunt, said he was scrapping “almost all” of Truss’ tax cuts, along with her flagship energy policy and her promise — repeated just last week — that there will be no public spending cuts.

    While the reversal of policy calmed financial markets and helped restore the government’s economic credibility, it further undermined the prime minister’s rapidly crumbling authority and fueled calls for her to step down before her despairing Conservative Party forces her out.

    Truss declined to attend the House of Commons to answer a question on the economy from the leader of the opposition, sending House of Commons leader Penny Mordaunt in her place. Mordaunt denied a lawmaker’s suggestion that Truss was “cowering under her desk” to avoid scrutiny.

    “The prime minister is not under a desk,” Mordaunt said, words hardly likely to inspire confidence in the leader who only came to power last month.

    Truss’ spokesman said the prime minister and Hunt had jointly agreed on the economic changes. But Hunt told Conservative lawmakers that Truss “backed him to the hilt in making difficult decisions” — suggesting he has a free hand to make policy.

    With Truss sitting silently beside him, Hunt told lawmakers that he was canceling Truss’ plan to reduce the basic rate of income tax by 1 percentage point and most of her other libertarian economic policies. In a message aimed squarely at reassuring the financial markets, he said Britain was “a country that funds our promises and pays our debts.”

    “And when that is questioned, as it has been, this government will take the difficult decisions necessary to ensure there is trust and confidence in our national finances,” Hunt said.

    Hunt was appointed Friday after Truss fired his predecessor Kwasi Kwarteng, who spent less than six weeks in the Treasury job. Hunt is seeking to restore the Conservative government’s credibility for sound fiscal policy after Truss and Kwarteng rushed out a plan for tax cuts without detailing how they would pay for them.

    Truss and Kwarteng jointly came up with a Sept. 23 announcement of 45 billion pounds ($50 billion) in unfunded tax cuts that immediately spooked the financial markets. The cuts fueled investor concerns about unsustainable levels of government borrowing, which pushed up government borrowing costs, raised home mortgage costs and sent the pound plummeting to an all-time low against the dollar. The Bank of England was forced to intervene to protect pension funds, which were squeezed by volatility in the bond market.

    Over the weekend, Hunt has been dismantling that economic plan. The government had already ditched parts of its tax-cutting plan and announced it would make a medium-term fiscal statement on Oct. 31, weeks earlier than previously scheduled.

    On Monday, Hunt went further. He scaled back a cap on energy prices designed to help households pay their bills. It will now be reviewed in April rather than lasting two years — sweeping away one of Truss’ signature plans to help Britons facing a cost-of-living crisis as food, fuel and mortgage prices soar.

    Hunt told lawmakers that the measures he announced would save 32 billion pounds a year, but that spending cuts were also coming.

    “There remain, I’m afraid, many difficult decisions to be announced” in the fuller budget statement on Oct. 31, he said.

    Hunt also said he was setting up a new Economic Advisory Council of economists and investment bankers to help inform policy — a far cry from Truss’ bid to throw out economic “orthodoxy.”

    The pound rose more than 1% to above $1.13 in London after Hunt’s announcements. That pushed the U.K. currency back above where it was trading on Sept. 22, the day before Kwarteng announced the tax cuts.

    Yields on 10-year government bonds, an indicator of government borrowing costs, fell to 3.947% from 4.327% on Friday. It was 3.495% on Sept. 22. Bond yields tend to rise as the risk of a borrower defaulting increases.

    Paul Johnson, director of the Institute for Fiscal Studies think tank, said Monday’s announcements would not be enough “to undo the damage caused by the debacle of the last few weeks. But they are big, welcome, clear steps in the right direction.”

    The financial fiasco has turned Truss into a lame-duck prime minister. She took office just six weeks ago after winning a party election to replace Prime Minister Boris Johnson, who was forced out in July after ethics scandals ensnared his administration. Many Conservatives now believe their only hope is to replace Truss — but they are divided about who should take over.

    In a BBC interview, Truss conceded that she had made mistakes. But, she vowed, “I will lead the Conservatives into the next general election.”

    Few believe that possible. The Conservative Party still commands a large majority in Parliament, and — in theory — has two years until a national election must be held. Polls suggest holding an election now would be a wipeout for the Tories, with the Labour Party winning a big majority.

    Labour Party economics spokeswoman Rachel Reeves said Truss was “barely in office, and she is certainly not in power,” and claimed the Conservatives could not fix the problems they had caused.

    “The truth is an arsonist is still an arsonist, even if he runs back into the burning building with a bucket of water,” she said.

    Chris Beauchamp, chief market analyst at online trading firm IG, said the markets were reassured by the presence of Hunt, a former U.K. foreign secretary and health chief.

    “I think markets in some ways would rather things just stayed as they are for a while,” he said. “OK, the PM has found her authority quite truncated. But at least you’ve got the chancellor in place almost running the country.

    “I think they’re quite content with that slightly odd state of affairs, for the moment.”

    ———

    Jo Kearney contributed to this story.

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  • Credit Suisse pays $495M tied to mortgage-backed securities

    Credit Suisse pays $495M tied to mortgage-backed securities

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    Credit Suisse has agreed to pay $495 million as part of a settlement with the U.S. over a yearslong dispute tied to mortgage-backed securities, an investment vehicle that played a central role in the 2008 financial crisis

    Credit Suisse has agreed to pay $495 million as part of a settlement with the U.S. over a yearslong dispute tied to mortgage-backed securities, an investment vehicle that played a central role in the 2008 financial crisis.

    The Swiss bank said that some of the transactions were prior to 2008.

    The New Jersey Attorney General, which announced the settlement Monday, filed a lawsuit in 2013 alleging more than $3 billion in damages citing the involvement of Credit Suisse.

    “This agreement in principle holds Credit Suisse accountable for the loss of billions of dollars that helped put the nation in financial crisis,” said First Assistant Attorney General Lyndsay Ruotolo. “It has taken more than a decade of investigation and litigation to reach this historic result, but we never wavered in our resolve to get here. The recovery Credit Suisse has agreed to pay reflects the magnitude of harm it inflicted on the public and underscores New Jersey’s commitment to vigorously pursue cases, no matter the challenges, to protect the financial interests of the investing public.”

    Credit Suisse said Monday that the settlement allows the bank to resolve its only remaining mortgage-backed securities matter involving claims by a regulator, the largest it faced.

    Credit Suisse has run into a series of troubles in recent years, including bad bets on hedge funds and a spying scandal involving UBS. Also, a Swiss court fined the bank more than $2 million in June for failing to prevent money laundering linked to a Bulgarian criminal gang more than 15 years ago.

    In July Credit Suisse CEO Thomas Gottstein announced that he was resigning after 2-1/2 years in the job.

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  • New UK Treasury chief to aims to calm markets with statement

    New UK Treasury chief to aims to calm markets with statement

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    LONDON — The new U.K. Treasury chief will announce details of his tax and spending plans Monday, two weeks ahead of schedule, in a bid to calm markets roiled by the government’s economic policies.

    Chancellor of the Exchequer Jeremy Hunt is expected to ditch more of the measures announced by the government of Prime Minister Liz Truss on Sept. 23.

    Truss drafted Hunt in on Friday after she fired his predecessor, Kwasi Kwarteng. Plans by Truss and Kwarteng for 45 billion pounds ($50 billion) in tax cuts — including an income tax reduction for the highest earners — without an accompanying assessment of how the government would pay for them sent the pound plunging to a record low against the U.S. dollar and the cost of government borrowing soaring.

    The Bank of England was forced to step in to buy government bonds to prevent the financial crisis from spreading to the wider economy.

    The government has since ditched parts of its tax-cutting plan and announced it would make a medium-term fiscal statement on Oct. 31. But the market remained jittery, and Hunt has decided he must make a statement to calm the waters even sooner.

    The Treasury said he would make a public statement, followed by a statement to the House of Commons, on Monday afternoon. Hunt spent the weekend in crisis talks with Truss, and also met Bank of England governor Andrew Bailey and the head of the government’s Debt Management Office.

    Hunt’s moves are aimed at restoring the government’s credibility for sound fiscal policy after Truss and Kwarteng rushed out a plan for tax cuts without detailing how they would pay for them.

    The unfunded tax cuts fueled investor concern about unsustainable levels of government borrowing, which pushed up government borrowing costs, raised home mortgage costs and sent the pound plummeting to an all-time low against the dollar. The Bank of England was forced to intervene to protect pension funds squeezed by volatility in the bond market.

    Hunt was under pressure to act before financial markets opened on Monday because the central bank’s support for the bond market ended Friday.

    The early response from investors was positive.

    The pound rose 0.5% to $1.1229 in early trading in London. The British currency is now trading for roughly the same price it was on Sept. 22, the day before Kwarteng announced the tax cuts.

    Yields on 10-year government bonds, an indicator of government borrowing costs, fell to 4.060% from 4.327% on Friday. It was 3.495% on Sept. 22. Bond yields tend to rise as the risk of a borrower defaulting increases and fall as that risk declines.

    But analysts warned the positive market news might only be a temporary reprieve.

    “Trussenomics may have been ripped up and fed to the shredder but the author of the big gamble remains in power, and has the final say on the direction of travel,’’ said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

    “Investors are craving more stability but, given the flip-flopping we’ve had so far in her super-short tenure, economic policy uncertainty remains and that’s likely to be the key driver in the bond markets and on foreign exchange desks,” she said.

    The financial fiasco has turned Truss into a lame-duck prime minister, and Conservative lawmakers are agonizing about whether to try to oust her. She took office just six weeks ago after winning a party election to replace Prime Minister Boris Johnson. He was forced out in July after serial ethics scandals ensnared his administration.

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  • Closing prices for crude oil, gold and other commodities

    Closing prices for crude oil, gold and other commodities

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    Benchmark U.S. crude oil for November delivery fell $3.50 to $85.61 a barrel Friday. Brent crude for December delivery fell $2.94 to $91.63 a barrel.

    Wholesale gasoline for November delivery fell 7 cents to $2.63 a gallon. November heating oil fell 11 cents to $3.98 a gallon. November natural gas fell 29 cents to $6.45 per 1,000 cubic feet.

    Gold for December delivery fell $28.10 to $1,648.90 an ounce. Silver for December delivery fell 85 cents to $18.07 an ounce and December copper fell 2 cents to $3.42 a pound.

    The dollar rose to 148.68 Japanese yen from 147.17 yen. The euro fell to 97.25 cents from 97.85 cents.

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  • UK Treasury chief out as prime minister plans U-turn

    UK Treasury chief out as prime minister plans U-turn

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    LONDON — Embattled British Prime Minister Liz Truss fired her Treasury chief ahead of a hastily arranged news conference on Friday as she struggled to calm markets and hang on to her job following the release of a controversial economic plan.

    Kwasi Kwarteng’s departure comes after just over a month in the job — and three weeks after he announced a tax-cutting “mini budget” that sent the pound plunging to record lows against the dollar.

    Kwarteng tweeted his departure letter to Truss, saying “You have asked me to stand aside as your Chancellor. I have accepted.”

    He defended the government’s economic plan, saying the country faces an “incredibly difficult” situation and “following the status quo was not an option.”

    Truss is due to hold a news conference later Friday. She is under intense pressure to scrap some of the 43 billion pounds ($48 billion) in unfunded tax cuts that roiled financial markets and led the Bank of England to step in to prevent a wider economic crisis.

    Senior members of the Conservative Party were publicly advising the government to take action. The pound rose as much as 1.7% against the dollar on Thursday and bond markets stabilized amid expectations that Truss would revise the economic growth plan.

    Truss, a free-market libertarian, came to power last month pledging to cut taxes to spur growth. But her ability to deliver on that commitment is now in doubt.

    Analysts suggest the most likely change in her program would be to abandon a promise to halt her predecessor’s plan to increase corporation tax from 19% to 25%. That would reduce the bill for her program by about 18 billion pounds a year.

    James Athey, the investment director at abrdn, said that it now seemed certain that the government “is about to U-turn on its decision not to U-turn on its profligate tax-cutting policies.″ The rumors are calming markets, he said.

    “The risk now is that investors have forgotten that there are significantly more problems than just an ill-advised and ill-timed fiscal easing to deal with,″ he said. “Inflation is at multi-decade highs, government borrowing is huge as is the current account deficit. The housing market is likely to suffer a hammer blow from the jump in mortgage rates and the war in Ukraine rumbles on. We may well be through the worst of the volatility but I fear that the U.K. is nowhere near out of the woods.”

    Conservative lawmakers are agonizing over whether to try to oust their second leader this year. Truss was elected last month to replace Boris Johnson, who was forced out in July. Some reports suggest senior Conservatives are plotting to replace Truss with a joint ticket of Rishi Sunak and Penny Mordaunt, her two closest rivals in the summer contest for leadership of the party, though it’s unclear how that could be achieved.

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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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  • Supreme Court to hear case that could raise price of pork

    Supreme Court to hear case that could raise price of pork

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    WASHINGTON — The Supreme Court will hear arguments over a California animal cruelty law that could raise the cost of bacon and other pork products nationwide.

    The case’s outcome is important to the nation’s $26-billion-a-year pork industry, but the outcome could also limit states’ ability to pass laws with impact outside their borders, from laws aimed at combating climate change to others intended to regulate prescription drug prices.

    The case before the court on Tuesday involves California’s Proposition 12, which voters passed in 2018. It said that pork sold in the state needs to come from pigs whose mothers were raised with at least 24 square feet of space, including the ability to lie down and turn around. That rules out the confined “gestation crates,” metal enclosures that are common in the pork industry.

    Two industry groups, the Iowa-based National Pork Producers Council and the American Farm Bureau Federation, sued over the proposition. They say that while Californians consume 13% of the pork eaten in the United States, nearly 100% of it comes from hogs raised outside the state, primarily where the industry is concentrated in the Midwest and North Carolina. The vast majority of sows, meanwhile, aren’t raised under conditions that would meet Proposition 12’s standards.

    The question for the high court is whether California has impermissibly burdened the pork market and improperly regulated an industry outside its borders.

    Pork producers argue that 72% of farmers use individual pens for sows that don’t allow them to turn around and that even farmers who house sows in larger group pens don’t provide the space California would require.

    They also say that the way the pork market works, with cuts of meat from various producers being combined before sale, it’s likely all pork would have to meet California standards, regardless of where it’s sold. Complying with Proposition 12 could cost the industry $290 million to $350 million, they say.

    So far, lower courts have sided with California and animal-welfare groups that had supported the proposition. But for a number of reasons the law has yet to go into effect.

    The Biden administration, for its part, is urging the justices to side with pork producers. The administration says Proposition 12 would be a “wholesale change in how pork is raised and marketed in this country.” And it says the proposition has “thrown a giant wrench into the workings of the interstate market in pork.”

    California’s Proposition 12 also covers other animals. It says egg-laying hens and calves being raised for veal need to be raised in conditions in which they have enough room to lie down, stand up and turn around freely. Those parts of the law aren’t at issue in the case.

    The case is National Pork Producers Council v. Ross, 21-468.

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  • NASCAR teams call revenue model ‘broken,’ warn of layoffs

    NASCAR teams call revenue model ‘broken,’ warn of layoffs

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    CHARLOTTE, N.C. — The most powerful teams in NASCAR warned Friday that the venerable stock car racing series has a “broken” economic model that is unfair and has little to no chance of long-term stability, a stunning announcement that added to a growing list of woes.

    The Cup Series is heading into the Charlotte Motor Speedway road course playoff elimination race Sunday with three full-time drivers sidelined with injuries suffered in NASCAR’s new car and no clear answer as to how to fix the safety concerns.

    With just five races left in the championship chase, it got much worse as teams went public with their year-long fight with NASCAR over equitable revenue distribution.

    “The economic model is really broken for the teams,” said Curtis Polk, who as Michael Jordan’s longtime business manager now holds an ownership stake in both the Charlotte Hornets and the two-car 23XI Racing team Jordan and Denny Hamlin field in NASCAR.

    “We’ve gotten to the point where teams realize the sustainability in the sport is not very long term,” Polk said. “This is not a fair system.”

    The Race Team Alliance was formed in 2014 to give teams a unified voice in negotiations with the sanctioning body. A four-member subcommittee outlined their concerns at a Charlotte hotel, with Polk joined by Jeff Gordon, the four-time NASCAR champion and vice chairman of Hendrick Motorsports, RFK Racing President Steve Newmark, and Dave Alpern, the president of Joe Gibbs Racing.

    Hendrick and Gibbs have won six of last seven Cup Series championships dating to 2015, but Gordon said the four-car Hendrick lineup, the most powerful in the industry, has not had a profitable season in years. It will again lose money this season despite NASCAR’s cost-cutting Next Gen car.

    “I have a lot of fears that sustainability is going to be a real challenge,” Gordon said.

    NASCAR issued a statement acknowledging “the challenges currently facing race teams.

    “A key focus moving forward is an extension to the charter agreement, one that will further increase revenue and help lower team expenses,” NASCAR said. “Collectively, the goal is a strong, healthy sport, and we will accomplish that together.”

    Led by Polk, whose role with the Hornets brings familiarity with the NBA’s franchise model, the RTA in June presented NASCAR with a seven-point plan on a new revenue sharing model. The proposal “sat there for months and we told NASCAR we’d like a counteroffer,” Polk said.

    He did not disclose the seven points other than noting that team sustainability and longevity were priorities. The committee said they are open to all ideas, including a spending cap like that in Formula One.

    “We are amenable to whatever gets us to a conceptual new structure,” Newmark said.

    NASCAR’s counteroffer offered “a minimal increase in revenue and emphasis on cost-cutting,” Polk said.

    The team alliance was unanimous in that the only place left to cut costs is layoffs.

    “We’ve already had substantial cuts. We are doing more with less than we ever have in 30 years,” Alpern said.

    The battle over costs has simmered for years. In 2016, NASCAR adopted a charter system for 36 cars that is as close to a franchise model as possible in a sport that was founded by and independently owned by the France family. The charters at least gave the teams something of value to hold — or sell — and protect their investment in the sport.

    The team business model is still heavily dependant on sponsorship, which the teams must individually secure. Newmark said sponsorship covers between 60% to 80% of the budgets for all 16 chartered organizations.

    Because sponsorship is so vital, teams are desperate for financial relief elsewhere and have asked NASCAR for “distribution from the league to cover our baseline costs,” Newmark said.

    The current charter agreement expires at the end of the 2024 season, the same time that NASCAR’s current television deals expire.

    Although TV money is split between NASCAR, teams and the tracks, the committee found that the value of the teams is just 7% while the tracks and NASCAR have 93% of the value. Polk noted that in Formula One, all revenue is split 50-50 between the teams and series ownership.

    Mars Inc., which first entered NASCAR in 1990, late last year decided this season would be its last and JGR spent the last nine months trying to find a new sponsor to keep Kyle Busch, the only winner of multiple championships at the Cup level. Busch has since signed with Richard Childress Racing and will leave JGR after 15 seasons as Toyota’s winningest NASCAR driver.

    “We have become full-time fundraisers,” Alpern said. “Instead of working on our business, we’re raising money just to exist.”

    Polk said the teams will honor the charter agreements through 2024. But in negotiating a new charter agreement, the teams are demanding more.

    “NASCAR is a money-printing machine,” Polk said. “But the teams and the drivers are the ones putting on the show.”

    NASCAR is now under fire from nearly every angle as drivers remain angry over some recent penalties and the stiffness of the new Next Gen car blamed for causing unprecedented injuries. What should have been routine crashes into the wall have sidelined both Alex Bowman and Kurt Busch with concussions, and Cody Shane Ware opted out of Sunday’s race because of a broken foot.

    NASCAR has tested potential adjustments for the car and will present the findings to drivers Saturday morning ahead of practice at Charlotte.

    ———

    More AP auto racing: https://apnews.com/hub/auto-racing and https://twitter.com/AP—Sports

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  • Hong Kong shares soar 6%, leading Asian market gains

    Hong Kong shares soar 6%, leading Asian market gains

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    TOKYO — Hong Kong’s share benchmark soared more than 6% on Wednesday as Asian shares tracked gains on Wall Street.

    New Zealand’s share benchmark rose 0.8% after its central bank hiked its benchmark interest rate to 3.5%, saying inflation remained too high and labor scarce. The half-point rate hike was the fifth in a row made by the Reserve Bank of New Zealand since February.

    Statistics New Zealand said inflation was running at 7.3% and unemployment at 3.3%. The rate hike came on the same day the government announced its finances were in better shape than forecast.

    The Hang Seng in Hong Kong rose 6.0% to 18,108.69, catching up with gains elsewhere as markets reopened following a holiday Tuesday. Markets in mainland China remained closed for a holiday.

    Japan’s benchmark Nikkei 225 added 0.5% to 27,138.99. Australia’s S&P/ASX 200 climbed 1.7% to 6,815.70. Shares in Australia got a boost after the Reserve Bank of Australia ordered a smaller-than-expected 25 basis points interest rate hike on Tuesday.

    South Korea’s Kospi gained 0.4% to 2,217.88.

    Analysts said the latest data on South Korea’s inflation may push the Bank of Korea to raise interest rates at its meeting set for next week, but such hikes were expected to slow in pace as inflation is brought under control.

    “We expect headline inflation to rise again in October. Gasoline prices will likely decline further, but city gas and power rates were raised at the beginning of October and fresh food prices will also probably rise ahead of winter,” said a report by Robert Carnell, regional head of research Asia-Pacific at ING.

    On Wall Street, the Dow Jones Industrial Average climbed more 2.8% to 30,316.32. The S&P 500 had its best day since May 2020 on Tuesday as the market clawed back more of the ground it lost over the past miserable several weeks. It surged 3.1% to 3,790.93.

    Twitter surged 22.2% after Elon Musk said he would go ahead with his $44 billion acquisition of the social media company, abandoning efforts to get out of the deal.

    The Nasdaq composite climbed 3.3% to 11,176.41. Small company stocks also made solid gains, lifting the Russell 2000 advanced 3.9% to 1,775.77.

    The two-day rally has hit markets as investors look for signs that central banks might ease up on aggressive rate hikes aimed at taming the hottest inflation in four decades. The rate hike by Australia’s central bank was smaller than previous ones.

    In the U.S., a government report on job openings showed the number of available jobs in the U.S. plummeted in August compared with July. It’s a sign that businesses may pull back further on hiring and potentially cool chronically high inflation, which could allow the Federal Reserve to slow the pace of rate increases.

    Investors are watching closely as central banks raise interest rates to make borrowing more difficult and slow economic growth to try to tame inflation. Investors are hoping that they will eventually ease off their aggressive rate hikes and the move by Australia’s central bank is a hopeful sign for some.

    Investors worry that the rate hikes, especially the increases from the Fed, could go too far in slowing growth and send economies into a recession. The Fed has already pushed its key overnight interest rate to a range of 3% to 3.25%, up from virtually zero as recently as March.

    Economic growth is already slowing globally and the U.S. economy contracted during the first two quarters of the year, which is considered an informal signal of a recession.

    Wall Street will get a more detailed look at the employment situation in the U.S. this week, with a report on hiring by private companies due out Wednesday, the latest tally of weekly applications for unemployment benefits on Thursday and the government’s monthly jobs report for September on Friday.

    In energy trading, benchmark U.S. crude fell 16 cents to $86.39 a barrel in electronic trading on the New York Mercantile Exchange. It surged $2.89 to 86.52 on Tuesday. Brent crude, the international standard for pricing, lost 8 cents to $91.72 a barrel.

    In currency trading, the U.S. dollar rose to 144.19 from 144.12 Japanese yen. The euro cost 99.69 cents, down from 99.87 cents.

    ———

    Damian J. Troise, Alex Veiga and Nick Perry contributed to this report.

    Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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  • US starts fiscal year with record $31 trillion in debt

    US starts fiscal year with record $31 trillion in debt

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    WASHINGTON — The nation’s gross national debt has surpassed $31 trillion, according to a U.S. Treasury report released Tuesday that logs America’s daily finances.

    Edging closer to the statutory ceiling of roughly $31.4 trillion — an artificial cap Congress placed on the U.S. government’s ability to borrow — the debt numbers hit an already tenuous economy facing high inflation, rising interest rates and a strong U.S. dollar.

    And while President Joe Biden has touted his administration’s deficit reduction efforts this year and recently signed the so-called Inflation Reduction Act, which attempts to tame 40-year high price increases caused by a variety of economic factors, economists say the latest debt numbers are a cause for concern.

    Owen Zidar, a Princeton economist, said rising interest rates will exacerbate the nation’s growing debt issues and make the debt itself more costly. The Federal Reserve has raised rates several times this year in an effort to combat inflation.

    Zidar said the debt “should encourage us to consider some tax policies that almost passed through the legislative process but didn’t get enough support,” like imposing higher taxes on the wealthy and closing the carried interest loophole, which allows money managers to treat their income as capital gains.

    “I think the point here is if you weren’t worried before about the debt before, you should be — and if you were worried before, you should be even more worried,” Zidar said.

    The Congressional Budget Office earlier this year released a report on America’s debt load, warning in its 30-year outlook that, if unaddressed, the debt will soon spiral upward to new highs that could ultimately imperil the U.S. economy.

    In its August Mid-Session Review, the administration forecasted that this year’s budget deficit will be nearly $400 billion lower than it estimated back in March, due in part to stronger than expected revenues, reduced spending, and an economy that has recovered all the jobs lost during the multi-year pandemic.

    In full, this year’s deficit will decline by $1.7 trillion, representing the single largest decline in the federal deficit in American history, the Office of Management and Budget said in August.

    Maya MacGuineas, president of the Committee for a Responsible Federal Budget said in an emailed statement Tuesday, “This is a new record no one should be proud of.”

    “In the past 18 months, we’ve witnessed inflation rise to a 40-year high, interest rates climbing in part to combat this inflation, and several budget-busting pieces of legislation and executive actions,” MacGuineas said. “We are addicted to debt.”

    A representative from the Treasury Department was not immediately available for comment.

    Sung Won Sohn, an economics professor at Loyola Marymount University, said “it took this nation 200 years to pile up its first trillion dollars in national debt, and since the pandemic we have been adding at the rate of 1 trillion nearly every quarter.”

    Predicting high inflation for the “foreseeable future,” he said, “when you increase government spending and money supply, you will pay the price later.”

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  • Depositors storm 4 Lebanese banks, demanding their own money

    Depositors storm 4 Lebanese banks, demanding their own money

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    BEIRUT — Lebanese depositors, including a retired police officer, stormed at least four banks in the cash-strapped country Tuesday after banks ended a weeklong closure and partially reopened.

    As the tiny Mediterranean nation’s crippling economic crisis continues to worsen, a growing number of Lebanese depositors have opted to break into banks and forcefully withdraw their trapped savings. Lebanon’s cash-strapped banks have imposed informal limits on cash withdrawals. The break-ins reflect growing public anger toward the banks and the authorities who have struggled to reform the country’s corrupt and battered economy.

    Three-quarters of the population has plunged into poverty in an economic crisis that the World Bank describes as one of the worst in over a century. Meanwhile, the Lebanese pound has lost 90% of its value against the dollar, making it difficult for millions across the country to cope with skyrocketing prices.

    Ali al-Sahli, a retired officer who served in Lebanon’s Internal Security Forces, raided a BLC Bank branch in the eastern town of Chtaura, demanding $24,000 in trapped savings to transfer to his son, who owes rent and tuition fees in Ukraine.

    “Count the money, before one of you dies,” al-Sahli said in a video he recorded with one hand while waving a gun in the other.

    According to Depositors’ Outcry, a protest group, al-Sahli said he had offered to sell his kidney to fund his son’s expenses after the bank for months blocked him from transferring money. With his son owing months of rent and tuition, the retired officer reached out to the protest group for help.

    In the video he filmed on his cellphone, al-Sahli waved a handgun, threatening to shoot, if bank employees didn’t oblige. Employees struggled to calm him down, as protesters from the depositors group and bystanders watched from outside.

    Al-Sahli was unable to retrieve any of his money, and security forces arrested him.

    In the southern city of Tyre, Ali Hodroj broke into a Byblos Bank branch, demanding about $40,000 of his trapped savings to pay outstanding loans. He held a handgun and fired a warning shot, as security forces encircled the area. Hodroj retrieved about $9,000 in Lebanese pounds, following negotiations, with the head of a depositors advocacy group mediating.

    Hassan Moghnieh, head of the Association of Depositors in Lebanon, told The Associated Press that Hodroj’s family retrieved the money before he turned himself in to police outside the branch.

    In Hazmieh near the Lebanese capital, former Lebanese Ambassador to Turkey Georges Siam entered an Intercontinental Bank of Lebanon demanding some of his locked savings. The branch staff shuttered its doors while Siam continued to negotiate with management.

    And in the northern city of Tripoli, workers from the Qadisha Electricity Co. broke into a local First National Bank branch protesting banks deducting fees from their delayed salary payments. The Lebanese Army arrived at the site in Tripoli and patrolled the area.

    Some depositors’ protest groups, including the Depositors’ Outcry, have supported the break-ins and vowed to continue doing so.

    “We’re sending a message to the banks that their security measures won’t stop the depositors, because these depositors are all struggling,” Depositors’ Outcry media coordinator Moussa Agassi told the AP. “We’re trying to tell the bank owners to try to find a solution, and beefing up security measures isn’t going to keep them safe.”

    The general public has commended the angry depositors, some even hailing them as heroes, most notably Sally Hafez, who stormed a Beirut bank branch with a fake pistol and gasoline canister to take some $13,000 to fund her 23- year-old sister’s cancer treatment. Siam was among those who praised her. “We need more of that,” he said in a tweet last month. “The lady is a hero. God bless her.”

    The banks, however, have condemned the heists, and urged the Lebanese government to provide security personnel.

    The Association of Banks in Lebanon in a statement Tuesday said the government is primarily responsible for the financial crisis, and that the banks have been unjust targets. The banks in the statement urged the government to swiftly enact reforms and reach an agreement with The International Monetary Fund for a bailout program.

    The ABL in late September shuttered for one week after at least seven depositors stormed into branches and forcefully took their trapped savings that month, citing security concerns. The banks last week partially reopened a handful of branches, only welcoming commercial clients with appointments into their premises.

    Lebanon meanwhile has been struggling to restructure its financial sector and economy to reach an agreement with The International Monetary Fund for a bailout. The IMF has criticized Lebanese officials for their slow progress.

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  • Is Tesla seeing a slowdown in demand?

    Is Tesla seeing a slowdown in demand?

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    As recently as July, Tesla Chief Executive Elon Musk said the electric-car maker did not have a problem with customer demand, simply a problem making and shipping all the Model Ys and Model 3s consumers were ready to buy.

    That may no longer be true.

    Analysts see early signs of caution for the world’s most valuable car maker, including for its increasingly premium pricing, at a time when the global economy is slowing and expectations for global auto sales are being dialed back.

    Tesla has navigated supply-chain challenges better than most of its rivals and analysts expect it to post strong growth through next year as it expands output, but there are also indications it is being forced to respond to a tougher market.

    The most immediate concern: Tesla made more than 22,000 more electric vehicles (EVs) than it delivered to customers in the third quarter, data released this week showed. That is the first time it has had to finance that many cars in inventory.

    For most of the past three years, Tesla has been selling more EVs in a quarter than it can produce. The one notable exception was in early 2020, when the COVID-19 pandemic disrupted deliveries.

    While Tesla’s numbers remain low, building inventory has historically been a down-cycle indicator for automakers, forcing markdowns in past recessions of the kind Tesla has not yet faced.

    Tesla blamed transport issues for a delivery total that fell short of Wall Street expectations.

    If Tesla needs to hold more inventory in coming quarters to smooth deliveries and avoid the end-of-quarter rush that has been its norm, that would add to the $1.2bn in undelivered cars it held at the end of the second quarter.

    Analysts believe Tesla still has more demand than it can supply, the bedrock assumption behind its aggressive expansion plan over the next year as it ramps up production at factories in Shanghai, Berlin and Austin, Texas.

    Morgan Stanley analyst Adam Jonas said he believed Tesla did not face an immediate demand problem, but added a caution on pricing and Tesla’s ability to buck the economic cycle.

    “It would be unreasonable to assume that there is: (a) a limit to how much Tesla can continue to increase prices without demand suffering and (b) that the company was not exposed to decelerating macroeconomic growth,” he said in a research note.

    Tesla chief Musk has acknowledged that ‘demand falls off a cliff’ when prices shoot up [File: Bloomberg]

    Prices at ’embarrassing levels’

    Tesla’s average vehicle transaction price jumped 31 percent to $69,831 in August, compared with $53,132 at the start of 2021, according to the Kelley Blue Book. That outpaced industry-wide price hikes on new cars of 18 percent to $48,301 during the same period.

    The waiting time Tesla customers face between order and delivery has also been dropping in both the United States and China, Tesla’s largest markets. In China, that lag, one indicator of the supply-demand balance, has been cut four times since August to a minimum of a week for delivery.

    And Tesla, which has resisted marketing and incentives, offered Chinese buyers a rebate of 8,000 yuan ($1,124) if they took delivery before the end of September.

    Musk himself in July said Tesla prices were hitting “embarrassing levels” and that “demand falls off a cliff” when prices are rising to “some arbitrarily high level”.

    As Tesla pushes its own capacity expansion, it is running into a wave of new EV competition, especially in China from the likes of BYD, Nio and XPeng.

    A Tesla output plan reported last week by Reuters, before the third quarter delivery announcement, showed the automaker’s detailed plan to run and source its factories to hit output growth of 50 percent this year and next, a target just beyond the most bullish outside forecasts.

    The question of whether and how Tesla sees the supply-demand balance shifting will be central for investors when the company reports quarterly results on October 19.

    Evolving economic risks

    Musk has offered an evolving view on economic risks. In June, he told Tesla staff he had a “super bad feeling” about the economy, a reason he cited to pause hiring at the time. In August, he told investors he expected a “mild recession” that could last up to 18 months.

    Guidehouse Insights analyst Sam Abuelsamid said Tesla needed to get higher production from its newer factories in Austin and Berlin. Musk had earlier compared the start of production in those plants to “gigantic money furnaces.”

    “Tesla could end up running into some financial challenges in the third and fourth quarters (of 2023), if those factories continue to be underutilised,” Abuelsamid said.

    Fitch Solutions, which provides research on country risk and industries, said on Tuesday that it expected global auto sales to drop 5.4 percent in 2022, before bouncing back only partly in 2023.

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