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  • Why Kwasi Kwarteng could not survive the battle with the Bank of England

    Why Kwasi Kwarteng could not survive the battle with the Bank of England

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    Jeremy Hunt was appointed U.K. chancellor of the exchequer on Friday after Kwasi Kwarteng was sacked in response to the market’s rebellion over his tax-cutting budget.

    Kwarteng lasted just 38 days, the second shortest tenure for the office in history. It was Prime Minister Liz Truss who wielded the knife. But, arguably, it was Bank of England Governor Andrew Bailey who set up the hit.

    Simply put, in the fight between monetary and fiscal policy, Threadneedle Street has taken out Downing Street. Once Bailey stood his ground, Kwarteng was toast.

    To explain, a quick recap. Kwarteng’s recent budget containing £45 billion in tax cuts, mainly funded by more debt issuance, came at a time when government borrowing costs were already rising as the Bank of England raised interest rates to combat inflation at 40-year highs around 10%.

    Indeed, Kwarteng’s proposals were seen juicing up spending just as the BoE was trying to damp demand in its efforts to push inflation back to the 2% target. The market recognized this dichotomy and rebelled, realizing that it faced more debt sales and even tighter monetary policy.

    The resulting selling by over-leveraged pension funds caused a crash in gilt prices and surging yields to multi-decade highs, threatening to break the U.K pension system. Bailey stepped in to calm the markets by pledging a bond buying package of up to £65 billion — right around the time when he had planned to actually sell gilts as part of quantitative tightening.

    It worked, mostly. But, keen to ensure the City of London would undertake the necessary deleveraging quickly, and it would not be infected with moral hazard, Bailey said the support would end on Friday October 14th.

    And this week he stressed it would definitely end on Friday.

    So, to the present. What Bailey’s insistence meant was that the BoE, via monetary policy, was done helping. If the bond market was still to be worried about the situation when it opened on Monday, then it would have to be the fiscal side that changed.

    And for the fiscal side to shift it would mean the removal of the tax-cutting elements that so rattled investors. Some, like the axing of the top rate of personal tax, had already been reversed. But more needed to be done to try and recover a sense of fiscal prudence.

    And that, inevitably, meant the removal of the author of the budget: Kwarteng.

    Shortly after his departure, Truss announced that she was seeking to calm markets and had decided to cancel the corporation tax cut that had been a cornerstone of the budget. The proposal, delivered just 21 days ago, was now an ideological husk.

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  • Inflation expectations rise in October as consumer mood stays somber

    Inflation expectations rise in October as consumer mood stays somber

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    The numbers: Consumer sentiment rose slightly to 59.8 in October even as Americans’ expectations for inflation worsened, according to a Friday survey.

    The University of Michigan’s gauge of consumer attitudes added 1.2 index points from 58.6 in September.

    Economists were expecting a reading of 59, according to a Wall Street Journal poll.

    Consumer expectations for inflation over the next year rose to 5.1% from September’s one-year low of 4.7%, while expectations for inflation over the next 5 years ticked up to 2.9% from 2.7% last month.

    Big picture: Americans are facing rising costs for key items like food and shelter as well as the impact of higher interest rates and the growing chance of a serious economic slowdown.

    “Sentiment is now 9.8 points above the all-time low reached in June, but this improvement remains tentative, as the expectations index declined by 3% from last month,” wrote Joanne Hsu, director of the survey, on Friday. “Continued uncertainty over the future trajectory of prices, economies, and financial markets around the world indicate a bumpy road ahead for consumers.”

    Key details: A  gauge of consumer’s views of current conditions rose in October to 65.3 from 59.7 in September, while an indicator of expectations for the next six months fell to 56.2 from 58 last month.

    Market reaction: U.S. stocks were trading mixed Friday morning, with the Dow Jones Industrial Average
    DJIA,
    -1.34%

    posting gains and the S&P 500
    SPX,
    -2.37%

    index showing slight losses.

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  • U.K. bond yields continue to drop as Kwarteng set to be fired with further tax-cut reversals expected

    U.K. bond yields continue to drop as Kwarteng set to be fired with further tax-cut reversals expected

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    U.K. bond yields continued to drop on Friday, on expectations the U.K. government will further backtrack on its tax cut plans and that U.K. Prime Minister Liz Truss will fire Chancellor of the Exchequer Kwasi Kwarteng.

    Kwarteng was photographed entering Downing Street after flying home early from the International Monetary Fund meeting in Washington, D.C. Truss’s office has announced a press conference. Both The Times and the Financial Times newspapers reported Kwarteng will be fired.

    The yield on the 30 year gilt
    TMBMKGB-30Y,
    4.265%

    — which was high as 5.1% as recently as Wednesday — fell 28 basis points to 4.27%.

    The yield on the 10-year gilt
    TMBMKGB-10Y,
    3.947%

    dropped 25 basis points to 3.95%. Yields move in the opposite direction to prices.

    The pound
    GBPUSD,
    -0.75%

    fetched $1.1273, down from $1.1331 on Thursday.

    Kwarteng in recent interviews has done nothing to douse speculation the U.K. government will further pare its tax-cut plans.

    Speculation of further U-turns has centered around corporate tax cuts in particular. Other tax cuts that could be reversed include the planned personal income-tax reduction to 19% from 20%.

    The government has already relented on a planned cut for those making above £150,000. Financial markets gyrated after Kwarteng announced its mini-budget, which called for some £45 billion in tax cuts on top of capping energy prices. Investec Securities estimates the total cost of the stimulus to be on the order of £150 billion.

    A medium-term fiscal plan, as well as an independent forecast from the Office of Budget Responsibliitiy, is due at the end of October.

    The Bank of England’s emergency bond-buying plan — designed to ease tensions for pension funds — is due to expire on Friday.

    The central bank says it’s purchased £17.8 billion in securities.

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  • Supreme Court refuses to get involved in Trump’s Mar-a-Lago case

    Supreme Court refuses to get involved in Trump’s Mar-a-Lago case

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    WASHINGTON (AP) — The Supreme Court on Thursday rejected former President Donald Trump’s plea to step into the legal fight over the FBI search of his Florida estate.

    The justices did not otherwise comment in turning away Trump’s emergency appeal.

    Trump had pressed the court on an issue relating to classified documents seized in the search authorized by a federal judge of Mar-a-Lago.

    The Trump team was asking the justices to overturn a lower court ruling and permit an independent arbiter, or special master, to review the roughly 100 documents with classified markings that were taken in the Aug. 8 search of Mar-a-Lago.

    A three-judge panel from the Atlanta-based U.S. Court of Appeals for the 11th Circuit last month limited the special master’s review to the much larger tranche of non-classified documents. The judges, including two Trump appointees, sided with the Justice Department, which had argued there was no legal basis for the special master to conduct his own review of the classified records.

    But Trump’s lawyers said in their application to the Supreme Court that it was essential for the special master to have access to the classified records to “determine whether documents bearing classification markings are in fact classified, and regardless of classification, whether those records are personal records or Presidential records.”

    The Justice Department said in a Supreme Court filing that Trump’s request had no merit.

    The FBI says it seized roughly 11,000 documents, including about 100 with classification markings, during its search. The Trump team asked a judge in Florida, Aileen Cannon, to appoint a special master to do an independent review of the records.

    Cannon subsequently assigned a veteran Brooklyn judge, Raymond Dearie, to review the records and segregate those that may be protected by claims of attorney-client privilege and executive privilege. The Justice Department objected to Dearie’s ability to review the classified records, prompting the 11th Circuit to side with the department.

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  • Japan’s Sony, Honda jointly making EVs for 2026 US delivery

    Japan’s Sony, Honda jointly making EVs for 2026 US delivery

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    TOKYO — A new electric car company that brings together two big names in Japanese business, Honda and Sony, officially kicked off Thursday, with both sides stressing their common values of taking up challenges and serving people’s needs.

    The electric vehicle from Sony Honda Mobility Inc. will go on sale in 2025, with deliveries coming first in the U.S. in early 2026, and in Japan later that year, Chief Executive Yasuhide Mizuno told reporters. Pre-orders start 2025.

    In March, Sony Group Corp. and Honda agreed to set up the 50-50 joint venture, with the idea of bringing together Honda’s expertise in autos, mobility technology and sales with Sony’s imaging, network, sensor and entertainment expertise.

    Production will take place at a Honda plant in the U.S., but details such as pricing, platform and the kind of battery to be used were not disclosed. Production volume was also not given, but officials said this was a special model and not intended for massive sales.

    Mizuno, who is from Honda Motor Co., said the collaboration brings together hardware and software to deliver an emotionally satisfying experience on the move.

    “It was necessary to take a totally new approach,” Mizuno told reporters in Tokyo. “We want to make this completely new.”

    The U.S. was chosen for the launch because electric vehicles were already popular there, Japan came second as Honda’s home market, and other markets, including Europe, will follow, but no dates were set, he said.

    Izumi Kawanishi, the Sony executive who became Chief Operating Officer at Sony Mobility, said partners will be added to the project.

    Demand for “zero-emissions” vehicles is expected to grow worldwide amid concerns about climate change and sustainability.

    Sony, which makes the PlayStation video-game console and has movie and music businesses, showed an electric car concept at the CES gadget show in Las Vegas two years ago, and has been eager to find an auto partner.

    Honda has electric vehicles in its lineup, although not as plentiful as do some rivals, like Ford Motor Co. or Nissan Motor Co. Tokyo-based Honda has teamed up with General Motors to share platforms for EVs in North America, but the products are not yet on sale.

    ———

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

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  • ‘Ecstatic’ WR Harry in line to make Bears debut

    ‘Ecstatic’ WR Harry in line to make Bears debut

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    LAKE FOREST, Ill. — Chicago Bears wide receiver N’Keal Harry is in line to make his 2022 season debut against the Washington Commanders on Thursday.

    Harry was activated off injured reserve on Monday after a 21-day window opened last week for him to return to the 53-man roster. The wide receiver was listed as a full participant during Wednesday’s practice and does not carry a designation on the final injury report of the week.

    “It’s been hard just sitting here watching, especially once I started going to the games and standing on the sidelines,” Harry said. “It just brings you so much closer to the actual game. So I’m excited. I’m ecstatic.”

    Harry underwent surgery to repair a high ankle sprain suffered during training camp in early August. He was placed on IR after cut-down day and remained there for Chicago’s first four games of the season.

    Bears coach Matt Eberflus said Chicago would have to “wait and see” whether Harry would be active for “Thursday Night Football,” but the receiver said he’s able to play if called upon.

    The addition of Harry, a 6-foot-4, 225-pound wideout, would provide Chicago with something in the passing game that it has yet to display.

    “Those big guys are open,” Eberflus said. “You can throw a deep pass to him, they’re open and they go get it, go up and climb and go get the ball. Any time we can add another guy like that to the mix, it’s going to create competition and it’s going to create more athletic ability on the football field for our offense.”

    Harry, a 2019 first-rounder, was traded to Chicago from New England in July for a 2024 seventh-round pick. He caught 22 passes for 184 yards and no touchdowns during his final season with the New England Patriots in 2021.

    Bears cornerback Jaylon Johnson is also expected to be available against Washington after missing Chicago’s past two games, against the Giants and Vikings, with a quad injury.

    Johnson was listed as a full participant for all three days of practice this week, although Monday and Tuesday were only walk-throughs.

    “I felt good about him last week, and he’s looking better and better and better,” Eberflus said of Johnson. “So we really like where he is. He’s been going through the workout today, working with speed, and we’re excited with where he is.”

    Meanwhile, the Commanders will be without two key offensive starters for a second consecutive game as tight end Logan Thomas (calf) and rookie receiver Jahan Dotson (hamstring) were ruled out. So, too, was inconsistent corner William Jackson III (back).

    Jackson was removed in the first half of Sunday’s 21-17 loss to Tennessee; coach Ron Rivera said it was based on his decision, and Jackson said his back made it difficult to play.

    Thomas and Dotson are two of Washington’s best red zone threats — Dotson leads the Commanders with three red zone scores this season. That was an issue late in the loss to the Titans on Sunday when they reached the 2-yard line and failed to score.

    ESPN’s John Keim contributed to this report.

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  • Trump angrily lashes out after his deposition is ordered

    Trump angrily lashes out after his deposition is ordered

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    NEW YORK — Former President Donald Trump angrily lashed out Wednesday, calling the nation’s legal system a “broken disgrace” after a judge ruled he must answer questions under oath next week in a defamation lawsuit lodged by a writer who says he raped her in the mid-1990s.

    He also called the 2019 lawsuit by E. Jean Carroll, a longtime advice columnist for Elle magazine, “a hoax and a lie.”

    The outburst late in the day came hours after U.S. District Judge Lewis A. Kaplan in Manhattan rejected a request by his lawyers to delay a deposition scheduled for Oct. 19.

    Kaplan is presiding over the case in which Carroll said Trump raped her in the dressing room of a Manhattan Bergdorf Goodman store in the mid-1990s. He called the lawsuit “a complete con job.”

    “I don’t know this woman, have no idea who she is, other than it seems she got a picture of me many years ago, with her husband, shaking my hand on a reception line at a celebrity charity event,” Trump said.

    “She completely made up a story that I met her at the doors of this crowded New York City Department Store and, within minutes, ‘swooned’ her. It is a Hoax and a lie, just like all the other Hoaxes that have been played on me for the past seven years,” he said.

    Then he grumbled: “Now all I have to do is go through years more of legal nonsense in order to clear my name of her and her lawyer’s phony attacks on me. This can only happen to ‘Trump’!”

    Carroll is scheduled to be deposed on Friday.

    Roberta Kaplan, Carroll’s attorney, said she was pleased with the judge’s ruling and looked forward to filing new claims next month “and moving forward to trial with all dispatch” after New York state passed the Adult Survivors Act, allowing her to sue for damages for the alleged rape without the statute of limitations blocking it.

    After Trump’s statement was released, a spokesperson for Kaplan’s firm, Kaplan Hecker & Fink, said the “latest statement from Donald Trump obviously does not merit a response.”

    Trump’s legal team has tried various legal tactics to delay the lawsuit and prevent him from being questioned by Carroll’s attorneys. But Judge Kaplan wrote that it was time to move forward, especially given the “advanced age” of Carroll, 78, and Trump, 76, and perhaps other witnesses.

    “The defendant should not be permitted to run the clock out on plaintiff’s attempt to gain a remedy for what allegedly was a serious wrong,” he wrote.

    Carroll’s lawsuit claims that Trump damaged her reputation in 2019 when he denied raping her. Trump’s legal team has been trying to quash the lawsuit by arguing that the Republican was just doing his job as president when he denied the allegations, including when he dismissed his accuser as “not my type.”

    Trump doubled down on the comment in his statement Wednesday, saying: “And, while I am not supposed to say it, I will. This woman is not my type! She has no idea what day, what week, what month, what year, or what decade this so-called ‘event’ supposedly took place. The reason she doesn’t know is because it never happened, and she doesn’t want to get caught up with details or facts that can be proven wrong.”

    Whether Trump will remain the defendant in the original lawsuit is a key question because if Trump was acting within the scope of his duties as a federal employee, the U.S. government would become the defendant in the case.

    The 2nd U.S. Circuit Court of Appeals said in a split decision last month that Trump was a federal employee when he commented on Carroll’s claims. But it asked another court in Washington to decide whether Trump’s public statements occurred during the scope of his employment.

    Kaplan, the judge, said Trump has repeatedly tried to delay the collection of evidence in the lawsuit.

    “Given his conduct so far in this case, Mr. Trump’s position regarding the burdens of discovery is inexcusable,” he wrote. “As this Court previously has observed, Mr. Trump has litigated this case since it began in 2019 with the effect and probably the purpose of delaying it.”

    The judge noted that the collection of evidence for the lawsuit to go to trial was virtually concluded, except for the depositions of Trump and Carroll.

    “Mr. Trump has conducted extensive discovery of the plaintiff, yet produced virtually none himself,” Kaplan said. “Completing these depositions — which already have been delayed for years — would impose no undue burden on Mr. Trump, let alone any irreparable injury.”

    The judge also said the deposition could be useful when Carroll’s lawyer next month files the new lawsuit.

    Whether the rape occurred is central to the defamation claims, as well as the anticipated new lawsuit, the judge said.

    ———

    Associated Press Writer Jill Colvin reported from Washington

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  • Fed more worried about risks of ‘unacceptably high’ inflation than overdoing rate hikes, meeting minutes show

    Fed more worried about risks of ‘unacceptably high’ inflation than overdoing rate hikes, meeting minutes show

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    Calling inflation “unacceptably high,” Federal Reserve leaders saw their strategy of fighting price pressures aggressively as less risky to the economy than doing too little, minutes of the bank’s last meeting show.

    The Fed approved another jumbo-size increase in U.S. interest rates at its Sept. 21-22 meeting. It also signaled plans for another pair of big increases before year-end in a surprise to Wall Street
    DJIA,
    -0.10%
    .

    The minutes of the Fed’s meeting underscore that top officials were disappointed and worried about persistently high inflation.

    “A sizable portion of the economic activity has yet to display much response,” the Fed minutes said. “Inflation had not yet responded appreciably to a policy tightening.”

    While some senior Fed officials also worried the bank could go too far and damage the economy, the majority appeared to believe it was vital for the central bank to squelch inflation, even if that meant keeping rates high for a prolonged period.

    “Many participants emphasized that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action,” the minutes said.

    The Fed predicts the economy will eventually slow as rates rise, but it noted the labor market remains extremely tight.

    Fed officials also expressed concern that oil prices could rise again, supply chains would not heal as quickly as expected and that rising wages could exacerbate inflation.

    “Inflation was declining more slowly than [Fed officials] had been anticipating,” the minutes said.

    The internal Fed debate has also playing out publicly since the last meeting.

    Some senior officials such as Atlanta Federal Reserve President Raphael Bostic hope the bank will make enough progress in its fight against inflation to “pause” rate hikes at the end of this year.

    Fed critics contend the bank is going to go too far and could plunge the economy into a second recession in four years. A pause would allow the Fed to see how much its prior rate hikes have succeeded in lowering the rate of inflation, they say.

    Others such as Minneapolis Fed chief Neel Kashkari and Cleveland Fed boss Loretta Mester say the Fed needs to take whatever steps necessary to quell inflation as soon as possible.

    Failing to do so, they contend, would make it even harder to get prices back under control if Americans come to view high inflation as the norm. That would do even more damage to the economy in the long run.

    Jennifer Lee, senior economist at BMO Capital Market, downplayed the debate and said the Fed in unified on its next few steps.

    “The Federal Reserve is pretty much in sync and is not going to be easing anytime soon,” she said.

    Since March the Fed has lifted a key short-term interest rate from near zero to an upper end of 3.25%. And the central bank has telegraphed plans to raise the so-called fed funds rate to as high as 4.75% by next year.

    Rising U.S. interest rates has done little so far to douse inflation.

    The rate of inflation, using the Fed’s preferred PCE price index, rose at a yearly rate of 6.2% as of August. That’s a long way off from the Fed’s forecast for inflation to fall to 2.8% in 2023 and 2.3% by 2024.

    The higher cost of borrowing has only chilled a few parts of the economy, most notably housing.

    The rate on a 30-year mortgage has surged above 7% to a 16-year high from less than 3% one year ago. The result has been a slowdown in home buying and construction and softer sales of home furnishings.

    Most consumer and business loans are influenced by the fed funds rate.

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  • Wall Street’s ‘fear gauge’ is flashing a warning that stocks could be about to fall off a cliff

    Wall Street’s ‘fear gauge’ is flashing a warning that stocks could be about to fall off a cliff

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    The CBOE Volatility Index has captured the attention of market analysts this year as a key relationship between Wall Street’s “fear gauge” and the S&P 500 index appears to have broken down.

    Typically, the VIX
    VIX,
    -0.27%
    ,
    a popular measure of the stock market’s expectation of volatility based on S&P 500 index options, and S&P 500 index itself
    SPX,
    -0.01%

    share an inverse correlation. When the S&P 500 falls to new multiyear lows, like it did early this week, the VIX climbs to new highs. However, this relationship has broken down this year. Most recently, the VIX failed to take out its highs from June as the S&P 500 logged its lowest closing low since September 2020 this week.

    A similar pattern emerged as stocks fell to what were then their lowest levels of the year in June.

    The dynamic can be seen in a chart produced by Katie Stockton, a market strategist at Fairlead Strategies, which can be found below.


    FAIRLEAD STRATEGIES

    But this trend of lower highs for the VIX isn’t the only technical indicator that has caught market strategists’ attention.

    The VIX is on the cusp of achieving a “golden cross” — a term used by market technicians to denote when the 50-day moving average of a given asset, exchange rate or index climbs above the 200-day moving average.

    In the past, these “golden crosses” have preceded sharp downturns in stocks. One occurred in September 2008, just before stock-market volatility exploded in response to Lehman Brothers’ bankruptcy, according to Tyler Richey, co-editor of the Sevens Report and a stock-market strategist who closely follows the Vix.

    “Using history as a guide, this is the kind of tipping point where things could get ugly,” Richey said.

    The previous VIX “golden cross” occurred nearly one year ago in December 2021. The S&P 500, Dow Jones Industrial Average
    DJIA,
    +0.19%

    and Nasdaq Composite
    COMP,
    -0.08%

    reached their cycle peaks little more than one month later.

    As of the close of trading on Tuesday, the 50-day moving average for the VIX stood at 25.76, while the 200-day moving average stood at 25.86.

    While they’re not as closely followed as the VIX, the CBOE Nasdaq Volatility Index and the CBOE Dow Jones Industrial Average Volatility Index are also on the cusp of reaching the “golden cross” milestone.

    Stockton said investors “shouldn’t find any solace” in the latest technical signals emanating from the VIX. However, she told MarketWatch that she doesn’t typically follow the golden cross indicator since the VIX is an “oscillating” gauge not a “trending” one.

    As for what might be driving the pattern of lower highs in the VIX, Richey said it could be a result of “real money” investors like mutual funds and pension funds liquidating their holdings, instead of using options-based hedging strategies to protect their downside risk.

    As of Wednesday morning, the Vix and other stock-market volatility gauges were mixed as the S&P 500 and the Dow
    DJIA,
    +0.19%

    shook off early losses, while the Nasdaq
    COMP,
    -0.08%

    remained mired in the red.

    Looking ahead, Stockton said she believes 35 is the next key “resistance” level for the VIX, which is just below the index’s highs from June.

    Should the volatility gauge surmount that level, Stockton said she wouldn’t expect the selling in stocks to stop until the VIX hits 50.

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  • Israel says it’s reached maritime border deal with Lebanon

    Israel says it’s reached maritime border deal with Lebanon

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    JERUSALEM (AP) — Israel’s prime minister said Tuesday that the country has reached an “historic agreement” with neighboring Lebanon over their shared maritime border after months of U.S.-brokered negotiations.

    At stake are rights over exploiting undersea natural gas reserves in areas of the eastern Mediterranean that the two countries — which do not have diplomatic relations — claim.

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

    The agreement is expected to enable additional natural gas production in the Mediterranean. Lebanon hopes gas exploration will help lift its country out of its spiraling economic crisis.

    The final draft of the agreement will be brought before Israel’s caretaker government for approval, just weeks before the country goes to the polls for the fifth time in under four years.

    Lebanon and Israel have been officially at war since Israel’s creation in 1948 and both countries claim some 860 square kilometers (330 square miles) of the Mediterranean Sea.

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  • Stocks could fall ‘another easy 20%’ and next drop will be ‘much more painful than the first’, Jamie Dimon says

    Stocks could fall ‘another easy 20%’ and next drop will be ‘much more painful than the first’, Jamie Dimon says

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    JPMorgan Chase & Co.
    JPM,
    -0.93%

    CEO Jamie Dimon warned investors on Monday that he expects markets to remain volatile for the foreseeable future, and that the S&P 500 could easily fall another 20% as the Federal Reserve continues to raise interest rates.

    Asked by CNBC about where he expects stocks to bottom, Dimon said he couldn’t say for sure, but that it’s easy to imagine the S&P 500 falling by another 20% as volatile markets become even more “disorderly” as rates continue to climb.

    “It may have a ways to go. It really depends on that soft-landing, hard-landing thing and since I don’t know the answer to that it’s hard to answer…it could be another easy 20%,” Dimon said.

    “The next 20% could be much more painful than the first. Rates going up another 100 basis points will be a lot more painful than the first 100 because people aren’t used to it, and I think negative rates, when all is said and done, will have been a complete failure.”

    Europe is already in a recession, Dimon said, and he expects a recession in the U.S. will arrive within “six to nine months.”

    An eventual economic downturn in the U.S. could range from “very mild to quite hard.” Ultimately, it will depend on the outcome of the war in Ukraine, Dimon added.

    Since it’s impossible to “guess” exactly how bad things might get for both the economy and markets, investors and companies should “be prepared” for the worst-case scenario, Dimon said.

    Companies should start shoring up their balance sheets now, Dimon said, adding that “if you need money, go raise it.”

    He also warned that cracks are starting to appear in credit markets, and that a full-blown panic could emerge somewhere in the universe of global debt.

    “The likely place you might see more of a crack or a little bit more of a panic is in credit markets. And it might be ETFs, it might be a country, it might be something you don’t suspect. If you make a list of all the credit crises…you cannot predict where they came from, although I think you can predict that this time it will happen,” he said.

    After assuring the public that the Fed would do its best to minimize the fallout for the U.S. economy, Federal Reserve Chairman Jerome Powell has recently adjusted his rhetoric to suggest that Americans likely won’t be spared from another recession as the Fed’s hopes for a “soft landing” dim.

    In September, the central bank cut its projections for U.S. economic growth to just 0.2% for 2022 and 1.2% in 2023.

    JPMorgan is already becoming “very conservative” with its lending standards, Dimon added. The New York-based megabank is expected to report third-quarter earnings on Friday.

    Dimon’s comments helped to drive U.S. stocks to their lows of the session on Monday as the main indexes were on track for a fourth day of losses. In recent trade, the S&P 500
    SPX,
    -0.75%

    was down 0.3%, the Dow Jones Industrial Average
    DJIA,
    -0.32%

    flat, and the Nasdaq Composite
    COMP,
    -1.04%

    off 0.5% as major indexes bounced off session lows.

    The longtime bank chief warned earlier this year that he saw an “economic hurricane” headed for the U.S. In August, he warned that chances of a “harder recession” were on the rise.

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  • Nasdaq closes at 2-year low after stocks fail to shake off Fed rate-hike gloom

    Nasdaq closes at 2-year low after stocks fail to shake off Fed rate-hike gloom

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    AP

    U.S. stocks finished with losses on Monday, sending the Nasdaq Composite to its lowest close in more than two years, after investors failed to shake off worries about further Federal Reserve rate hikes and JPMorgan Chase & Co.’s Jamie Dimon warned of a potential 20% decline in the S&P 500.

    How stocks traded
    • The Dow
      DJIA,
      -0.32%

      closed down by 93.91 points, or 0.3% at 29,202.88.

    • The S&P 500
      SPX,
      -0.75%

      finished down by 27.27 points, or 0.8%, at 3,612.39.

    • The Nasdaq Composite gave up 110.30 points, or 1%, to end at 10,542.10 — the lowest close since July 28, 2020.

    Monday’s declines exacerbated losses which occurred at the end of last week. On Friday, the Dow fell 630 points, or 2.1%, the S&P 500 declined 2.8%, and the Nasdaq Composite dropped 3.8%. The Nasdaq Composite was down 31.9% for the year to date through Friday.

    What drove markets

    Major indexes finished lower for a fourth consecutive session on Monday as concerns about additional rate hikes by the Fed continued to damp sentiment. Dow industrials, the S&P 500 and the Nasdaq all fell to session lows after a CNBC interview with Dimon, chief executive of JPMorgan
    JPM,
    -0.93%
    ,
    who said the S&P 500 could fall by “another easy 20%” from current levels.

    Read: Here are the 5 times traders and stock-market investors got fooled by Fed ‘pivot’ hopes in past year

    Soft data a week ago had raised hopes that the Fed would soon pause its monetary tightening cycle in its battle to suppress multidecade high inflation, and the market subsequently rebounded off its near two-year lows. But a strong jobs report on Friday crushed that Fed “pivot” narrative and stocks plunged again.

    On Monday, the CBOE Vix index
    VIX,
    +3.48%
    ,
    a gauge of expected S&P 500 volatility, sat at 32.15, well above its long-term average of 20.

    “The low interest-rate environment forced investors to chase yield and bid up the asset prices too high. Eventually the market is fair and asset values have to achieve some sense of common ground or base level valuation. So it was inevitable that this valuation correction would happen,” said Siddharth Singhai, chief investment officer for New York-based hedge fund IronHold Capital.

    “Panic will swing the market towards excessive pessimism and then the valuations will be too cheap. That hasn’t happened yet. Upcoming rate hikes will most likely be a catalyst for panic, however,” he wrote in an email to MarketWatch on Monday.

    Coming into Monday’s session, trading had been expected to be somewhat thinned by the Columbus Day and Indigenous People’s Day holiday, which closed the Treasury market.

    Now, traders are looking toward more data later in the week for further guidance on Fed thinking and equity valuations. The U.S. producer price numbers will be released on Wednesday and the consumer prices report on Thursday, the last of their kind before the Fed’s policy decision on Nov. 2.

    Then on Friday, third-quarter corporate earnings season really kicks into gear when big banks like JPMorgan
    JPM,
    -0.93%

    and Citigroup
    C,
    -1.40%

    present their numbers.

    Read: JPMorgan, Citi, Morgan Stanley and Wells Fargo kick off bank earnings season in choppy waters and S&P 500 would be in an ‘earnings recession’ if not for this one booming sector — but that may not last long

    Investors were also keeping an eye on the strong U.S. dollar, which is considered a drag on the earnings of U.S. multinationals. The dollar index
    DXY,
    +0.25%

    rose 0.3% to 113.12 as the euro intermittently broke below $0.97 after Russia sent missiles into cities across Ukraine.

    See: A rampaging U.S. dollar is wreaking havoc in financial markets. Here’s why it’s so hard to stop it.

    “We expect a lot more volatility in markets for the remainder of the year as the inevitability of higher rates sinks in and the economic consequences become more pronounced,” said Arthur Laffer Jr., president of Nashville-based Laffer Tengler Investments. Fed Chairman Jerome Powell “will not be a very popular person but it seems his legacy is focused on fighting any resurgence of 1970s inflation in the U.S. at all costs.”

    Companies in focus
    • Rivian Automotive Inc.
      RIVN,
      -7.28%

      intends to recall about 13,000 vehicles due to a possible safety issue that has so far been found to have affected several units, the company said Friday night. Shares finished down by 7.3%.

    • Tesla Inc.
      TSLA,
      -0.05%

      reported record monthly sales of China-made electric vehicles in September, as it continues to ramp production in the world’s number-two economy. The electric-vehicle maker delivered 83,135 EVs from its Shanghai plant in September, an 8% rise from August, according to a report by the China Passenger Car Association. Tesla shares nonetheless finished down by less than 0.1%.

    — Jamie Chisholm contributed to this article.

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  • Panthers fire Matt Rhule after 1-4 start; Wilks takes over

    Panthers fire Matt Rhule after 1-4 start; Wilks takes over

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    CHARLOTTE, N.C. — The Carolina Panthers fired coach Matt Rhule on Monday, ending the former Baylor coach’s tenure five games into his third losing season.

    Rhule, the first NFL coach to be fired this season, went 11-27 with Carolina. The Panthers fell to 1-4 with Sunday’s 37-15 home loss to San Francisco as 49ers fans made Bank of America Stadium their East Coast home.

    Defensive pass game coordinator and secondary coach Steve Wilks will serve as interim coach for the rest of the season. The 53-year-old Wilks spent one year as Arizona’s head coach in 2018, going 3-13.

    Rhule did not immediately respond to voice and text messages on Monday.

    The 47-year-old Rhule was lured away from Baylor with a seven-year, guaranteed $62 million contract by David Tepper, the second-wealthiest owner in the NFL.

    Tepper was initially patient with Rhule following Sunday’s loss, but grew increasingly agitated and changed his mind on Monday.

    Rhule said after the game he didn’t want to discuss his job security because he didn’t want make it about himself.

    Rhule’s teams went 5-11 in 2020 and 5-12 last year.

    The Panthers hoped Rhule could turn things around in his third year as he did at Baylor and at Temple before that. The team had constant turnover at quarterback under Rhule, with Teddy Bridgewater as the starter in 2020 and Sam Darnold and Cam Newton getting starts last year.

    The Panthers traded for Baker Mayfield this offseason. But the 2018 No. 1 overall draft pick has been awful, ranking last in the NFL in ESPN’s total quarterback rating. Mayfield has completed 54.9% of his passes and is averaging fewer than 200 yards passing per game with four touchdowns and four interceptions.

    The poor play at the game’s most important position put unsustainable pressure on Carolina’s defense. Under Rhule, the Panthers were 1-27 when allowing an opponent to score 17 or more points.

    Mayfield injured his ankle in the loss to San Francisco and was in a walking boot after the game. It’s unclear if he will miss any time.

    Mayfield was one of several players who spoke out in support of Rhule.

    “We’re fine in the locker room when it comes to that,” Mayfield said. “There are a lot of plays that we just have to flat-out make — and he can’t do that. He can’t go make plays for us. He can’t do the execution for us.”

    This marks the second time in four years Tepper has fired a coach during the season. He let go of Ron Rivera, the winningest coach in franchise history, with four games left in 2019 with the Panthers at 5-7.

    The Panthers have not been to the playoffs since 2017 — the year before Tepper took over — and have not won a playoff game since winning the NFC championship in 2015 to reach the franchise’s second Super Bowl.

    ———

    More AP NFL: https://apnews.com/hub/nfl and https://twitter.com/AP—NFL

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  • Stock futures struggle for direction amid Fed rate-hike gloom

    Stock futures struggle for direction amid Fed rate-hike gloom

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    U.S. stock futures were looking for direction Monday as worries about Fed rate rises persisted, with major indexes trading not far off their 2022 lows set at the end of last month.

    Investors were looking ahead to key inflation data due later this week, as well as minutes of the Fed’s September policy meeting and the start of earnings season.

    How stocks are trading
    • S&P 500 futures
      ES00,
      -0.04%

      erased earlier losses to tick up 3.50 points, or 0.1%, to 3,656.75.

    • Dow Jones Industrial Average futures
      YM00,
      +0.34%

      rose 63 points, or 0.2%, to 29,416.

    • Nasdaq 100 futures
      NQ00,
      -0.54%

      were down 9.50 points, or 0.1%, at 11,092.

    On Friday, the Dow Jones Industrial Average
    DJIA,
    +0.11%

    fell 630 points, or 2.1%, the S&P 500
    SPX,
    -0.31%

    declined 2.8%, and the Nasdaq Composite
    COMP,
    -2.61%

    dropped 3.8%. The Nasdaq Composite was down 31.9% for the year to date through Friday.

    What’s driving markets

    U.S. stocks were in line for a fourth consecutive session of losses as concerns about additional interest rate rises by the Federal Reserve continued to dampen sentiment.

    Trading was expected to be somewhat thinned by the Columbus Day and Indigenous People’s Day holiday, which closed the Treasury market.

    Soft data a week ago raised hopes that the Fed would soon pause its monetary tightening cycle in its battle to suppress multi-decade high inflation, and the market subsequently rebounded off its near two-year lows. But a strong jobs report on Friday crushed that Fed “pivot” narrative and stocks plunged again.

    See: Why stock-market investors keep falling for Fed ‘pivot’ talk — and what it will take to put in a bottom

    The 5-day round trip saw an average move for the S&P 500 of 1.9%. Little surprise then that the CBOE Vix index
    VIX,
    +5.20%
    ,
    a gauge of expected S&P 500 volatility, sat on Monday at 31.4, more than 50% above its long term average of 20.

    “The market response to Friday’s U.S. jobs report was characteristic of a bear market in equities. U.S. indices reversed sharply in the absence of the bad economic news required to shake the Fed’s hawkish determination,” said Ian Williams, strategist at Peel Hunt.

    Now traders will look toward more data due later in the week for further guidance on Fed thinking and equity valuations.

    The U.S. producer price numbers will be released on Wednesday and the consumer prices report on Thursday, the last of their kind before the Fed’s rate-setting meeting on Nov. 2.

    Then on Friday, third-quarter corporate earnings season really kicks into gear when big banks like JPMorgan
    JPM,
    +0.47%

    and Citigroup
    C,
    -0.31%

    present their numbers.

    Read: JPMorgan, Citi, Morgan Stanley and Wells Fargo kick off bank earnings season in choppy waters

    “The estimated earnings growth rate for the S&P 500 is 2.4%. If 2.4% is the actual
    growth rate for the quarter, it will mark the lowest earnings growth rate reported by the index since Q3 2020 (-5.7%),” said John Butters, senior earnings analyst at Factset.

    Further hurting risk appetite on Monday was additional gains for the dollar, whose strength is considered a drag on the earnings of U.S. multinationals. The dollar index
    DXY,
    +0.28%

    rose 0.3% to 113.15 as the euro broke back below $0.97 after Russia sent missiles into cities across Ukraine.

    Companies in focus
    • Rivian Automotive Inc.
      RIVN,
      -8.25%

      intends to recall about 13,000 vehicles due to a possible safety issue that has so far been found to have impacted several units, the company said Friday night. Shares were down 7.1% in premarket trade.

    • Tesla Inc.
      TSLA,
      +0.06%

      reported record monthly sales of China-made electric vehicles in September, as it continues to ramp production in the world’s number-two economy. The electric-vehicle maker delivered 83,135 EVs in September, an 8% rise from August, according to a report by the China Passenger Car Association on Sunday. Tesla shares were down 0.2%.

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  • Putin says military strikes against Ukraine were retaliation for bridge attack

    Putin says military strikes against Ukraine were retaliation for bridge attack

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    MOSCOW — Russian President Vladimir Putin said that a series of strikes Monday across Ukraine came in retaliation against the Ukrainian attack on a bridge to Crimea and other attacks in Russia that he described as “terrorist” actions.

    Putin said the Russian military launched precision weapons from the air, sea and ground to target key energy and military command facilities.

    He warned that if Ukraine continues to mount “terrorist attacks” on Russia, Moscow’s response will be “tough and proportionate to the level of threats.”

    The intense, hours-long attack marked a sudden military escalation by Moscow. It came a day after Putin called the explosion Saturday on the huge bridge connecting Russia to its annexed territory of Crimea a “terrorist act” masterminded by Ukrainian special services.

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  • U.K. to bring forward budget review to Oct. 31

    U.K. to bring forward budget review to Oct. 31

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    The U.K. Treasury announced Monday it was bringing forward the publication of an independent review into its budget plans to the end of October.

    Bond yields were still higher on the day, but off their highest levels. The 2-year gilt
    TMBMKGB-02Y,
    4.189%

    yield , as high as 4.23%, was at 4.18%, while the 30-year gilt
    TMBMKGB-30Y,
    4.520%
    ,
    which had a yield as high as 4.56%, was at 4.51%.

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  • Russia says truck bomb damages key bridge to Crimea

    Russia says truck bomb damages key bridge to Crimea

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    KHARKIV, Ukraine (AP) — Russian authorities said that a truck bomb on Saturday caused a fire and the collapse of a section of a bridge linking Russia-annexed Crimea with Russia — a key supply artery for Moscow’s faltering war effort in southern Ukraine.

    The attack on the bridge comes a day after Russian President Vladimir Putin turned 70, dealing him a humiliating blow that could lead him to up the ante in his war on Ukraine.

    Russia’s National Anti-Terrorism Committee said that the truck bomb caused seven railway cars carrying fuel to catch fire, resulting in a “partial collapse of two sections of the bridge.” The committee didn’t immediately apportion blame.

    The Crimean Peninsula holds symbolic value for Russia and is key to sustaining its military operations in the south. If the bridge is made inoperable, it would make it significantly more challenging to ferry supplies to the peninsula. While Russia seized the areas north of Crimea early during the invasion and built a land corridor to it along the Sea of Azov, Ukraine is pressing a counteroffensive to reclaim them.

    The bridge has train and automobile sections. Russia’s National Anti-Terrorism Committee specified that the explosion and fire led to the collapse of the two sections of one of the two links of the automobile bridge, while another link was intact.

    Authorities have suspended commuter train traffic across the bridge until further notice. Putin was informed about the explosion and he ordered the creation of a government panel to deal with the emergency.

    The 19-kilometer (12-mile) bridge across the Kerch Strait linking the Black Sea and the Sea of Azov is the longest in Europe. It has provided an essential link to the Crimean Peninsula, which Russia annexed from Ukraine in 2014. Ukrainian officials have repeatedly threatened to strike the bridge.

    Russia opened the first part of the span to car traffic in May 2018. The parallel bridge for rail traffic opened the following year.

    The $3.6 billion project is a tangible symbol of Moscow’s claims on Crimea. It was Russia’s only land link to the peninsula until Russian forces seized more Ukrainian territory on the northern end of the Sea of Azov in heavy fighting, particularly around the city of Mariupol, earlier this year.

    In August, Russia suffered a series of explosions at an airbase and munitions depot in Crimea, which underlined its vulnerability.

    The truck bomb on the bridge occurred hours after explosions rocked the eastern Ukrainian city of Kharkiv early Saturday, sending towering plumes of smoke into the sky and triggering a series of secondary explosions.

    Kharkiv Mayor Ihor Terekhov said on Telegram that the early-morning explosions were the result of missile strikes in the center of the city. He said that the blasts sparked fires at one of the city’s medical institutions and a nonresidential building. There were no immediate reports of casualties.

    The blasts came hours after Russia concentrated attacks in its increasingly troubled invasion of Ukraine on areas it illegally annexed, while the death toll from earlier missile strikes on apartment buildings in the southern city of Zaporizhzhia rose to 14.

    On Friday, the Norwegian Nobel Committee awarded the Nobel Peace Prize to human rights organizations in his Russia and Ukraine, and to an activist jailed in Belarus, an ally of Moscow.

    Berit Reiss-Andersen, the committee’s chair, said the honor went to “three outstanding champions of human rights, democracy and peaceful coexistence,” though it was widely seen as a rebuke to Putin and his conduct of Europe’s worst armed conflict since World War II.

    Putin signed documents on Wednesday to illegally claim four regions of Ukraine as Russian territory, including the Zaporizhzhia region that is home to Europe’s largest nuclear power plant, whose reactors were shut down last month.

    That move was foreshadowed by Russia’s annexation of Crimea in March 2014, which was carried out after Moscow alleged residents of the peninsula had voted to join with Russia. That move was widely condemned, and prompted sanctions from the U.S. and the European Union.

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  • Dow books 630-point drop after strong jobs data rattles investors, but stocks cement weekly gains

    Dow books 630-point drop after strong jobs data rattles investors, but stocks cement weekly gains

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    U.S. stocks finished sharply lower Friday, but still booked their best weekly gains in a month, after September jobs data showed an unexpected fall in the unemployment rate that’s anticipated to reinforce the Federal Reserve’s resolve to keep tightening monetary policy.

    Investors also weighed a profit warning at a leading microchip maker ahead of next week’s increase in quarterly earnings results.

    What happened
    • The Dow Jones Industrial Average
      DJIA,
      -2.11%

      fell 630.15 points, or 2.1%, ending at 29,296.79, but off the session low of 29,142.66.

    • The S&P 500
      SPX,
      -2.80%

      dropped 104.86 points, or 2.8%, closing at 3,639.66.

    • The Nasdaq Composite
      COMP,
      -3.80%

      shed 420.91 points, or 3.8%, to finish at 10,652.40.

    Stocks posted back-to-back losses, trimming weekly gains, but recorded their best weekly gains since Sept. 9, according to Dow Jones Market Data.

    Read: Will the stock market be open on Columbus Day?

    What drove markets

    Stocks recorded sharp losses Friday after the Labor Department said the U.S. economy added 263,000 jobs in September, while the unemployment rate declined to 3.5% from an August reading of 3.7%. Average hourly earnings rose 0.3%.

    Still, a powerful rally earlier in the week boosted all three major stock indexes to weekly gains, a departure from three straight weekly losses, according to Dow Jones Market Data.

    “It’s manic. We are all on edge,” said Kent Engelke, chief economic strategist at Capitol Securities Management, of the sharp market swings.

    “Any piece of good news is a cause for an explosive rally,” Engelke said by phone. On the flip side, he pegged technology-based trading “in an illiquid and emotional market” as exacerbating Friday’s selloff.

    “It’s a reflection that people have re-entered the mind-set that the Fed is going to be raising rates at a rapid clip, probably for longer than what they might have suspected at the start of the week,” said Robert Pavlik, a senior portfolio manager at Dakota Wealth Management, by phone.

    Pavlik expects the Fed to keep tightening financial conditions to try to head off inflation. “But once we turn the corner, and the economy slows down, the Fed probably will be more aggressive in cutting rates on the way down.”

    In addition, the Fed has been “draining liquidity from the system at a remarkable pace,” wrote Rick Rieder, BlackRock’s chief investment officer of global fixed income, in a Friday client note, while pointing to an astounding $1.3 trillion decline in the central bank’s balance sheet since the December 2021 peak.

    Pavlik at Dakota Wealth said he anticipates the Fed will start slowing interest rate hikes by mid-next year, which likely means continued pressure for the stock market, particularly with a backdrop of big oil-price
    CL00,
    +5.37%

    gains this week after global crude producers voted to cut monthly production and with the U.S. dollar’s
    DXY,
    +0.44%

    surge this year against a basket of rival currencies.

    U.S. crude oil prices climbed for a fifth day in a row on Friday to settle at $92.64 a barrel, while booking at 16.5% weekly gain.

    New York Fed President John Williams said Friday that benchmark interest rates likely need to hit 4.5% over time. The Fed’s policy rate now sits in a 3%-3.25% range, up from a zero-0.25% range a year ago.

    The benchmark 10-year Treasury rate
    TMUBMUSD10Y,
    3.889%

    climbed to 3.883% Friday, as the key metric used to gauge the affordability of credit for businesses, household and the economy posted 10 straight weeks of gains, according to Dow Jones Market Data.

    Read: Bond markets facing historic losses grow anxious of Fed that ‘isn’t blinking yet’

    Investors continued to hope for relief on the inflation front and will be monitoring next week’s release of the September consumer-price index, as well as corporate earnings season as it picks up.

    Companies in focus
    • Twitter Inc.
      TWTR,
      -0.43%

      shares fell 0.4% Friday after a judge delayed a looming trial between the company and Elon Musk to allow the Tesla Inc.
      TSLA,
      -6.32%

      CEO more time to close his $44 billion acquisition of the social media platform.

    • Besides the jobs report, investors weighed a profit warning from microchip maker Advanced Micro Devices Inc. AMD, which said the PC market weakened significantly during the quarter. AMD shares fell 13.9%, and rivals including Nvidia Corp. NVDA and Intel Corp. INTC also closed lower.

    • U.S. cannabis stocks were choppy Friday, with the AdvisorShares Pure US Cannabis ETF
      MSOS,
      -2.80%

      ending lower, following steep gains earlier in the week after President Joe Biden said the U.S. would consider de-scheduling cannabis from its current position as a Schedule 1 narcotic under federal law.

    —Steven Goldstein contributed reporting to this article

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  • Treasury yields climb as U.S. unemployment drops and wage growth remains strong

    Treasury yields climb as U.S. unemployment drops and wage growth remains strong

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    Treasury yields rose Friday after the U.S. September payrolls report showed a surprise decline in unemployment as well as strong growth in wages, making a pivot in Fed policy less likely.

    What’s happening
    What’s driving markets

    The U.S. created 263,000 nonfarm jobs in September — roughly in line with expectations — with the unemployment rate falling to 3.5% from 3.7%, while the year-over-year growth rate in hourly wages was 5%.

    The unemployment decline was a surprise to economists who had anticipated a steady jobless picture.

    Federal Reserve Gov. Christopher Waller late on Thursday said he didn’t expect the jobs report to change anyone’s thinking at the central bank. New York Fed President John Williams will have the opportunity to comment on the data when he speaks at 10 a.m. Eastern.

    Ahead of the release, strategists at ING said the price action this week suggests the market has moved away from the early Fed policy pivot idea. “We may well have seen the structural top at 4% for the 10 year, or thereabouts, but we also feel we’re liable to see it at least one more time. There is a large fall in market rates to come, but we’re not at that point just yet,” they added.

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  • Soccer’s worst disasters: Same mistakes by police, fans die

    Soccer’s worst disasters: Same mistakes by police, fans die

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    Police fire tear gas into a crowd of soccer fans, who panic and rush for the exits. There are so many trying to escape and some of the gates are locked. The stadium becomes a death trap.

    People are trampled in the desperation. Others suffocate, crushed by the weight of bodies around them.

    They are the details of last weekend’s soccer game in Malang, Indonesia, where 131 people, some of them children, died in a crush after police fired tear gas at fans of home team Arema FC. It’s also the story of the Estadio Nacional disaster in Lima, Peru, in 1964, when 328 died in a panic sparked by tear gas. It was the same in Accra, Ghana, in 2001, when 126 died.

    Soccer’s three worst stadium tragedies occurred over a 60-year span but are so strikingly similar that its clear lessons haven’t been learned.

    The world’s most popular game has historic problems of hooliganism, and Indonesia has its share of team rivalries that have led to violence. But Arema had the only fans in the stadium. Just them and the police.

    “Not a single rival supporter. How can that match kill more than 100 people?” said a sobbing Gilang Widya Pramana, the president of Arema.

    The blame has landed at the feet of the police, like it did in Lima, and Accra, and elsewhere.

    Some Arema supporters rushed the field in anger at their team’s loss. Yet, major soccer tragedies have almost always been caused, experts say, by a heavy-handed overreaction by police and poor stadium safety. Firing tear gas in enclosed stadiums is universally condemned by security experts. Locking exits goes against all safety regulations.

    “Actually, fans killing other fans is an incredibly rare thing,” said Prof. Geoff Pearson of the University of Manchester, an expert on the policing of soccer fans. “When we look at pretty much all the major (soccer) tragedies, I can’t think of an exception off the top of my head, all of these have been caused by unsafe stadiums or practices, or inappropriate policing.”

    Indonesia, a country of 273 million, is due to host next year’s Under-20 World Cup. It is soccer’s “sleeping giant,” said James Montague, a journalist and author who traveled there to watch games with fans.

    Montague found a passion for soccer that matches, even outstrips, the game’s leading countries. He said he also found “largely decrepit” stadiums, corruption and mismanagement everywhere and the kind of police that would “smash me in the face with a baton just because I’m standing there watching a football match.”

    Soccer was believed to have reached a turning point 33 years ago with the Hillsborough disaster, where 97 Liverpool fans died as a result of a crush at a stadium in Sheffield, England, in 1989. Police were eventually found to have been to blame for letting fans into an already overcrowded section but it took 27 years before the police’s lies and coverups — blaming drunken fans for the deaths — were fully exposed.

    Hillsborough led to sweeping reforms in English soccer, making stadiums safer and demanding police change.

    That echoes in Indonesia this week. So do calls for justice. Indonesian authorities have laid charges against six people for the crush, three of them police officers.

    But a lack of ultimate accountability — “the state closes ranks,” Montague said — has also been a repeat feature.

    A BBC report on the 50th anniversary of the Lima disaster found that only one police officer had been sentenced for soccer’s deadliest stadium tragedy, getting 30 months in prison. More than 30 years after Hillsborough, one official has been convicted of a safety offense and fined. Police were acquitted after Africa’s worst sports disaster in Accra despite an inquiry that blamed them for the reckless firing of tear gas and rubber bullets.

    Soccer authorities stand helpless. FIFA, the governing body of world soccer based in Switzerland, has recommendations that tear gas should never be used in stadiums. But soccer bodies can’t dictate the tactics used by a country’s security forces, even if it’s at a soccer game.

    “It is all down to the organized culture of the police,” said Ronan Evain, executive director of Football Supporters Europe, a group that represents fans’ interests.

    Soccer’s inability to interfere in domestic security matters is underlined by the situation in Egypt, where a 2012 stadium riot that killed 74 people came amid a decade of harsh crackdowns on fans by security forces. Dozens of fans have been killed in encounters with police at and away from games, and some fan groups were declared terrorist organizations because they were critical of the Egyptian government, which has been widely accused of human rights violations.

    The African soccer body is even based in Cairo but has no authority to intervene.

    It’s the police, Pearson said, who have to be “willing to admit their mistakes and learn from their mistakes.” But that kind of institutional change is grudging.

    Hillsborough did bring effective reform for England, but it stands almost alone. Lessons were lost after Lima and Accra, and the same can happen again after Indonesia.

    Only days after last weekend’s tragedy, police fired tear gas and rubber bullets at soccer fans outside a stadium in Argentina and one person died in the chaos.

    George Lawson worked at the Ghana Broadcasting Corporation when he raced to the unfolding tragedy at Ohene Djan Stadium in Accra 21 years ago. He remembered being stunned by the sight of dozens of bodies lying on the ground. He recalled his country coming to a standstill.

    But while an inquiry demanded the stadium be totally upgraded, the only lasting change has been a bronze statue erected outside as a memorial, with the inscription: “I am my brother’s keeper.”

    “When things happen like this, there’s a hullabaloo,” Lawson said. “And after some time people forget about it.”

    ———

    AP Sports Writer Graham Dunbar in Geneva contributed to this report.

    ———

    AP World Cup coverage: https://apnews.com/hub/world-cup and and https://twitter.com/AP—Sports

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