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Tag: northern europe

  • A robot is killing weeds by zapping them with electricity | CNN Business

    A robot is killing weeds by zapping them with electricity | CNN Business

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    London
    CNN Business
     — 

    On a field in England, three robots have been given a mission: to find and zap weeds with electricity before planting seeds in the cleared soil.

    The robots — named Tom, Dick and Harry — were developed by Small Robot Company to rid land of unwanted weeds with minimal use of chemicals and heavy machinery.

    The startup has been working on its autonomous weed killers since 2017, and this April launched Tom, its first commercial robot which is now operational on three UK farms. The other robots are still in the prototype stage, undergoing testing.

    Small Robot says robot Tom can scan 20 hectares (49 acres) a day, collecting data which is then used by Dick, a “crop-care” robot, to zap weeds. Then it’s robot Harry’s turn to plant seeds in the weed-free soil.

    Using the full system, once it is up and running, farmers could reduce costs by 40% and chemical usage by up to 95%, the company says.

    According to the UN Food and Agriculture Organization six million metric tons of pesticides were traded globally in 2018, valued at $38 billion.

    “Our system allows farmers to wean their depleted, damaged soils off a diet of chemicals,” says Ben Scott-Robinson, Small Robot’s co-founder and CEO.

    Small Robot says it has raised over £7 million ($9.9 million). Scott-Robinson says the company hopes to launch its full system of robots by 2023, which will be offered as a service at a rate of around £400 ($568) per hectare. The monitoring robot is placed at a farm first and the weeding and planting robots delivered only when the data shows they’re needed.

    To develop the zapping technology, Small Robot partnered with another UK-based startup, RootWave.

    “It creates a current that goes through the roots of the plant through the soil and then back up, which completely destroys the weed,” says Scott-Robinson. “We can go to each individual plant that is threatening the crop plants and take it out.”

    “It’s not as fast as it would be if you went out to spray the entire field,” he says. “But you have to bear in mind we only have to go into the parts of the field where the weeds are.” Plants that are neutral or beneficial to the crops are left untouched.

    Small Robot calls this “per plant farming” — a type of precise agriculture where every plant is accounted for and monitored.

    For Kit Franklin, an agricultural engineering lecturer from Harper Adams University, efficiency remains a hurdle.

    “There is no doubt in my mind that the electrical system works,” he tells CNN Business. “But you can cover hundreds of hectares a day with a large-scale sprayer … If we want to go into this really precise weed killing system, we have to realize that there is an output reduction that is very hard to overcome.”

    But Franklin believes farmers will adopt the technology if they can see a business case.

    “There’s a realization that farming in an environmentally friendly way is also a way of farming in an efficient way,” he says. “Using less inputs, where and when we need them, is going to save us money and it’s going to be good for the environment and the perception of farmers.”

    As well as reducing the use of chemicals, Small Robot wants to improve soil quality and biodiversity.

    “If you treat a living environment like an industrial process, then you are ignoring the complexity of it,” Scott-Robinson says. “We have to change farming now, otherwise there won’t be anything to farm.”

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  • Hong Kong protester allegedly beaten at Chinese consulate in UK | CNN

    Hong Kong protester allegedly beaten at Chinese consulate in UK | CNN

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    Hong Kong
    CNN
     — 

    Police in Manchester have launched an investigation after a Hong Kong pro-democracy protester was allegedly beaten on the grounds of the Chinese consulate in the English city.

    A pro-democracy group called Hong Kong Indigenous Defence Force had staged a protest outside the consulate in the northern city on Sunday, in opposition to the Chinese Communist Party Congress happening the same day in Beijing.

    Video of the incident shared widely on social media shows a confrontation breaking out on the sidewalk outside the consulate, with loud shouts heard as people rush towards the gated entrance. The video then appears to show one Hong Kong protester being dragged through the gate into the consulate grounds and beaten by a group of men.

    The video appears to show local police entering the grounds of the consulate to break up the violence.

    Hong Kong Indigenous Defence Force alleges that Chinese consular staff were involved in the alleged beating, and that the protester was taken to hospital in stable condition.

    Greater Manchester Police said Monday they were investigating the incident, in which a man “suffered several physical injuries.”

    “We understand the shock and concern that this incident will have caused not just locally, but for those much further afield who may have connections with our communities here in Greater Manchester,” assistant chief constable Rob Potts said in a statement.

    “Shortly before 4 p.m. a small group of men came out of the building and a man was dragged into the Consulate grounds and assaulted. Due to our fears for the safety of the man, officers intervened and removed the victim from the Consulate grounds.”

    “The man – aged in his 30s – suffered several physical injuries and remained in hospital overnight for treatment. He is continuing to receive our support for his welfare.”

    The statemented added that currently “no arrests have been made” and that the investigation was ongoing.

    A spokesperson for British Prime Minister Liz Truss described the incident as “deeply concerning.”

    On Monday, Chinese Foreign Ministry spokesperson Wang Wenbin said he was “not aware of the situation.”

    “Chinese Embassy and consulates in the UK have always abided by the laws of the countries where they are stationed,” he said in a regular news briefing. “We also hope that the British side, in accordance with the provisions of the Vienna Convention on Diplomatic Relations, will facilitate the normal performance of the duties of the Chinese Embassy and consulates in the UK.”

    CNN approached the Chinese Embassy in London for comment but did not receive an immediate response.

    Video of the scuffle has been shared online by multiple UK lawmakers, who have called for an investigation into the alleged involvement of Chinese consular staff.

    “The UK Government must demand a full apology from the Chinese Ambassador to the UK and demand those responsible are sent home to China,” ruling Conservative Party lawmaker Iain Duncan Smith wrote on Twitter.

    Conservative Party member of Parliament Alicia Kearns also tweeted on Sunday that authorities “need to urgently investigate,” and that the Chinese Ambassador should be summoned. “If any official has beaten protesters, they must be expelled or prosecuted,” she wrote.

    Both lawmakers have previously been vocal critics of the Chinese Communist Party.

    Prominent Hong Kong activists have also spoken out. Nathan Law, a former lawmaker and pro-democracy figure who fled to the UK in 2020, tweeted: “If the consulate staff responsible are not held accountable, Hong Kongers would live in fear of being kidnapped and persecuted.” He urged the British government to “investigate and protect our community and people in the UK.”

    Britain is home to large numbers of Hong Kong citizens, many of whom left the territory following the introduction of a sweeping national security law in 2020 that critics say stripped the former British colony of its autonomy and precious civil freedoms, while cementing Beijing’s authoritarian rule.

    According to an online statement by organizers of Sunday’s protest, around 60 demonstrators had gathered outside the Manchester consulate to protest “the re-election of Xi Jinping.”

    The Chinese Communist Party Congress, a twice-a-decade leadership reshuffle and meeting of the party’s top officials, kicked off on Sunday. Chinese leader Xi, who came to power in 2012, is widely expected to break with convention and take on a third term, paving the way for lifelong rule.

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  • Two teens and a child among 10 people killed in Ireland gas station explosion | CNN

    Two teens and a child among 10 people killed in Ireland gas station explosion | CNN

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    CNN
     — 

    Ten people, including two teenagers and a young child, were killed in Friday’s explosion at a gas filling station in the northwest of Ireland, local authorities said.

    Irish police said that among the 10 dead in the blast in Donegal ere four men, three women, a teenage boy, a teenage girl, and another younger girl. Police said earlier that eight people had been injured.

    The explosion happened shortly after 3 p.m. local time on Friday in County Donegal at the Applegreen petrol station on the outskirts of the village of Creeslough.

    Police said they believed it was a “tragic accident,” and the largest number of civilian casualty seen in decades in the region.

    Superintendent David Kelly said: “This is a tragedy for our community. There are families left devastated.

    “I want to offer, on behalf of myself and my colleagues that attended the scene, our very sincere condolences.

    Speaking on Saturday morning to the national broadcaster RTE, Irish Prime Minister, known as the Taoiseach, Micheál Martin expressed his condolences.

    Martin said: “It is absolutely devastating and quite shocking in terms of the enormity of this tragedy, the scale of it. An explosion ripping through the normality of a community, with people going to the shop, the normal toing and froing of life.

    “Community is what defines our people and we are witnessing a terrible tragedy in a wonderful community,” he said.

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  • How meltdown in a $1 trillion market brought the UK to the brink of a financial crisis | CNN Business

    How meltdown in a $1 trillion market brought the UK to the brink of a financial crisis | CNN Business

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    London
    CNN Business
     — 

    Pension funds are designed to be dull. Their singular goal — earning enough money to make payouts to retirees — favors cool heads over brash risk takers.

    But as markets in the United Kingdom went haywire last week, hundreds of British pension fund managers found themselves at the center of a crisis that forced the Bank of England to step in to restore stability and avert a broader financial meltdown.

    All it took was one big shock. Following finance minister Kwasi Kwarteng’s announcement on Friday, Sept. 23 of plans to ramp up borrowing to pay for tax cuts, investors dumped the pound and UK government bonds, sending yields on some of that debt soaring at the fastest rate on record.

    The scale of the tumult put enormous pressure on many pension funds by upending an investing strategy that involves the use of derivatives to hedge their bets.

    As the price of government bonds crashed, the funds were asked to pony up billions of pounds in collateral. In a scramble for cash, investment managers were forced to sell whatever they could — including, in some cases, more government bonds. That sent yields even higher, sparking another wave of collateral calls.

    “It started to feed itself,” said Ben Gold, head of investment at XPS Pensions Group, a UK pensions consultancy. “Everyone was looking to sell and there was no buyer.”

    The Bank of England went into crisis mode. After working through the night of Tuesday, Sept. 27, it stepped into the market the next day with a pledge to buy up to £65 billion ($73 billion) in bonds if needed. That stopped the bleeding and averted what the central bank later told lawmakers was its worst fear: a “self-reinforcing spiral” and “widespread financial instability.”

    In a letter to the head of the UK Parliament’s Treasury Committee this week, the Bank of England said that if it hadn’t interceded, a number of funds would have defaulted, amplifying the strain on the financial system. It said its intervention was essential to “restore core market functioning.”

    Pension funds are now racing to raise money to refill their coffers. Yet there are questions about whether they can find their footing before the Bank of England’s emergency bond-buying is due to end on Oct. 14. And for a wider range of investors, the near-miss is a wake-up call.

    For the first time in decades, interest rates are rising quickly around the world. In that climate, markets are prone to accidents.

    “What the previous two weeks have told you is there can be a lot more volatility in markets,” said Barry Kenneth, chief investment officer at the Pension Protection Fund, which manages pensions for employees of UK companies that become insolvent. “It’s easy to invest when everything’s going up. It’s a lot more difficult to invest when you’re trying to catch a falling knife, or you’ve got to readjust to a new environment.”

    The first signs of trouble appeared among fund managers who focus on so-called “liability-driven investment,” or LDI, for pensions. Gold said he started to receive messages from worried clients over the weekend of Sept. 24-25.

    LDI is built on a straightforward premise: Pensions need enough money to pay what they owe retirees well into the future. To plan for payouts in 30 or 50 years, they buy long-dated bonds, while purchasing derivatives to hedge these bets. In the process, they have to put up collateral. If bond yields rise sharply, they are asked to put up even more collateral in what’s known as a “margin call.” This obscure corner of the market has grown rapidly in recent years, reaching a valuation of more £1 trillion ($1.1 trillion), according to the Bank of England.

    When bond yields rise slowly over time, it’s not a problem for pensions deploying LDI strategies, and actually helps their finances. But if bond yields shoot up very quickly, it’s a recipe for trouble. According to the Bank of England, the move in bond yields before it intervened was “unprecedented.” The four-day move in 30-year UK government bonds was more than twice what was seen during the highest-stress period of the pandemic.

    “The sharpness and the viciousness of the move is what really caught people out,” Kenneth said.

    The margin calls came in — and kept coming. The Pension Protection Fund said it faced a £1.6 billion call for cash. It was able to pay without dumping assets, but others were caught off guard, and were forced into a fire sale of government bonds, corporate debt and stocks to raise money. Gold estimated that at least half of the 400 pension programs that XPS advises faced collateral calls, and that across the industry, funds are now looking to fill a hole of between £100 billion and £150 billion.

    “When you push such large moves through the financial system, it makes sense that something would break,” said Rohan Khanna, a strategist at UBS.

    When market dysfunction sparks a chain reaction, it’s not just scary for investors. The Bank of England made clear in its letter that the bond market rout “may have led to an excessive and sudden tightening of financing conditions for the real economy” as borrowing costs skyrocketed. For many businesses and mortgage holders, they already have.

    So far, the Bank of England has only bought £3.8 billion in bonds, far less than it could have purchased. Still, the effort has sent a strong signal. Yields on longer-term bonds have dropped sharply, giving pension funds time to recoup — though they’ve recently started to rise again.

    “What the Bank of England has done is bought time for some of my peers out there,” Kenneth said.

    Still, Kenneth is concerned that if the program ends next week as scheduled, the task won’t be complete given the complexity of many pension funds. Daniela Russell, head of UK rates strategy at HSBC, warned in a recent note to clients that there’s a risk of a “cliff-edge,” especially since the Bank of England is moving ahead with previous plans to start selling bonds it bought during the pandemic at the end of the month.

    “It might be hoped that the precedent of BoE intervention continues to provide a backstop beyond this date, but this may not be sufficient to prevent a renewed vigorous sell-off in long-dated gilts,” she wrote.

    As central banks jack up interest rates at the fastest clip in decades, investors are nervous about the implications for their portfolios and for the economy. They’re holding more cash, which makes it harder to execute trades and can exacerbate jarring price moves.

    That makes a surprise event more likely to cause massive disruption, and the specter of the next shocker looms. Will it be a rough batch of economic data? Trouble at a global bank? Another political misstep in the United Kingdom?

    Gold said the pension industry as a whole is better prepared now, though he concedes it would be “naive” to think there couldn’t be another bout of instability.

    “You would need to see yields rise more quickly than we saw this time,” he said, noting the larger buffers funds are now amassing. “It would require something of absolutely historic proportions for that not to be enough, but you never know.”

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  • USWNT defeated by England in front of record Wembley crowd under shadow of Yates report | CNN

    USWNT defeated by England in front of record Wembley crowd under shadow of Yates report | CNN

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    CNN
     — 

    The United States Women’s National Team (USWNT) was defeated 2-1 by England at Wembley in an international friendly that spotlighted both the increasing popularity of women’s football and its failures.

    Billed as a match-up between the world and European champions, both teams had displayed impressive form in recent months – the USWNT arrived on a 21-game unbeaten streak and England on its own 23-game unbeaten run that included winning Euro 2022.

    But the build-up to the match was dominated by matters off the pitch as, back in the US, women’s professional soccer had been left reeling from an independent investigation that found systemic abuse and misconduct within the sport.

    “It’s been an extremely difficult week for everybody and I’m proud of the players for even being on the field and playing the game,” US head coach Vltako Andonovski said after the match, according to the BBC. “It wasn’t easy.

    “I applaud their bravery and I applaud their fearless mentality and relentlessness. Once again they showed that nothing can stop them playing the game that they love. I’m very proud of them and hoping we never have to go through that again.”

    Before kickoff, both teams came together, holding a banner that read, “Protect the Players,” while the Wembley Arch was illuminated with teal light to show support for the victims of abuse.

    “First and foremost, if the players aren’t protected, then you don’t have a game, you don’t have anything. So for us to put that at the forefront of such an important night and game was really amazing and powerful for all of us,” American soccer star Megan Rapinoe said after the game, per Sky Sports.

    Throughout the match, both teams also wore teal armbands in a further display of support.

    “To take the time to do that, get the armbands – I think they were flown in from California and a little tight on some people, I’m happy I have a skinny arm – just an incredible show by all of us, some things are bigger than the game and we were able to put that on display,” Rapinoe added.

    “Obviously the report came out about our league but … it’s probably a global issue as well. To anyone in the stands tonight who has been affected by it, obviously all the players, to just show that kind of support on a night like this.”

    And the night showcased the increasing reach of women’s football as 76,893 fans gathered at Wembley Stadium – the highest attended friendly match in USWNT history – to watch both sides beginning to fine tune their preparations for next year’s World Cup.

    England took the lead after just nine minutes, as Beth Mead played a ball into the box that eluded US defender Alana Cook and landed at the feet of Lauren Hemp, who guided the ball into the goal.

    Although England continued to threaten, the American defense held firm and the USWNT tied the scores less than 20 minutes later as Sophia Smith capitalized on a mistake to fire the ball past England goalkeeper Mary Earps.

    “[Smith] seemed like she made a name for herself. But we can’t forget she’s 21 years old,” US head coach Vltako Andovnoski told media after the game, according to CBS Sports.

    “To come in an environment like this, and to be a difference maker … it just shows the potential that she has. I think that we haven’t seen the best of her [yet].

    “These are games that will expedite Soph’s development, and I’m excited to see what she’s going to look like six months from now, nine months from now.”

    Sophia Smith is one of the USWNT's rising stars.

    But England restored its lead soon after when the VAR intervened to award the home side a penalty after a high foot from Hailie Mace caught Lucy Bronze in the head. Georgia Stanway converted for a 2-1 lead.

    And the free flowing first half seemed to show no signs of abating as Smith opened up the English defense for Rapinoe who fed Trinity Rodman for a goal. But once again, the VAR intervened in England’s favor, ruling that Smith had been fractionally offside in the move.

    The second half was an altogether cagier affair as England missed two opportunities to extend its lead, allowing the USWNT a glimmer of hope.

    When the referee awarded a penalty to the Americans for handball with just 10 minutes remaining, that glimmer widened a little but replays overturned the decision and England held on to close out its first win against the reigning world champions since 2017.

    “You are the best team in the world when you have won the World Cup. We haven’t,” England head coach Sarina Wiegman told reporters, per Reuters. “We are in a good place, but there are so many good countries.

    “We just have to do what we can, control, stick together and communicate with each other at all times. We need to have the freedom to make our own choices in the game. I think we are doing well in that.”

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  • A ‘Great British Bake Off’ episode is getting heat for stereotyping Mexican culture | CNN

    A ‘Great British Bake Off’ episode is getting heat for stereotyping Mexican culture | CNN

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    CNN
     — 

    A recent episode of “The Great British Bake Off” is drawing criticism from some viewers for its depictions of Mexican culture.

    In the “Mexican Week” episode of the reality competition series, which aired in the UK on Tuesday and was released in the US on Friday, contestants are tasked with making pan dulce, tacos and tres leches cake – dishes that critics saw as cliché and uninspired. The hosts, meanwhile, pepper in attempts at tongue-in-cheek humor that not all viewers found funny.

    In the opening scene, hosts Noel Fielding and Matt Lucas wear sombreros and serapes while quipping about whether people might find such jokes offensive. At another point, Fielding muses, “So, is Mexico a real place?” while Lucas, in turn, likens the country to Xanadu. Other scenes include Lucas shaking maracas and contestants butchering pronunciations for guacamole and pico de gallo.

    The episode’s flippant tone and use of stereotypes rubbed many viewers the wrong way.

    Lesley Tellez, a food journalist and author of the cookbook “Eat Mexico: Recipes from Mexico City’s Streets, Markets and Fondas,” said that while she hadn’t seen the full episode, she found the snippets that were circulating on social media unimaginative.

    Despite its diversity, Mexican cuisine gets overshadowed in the culinary world by European cuisines, she added, and the show’s treatment of it perpetuates misconceptions.

    “I think they should have been a lot more thoughtful about it,” Tellez told CNN. “It reduces Mexican food to stereotypes – to being this two-dimensional cuisine.”

    Though it would have veered from the show’s typical format, Tellez said she would have liked to see “The Great British Bake Off” bring in a Mexican chef as a guest, as opposed to having two White, British judges serve as authorities.

    Alejandra Ramos, host of “The Great American Recipe” on PBS and a chef of Puerto Rican descent, said the episode reflected a lack of diversity behind and in front of the camera.

    “This would have been a perfect moment to bring in a Mexican guest judge or host to lead the discussions on camera and to guide the contestants,” she wrote in an email to CNN. “There should have also been consultants with actual Mexican cultural and food background and expertise brought in to consult on the story, scripting, food styling and challenges – as well as the post-production and marketing.”

    Ramos also questioned why a baking competition would challenge contestants to make tacos – a point viewers of the show have also called out on social media.

    “Mexico has incredible pastries, cakes, breads, and even baked savory dishes that they could have made instead,” she said. “But that would have called for more actual knowledge about Mexican culture and cuisine which is clearly lacking here.”

    CNN has reached out to “The Great British Bake Off” for comment.

    Since the first episode aired in 2010, “The Great British Bake Off” – which streams stateside as “The Great British Baking Show” – has become a cultural phenomenon, soothing viewers with its spirit of camaraderie and offering them an escape. Still, it’s garnered complaints of cultural insensitivity before.

    During a “Japanese Week” episode in 2020, some contestants devised concoctions that instead relied on Chinese and Indian flavors, which some critics said amounted to conflating distinct Asian cuisines. That same episode saw Lucas refer to katsu curry as “cat poo curry.”

    “Anyone who’s watched GBBO also knows how prickly the judges get when they think something has too much spice, how easily they exoticize non-British foods, and how the standard marker of a good baker is their ability to make a Victoria Sponge,” Jaya Saxena wrote in a 2020 article for Eater.

    Former contestants have also spoken out on the show’s diversity issues.

    In an interview with Insider last year, Rav Bansal called for new hosts and judges who were better versed in non-English ingredients and recipes, and who could better reflect the show’s diverse cast of contestants. Ali Imdad expressed surprise that production staff had allowed certain missteps to occur. Ruby Tandoh referred to the show as a “strange vehicle for change,” writing in an essay for the food publication Heated that it had launched the careers of several Black and brown chefs while being “steeped in the symbolism of an old-fashioned, implicitly white Britishness.”

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  • Facing risk of blackouts this winter, the UK will drill for more oil | CNN Business

    Facing risk of blackouts this winter, the UK will drill for more oil | CNN Business

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    London
    CNN Business
     — 

    The UK government could award oil and gas companies more than 100 new licenses to drill in the North Sea, as it looks for ways to bolster energy security amid a global supply crunch.

    Launched Friday, the licensing round won’t lead to new UK production for several years. And when drilling does begin, Britain will still be dependent on energy imports, according to the government, leaving it vulnerable to soaring prices and supply disruptions of the kind that threaten blackouts this winter.

    UK utilities company National Grid

    (NGG)     warned Thursday that households and businesses could be left without power for up to three hours at a time in a worst-case scenario of very cold weather, low levels of wind, gas shortages and an inability to import electricity from Europe. It said it would take steps to mitigate the risk, including bringing old coal-fired power stations back online if necessary.

    Starting November 1, National Grid will also offer financial incentives to customers to reduce power consumption at peak times.

    Kathryn Porter, an energy consultant at Watt-Logic, told CNN Business that National Grid was still underestimating the risks to supply, but that blackouts for households were unlikely because it could disconnect large energy users at peak times if necessary.

    The latest licensing round won’t improve the immediate supply picture and could face a legal challenge from environmental activists. Greenpeace said that new oil and gas licenses were “potentially unlawful” and that it would be looking for ways to act.

    “New oil and gas licenses won’t lower energy bills for struggling families this winter or any winter soon nor provide energy security in the medium term,” Philip Evans, energy transition campaigner for Greenpeace UK, said in a statement.

    “New licenses — and more importantly more fossil fuels — solve neither of those problems but will make the climate crisis even worse,” he added.

    Analysis by the North Sea Transition Authority (NSTA), the regulator that grants licenses, shows the average time between discovery of oil and gas deposits and first production is close to five years, though that lag is “falling.”

    In a statement on Friday, the NSTA said it will prioritize areas in the southern North Sea that can be developed quickly and where gas has already been discovered. Companies have until January 12 to apply for licenses, with permits expected to be issued as soon as the second quarter of 2023.

    The NSTA said the licensing round has been subject to a “climate compatibility check” to ensure it aligns with the UK government’s commitment to reach net zero carbon emissions by 2050. It added that producing gas domestically has a much lower carbon footprint than importing it from abroad.

    The International Energy Agency said last year that investment in new fossil fuel supply projects, including drilling for oil and gas, must stop immediately if the world is to limit global warming to 1.5 degrees Celsius above preindustrial levels.

    The UK government set out plans earlier this year to generate 95% of Britain’s electricity from low carbon sources by 2030. The plan, which allows drilling for oil and gas, will also ramp up nuclear power and wind energy.

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  • The bond market is crumbling. That’s bad for Wall Street and Main Street | CNN Business

    The bond market is crumbling. That’s bad for Wall Street and Main Street | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN Business
     — 

    The global bond market is having a historically awful year.

    The yield on the 10-year US Treasury bond, a proxy for borrowing costs, briefly moved above 4% on Wednesday for the first time in 12 years. That’s a bad omen for Wall Street and Main Street.

    What’s happening: This hasn’t been a pretty year for US stocks. All three major indexes are in a bear market, down more than 20% from recent highs, and analysts predict more pain ahead. When things are this bad, investors seek safety in Treasury bonds, which have low returns but are also considered low-risk (As loans to the US government, Treasury notes are seen as a safe bet since there is little risk they won’t be paid back).

    But in 2022’s topsy-turvy economy, even that safe haven has become somewhat treacherous.

    Bond returns, or yields, rise as their prices fall. Under normal market conditions, a rising yield should mean that there’s less demand for bonds because investors would rather put their money into higher-risk (and higher-reward) stocks.

    Instead markets are plummeting, and investors are flocking out of risky stocks, but yields are going up. What gives?

    Blame the Fed. Persistent inflation has led the Federal Reserve to fight back by aggressively hiking interest rates, and as a result the yields on US Treasury bonds have soared.

    Economic turmoil in the United Kingdom and European Union has also caused the value of both the British pound and the euro to fall dramatically when compared to the US dollar. Dollar strength typically coincides with higher bond rates as well.

    So while we’d normally see a rising 10-year yield as a signal that US investors have a rosy economic outlook, that isn’t the case this time. Gloomy investors are predicting more interest rate hikes and a higher chance of recession.

    What it means: Portfolios are aching. Vanguard’s $514.5 billion Total Bond Market Index, the largest US bond fund, is down more than 15% so far this year. That puts it on track for its worst year since it was created in 1986. The iShares 20+ Year Treasury bond fund

    (TLT)     (TLT) is down nearly 30% for the year.

    Stock investors are also nervously eyeing Treasuries. High yields make it more expensive for companies to borrow money, and that extra cost could lower earnings expectations. Companies with significant debt levels may not be able to afford higher financing costs at all.

    Main Street doesn’t get a break, either. An elevated 10-year Treasury return means more expensive loans on cars, credit cards and even student debt. It also means higher mortgage rates: The spike has already helped push the average rate for a 30-year mortgage above 6% for the first time since 2008.

    Going deeper: Still, investors are more nervous about the immediate future than the longer term. That’s spurred an inverted yield curve – when interest rates on short-term bonds move higher than those on long-term bonds. The inverted yield curve is a particularly ominous warning sign that has correctly predicted almost every recession over the past 60 years.

    The curve first inverted in April, and then again this summer. The two-year treasury yield has soared in the last week, and now hovers above 4.3%, deepening that gap.

    On Monday, a team at BNP Paribas predicted that the inverted gap between the two-year and 10-year Treasury yields could grow to its largest level since the early 1980s. Those years were marked by sticky inflation, interest rates near 20% and a very deep recession.

    What’s next: The bond market may face fresh volatility on Friday with the release of the Federal Reserve’s favored inflation measure, the Personal Consumption Expenditure Price Index for August. If the report comes in above expectations, expect bond yields to move even higher.

    The Bank of England held an emergency intervention to maintain economic stability in the UK on Wednesday. The central bank said it would buy long-dated UK government bonds “on whatever scale is necessary” to prevent a market crash.

    Investors around the globe have been dumping the British pound and UK bonds since the government on Friday unveiled a huge package of tax cuts, spending and increased borrowing aimed at getting the economy moving and protecting households and businesses from sky-high energy bills this winter, reports my colleague Mark Thompson.

    Markets fear the plan will drive up already persistent inflation, forcing the Bank of England to push interest rates as high as 6% next spring, from 2.25% at present. Mortgage markets have been in turmoil all week as lenders have struggled to price their loans. Hundreds of products have been withdrawn.

    “This repricing [of UK assets] has become more significant in the past day — and it is particularly affecting long-dated UK government debt,” the central bank said in its statement.

    “Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability. This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy.”

    Many final salary, or defined-benefit, pension funds were particularly exposed to the dramatic sell-off in longer dated UK government bonds.

    “They would have been wiped out,” said Kerrin Rosenberg, UK chief executive of Cardano Investment.

    The central bank said it would buy long-dated UK government bonds until October 14.

    Steep drops in bond prices may be signaling doom and gloom for the economy, but some analysts say short-term bonds are still looking more attractive than equities right now.

    “Record low yields have kept fixed income in the shadow of equities for decades,” said analysts at BNY Mellon Wealth Management in a research note. “But the aggressive shift in Fed policy is beginning to change this.”

    Central banks around the globe have responded to elevated inflation by hiking interest rates– and bond yields have increased alongside them. The two-year US Treasury bond is currently yielding nearly 4%. That’s still a relatively low return, but better than the S&P 500’s dividend yield of around 1.7%.

    “For the first time in several years, bonds are attractive investment options. In addition to providing diversification versus equities…you now get paid for owning them,” wrote Barry Ritholtz of Ritholtz Wealth Management on Wednesday.

    Consider the alternative: the S&P is down more than 20% year to date.

    The US Bureau of Economic Analysis releases its third estimate for Q2 GDP and US weekly jobless claims.

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  • UK PM Liz Truss admits mistakes on controversial tax cuts plan, but doubles down on it anyway | CNN

    UK PM Liz Truss admits mistakes on controversial tax cuts plan, but doubles down on it anyway | CNN

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    London
    CNN
     — 

    British Prime Minister Liz Truss admitted mistakes had been made with her government’s controversial “mini-budget” announced last week – which sent the pound to historic lows and sparked market chaos – but stood by her policies.

    Speaking to the BBC’s Laura Kuenssberg on Sunday morning Truss said: “I do accept we should have laid the ground better and I’ve learned from that, and I’ll make sure I’ll do a better job of laying the ground in the future.”

    She said that she wanted “to tell people I understand their worries about what happened this week and I stand by the package we announced and I stand by the fact we announced it quickly.”

    Last week, Truss’ government announced that they would cut taxes by £45 billion ($48 billion) in a bid to get the UK economy moving again, with a package that includes scrapping the highest rate of income tax for top earners from 45% to 40% and a big increase in government borrowing to slash energy prices for millions of households and businesses this winter.

    Many leading economists described the unorthodox measures as a reckless gamble, noting that the measures came a day after the Bank of England warned that the country was already likely in a recession.

    Truss said the reforms were not agreed by her cabinet, but were a decision made by Chancellor Kwasi Kwarteng. “It was a decision the chancellor made,” she told the BBC.

    She doubled down on that decision however, saying that her government made the “right decision to borrow more this winter to face the extraordinary consequences we face,” referring to the energy crisis caused by the war in Ukraine. She claimed that the alternative would be for people to pay up to £6,000 in energy bills, and that inflation would be 5% higher.

    “We’re not living in a perfect world, we are living in a very difficult world, where governments around the world are taking tough decisions,” Truss said.

    Regarding the rising cost of living in the UK, namely the rise of mortgage rates, Truss said that is mostly driven by interest rates and is “a matter for the independent Bank of England.”

    The Bank of England said Wednesday it would buy UK government debt “on whatever scale is necessary” in an emergency intervention to halt a bond market crash that it warned could threaten financial stability.

    Meanwhile, Credit Suisse said that UK house prices could “easily” fall between 10% and 15% over the next 18 months if the Bank of England aggressively hikes interest rates to keep inflation in check.

    The fallout could make it harder for people to get approved for mortgages, and encourage prospective buyers to delay their purchases. A drop in demand would lead to falling prices.

    Truss defended her government’s policies to the BBC as the Conservative party’s annual conference kicked off in in Birmingham.

    The party is bitterly divided, with its poll ratings sinking lower than they were even under the disgraced leadership of Boris Johnson.

    On Sunday, that chill was evident, as Nadine Dorries, the former culture secretary who backed Truss to be prime minister, accused Truss of throwing Chancellor Kwasi Kwarteng “under a bus” in her BBC interview, when she said the tax cut decision were made by him and not the Cabinet.

    “One of @BorisJohnson faults was that he could sometimes be too loyal and he got that. However, there is a balance and throwing your Chancellor under a bus on the first day of conference really isn’t it. [Hope] things improve and settle down from now,” Dorries said on Twitter.

    Conservative members of parliament fear the combination of tax cuts along with huge public spending to help people cope with energy bills, rising inflation, rising interest rates and a falling pound are going to make winning the next general election impossible.

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  • London is stage for NFL’s milestone 100th international game | CNN

    London is stage for NFL’s milestone 100th international game | CNN

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    CNN
     — 

    The NFL returns to London on Sunday as the Minnesota Vikings (2-1) and New Orleans Saints (1-2) contest the first of five international slate of games scheduled this season.

    With Justin Jefferson and the Vikings taking on Alvin Kamara and the Saints at Tottenham Hotspur Stadium, Sunday’s game will mark the 100th game played outside of the US regular and preseason.

    After edging out a victory against the Detroit Lions in week 3, the Vikings are looking to reprise the magic of the ‘Minneapolis Miracle’ – Stefon Diggs scored a remarkable 61-yard touchdown in a NFC Divisional semifinal four years ago – against a struggling Saints team, which will be without starting quarterback Jameis Winston and All-Pro wide receiver Michael Thomas.

    This year, 10 teams will travel to three different countries, including the first-ever regular season game in Germany, when Tom Brady and the Tampa Bay Buccaneers host the Seattle Seahawks at Allianz Arena – home of Bundesliga football club Bayern Munich – in November.

    During weeks 4 and 5 over 200 players, coaches and executives will celebrate their heritage by sporting international flags on their helmets and attire.

    Amon-Ra St. Brown of the Detroit Lions in action against the Green Bay Packers.

    Players like Arizona Cardinals star Kyler Murray, who will don a South Korea flag, and Detroit Lions wide receiver Amon-Ra St. Brown – Germany’s flag will be on his helmet – will highlight the NFL’s global diversity within the league.

    “My mom is from Germany, so having German grandparents, speaking German, every summer the heritage and culture has been a part of my whole life,” said St. Brown.

    “I’m half German. It’s a part of me. I love it. In my young career, I have already been amazed to see the influence my culture and heritage has had and I’m excited to continue to see the German representation have an impact within our game.”

    Minnesota Vikings Wide Receiver Justin Jefferson (18) lines up with Running Back Dalvin Cook (4).

    Brady and the Bucs (2-1) will play at Raymond James Stadium on Sunday night against Patrick Mahomes and the Kansas City Chiefs (2-1).

    Earlier this week, the Bucs were forced to practice at the Miami Dolphins’ team facility due to the impact of Hurricane Ian, leaving the primetime matchup in Tampa in limbo.

    Despite the destruction caused by the hurricane, the team confirmed the game would go on as scheduled, with Brady highlighting how the match could serve as a moment where fans can come together.

    “I always feel like sports has brought people together over a long period of time,” Brady said on Thursday during a regularly scheduled media session.

    “Watching different adversities, whether that was 9/11, whether that was Katrina, sports has an amazing way of healing wounds and bringing people together and bringing communities together and start to cheer for a common interest for the common good.”

    Weather concerns aside, both teams enter week 4 coming off their first losses of the season.

    In a rematch of Super Bowl LV, in which Brady won his seventh career championship, the two superstar quarterbacks will meet again for a sixth time and first since the title game.

    Brady, who owns a 3-2 record over Mahomes, will enter Sunday’s game with the return of some much-needed offensive weapons – star wide receiver Mike Evans is back from his one-game suspension for an on field scuffle with New Orleans Saints cornerback Marshon Lattimore.

    However receivers Chris Godwin and Julio, who have been out since the season opened with hamstring and knee injuries, are doubts for the Bucs.

    “Any time you get your starters back you’ll happy to have them back and have them healthy,” said Bucs head coach Todd Bowles on Friday about the possibility of having the three wide receivers back on the field. “So, we just want to make sure they’re all healthy when they come back.”

    The game on Sunday is at 8:20 p.m. ET on NBC.

    Tom Brady looks on prior to the game against the Green Bay Packers.

    Baltimore Ravens quarterback Lamar Jackson has started the season at a historic pace, tallying 12 total touchdowns through the first three weeks of the season while leading the team to a 2-1 record.

    Jackson, who is playing on the final year of his contract, will lead the Ravens against fellow MVP candidate Josh Allen and the tough Buffalo Bills defense.

    Both teams have suffered their only defeats this season in epic showdowns against the resilient Miami Dolphins.

    The 2018 NFL first round picks have been a big part of their team’s early success as Allen is coming off a 400-plus yard passing game against the Dolphins, and at nine passing touchdowns trails only Jackson for most this season.

    Jackson and Allen are the only two players in the NFL’s 103-year history to reach both nine touchdown passes and 100 rushing yards over the first three games of a season.

    Sunday’s showdown kicks off at 1 p.m. ET on CBS.

    Stefon Diggs (14) of the Buffalo Bills celebrates with teammate Josh Allen (17) after scoring a touchdown against the Tennessee Titans on September 19, 2022.

    The reigning Super Bowl champion Los Angeles Rams (2-1) will travel to San Francisco to take on the division and in-state rival 49ers (1-2) on Monday Night Football.

    In recent years, the 49ers have been the Rams’ Achilles heel, as Los Angeles has failed to notch a victory at Levi’s Stadium since 2018.

    Notably, before their victory in the NFC Championship last season, the Rams had lost six games in a row to San Francisco.

    After losing quarterback Trey Lance for the season with an ankle injury in week 2, Jimmy Garoppolo and the 49ers will look to continue their recent success against the Rams to fix a rough start to the season in which they sport a 1-2 record in the highly competitive NFC West.

    The game between the NFC West rivals kicks off on Monday at 8:15 p.m. ET on ESPN.

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  • Liz Truss faces her party faithful after a disastrous week. Many Conservatives fear defeat looms at UK’s next election | CNN

    Liz Truss faces her party faithful after a disastrous week. Many Conservatives fear defeat looms at UK’s next election | CNN

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    London
    CNN
     — 

    Liz Truss’ first full week as British Prime Minister has not been an easy one. It began with the pound crashing to its lowest level in decades following her government’s mini-budget last Friday. It ended with her meeting the UK’s independent financial forecaster and having to explain herself after a week of economic chaos.

    This weekend, she will travel to Birmingham to attend her Conservative party’s annual conference, a meeting that could become a defining moment in her premiership.

    Her party is bitterly divided. Since becoming leader, poll ratings have sunk lower than they were even under the disgraced leadership of Boris Johnson. Conservative members of Parliament fear the combination of tax cuts along with huge public spending to help people cope with energy bills, rising inflation, rising interest rates and a falling pound are going to make winning the next general election impossible.

    Even her supporters privately say that while they support her tax cuts, the communication has been appalling and fear that she might never recover from her disastrous start. Many are comparing it to Black Wednesday in 1992, when sterling crashed sufficiently that the UK had to pull out of the European Exchange Rate Mechanism. Then-Prime Minister John Major never recovered from the crisis and despite an economic recovery, lost the next election in 1997.

    For now, no one expects the government to reverse its policy. “They are stuck with this. The thing with radical policy that shakes market confidence is that U-turning creates even more instability and won’t restore market confidence,” says one Conservative MP.

    Beyond how a U-turn might look to those outside, the more important reason Truss is likely to stick to her guns is that she sincerely believes that her economic plan is the right thing for Britain. Her supporters argue that the UK has had anemic growth for years. They believe that a more competitive tax system and new regulatory system is the best way to encourage investment, create jobs and grow the economy.

    In itself, this is not a controversial idea. What some fear is that the combination of tax cuts and borrowing to fund public spending is a disastrous combination of policies that have been poorly communicated at the worst possible time.

    “We look like reckless gamblers who only care about the people who can afford to lose the gamble,” one former Conservative minister told CNN earlier this week. “My fear is that it’s the final role of the dice to win the next election that has already backfired.”

    The idea that this is a gamble, Truss’ kitchen sink moment, to do something drastic and win the next election, is shared by other Conservatives.

    However, they are concerned that these policies have been cooked up by politicians who spend too much time in Westminster talking to people who agree with them, but are alienated from what average voters are concerned about.

    “Ordinary people are seeing their mortgages go up at a rate that outstrips any government support for energy bills or money saved through tax cuts,” says another former minister. “The crazy thing is that Boris [Johnson] won an 80-seat majority with an electoral coalition that still exists today. Ripping up his government’s policies and reinventing the wheel just wasn’t necessary.”

    The mood going into Conservative Party conference is undeniably bleak. Not everyone thinks that the next election is already lost, but most think the current situation is a mess that needs sorting out very quickly.

    “They need to explain their fiscal rules, cut spending on white elephant projects and not look like they are doing everything so hastily,” says a Conservative MP who supported Truss’ leadership campaign.

    Another Truss ally says: “The problem with Liz and Kwasi [Kwarteng, the finance minister] is they are both very intelligent and think about six moves ahead of everyone else. They need to explain their actions more clearly and give people the time to understand what they are trying to do.”

    And her critics also believe there are ways of turning this around without losing face. “They could keep the policies but roll them out slowly. Kick some stuff into the long grass so there isn’t so much immediate impact.”

    There is also the real possibility that her plans work. Sterling could recover, the economy could grow against the odds and she might have some real wins to take into next election, which is still probably over two years away.

    The question Conservatives are asking is, does Truss have the political talent, both herself and in the team around her, to win over the public?

    Her team is full of young people who are undeniably skilled, but in some cases lack the experience you’d typically associate with people who work for the leader of a country, many Conservatives believe. There is also a sense that the third change in leaders in six years has burned through the talent.

    There is still time for Truss to turn things around. But she is losing support from her own side, and there is already speculation that Conservative MPs are thinking about ways to get rid of her, which is incredible just weeks into her premiership.

    The official opposition Labour Party held their conference earlier this week, and the mood was one of cautious optimism. Almost everyone there, from corporate PRs to party activists, felt this was a party on the verge of power.

    In the coming week, Truss needs to address her own party faithful and give them something to be optimistic about. If she doesn’t, the sense of inevitability that power is slipping away from the Conservatives could become a self-fulfilling prophecy that drives the party into the wilderness after over a decade at the top of British politics.

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  • US officials troubled by controversial UK tax cut plan | CNN Business

    US officials troubled by controversial UK tax cut plan | CNN Business

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    New York
    CNN
     — 

    US officials are increasingly troubled by the United Kingdom’s proposal to slash taxes at a time of crushing inflation, a plan that has ignited turbulence in financial markets.

    UK Prime Minister Liz Truss’s tax-cut plan has drawn criticism from economists and investors and prompted the Bank of England to calm panicked markets with an emergency intervention on Wednesday.

    The Biden administration, including the Treasury Department, is concerned by the UK’s tax-cut plan, an administration official familiar with the matter told CNN Thursday.

    The risk for the United States is that any trouble on the other side of the Atlantic could spill over to the global financial system and world economy.

    US Commerce Secretary Gina Raimondo criticized Truss’s plan Wednesday, pointing out that the British pound has “plummeted” since the proposal was unveiled.

    “The policy of cutting taxes, and simultaneously increasing spending, isn’t one that is going to fight inflation in the short term or put you in good stead for long-term economic growth,” Raimondo said in response to a question at an event held by The Hamilton Project at the Brookings Institution.

    Raimondo sought to contrast the UK’s approach with that of the Biden administration.

    “We’re pursuing a different strategy … We’re taking inflation seriously, letting the Federal Reserve do its job, watching deficit spending,” she said. “Investors, businesspeople want to see world leaders taking inflation very seriously. And it’s hard to see that out of this new government.”

    Biden officials have conveyed their worries about the UK plan through the International Monetary Fund, according to Bloomberg News, which previously reported on the concerns of US officials.

    The United States is the largest shareholder in the IMF, which issued a rare criticism of the UK plan this week and urged the country’s officials to “reevaluate” the tax cuts.

    “Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy,” an IMF spokesperson said earlier this week.

    Truss defended her tax plan, telling CNN’s Jake Tapper last week that her government is incentivizing businesses to invest and helping ordinary people with their taxes.

    Some US officials have been careful not to directly criticize their UK counterparts.

    US Treasury Secretary Janet Yellen on Tuesday declined to comment directly on the UK economic plan, though she noted the UK is dealing with “significant inflation problems” — just like the United States.

    Asked if she is concerned about disorderly markets, Yellen said “markets are functioning well” and she hasn’t seen liquidity problems emerge.

    Yet the large swings in bond and currency markets raise questions about just how well markets are functioning.

    A day after Yellen’s comments, the Bank of England announced an emergency intervention. The central bank promised to buy UK government debt “on whatever scale is necessary” to prevent a bond market crash and ease “dysfunction” in financial markets.

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  • The UK is gripped by an economic crisis of its own making | CNN Business

    The UK is gripped by an economic crisis of its own making | CNN Business

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    London
    CNN Business
     — 

    A week ago, the Bank of England took a stab in the dark. It raised interest rates by a relatively modest half a percentage point to tackle inflation. It couldn’t know the scale of the storm that was about to break.

    Less than 24 hours later, the government of new UK Prime Minister Liz Truss unveiled its plan for the biggest tax cuts in 50 years, going all out for economic growth but blowing a huge hole in the nation’s finances and its credibility with investors.

    The pound crashed to a record low against the US dollar on Monday after UK finance minister Kwasi Kwarteng doubled-down on his bet by hinting at more tax cuts to come without explaining how to pay for them. Bond prices collapsed, sending borrowing costs soaring, sparking mayhem in the mortgage market and pushing pension funds to the brink of insolvency.

    Financial markets were already in a febrile state because of the rising risk of a global recession and the gyrations caused by three outsized rate increases from a US central bank on the warpath against inflation. Into that “pressure cooker” stumbled the new UK government.

    “You need to have strong, credible policies, and any policy missteps are punished,” said Chris Turner, global head of markets at ING.

    After verbal assurances by the UK Treasury and Bank of England failed to calm the panic — and the International Monetary Fund delivered a rare rebuke — the UK central bank pulled out its bazooka, saying Wednesday it would print £65 billion ($70 billion) to buy government bonds between now and October 14 — essentially protecting the economy from the fallout of the Truss’ growth plan.

    “While this is welcome, the fact that it needed to be done in the first place shows that the UK markets are in a perilous position,” said Paul Dales, chief UK economist at Capital Economics, commenting on the bank’s intervention.

    The emergency first aid stopped the bleeding. Bond prices recovered sharply and the pound steadied Wednesday against the dollar. But the wound hasn’t healed.

    The pound tumbled 1%, falling back below $1.08 early Thursday. UK government bonds were under pressure again, with the yield on 10-year debt climbing to 4.16%. UK stocks fell 2%.

    “It wouldn’t be a huge surprise if another problem in the financial markets popped up before long,” Dales added.

    The next few weeks will be critical. Mohamed El-Erian, who once helped run the world’s biggest bond fund and now advises Allianz

    (ALIZF)    , said that the central bank had bought some time but would need to act again quickly to restore stability.

    “The Band-Aid may stop the bleeding, but the infection and the bleeding will get worse if they do not do more,” he told CNN’s Julia Chatterley.

    The Bank of England should announce an emergency rate hike of a full percentage point before its next scheduled meeting on November 3. The UK government should also postpone its tax cuts, El-Erian said.

    “It is doable, the window is there, but if they wait too long, that window is going to close,” he added.

    The UK government has previewed rolling announcements in the coming weeks about how it plans to change immigration policy and make it easier to build big infrastructure and energy projects to boost growth, culminating in a budget on November 23 at which it has promised to publish a detailed plan for reducing debt over the medium term.

    But it shows no sign of backing away from the fundamental policy choice of borrowing heavily to fund tax cuts that will mainly benefit the rich at a time of high inflation. And the UK Treasury says it won’t bring forward the November announcement.

    Truss, speaking publicly for the first time since the crisis erupted, blamed global market turmoil and the energy price shock from Russia’s invasion of Ukraine for this week’s chaos.

    “This is the right plan that we’ve set out,” she told local radio on Thursday.

    One big problem identified by investors, former central bankers and many leading economists is that her government only set out half a plan at best. It went ahead without an independent assessment from the country’s budget watchdog of the assumptions underlying the £45 billion ($48 billion) annual tax cuts, and their longer term impact on the economy. It fired the top Treasury civil servant earlier this month.

    Charlie Bean, former deputy governor at the Bank of England, told CNN Business that the government was guilty of “really stupid” decisions. His former boss at the bank, Mark Carney, accused the government of “undercutting” UK economic institutions, saying that had contributed to the “big knock” suffered by the country’s financial system this week.

    “This is an economic crisis. It is a crisis… that can be addressed by policymakers if they choose to address it,” he told the BBC.

    British newspapers have started to speculate that Truss will have to fire Kwarteng, her close friend and political soulmate, if she wants to regain the political initiative and prevent her government’s dire poll ratings from plunging even further.

    “Every single problem we have now is self-inflicted. We look like reckless gamblers who only care about the people who can afford to lose the gamble,” one former Conservative minister told CNN.

    But for now she’s trying to tough it out, and cling onto the Reaganite experiment.

    “Raising, postponing, or abandoning tax cuts will be avoided by Truss at all costs as such a reversal would be humiliating and could leave her looking like a lame duck prime minister,” wrote Mujtaba Rahman and Jens Larson at political risk consultancy Eurasia Group.

    The only alternative left to balance the books would be to slash government spending, and that would prove equally politically difficult as the country enters a recession with its public services under enormous strain and a restive workforce that has shown it’s ready to strike in large numbers over pay.

    “Truss and Kwarteng are now facing a severe economic crisis as the world’s financial markets wait for them to make policy changes that they and the Conservative party will find unpalatable,” the Eurasia analysts wrote.

    The foreign investors who keep the British economy solvent are left scratching their heads for another eight weeks, leaving plenty of time for doubts to surface again about the UK government’s commitment to responsible fiscal policymaking.

    “The message of financial markets is that there is a limit to unfunded spending and unfunded tax cuts in this environment and the price of those is much higher borrowing costs,” Carney said.

    That leaves the Bank of England in a tight spot. A week ago it was pressing the brakes on the economy to take the heat out of price increases, even as the government tried to juice growth. The task got even harder this week when it was forced to dust off its crisis playbook and bail out the government.

    It may not be long before it has to intervene again, this time with an emergency rate hike.

    “[Wednesday’s] intervention is designed to stabilize UK government bond prices, keep the bond market liquid and prevent financial instability but that won’t necessarily stop sterling falling further, with its attendant inflationary consequences,” Bean, the former central banker, told CNN Business.

    “I think there is still a good chance they will need to act ahead of the November meeting,” he added.

    — Julia Horowitz, Luke McGee, Anna Cooban, Rob North, Livvy Doherty and Morgan Povey contributed to this article.

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  • UK citizen extradited to US pleads guilty to 2020 Twitter hack | CNN Business

    UK citizen extradited to US pleads guilty to 2020 Twitter hack | CNN Business

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    Reuters
     — 

    A citizen of the United Kingdom who was extradited to New York from Spain last month has pleaded guilty to cyberstalking and computer hacking schemes, including the 2020 hack of the social media site Twitter, the U.S. Justice Department said on Tuesday.

    Joseph James O’Connor, 23, was charged in both North Dakota and New York. The North Dakota case was transferred to the U.S. District Court for the Southern District of New York.

    O’Connor pleaded guilty to charges including conspiring to commit computer intrusions, to commit wire fraud and to commit money laundering.

    O’Connor, who was extradited to the U.S. on April 26, will also forfeit more than $794,000 and pay restitution to victims, prosecutors said. He faces a maximum of 77 years in prison at sentencing on June 23.

    “O’Connor’s criminal activities were flagrant and malicious, and his conduct impacted multiple people’s lives. He harassed, threatened, and extorted his victims, causing substantial emotional harm,” Assistant Attorney General Kenneth Polite said in a statement.

    Prosecutors said the schemes included gaining unauthorized access to social media accounts on Twitter in July 2020 as well as a TikTok account in August 2020. Along with his co-conspirators, O’Connor stole at least $794,000 worth of cryptocurrency.

    The July 2020 Twitter attack hijacked a variety of verified accounts, including those of then-Democratic presidential candidate Joe Biden and Tesla CEO Elon Musk, who now owns Twitter.

    The accounts of former President Barack Obama, reality TV star Kim Kardashian, Bill Gates, Warren Buffett, Benjamin Netanyahu, Jeff Bezos, Michael Bloomberg and Kanye West were also hit.

    The alleged hacker used the accounts to solicit digital currency, prompting Twitter to prevent some verified accounts from publishing messages for several hours until security could be restored.

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  • Meta sells Giphy at a significant loss after UK breakup order | CNN Business

    Meta sells Giphy at a significant loss after UK breakup order | CNN Business

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    CNN
     — 

    Stock-photo website Shutterstock on Tuesday said it will acquire Giphy and its online repository of animated images for $53 million, after UK antitrust regulators forced Meta to spin off the company last year.

    The value of the deal is sharply lower than the $315 million Meta was widely reported to have paid to acquire Giphy in 2020.

    UK officials had alleged that Meta’s acquisition would reduce competition in advertising and social media, and an appeals court upheld that decision last year, prompting Meta to say it would sell Giphy to comply with the UK’s breakup order.

    The deal will add GIFs and reaction stickers to Shutterstock’s digital content library while expanding Shutterstock’s access to Giphy’s 1.7 billion users, the company said in Tuesday’s announcement.

    The transaction is expected to close in June.

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  • Apple faces $1 billion UK lawsuit by app developers over App Store fees | CNN Business

    Apple faces $1 billion UK lawsuit by app developers over App Store fees | CNN Business

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    More than 1,500 app developers in the United Kingdom brought a £785 million ($1 billion) class action lawsuit against Apple Tuesday over its App Store fees.

    Revenues at Apple

    (AAPL)    ’s services business, which includes the App Store, have grown rapidly in the last few years and now hover around $20 billion per quarter.

    However, the commissions of 15% to 30% that the company charges some app makers for using an in-app payment system have been criticized by app developers and targeted by antitrust regulators in several countries.

    Apple has previously said that 85% of developers on the App Store do not pay any commission and that it helps European developers access markets and customers in 175 countries around the world through the App Store.

    The UK lawsuit at the Competition Appeal Tribunal is being brought by Sean Ennis, a professor at the Centre for Competition Policy at the University of East Anglia and a former economist at the Organisation for Economic Co-operation and Development, on behalf of 1,566 app developers.

    He is being advised by law firm Geradin Partners.

    “Apple’s charges to app developers are excessive and only possible due to its monopoly on the distribution of apps onto iPhones and iPads,” Ennis said in a statement.

    “The charges are unfair in their own right and constitute abusive pricing. They harm app developers and also app buyers.”

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  • UK blocks Microsoft takeover of Activision Blizzard | CNN Business

    UK blocks Microsoft takeover of Activision Blizzard | CNN Business

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    London
    CNN
     — 

    The UK antitrust regulator has blocked Microsoft’s $69 billion purchase of Activision Blizzard, thwarting one of the tech industry’s biggest deals over concerns it will stifle competition in cloud gaming.

    The Competition and Markets Authority said in a statement Wednesday that it was worried the deal would lead to “reduced innovation and less choice for UK gamers over the years to come.”

    The acquisition would make Microsoft

    (MSFT)     “even stronger” in cloud gaming, a market in which it already holds a 60%-70% share globally, the regulator added.

    Activision Blizzard is one of the world’s biggest video game developers, producing games such as “Call of Duty,” “World of Warcraft,” “Diablo” and “Overwatch.” Microsoft, which sells the Xbox gaming console, offers a video game subscription service called Xbox Game Pass, as well as a cloud-based video game streaming service.

    The deal to combine the businesses has been met with growing opposition by antitrust regulators worldwide. In December, the US Federal Trade Commission sued to block the takeover over similar competition concerns. A hearing is scheduled for August. The European Union is also evaluating the transaction

    Microsoft could seek to make Activision’s games exclusive to its own platforms and then increase the cost of a Game Pass subscription, the Competition and Markets Authority said.

    “The cloud allows UK gamers to avoid buying expensive gaming consoles and PCs and gives them much more flexibility and choice as to how they play. Allowing Microsoft to take such a strong position in the cloud gaming market just as it begins to grow rapidly would risk undermining the innovation that is crucial to the development of these opportunities,” it added.

    “The evidence available… indicates that, absent the merger, Activision would start providing games via cloud platforms in the foreseeable future.”

    Both companies plan to appeal the decision. “Alongside Microsoft, we can and will contest this decision, and we’ve already begun the work to appeal to the UK Competition Appeals Tribunal,” Activision Blizzard CEO Bobby Kotick said in a statement.

    Microsoft President Brad Smith added: “This decision appears to reflect a flawed understanding of the market and the way the relevant cloud technology actually works.”

    The Competition and Markets Authority, which launched an in-depth review of the blockbuster deal in September, said Microsoft’s proposed remedies to its concerns had “significant shortcomings.”

    “Their proposals… would have replaced competition with ineffective regulation in a new and dynamic market,” explained Martin Coleman, chair of the independent panel of experts conducting the investigation.

    “Microsoft already enjoys a powerful position and head start over other competitors in cloud gaming, and this deal would strengthen that advantage, giving it the ability to undermine new and innovative competitors,” Coleman continued. “Cloud gaming needs a free, competitive market to drive innovation and choice.”

    The UK cloud gaming market is expected to be worth up to £1 billion ($1.2 billion) by 2026, around 9% of the global market, according to the Competition and Markets Authority.

    -— Josh du Lac and Brian Fung contributed reporting.

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  • Biden and Sunak meet amid a turning point in the Russia-Ukraine war | CNN Politics

    Biden and Sunak meet amid a turning point in the Russia-Ukraine war | CNN Politics

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    CNN
     — 

    When United Kingdom Prime Minister Rishi Sunak visited the White House on Thursday, he hoped a shared perspective on Ukraine and a new push for economic partnership could reinforce what has been a steady, if rather business-like, working relationship.

    For President Joe Biden and his team, a relatively low-key prime minister whose term has outlasted a wilting head of lettuce – unlike his predecessor’s – is reason enough for celebration.

    “There is no issue of global importance, none, that our nations are not leading together and where we’re not sharing our common values to make things better,” Biden said at the start of a news conference, during which the leaders unveiled a new economic partnership that stopped short of a free trade agreement.

    Stability in 10 Downing Street has allowed for better coordination on Ukraine, according to officials, and helped resolve a festering dispute over Northern Ireland trade rules. Sunak’s pragmatic approach in some ways mirrors Biden’s, even if they hold opposing ideological outlooks.

    That made Thursday’s meeting in the Oval Office – Sunak’s first since taking office – a key moment for the men as they look to deepen their relationship.

    As the meeting got underway, Biden thanked Sunak for his partnership on Ukraine, and hailed the relationship between their two countries.

    “You know Prime Minister Churchill and Roosevelt met here a little over 70 years ago and they asserted that the strength of the partnership between Great Britain and the United States was strength of the free world. I still think there’s truth to that assertion,” Biden said.

    The talks come at a turning point in the Russia-Ukraine war, following the collapse of the Nova Kakhovka dam and ahead of a widely expected counteroffensive meant to retake territory. The White House said Ukraine would be “top of mind” in Thursday’s meeting.

    In his news conference, Biden said he was confident that Congress would continue providing support for Ukraine, despite a divide among Republicans.

    “The fact of the matter is that I believe we’ll have the funding necessary to support Ukraine as long as it takes,” Biden said. “I believe that we’re going to get that support, it will be real.”

    As he began his visit in Washington, Sunak said Wednesday it is “too early” to determine what caused the destruction of the dam in southern Ukraine’s Kherson region.

    “Our military and security services are currently investigating it. But if it is intentional, it would represent an unprecedented level of barbarism,” he told Sky News in Washington.

    The US and UK have been the leading contributors of military aid to Ukraine, and are coordinating on providing F-16 fighter jets to reinforce long-term deterrence against Russia.

    At the same time, Sunak is coming into the meeting with major economic priorities, including a push for closer investment links and more resilient supply chains.

    He’s also expected to deliver a pitch on making Britain a world leader on developing and regulating artificial intelligence – an area that a British official said was “very much on the prime minister’s mind” and that Biden’s aides are also watching closely. Because of Britain’s exit from the EU, the country has been left out of talks with the US and Europe on the emerging technology. Sunak, who studied in Silicon Valley and views tech as a key issue, is proposing a summit meeting in the fall to discuss AI.

    Biden said he was looking at “watermarks on everything that has to do with, produced by AI,” and acknowledged the technology’s potential for both good but also “great damage.”

    Ahead of the visit, Sunak cast his economic objectives as directly linked to the security agenda.

    “The UK and US have always worked in lockstep to protect our people and uphold our way of life. As the challenges and threats we face change, we need to build an alliance that also protects our economies,” he said. “Just as interoperability between our militaries has given us a battlefield advantage over our adversaries, greater economic interoperability will give us a crucial edge in the decades ahead.”

    Not on the agenda, according to US and UK officials, is a new bilateral trade deal, which had been discussed under former President Donald Trump but now remains on ice.

    The broad agenda reflects the typically extensive list of issues between the two nations, whose partnership is nearly always described by their leaders as a “special relationship.” Indeed, officials in London and Washington both describe the bond between Biden and Sunak as warm and friendly, as would be expected between the leaders of two countries so closely aligned.

    When Biden met Sunak in San Diego earlier this year, he made reference to the condo the Stanford MBA graduate maintains in California.

    “That’s why I’m being very nice to you, maybe you can invite me to your home,” Biden said, perhaps unknowingly raising what has been a controversial issue for the prime minister.

    Still, there are undeniable differences between the two men, not least on issues of government economic intervention and the complicated exit of Britain from the European Union.

    Few see Biden and Sunak developing a transatlantic friendship akin to Ronald Reagan and Margaret Thatcher, George W. Bush and Tony Blair, or Barack Obama and David Cameron (who called each other “bro”).

    While the two men have encountered each other several times over the past year, including last month at the Group of 7 summit in Japan, it will be Sunak’s first time at the White House for formal talks since he assumed the premiership in October.

    Sunak traveled to San Diego in March for a three-way defense summit and met with Biden in Belfast during the president’s visit to Northern Ireland in April. Yet that meeting was only a brief chat over tea; Biden spent most of his visit to Ireland exploring his ancestral roots.

    There is little question the two men hold very different political ideologies, even if they share a pragmatic, low-drama style – at least compared with their predecessors.

    Some members of Sunak’s government have openly criticized Biden’s Inflation Reduction Act, calling green subsidies included in the package protectionist and warning they would harm American allies. And Sunak has voiced a more limited view of government’s role in the economy, akin to his ideological predecessor Thatcher.

    Biden’s intense interest in resolving a long-festering dispute in Northern Ireland over trade rules has also caused tension. He said after visiting the island in April his trip was intended “to make sure the Brits didn’t screw around” with the region’s peace structure – a comment that only intensified views among unionists of his pro-Irish allegiances.

    There are also generational differences; at 43, Sunak is the youngest leader in the G7 club of industrial democracies while Biden is the oldest at 80.

    Still, Sunak has acted as a stabilizing force at 10 Downing Street after a tumultuous period that saw three prime ministers take the job over the course of two months.

    Biden and his aides made little attempt to disguise their frustrations with Boris Johnson, a top Brexit proponent. His successor, Liz Truss, was barely in office long enough for Biden to form a full opinion.

    By comparison, Sunak has sought to resolve some of the sticky issues that felled his predecessors. He did strike an agreement with the European Union on trade rules in Northern Ireland, though the deal wasn’t enough to bring unionists back to a power sharing government

    And he has been a staunch proponent of economic and military support for Ukraine, most recently in a pledge to help train Ukrainian pilots on western fighter jets.

    One area of discussion likely to arise will be NATO’s next secretary general. Sunak has been lobbying for the British defense secretary Ben Wallace, but other candidates are also thought to be under consideration. The job is typically reserved for a European but would require Biden’s sign-off.

    This story has been updated with additional information.

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  • Google workers in London stage walkout over job cuts | CNN Business

    Google workers in London stage walkout over job cuts | CNN Business

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    Reuters
     — 

    Hundreds of Google employees staged a walkout at the company’s London offices on Tuesday, following a dispute over layoffs.

    In January, Google’s parent company Alphabet announced it was laying off 12,000 employees worldwide, equivalent to 6% of its global workforce.

    The move came amid a wave of job cuts across corporate America, particularly in the tech sector, which has so far seen companies shed more than 290,000 workers since the start of the year, according to tracking site Layoffs.fyi.

    Trade union Unite, which counts hundreds of Google’s UK employees among its members, said the company had ignored concerns put forward by employees.

    “Our members are clear: Google needs to listen to its own advice of not being evil,” said Unite regional officer Matt Whaley.

    “They and Unite will not back down until Google allows workers full union representation, engages properly with the consultation process and treats its staff with the respect and dignity they deserve.”

    A Google employee attending the protest, who asked not to be named for fear of retaliation, told Reuters that talks between employees and management had been “extremely frustrating.”

    “It has been difficult for those involved. We have a redundancy process for a reason, so that employees can make their voice heard,” they said. “But it feels as if our concerns have fallen on deaf ears.”

    Google’s senior management has been engaged in redundancy talks in many parts of Europe, in line with local employment laws.

    Last month, workers at the company’s Zurich office in Switzerland staged a similar walkout, with employee representatives claiming Google had rejected their proposals to reduce job cuts.

    “As we said on January 20, we’ve made the difficult decision to reduce our workforce by approximately 12,000 roles globally. We know this is a very challenging time for our employees,” a Google spokesperson said.

    “In the UK, we have been constructively engaging and listening to our employees through numerous meetings, and are working hard to bring them clarity and share updates as soon as we can in adherence with all UK processes and legal requirements.”

    Google employs more than 5,000 people in the United Kingdom.

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  • Britain’s ‘profound economic crisis’ gives Rishi Sunak only unpleasant choices | CNN Business

    Britain’s ‘profound economic crisis’ gives Rishi Sunak only unpleasant choices | CNN Business

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    London
    CNN Business
     — 

    Rishi Sunak, Britain’s third prime minister in seven weeks, took office on Tuesday with a pledge to fix the “mistakes” of predecessor Liz Truss and tackle a “profound economic crisis.”

    The task won’t be an easy one, he acknowledged.

    “This will mean difficult decisions to come,” Sunak said in his first speech from No. 10 Downing Street.

    The United Kingdom was already sliding towards a recession when Truss took office in September, as soaring energy bills ate into spending. Now, Sunak has another headache: He must restore the government’s credibility with investors after Truss’ unfunded tax cuts sparked a bond market revolt, forcing the Bank of England to intervene to prevent a financial meltdown. Borrowing costs, including mortgage rates, shot higher.

    Accomplishing this goal will require delivering a detailed plan to put public finances on a more sustainable path. (A government watchdog warned in July that without major action, debt could reach 320% of the UK’s gross domestic product in 50 years.)

    The problem? There’s little appetite for government spending cuts after years of austerity in the wake of the 2008 global financial crisis. Plus, failing to help households deal with surging living costs could prove politically devastating and further weigh on the economy.

    “It’s not a particularly pleasant economic hand to be dealt [as] a new prime minister,” said Ben Zaranko, a senior research economist at the Institute for Fiscal Studies.

    Finance minister Jeremy Hunt got the ball rolling last week when he reversed £32 billion ($37 billion) in tax cuts that formed the bedrock of Truss’ plan to boost growth.

    Yet Sunak and Hunt — who will stay in his job — still need to find between £30 billion and £40 billion in savings to bring down public debt as a share of the economy in the next five years, according to calculations by IFS, an influential think tank.

    “It is going to be tough,” Hunt said in a tweet. “But protecting the vulnerable — and people’s jobs, mortgages and bills — will be at the front of our minds as we work to restore stability, confidence and long-term growth.”

    Sunak and Hunt won’t have the option of going light on the details. If investors don’t buy into their plan and borrowing costs shoot up again, getting the situation under control would only become trickier, as interest payments on government debt rise.

    “If markets don’t [see] the plans as credible, then filling the fiscal hole could become even harder,” said Ruth Gregory, senior UK economist at Capital Economics.

    One area Sunak may be tempted to tap is the social welfare budget. Questions have swirled about whether the Conservative government may try to avoid boosting state benefits in line with inflation, as is customary. (American recipients of Social Security will receive the biggest cost-of-living adjustment in more than four decades next year.)

    Most UK working-age benefits would typically go up by 10.1% next April based on inflation data. But there’s speculation the increase could be linked instead to average earnings, which are growing at a much slower rate than inflation. That could save £7 billion ($8 billion) in 2023-24, according to IFS.

    Such a move would prove controversial, however — especially since benefits have not kept up with rampant inflation in 2022.

    “I would like to see if we could find a way to increase benefits by inflation, but what I will say is that trade-offs are involved,” former Conservative cabinet minister Sajid Javid told ITV this week.

    A more palatable option, at least for households, would be extracting more taxes from corporations.

    Hunt has already said that corporate taxes will rise from 19% to 25% next spring. The Financial Times has reported that Hunt could also target earnings from oil and gas companies by extending a windfall tax on profits.

    In an interview with the BBC earlier this month, Hunt said he was “not against the principle” of windfall taxes and that “nothing is off the table.” Higher taxes on the financial sector are also under consideration, according to the Financial Times.

    Industry groups are already circling the wagons. Banking trade association UK Finance said its members already pay “a higher rate of taxation overall than any other sector,” and urged the government not to “risk the competitiveness of the UK’s banking and finance industry.”

    Sunak could also walk back Truss’ commitment to boosting defense spending to 3% of the economy by 2030, though that carries its own political risks given Russia’s war in Ukraine. Other countries in the region, such as Germany, have said they will ramp up military investments, and the United Kingdom may be loath to fall behind, Zaranko said.

    Investors and economists expect that the government will announce a mixture of tax increases and spending cuts shortly. Hunt is due to reveal his plans in greater depth on October 31.g

    “Despite the fiscal U-turns, the government will still need to show a fiscally credible path next week in the budget to balance the books,” Sonali Punhani, an economist at Credit Suisse, said in a note to clients this week.

    That could exacerbate the country’s downturn. The Bank of England has projected that the United Kingdom is already in a recession, and a gauge of business activity in October slumped to its lowest level in 21 months.

    “We are seeing quite a dramatic shift in the fiscal outlook from being much looser than we expected just a few weeks ago to being much tighter than we expected,” Gregory of Capital Economics said. “I think the risk is that the recession is deeper or longer than we expect.”

    A weaker economy would present its own complications.

    No one wants to repeat the errors of the brief Truss era, when her gamble that unfunded tax cuts would jumpstart growth backfired spectacularly.

    But business groups are warning that completely abandoning the objective of boosting Britain’s anemic economic growth would create problems, too.

    The austerity of the 2010s produced “very low growth, zero productivity and low investment,” Tony Danker, head of the Confederation of British Industry, told the BBC on Tuesday.

    “The country could end up in a similar doom loop where all you have to do is keep coming back every year to find more tax rises and more spending cuts, because you’ve got no growth.”

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