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Shaktikanta Das Says Banks Should Take Measures To Avoid Credit 'Exuberance'
RBI's tighter consumer lending rules are pre-emptive in nature and in the overall interest of sustainability, Das says.
Reserve Bank of India Governor Shaktikanta Das said the tighter rules for consumer lending were pre-emptive and advised lenders to continue stress tests and precautionary measures to avoid "exuberance".
The recently announced macro prudential measures are in the "overall interest of sustainability", "pre-emptive in nature", "calibrated and targeted", Das said, speaking at the FIBAC 2023 Conference organised by Ficci and IBA. He, however, underscored that major growth drivers like loans for housing, vehicles and small businesses have been excluded.
The central bank raised risk weights on personal and unsecured loans to check the surge in such lending. Analysts said that will make such lending costlier for banks and non-bank lenders.
"Banks, NBFCs and other financial entities must continue to do stress testing of their books," Das said. "In fact, there is a strong case for companies in the real sector also to stress test their businesses and balance sheets."
Banks and NBFCs would be well advised to take "certain precautionary measures", the RBI governor said.
While credit growth is accelerating, lenders may take due care to ensure that credit growth at the overall, sectoral and sub-sectoral levels remain "sustainable and all forms of exuberance are avoided", he said.
Expansion of the credit portfolio and pricing should be in sync with the risks envisaged, Das said, advising banks and NBFCs to strengthen their asset liability management
"In certain cases, we have observed increased reliance on high-cost short term bulk deposits while the tenure of the loans, both in retail and corporate loans, is getting elongated," he said.
As the Indian economy strives to grow in an evolving and uncertain global environment, it is imperative that "our financial sector remains strong", said Das. Though the banks are well-capitalised, they must constantly evaluate their exposure to NBFCs and individual non-bank lenders to multiple banks, Das said. The NBFCs, on their part, should focus on broad-basing their funding sources and reducing overdependence on bank funding, he said.
The Indian banking system continues to be resilient, backed by improved capital ratios, asset quality and robust earnings growth, while the financial indicators of non-banks are also in line with that of the banking system, Das said. "In good times like these, banks and NBFCs need to reflect and introspect as to where potential risks could possibly originate."
Now is the time for them to further strengthen risk management practices and build additional buffers to face the situation, if the business cycle turns adverse, he said.
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Banking & Finance
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India To Cut Floor Price For Basmati Exports To Stay Competitive
India, the world’s biggest rice exporter, is considering to cut the floor price for basmati shipments to make the premium variety attractive in the world market, according to people familiar with the matter.
(Bloomberg) -- India, the world’s biggest rice exporter, is considering to cut the floor price for basmati shipments to make the premium variety attractive in the world market, according to people familiar with the matter.
The nation, which has curbed overseas sales of all grades of rice to control domestic food inflation, will reduce the minimum export price to $850 a ton from $1,200, said the people who asked not to be identified as the discussions are confidential. A decision on the issue will be taken soon, they said.
The government is looking at the proposal following pleas from the industry, which says that current price levels are making Indian shipments costlier than those from countries such as Pakistan, the people said. Basmati rice accounted for about 20% of India’s shipments in 2021-22.
A spokesperson, who represents both food and commerce ministries, declined to comment on the proposal.
The likely move may help Indian traders compete in the world market and bring down global prices of the variety, which is generally grown in the Indian subcontinent and commands a healthy premium because of its longer grain size and unique aroma. The possible measure is not expected to have an upward pressure on local rice prices as India traditionally exports most of its basmati.
The South Asian nation set the floor price in August to prevent some traders from smuggling non-basmati white rice, which has been banned for exports, by declaring them as the more expensive basmati. The benchmark Asian rice price jumped to the highest in about 15 years early last month on global supply concerns, before trimming gains on an improved Thai crop outlook.
Even after India’s possible move on basmati exports, curbs on shipments of wheat, rice and sugar could stay for a longer period, traders say. The government may relax some norms after the harvesting of monsoon-sown crops in October and November, but several restrictions could continue until early 2024 when national elections must be held. Prime Minister Narendra Modi will face voters of a third five-year term.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Agriculture
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Income Tax Return: More Than 2.45 Crore Refunds For AY 2023-24 Issued, Says CBDT
The Income Tax department said that of the 6.98 crore ITRs filed, 6.84 crore have been verified for the annual year 2023-24.
ITR Filing 2023: The last date to e-verify the ITRs (Income Tax Returns) filed in July was in August, this is based on the new 30-day e-verification norm. Earlier, taxpayers could e-verify ITRs for 120 days.
On September 5, the Income Tax department shared that out of the 6.98 crore ITRs filed, 6.84 crore have been verified for the annual year 2023-24.
This means that the department has accomplished the goal of processing 88% of the verified ITRs.
More than 2.45 crore refunds for the annual year 2023-24 have been issued with an average processing time of ITRs (after verification) reduced to 10 days.
With over 6 crore of verified ITRs processed, Income Tax Department has processed about 88% of the verified ITRs for AY 2023-24 as on 05.09.2023.— Income Tax India (@IncomeTaxIndia) September 5, 2023
ðMore than 2.45 crore refunds for AY 2023-24 issued.
ðAverage processing time of ITRs (after verification) reduced to 10 days.⦠pic.twitter.com/Fkq70gWaqu
"The department's efforts to provide seamless and expeditious taxpayer services are being continuously strengthened," said the Income Tax department.
As compared to the annual year 2019-20 and 2022-23 where processing took 82 days and 16 days respectively, it is observed that the average processing time of ITRs (after verification) has been deducted to 10 days for returns filed for the annual year 2023-24.
However, the department struggled to process returns in the following instances:
There are about 14 lakh ITRs for the annual year 2023-24 which have been filed but are yet to be verified by the taxpayers as of September 4. Failure to verify the returns causes delays in processing as the return can only be taken up for processing once the taxpayer has completed the verification. Taxpayers are urged to complete the verification process immediately.
There are about 12 lakh verified ITRs in which further information has been sought by the department, for which requisite communication has been sent to the taxpayers through their registered e-filing accounts. Taxpayers are requested to respond to such communication expeditiously.
The department came across several cases where the taxpayer had not verified their bank accounts and hence the refund could not be issued. The department requests such taxpayers to validate their bank accounts through their e-filing portal.
Lastly, the department stressed that it is committed to speedy processing and expeditious issue of refunds and solicits the cooperation of the taxpayers.
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Banking & Finance
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Senate Republicans are again pushing back on President Biden’s efforts at student loan forgiveness.
Biden announced an alternative plan for a student loan handout in late June after the Supreme Court blocked his initial plan that would have forgiven up to $20,000 for some federal borrowers.
"Once again, Biden’s newest student loan scheme only shifts the burden from those who chose to take out loans to those who decided not to go to college, paid their way, or already responsibly paid off their loans," said Sen. Bill Cassidy, R-La., the top Republican on the Senate Committee for Health, Education, Labor and Pensions (HELP).
Cassidy, along with the Senate Minority Whip John Thune, R-S.D., and Sen. John Cornyn, R-Texas, introduced a measure on Tuesday aimed at repealing the latest plan.
Lawmakers in both chambers voted to override Biden’s initial student loan plan earlier this year, before the Supreme Court struck it down. The president vetoed that legislation, known as a Congressional Review Act (CRA), though a handful of Democrats in the House and Senate voted with Republicans to stymie Biden's plans.
The latest CRA against Biden’s new student loan plan is backed by at least a dozen Republican senators and already has a companion bill in the GOP-led House.
It’s not immediately clear, however, if Majority Leader Chuck Schumer, D-N.Y., will bring their CRA to the floor for a vote. Schumer allowed a vote on the initial measure, despite being a vocal supporter of student loan forgiveness efforts.
But Republicans and even some Democrats have decried both of Biden’s plans as a "handout" that does little to fix the underlying problem of skyrocketing university costs.
"Instead of creating a real plan to lower the costs of higher education, President Biden continues to propose budget-busting student loan bailouts that would force 87% of Americans who do not have student loan debt to bear the costs of the 13% of Americans who do," Thune said Tuesday.
Just hours after the Supreme Court struck down his marquee student loan plan, arguing Biden overstepped his authority invoking the 2003 HEROES Act to forgive debts, the president announced he would instead lean on 1965’s Higher Education Act, which allows the Education Secretary to waive or otherwise make changes to student loan debt.
Biden said the backup plan was "legally sound" when announcing it, though he conceded "it’s going to take longer" due to the accompanying regulatory process.
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Banking & Finance
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The Daily Telegraph leads with news of a study by scientists at Johns Hopkins University and Sweden's Lund University - which it says suggests that the Covid lockdown measures in the spring of 2020 saved as few at 1,700 lives in England and Wales.
According to the paper, the study concludes that the benefits of the policy were "a drop in the bucket compared to the staggering collateral costs", such as lockdown's impact on economic growth and children's education.
Asked to comment on the study, a government spokesman tells the paper ministers are committed to learning from the findings of the Covid inquiry.
The Guardian's headline also focuses on the pandemic. It quotes the Trades Union Congress as saying Conservative austerity left Britain "hugely unprepared" for Covid.
Ahead of the opening hearing of the Covid inquiry next week, the paper says the TUC will argue, in a report, that the policies of David Cameron and his chancellor, George Osborne, led to "unsafe staffing in public services and decimated workplace safety enforcement". The paper says both men are likely to push back against the claims when they are called for cross-examination by the inquiry.
The Times says two of Labour's biggest union backers have criticised what it describes as a "central pillar" of Sir Keir Starmer's green strategy.
It reports that Gary Smith, the general Secretary of the GMB, has joined Sharon Graham of Unite in criticising Labour's pledge to ban new licences for oil and gas extraction in the North Sea.
It quotes Mr Smith as saying the proposals are naive and display a "lack of intellectual rigour and thinking". The paper says Sir Keir has stated that Labour would allow existing North Sea projects to continue until 2050.
The i paper reports more than half of young adults, aged 18-24, are concerned that artificial intelligence systems will damage their employment prospects. A survey for the paper says 52% expect that advanced AI may one-day start to act "against our human interests".
The Daily Mail's front page says there is a "record demand" for 35 year mortgages because of rising interest rates. It says one-in-five first time buyers are signing up for a longer mortgage term in an effort to make repayments more affordable. But it warns that in many cases people will still be paying off the deals into their seventies.
The Daily Mirror reports that a British scientist - Professor Robert Wilkinson - is warning that a tuberculosis pandemic could hit the UK unless a "one-shot cure" is found. It says the professor, who works at a clinic in South Africa, has predicted the bug will "overtake Covid as the world's most deadly infectious disease".
And the Times tells readers that Scotland is "hoping to rival the Red Sea as a snorkelers' paradise". It says the Scottish Wildlife Trust is setting up a series of snorkelling trails around the country. But its reporter, who went to have a go, said a safety briefing for the Red Sea probably would not include "quite so much chat about uncontrollable shivering".
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Interest Rates
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Sitharaman Visits Indian Investments In Lanka's East
After inaugurating the branch, Sitharaman appreciated that SBI, with its 159 years of significant presence, is the oldest bank in Sri Lanka and continues to grow its business at home and abroad.
Finance Minister Nirmala Sitharaman on Thursday visited Sri Lanka's eastern port town of Trincomalee where she opened a branch of the State Bank of India and appreciated its role in supporting corporates in international trade.
Sitharaman, who is in the country on a three-day visit, started her day by visiting the main Hindu Temple in the multi-ethnic city to pay homage to it before opening a branch of the State Bank of India in Trincomalee.
Senthil Thondaman, the Governor of Eastern Province, Gopal Baglay, India’s High Commissioner to Sri Lanka, and Chairman SBI Dinesh Khara were also present at the inauguration.
After inaugurating the branch, Sitharaman appreciated that SBI, with its 159 years of significant presence, is the oldest bank in Sri Lanka and continues to grow its business at home and abroad.
During the Sri Lankan economic crisis, SBI's presence in Sri Lanka paved the way for a smooth extension of the Line of Credit worth $ 1 billion by India to Sri Lanka.
Besides, SBI Sri Lanka continues to play a vital role by supporting corporates in international trade.
The SBI in Sri Lanka continues to scale up remittance through a robust digital platform via the SBI Sri Lanka YONO app and online banking, in addition to the in-branch operations.
Sitharaman later visited the Lanka Indian Oil Company complex in the port city.
As Sitharaman visited the country, the two nations also held the 12th round of the Economic and Technology Cooperation Agreement (ETCA), which had been stalled since 2018.
The talks, from October 30 to November 1, commenced following the visit by Sri Lankan President Ranil Wickremesinghe to Delhi in late July.
Both Wickremesinghe and Prime Minister Narendra Modi had agreed to enhance bilateral trade and investment.
The 12th round covered goods, services, rules of origin, trade remedies, customs procedures and trade facilitation, technical barriers to trade and a range of topics, a press release said.
The 19-member Indian official delegation was led by Anant Swarup, the chief negotiator and the joint secretary of the Department of Commerce and Industry of India.
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Banking & Finance
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Petrol prices have risen for the fourth month in a row, jumping by 4.5p a litre on average last month, the RAC says.
Unleaded went up from about £1.52 to £1.57 in September, pushing the cost of filling a family car to over £86.
The RAC said increased fuel costs were being driven by higher global oil prices, but it also claimed that petrol was being "overpriced".
But independent forecourts said they were "not unjustifiably pricing petrol higher than needed".
The Petrol Retailers Association, which represents independent sellers accounting for 64% of UK forecourts, said margins were "under pressure" due to higher labour and energy costs, and reduced sales.
The cost of living in the UK has begun to ease slightly, with inflation, the rate consumer prices rise at, falling to 6.7%.
But rising fuel prices for both petrol and diesel will increase pressure on household finances.
The RAC said drivers were "sadly really starting to suffer again at the pumps", with its latest data for September showing petrol rose by 4.5p per litre on average in the month, while diesel increased by 8p per litre.
Diesel has risen to £1.63 from £1.54 per litre since the start of last month.
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Simon Williams, the motoring group's spokesman, said the RAC's analysis showed that "petrol is currently overpriced by around 7p a litre".
"In the last two weeks the wholesale cost of diesel has become 10p a litre more expensive than petrol, yet the gap at the pumps is only 5p," he said.
"If retailers as a whole were playing fair with drivers petrol would be at least 7p cheaper than it is now, down to around £1.50 [per litre] from its current average of £1.57."
But Gordon Balmer, executive director of the Petrol Retailers Association, hit back at the RAC, saying that margins had "inevitably increased" due to higher running costs.
"Attempting to whip up public anger by suggesting otherwise is deeply irresponsible," he said.
Mr Williams said it was "worrying that retailer margin across the UK is higher for petrol than it should be" following an investigation by the competition watchdog earlier this year into the supermarkets Asda, Sainsbury's, Morrison's and Tesco, which dominate the fuel retail market.
A probe from the Competition and Markets Authority found that weak competition meant supermarket margins on fuel had increased, resulting in drivers paying more at the pumps.
As a result, some retailers have agreed to sign up a voluntary scheme to allow drivers to compare live fuel prices online, and the government has said it plans to make the practice mandatory.
The BBC contacted all four fuel-selling supermarkets for comment. Asda said it remained the "cheapest place for drivers to fill up across the UK", with its unleaded 4.8p cheaper on average.
A Sainsbury's spokesperson said it welcomed "greater pricing transparency in the fuel market" and also claimed it "consistently" offered "among the lowest fuel prices in every area that we operate".
It said with regards to increased margins, it had used profits to absorb inflation "to keep grocery prices as low as possible".
The government said the "soon", all fuel retailers would be required to "release their prices by law", which it said would "help motorists find the best deals".
"We have been clear with fuel retailers that pricing needs to be fairer and more transparent for UK motorists," said a spokesperson for the Department for Energy Security and Net Zero.
Oil price rises
Fuel prices rose sharply during 2021 and the first half of 2022, driven by oil prices soaring following Russia's invasion of Ukraine.
But prices fell back in late 2022 and the first half of this year, before the recent uptick.
The latest rise is as a result of Saudi Arabia and Russia, members of the Opec+ group and two of the world's largest oil-producing nations which meet regularly to determine whether to increase or decrease production, decided to reduce production earlier in August.
Oil prices have risen in response, with Brent crude oil - a major ingredient in motor fuel - rising above $90 a barrel on Tuesday.
The weaker value of sterling has also made wholesale fuel, which is traded in US dollars, more expensive to buy in the UK.
How to save money on petrol and diesel
- Watch your speed: The RAC says 45-50mph is the most efficient speed to drive for fuel efficiency
- Switch off the air conditioning: Extra energy is needed to power a car's air conditioning system and turning it on can increase your fuel consumption by up to 10%, according to the AA
- Check your tyre pressure: Underinflated tyres will use up extra petrol. Check your pressures regularly, especially before heading off on a long journey
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Inflation
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COLUMBIA, Mo. -- The Mega Millions lottery jackpot is approaching $1 billion ahead of Friday's drawing, driving first-time buyers and other hopefuls to stock up on tickets.
Regeina Whitsitt, a lottery clerk for RED X Grocery Store in the Missouri city of Riverside near the border of Kansas, said she’s sold tickets to a number of new players trying to win the $910 million jackpot. Customers are buying $60 to $100 worth of tickets, Whitsitt said.
The $910 million prize is one of the largest in U.S. lottery history and follows a $1.08 billion Powerball prize won by a player July 19 in Los Angeles. California lottery officials haven’t announced a winner for that jackpot, the sixth-largest in U.S. history.
The largest U.S. jackpot was a $2.04 billion Powerball prize won in November 2022.
The current Mega Millions jackpot is shaping up to be the fifth highest in Mega Millions history, with a one-time cash prize estimated at $464 million. The last winner took home $20 million in April. Since then, there have been 28 consecutive drawings without a jackpot winner.
The highest Mega Millions jackpot, won in 2018, was more than $1.5 billion.
WHAT ARE THE CHANCES OF WINNING?
The odds of winning the Mega Millions jackpot are 1 in 302,575,350. Your odds of winning are only slightly improved by buying more than one ticket. And the odds are so long that it’s certainly not worth spending money you’ll miss for more tickets, experts warn. If buying one ticket gives you a 1 in 302,575,350 of winning the jackpot, spending $10 for five tickets improves your chances to only 5 in 303 million. The same is true is you spend $100. So you could spend a lot of money on tickets and still almost undoubtedly not hit the jackpot. Lottery officials say the average player buys two or three tickets, meaning they’re putting money down on a dream with very little chance of a jackpot payoff. For every dollar players spend on the lottery, they will lose about 35 cents on average, according to an analysis of lottery data by the Howard Center for Investigative Journalism at the University of Maryland.
WHY ARE LOTTERY JACKPOTS SO LARGE THESE DAYS?
That’s how the games have been designed. The credit for such big jackpots comes down to math -- and more difficult odds. In 2015, the Powerball lottery lengthened the odds of winning from 1 in 175.2 million to 1 in 292.2 million. Mega Millions followed two years later, stretching the odds of winning the top prize from 1 in 258.9 million to 1 in 302.6 million. The largest lottery jackpots in the U.S. have come since those changes were made.
WHERE IS MEGA MILLIONS PLAYED?
Mega Millions is played in 45 states, as well as Washington, D.C. and the U.S. Virgin Islands.
HOW MUCH MONEY DOES THE LOTTERY MAKE FOR STATES?
State-run lotteries brought in roughly $95 billion in revenue in 2021, according to the U.S. Census Bureau. Of that, about $64 billion was paid out in prizes and another $3.4 billion was used to run the programs. A little under $27 billion in revenue was left for states to pad their budgets. State lotteries spend more than a half-billion dollars a year on pervasive marketing campaigns designed to persuade people to play often, spend more and overlook the long odds of winning. For every $1 spent on advertising nationwide, lotteries have made about $128 in ticket sales, according to an analysis of lottery data by the Howard Center for Investigative Journalism at the University of Maryland.
___
Associated Press video journalist Nicholas Ingram contributed to this report from Riverside, Missouri.
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Consumer & Retail
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Petrol prices should be cut by 5p a litre by the biggest fuel retailers to reflect their lower wholesale costs, the RAC has said.
The motoring body also says that drivers have not yet felt the benefits of the government's 5p duty cut brought in last year.
The price of oil spiked after Russia invaded Ukraine last year which lead to higher prices at the pumps for drivers.
But wholesale oil prices are now lower, with price per barrel nearly $20 less.
The RAC said the big four supermarkets were making the most profits from petrol - an average of 16p for every litre of unleaded fuel sold in October, and 12p for every litre of diesel. It also said the profit on unleaded was double the average the supermarkets had been making since 2012. In response, Asda told the BBC its prices were around 4p per litre cheaper than the UK average; Tesco, Sainsburys and Morrisons didn't comment.
Supermarkets have recently come under fire for their petrol pricing following an investigation by the Competition and Markets Authority (CMA).
Fuel duty was cut by Chancellor Jeremy Hunt last March, but there were concerns it was not immediately reflected through lower pump prices.
The investigation found the cut had been passed on, but the CMA said increased profit margins cancelled out the benefit.
The watchdog found that weak competition meant supermarket margins on fuel had increased, resulting in extra costs for drivers. As a result, retailers agreed to set up a scheme to allow motorists to compare live fuel prices online.
Ukraine-Russia war pushing up prices
Oil prices jumped following Russia's invasion of Ukraine, with Brent crude hitting more than $120 a barrel in June 2022.
Following that peak, oil prices fell back to a little above $70 a barrel in March this year amid concerns over weak demand.
However, recent months have seen oil prices climb again to around $90 a barrel as major oil producers like Saudi Arabia and Russia started to restrict output.
Despite this, wholesale prices still remain lower than last summer and this is why the RAC is calling on retailers to reflect the lower prices at the pumps.
RAC fuel spokesman Simon Williams said: "Drivers are still losing out massively when wholesale prices come down. But in Northern Ireland, where the supermarkets don't dominate fuel retailing, drivers are getting a fairer deal with a litre of unleaded costing 150p and diesel 157p - 5p less than the UK average."
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Consumer & Retail
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California Gov. Gavin Newsom said Sunday that he plans to sign into law a pair of climate-focused bills intended to force major corporations to be more transparent about greenhouse gas emissions and the financial risks stemming from global warming.
Newsom's announcement came during an out-of-state trip to New York’s Climate Week, where world leaders in business, politics and the arts are gathered to seek solutions for climate change.
California lawmakers last week passed legislation requiring large businesses from oil and gas companies to retail giants to disclose their direct greenhouse gas emissions as well as those that come from activities like employee business travel.
Such disclosures are a "simple but intensely powerful driver of decarbonization," said the bill’s author, state Sen. Scott Wiener, a Democrat.
"This legislation will support those companies doing their part to tackle the climate crisis and create accountability for those that aren’t," Wiener said in a statement Sunday applauding Newsom’s decision.
Under the law, thousands of public and private businesses that operate in California and make more than $1 billion annually will have to make the emissions disclosures. The goal is to increase transparency and nudge companies to evaluate how they can cut their carbon emissions.
The second bill approved last week by the state Assembly requires companies making more than $500 million annually to disclose what financial risks climate change poses to their businesses and how they plan to address those risks.
State Sen. Henry Stern, a Democrat from Los Angeles who introduced the legislation, said the information would be useful for individuals and lawmakers when making public and private investment decisions. The bill was changed recently to require companies to begin reporting the information in 2026, instead of 2024, and mandate that they report every other year, instead of annually.
Newsom, a Democrat, said he wants California to lead the nation in addressing the climate crisis. "We need to exercise not just our formal authority, but we need to share our moral authority more abundantly," he said.
Newsom's office announced Saturday that California has filed a lawsuit against some of the world’s largest oil and gas companies, claiming they deceived the public about the risks of fossil fuels now faulted for climate change-related storms and wildfires that caused billions of dollars in damage.
The civil lawsuit filed in state Superior Court in San Francisco also seeks the creation of a fund — financed by the companies — to pay for recovery efforts following devastating storms and fires.
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Energy & Natural Resources
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Pakistan, IMF Discussing $2.5 Billion 'Standby Arrangement'
Pakistan Prime Minister Shehbaz Sharif on Tuesday discussed the IMF programme with its Managing Director Kristalina Georgieva and expressed hope that coordination on the points of the bailout programme would lead to a decision from the global lender in a day or two.
Cash-strapped Pakistan and the International Monetary Fund are discussing a new short-term standby arrangement worth about $2.5 billion to get the country through the political transition to the newly-elected government in the second quarter of the current fiscal year, according to a media report on Wednesday.
Pakistan’s ninth review by the IMF under the 2019 Extended Fund Facility for the release of a $1.2 billion tranche is still pending with the programme’s expiry on June 30.
A new short-term — six to nine months — standby arrangement is being discussed by Pakistan and the IMF worth about $2.5bn, the remaining part of the EEF expiring on June 30, the Dawn newspaper reported.
Pakistan Prime Minister Shehbaz Sharif on Tuesday discussed the IMF programme with its Managing Director Kristalina Georgieva and expressed hope that coordination on the points of the bailout programme would lead to a decision from the global lender in a day or two, a statement by the PM Office said.
Pakistan signed a $6.5 billion package with the Washington-based IMF in 2019.
The plan was derailed several times and the full reimbursement is still pending due to insistence by the donor that Pakistan should complete all formalities.
The SBA is one of the two options currently under discussion by the two sides after the government met all the conditions and prior actions of the ninth review, and also those relating to subsequent 10th and 11th tranches without disbursement of $2.5 billion funds outstanding since October 2022, the report added.
The options have been discussed at the staff level and during recent back-to-back engagements between Prime Minister Sharif and Georgieva, including the one through telephone on Tuesday morning.
“In the strict sense, we have completed conditions of not only 9th but with the revised budget, the terms of 10th and 11th reviews had also been met and (Pakistan) deserves disbursement of entire outstanding approved quota,” an official was quoted as saying by the newspaper.
The two sides had exchanged a memorandum of economic and financial policies a few days ago for completion of the ninth review, the official added.
However, the Fund’s rules do not provide quick reviews, particularly when the programme’s one-year extension expires on June 30. This was explained by Georgieva to prime minister Sharif in Paris.
The IMF has acknowledged Pakistani authorities’ swift completion of policy actions. Earlier, IMF staff raised objections over the original budget presented on June 9 but has now confirmed that the revised budget, including additional taxes, expenditure cuts, an end to amnesty scheme for remittances etc, had met its programme requirements.
The two options include the disbursement of $1.1 billion under the ninth review. But once approved by the IMF executive board, this would mean the end of the programme, without the possibility of release of two subsequent tranches of $1.4 billion.
This, however, is not a preferred option for the government because Pakistan would lose $1.4 billion worth of quota approved by the IMF executive board, the report added.
The other option under consideration is to enter into a new short-term arrangement with upfront disbursement equivalent to the ninth review ($1.1 billion) within the next 15 days, followed by two-three more reviews for up to $500 million each.
This would send a message of stability to the markets as the current government completes its term in less than two months and is to be replaced by a caretaker setup until a new regime takes charge after the general elections.
For both options, the two sides have to announce a staff-level agreement by June 30 for confidence building. The executive board approval could follow over the next week or so.
“For us, the priority is to secure the entire amount of $2.5 billion,” sources were quoted as saying by the report, adding the authorities pitched a higher amount for SBA but perhaps that was asking for too much.
But to achieve this, the government may have to increase the petroleum levy by up to Rs 5 per litre in the coming pricing review to secure at least an average of Rs 55 per litre petroleum levy for the year and commit to the expedited regulatory process for rebasing of electricity tariffs by Rs 5-8 per unit with effect from July 1 even if its approval takes a couple of weeks.
Both EFF and SBA windows are similar in nature except that EFF has a longer (3-4 year) tenure to address the medium-term balance of payment challenges while SBA is generally short-term (9-24 months) with relatively flexible terms.
Meanwhile, Pakistan expected inflows from friendly Arab countries over the next couple of days to close the fiscal year with a higher foreign exchange reserve position.
Pakistan urgently needs the IMF loan which will open avenues for more funding by various multilateral and bilateral donors to support its meagre foreign reserves of around $4 billion.
Pakistan’s economy has been in a free fall mode for the last many years, bringing untold pressure on the poor masses in the form of unchecked inflation, making it almost impossible for a vast number of people to make ends meet.
Pakistan started preparations for the general elections with a meeting of the election commission recently. The current National Assembly will complete its five-year term on August 12 and the fresh general election must be conducted within 60 days as laid down in the Constitution of Pakistan.
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Banking & Finance
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Moody’s on Friday changed its outlook on the US credit rating to “negative” from “stable” citing large fiscal deficits and a decline in debt affordability.
The move follows a rating downgrade of the sovereign by another rating agency, Fitch, earlier this year, which came after months of political brinkmanship around the US debt ceiling.
“Continued political polarization within US Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability,” Moody’s said in a statement.
Republicans who control the House of Representatives expect to release a stopgap spending measure on Saturday, aimed at averting a partial government shutdown by keeping federal agencies open when current funding expires next Friday.
Moody’s is the last of the three major rating agencies to maintain a top rating for the US government. Fitch changed its rating from triple-A to AA+ in August joining S&P, which has an AA+ rating since 2011.
While it changed its outlook – indicating that a downgrade is possible over the medium term – Moody’s affirmed its long-term issuer and senior unsecured ratings at ‘Aaa’ citing the US credit and economic strengths.
“The US’ institutional and governance strength is also very high, supported in particular by monetary and macroeconomic policy effectiveness,” it said.
Top officials in President Biden’s administration rejected the move.
White House spokesperson Karine Jean-Pierre said the change was “yet another consequence of congressional Republican extremism and dysfunction.”
“While the statement by Moody’s maintains the United States’ AAA rating, we disagree with the shift to a negative outlook. The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset,” Deputy Treasury Secretary Wally Adeyemo said in a statement.
Adeyemo said the Biden administration had demonstrated its commitment to fiscal sustainability, including through over $1 trillion in deficit reduction measures included in a June agreement struck with Congress on raising the US debt limit, and Biden’s proposal to reduce the deficit by nearly $2.5 trillion over the next decade.
The outlook change comes at a volatile stretch for the bond market. Treasury yields have soared over the last few months to 16-year highs on expectations the Federal Reserve will keep monetary policy tight, as well as on US-focused fiscal concerns.
“The sharp rise in US Treasury bond yields this year has increased pre-existing pressure on US debt affordability,” Moody’s said.
Yields, which move inversely to bond prices, have reversed some of the gains in recent weeks.
“It is a reminder that the clock is ticking and the markets are moving closer and closer to understanding that we could go into another period of drama that could lead ultimately to the government shutting down,” said Quincy Krosby, chief global strategist at LPL Financial.
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Interest Rates
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- Sam Bankman-Fried's trial is underway in New York, as prosecutors try to prove the crypto entrepreneur misused billions of dollars of client money.
- The first witness was a cocoa bean trader, who says he lost $100,000 with FTX.
- A conviction could put Bankman-Fried in prison for the rest of his life.
Marc-Antoine Julliard typically trades cocoa beans. But in the spring of 2021, the London-based commodities broker decided to diversify into cryptocurrency trading. His platform of choice was FTX.
Two years later, Julliard stood as the prosecution's first witness in the criminal fraud trial against FTX founder Sam Bankman-Fried, who's accused of misusing billions of dollars in client money.
In testimony that lasted around 50 minutes on Wednesday, Julliard recounted his experience with FTX, including the "extremely anxious" feeling he had the day he unsuccessfully attempted to withdraw part of the $100,000 worth of crypto and cash he had stored on the site. He and thousands of other FTX customers were practically wiped out when the exchange went belly up late last year.
Like many others, Julliard said he he was under the impression that there were "strong financials behind the company."
Julliard is the poster child for the case the prosecution laid out in its opening statement as it tries to prove to a jury that clients were led to believe the money they stored with FTX was safe. Prospective customers, Julliard said, were drawn in through savvy marketing, with no reason to believe that FTX would be repurposing their crypto funds.
In a trial that's set to last six weeks, Bankman-Fried, a man once revered as the "white knight" of crypto, faces seven federal charges, including wire fraud, securities fraud and money laundering, that could put him in prison for the rest of his life.
A jury was seated shortly after 11:30 a.m. (though four of the 12 jurors were already looking to be dismissed). Opening statements began about an hour later. Julliard took the stand just before 2 p.m. to a packed courthouse in Manhattan.
As the lead witness, Julliard helped lay out the government's narrative. Much of his decision to buy into FTX had to do with the celebrities and venture funds attached to the brand. He referenced an ad with supermodel Gisele Bündchen and Formula 1 marketing. He also pointed to prolific media coverage, which bolstered his trust in the company.
Julliard wasn't an aggressive crypto trader. He said he never participated in margin trading, or borrowing money to make purchases, nor did he engage in a lending program offered by the company that allowed users to earn interest on idle crypto.
The defense is trying to make clients accountable for what it says were their choices to buy and trade crypto.
"Sam didn't defraud anyone," said Mark Cohen, Bankman-Fried's attorney, in his opening statement. Cohen called it a "hindsight case" brought by the government, and said that just because people lost money, doesn't mean the 31-year-old Bankman-Fried committed fraud.
Bankman-Fried donned a fresh suit with a purple tie and a clean haircut — a much different look than the beach shorts, sandals and wild curls that helped define his image during crypto's heyday. The entrepreneur, who Cohen described as a "math nerd that didn't drink or party," diligently took notes on his air-gapped laptop as he conversed with both of his attorneys and, during breaks, sometimes stood while emphatically motioning with his hands as he spoke to his counsel.
Throughout both sides' opening statements, Bankman-Fried kept his eyes trained on the jury box. His head was turned 90 degrees to his right to watch those who will ultimately decide his fate. Bankman-Fried was joined in court by his parents, who are both being sued by FTX's new management for having allegedly "exploited their access and influence within the FTX enterprise to enrich themselves…by millions of dollars."
Cohen is projecting Bankman-Fried as a startup founder and equated running FTX and Alameda Research, his sister hedge fund, to "building a plane while flying on it." He told the jury that there was no risk management in place. Specifically, he said the firm didn't have a chief risk officer.
Far from the "cartoon of a villain" that the government presented, Cohen gave different explanations for his client's supposedly illegal actions. One example dealt with the secret backdoor baked into FTX's code that prosecutors say gave Alameda a way to borrow much needed capital.
Cohen said there was nothing secretive about this backchannel in the code base and said the special access to FTX was there because Alameda was initially set up as a market maker for the crypto exchange, which needed the liquidity, especially in its early days.
Cohen reminded the jury that the three insiders who will take the stand against Bankman-Fried have all signed cooperation agreements with the government.
The prosecution's opening statement was delivered by Assistant U.S. Attorney Thane Rehn. Over the course of about a half hour, Rehn drove home the point that everyday investors were the ones who fell victim to FTX's scheme. By the summer of 2022, he said, more than $10 billion had been stolen from thousands of FTX customers who had trusted custody of their crypto and cash to the platform.
Rehn said the evidence would show jurors how Bankman-Fried lied to FTX users, investors and lenders, and how he spent a good amount of the money he stole for his own good. Rehn referenced campaign contributions, for example, as one way that Bankman-Fried looked to curry favor on Capitol Hill.
Rehn called Alameda a "second, smaller and more secretive company" founded and controlled by Bankman-Fried that was integral to the defendant's alleged scheme.
The government also teed up its star witness, ex-girlfriend and Alameda's ex-CEO, Caroline Ellison. She pleaded guilty in December to multiple charges and has been cooperating with the U.S. attorney's office in Manhattan for months.
Rehn plans to show that Bankman-Fried installed his girlfriend at the top of his hedge fund, though he remained the one calling the shots behind the scenes.
Noticeably absent was the mention of Ellison's co-CEO Sam Trabucco, who was a classmate of Bankman-Fried at MIT. Trabucco left FTX in Aug. 2022, and has stayed relatively under the radar.
Also central to the government's case is the alleged coverup to hide Bankman-Fried's crimes. Those tactics include backdating contracts and using encrypted messaging apps set to auto-delete to avoid a paper trail.
"This man stole billions of dollars from thousands of people," Rein said, as he closed his statement.
The prosecution's second witness was Adam Yedidia, who met Bankman-Fried in college at the Massachusetts Institute of Technology. The pair remained good friends.
Yedida detailed his experience working first as a trader at Alameda for two months in 2017, and later as a software engineer for FTX beginning in January 2021. He said he resigned from FTX the day before the exchange filed for bankruptcy after a fellow developer told him that Alameda had used FTX customer deposits to pay back creditors.
Speaking quickly and deliberately with an air of practiced nonchalance, Yedida testified that he hadn't talked to Bankman-Fried or seen him in person since Nov. 2022.
When asked why he was appearing under an immunity order, Yedida said he was concerned that as an FTX developer, he "may have unwittingly written code that contributed to a crime."
Prosecutors got through a half hour of testimony before breaking for the day. The government will continue its questioning of Yedida at 9:30 A.M. on Thursday.
FTX co-founder Gary Wang will also be taking the stand this week for the government.
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Crypto Trading & Speculation
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The recent cost of living crisis has led to painful choices for many households facing soaring food and energy prices.
In addition, the higher interest rates deployed to tackle rising prices have caused problems for many mortgage holders, tenants and businesses.
But recent figures showed pay rises are now matching the cost of living, and interest rates are on hold for now.
However, that doesn't mean all of us will see a rapid improvement in our fortunes.
Although many will be hoping the current squeeze on finances is coming to an end, there are several reasons why some may yet be worse off.
Jobs and wages
Workers' attempts to get pay rises that match outgoings have been helped by employers anxious to attract and keep staff in the face of skills shortages. But that's changing. As higher interest rates add to the pressure on businesses, more than 200,000 jobs were shed between May and July.
The rise in unemployment so far has been relatively modest, but it's gathered momentum and will probably increase further. There is always a lag between interest rates changes and bosses making hiring decisions.
Already, surveys show new pay deals moderating in recent weeks, also reflecting expectations - voiced by the Bank of England, the Treasury and independent economists - that inflation, which measures how prices change over time, will carry on falling.
Yet even the Bank is forecasting inflation will remain above its 2% target next year - meaning that prices will keep rising.
Food is one area where we've seen the most stubborn inflation. A shop that cost £60 last year is more than £70 now.
Those price rises should slow, but analysts warn the era of cheaper food may not return. Businesses saw their profit margins squeezed by higher costs last year and may look to build them back up.
Tax
Even if pay keeps pace with prices from here, and even if you scored a sizeable rise, ripping open your payslip may not have given you a warm glow.
Enter the "stealth tax". The government has opted not to increase the threshold at which different rates of income tax become payable in line with inflation since 2021. As incomes grow, that's helped create more than two million new income taxpayers since 2021 - and pulled 1.3 million people into the higher rate (40p) income tax bracket.
Don't expect tax relief soon. Current plans have the measure continuing until 2028, bumping up the number of taxpayers and tax bills. The chancellor also indicated this week that we can't expect tax cuts in November's Autumn Statement, as he focuses on meeting his self-imposed financial rules.
Taking tax changes and rising prices into account, the Resolution Foundation, an independent think tank focused on improving living standards, says the income of the typical working-age households will be 4% lower by 2024 than it was 2021. That may not improve before 2025.
With the government's cost-of-living payments also due to end after the winter, those on below average incomes could be hit hardest. That group, the think tank claims, could see incomes after tax and inflation falling by a further 1% between 2024 and 2025.
Borrowing costs
The rise in interest rates has felt like an inexorable slog for some, with mortgage holders in particular in the direct line of fire in the battle against inflation.
About half of homeowners with a mortgage, and a higher proportion of landlords with loans, have seen monthly repayments rise - typically by hundreds of pounds.
Whether the Bank of England has now finished hiking rates, or has merely paused, many more may face similar pain.
The governor of the Bank of England has signalled that interest rates are destined to stay high for some time, and it's financial markets' expectations where rates will go that shape the cost of fixed-rate mortgage deals.
About 400,000 borrowers are on fixed-rate deals that are due to finish before the end of this year, with 1.6 million on deals expiring next year. Those people will move onto products with much higher rates, and could see their repayments jump.
Analysts at Oxford Economics say total debt repayments in 2024 are typically set to take up almost four times as much of households' budgets as they did in 2021. Repossessions are expected to rise, although protective measures should keep them very low compared to past downturns.
So it takes a while for the impact of previous rate hikes to feed through to people's pockets and, therefore, to house prices. Economists reckon prices could fall by a further 5% in 2024, but high mortgage rates still make it a challenge to jump on or up the housing ladder.
The difficulties many, particularly young people, have faced in buying are one reason why the proportion of households who hold a mortgage has actually dropped to below a third. Those renting instead are already facing pressures - rents in London, for example, are rising at their fastest rate since at least 2006 as landlords' costs soar too. As some of those landlords sell up, the availability of rental properties could be hit.
The other reason for the drop in the proportion of households with a mortgage is the increase in those - typically older - who own outright. They are also more likely to be among those who built up hefty savings during the pandemic, insulating them against the shock of recent years. It's one reason why spending on non-essentials has held up. But with interest rates on hold, they're unlikely to see savings rates rise further.
With so many likely to see their budgets remaining under pressure, consumer spending - the core part of our economy - could take a knock. Many economists are concerned about the prospects for growth.
Some voters could be feeling that greater strain just as a general election moves into view. They'll be looking to politicians for answers on how they intend to improve their lot.
What can I do if I can't pay my debts
- Talk to someone. You are not alone and there is help available. A trained debt adviser can talk you through the options. Here are some organisations to get in touch with.
- Take control. Citizens Advice suggest you work out how much you owe, who to, which debts are the most urgent and how much you need to pay each month.
- Ask for a payment plan. Energy suppliers, for example, must give you a chance to clear your debt before taking any action to recover the money
- Ask for breathing space. If you're receiving debt advice in England and Wales you can apply for a break to shield you from further interest and charges for up to 60 days.
Tackling It Together: More tips to help you manage debt
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Inflation
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It would be "risky" for the government to protect mortgage holders against rising interest rates, according to a former Bank of England deputy governor.
Speaking to Sophy Ridge on Sky News, Sir Charlie Bean said trying to help those paying off home loans could force the bank to raise the base rate even further.
His warning follows a report from the Resolution Foundation think tank that says average annual mortgage repayments are set to rise by £2,900 for those renewing next year.
Total annual mortgage repayments could rise by £15.8bn by 2026, the report added.
Sir Charlie said: "There's not a lot [government] can do to influence the overall macro environment in a favourable way.
"There may be things it wants to do to alleviate pain on particular parts of the population, poor households or whatever.
"There obviously have been some calls for protecting those with mortgages.
"I think that's risky territory to get into because of course, if you do that and reduce the pressures on those with mortgages, that reduces the extent to which the economy slows and just means the bank has to raise interest rates even more."
An extended period of inflation led the Bank of England to raise interest rates, pushing up the cost of borrowing.
These increases are now expected to continue until the middle of next year, with the base rate forecast to peak at nearly 6%.
Read more:
Explained: What is causing the mortgage crunch
Ed Conway: Mortgage payers face largest home loan squeeze since early 90s
Sunak insists he won't pass the buck if he misses key inflation pledge
With an election expected in 2024, interest rates continuing to rise ahead of the vote would cause headaches for Rishi Sunak and campaigners for the Conservative Party.
The uncertainty has led to TSB pulling all its 10-year fixed-rate deals from the market - and Santander withdrew its offers for new borrowers this week.
Michael Gove, the housing secretary, was asked by Sophy Ridge whether he was "frightened" by the situation.
He said he was "concerned of course", saying the government's target of getting inflation down would allow the bank to reduce interest rates.
The cabinet minister revealed he does not have a mortgage, but acknowledged the situation is "very difficult for hundreds of thousands of people".
He added: "As a minister who is responsible for housing, I do take a close interest in what's happening in the mortgage market.
"It only reinforces the importance of doing everything else that we can to support homeowners and indeed, specifically, to help those in the rental sector as well who have faced the prospect of increasing rents and that's why we are bringing forward legislation, the Private Rented Sector Reform Bill, in order to help them."
The bill is aimed at removing no-fault evictions and holding landlords to higher standards, while also allowing homeowners to have an easier time recovering properties from disruptive tenants.
Criticisms have been made of the Bank of England for not raising interest rates fast enough, allowing inflation to rise.
Sir Charlie admitted that his old employer was "a little behind the curve" in its actions - but added most of the inflationary pressure was coming from external factors like "the war in Ukraine, rising gas prices, global food prices, also supply chain pressures as economies reopened after the pandemic".
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Interest Rates
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I’m turning 68 shortly and plan to wait to claim my Social Security at age 70 to maximize the monthly benefit. I also plan to retire at the end of the year, if not sooner (so in three months or less). Does withdrawing from my traditional IRAs (current balance is $215,000) to reduce the income tax on my RMDs outweigh the benefit of keeping those withdrawals invested and growing tax-deferred? My understanding is that if I withdraw amounts up to my standard deduction, then those amounts would be tax-free.
– Austen
Retirement withdrawals, Social Security benefits, required minimum distribution (RMDs), taxes … there are a lot of moving parts when it comes to making decisions about your retirement income. Reducing the amount of money that’s subject to RMDs can help minimize your taxes once they kick in. This may also help avoid taxes on your Social Security benefits.
If you don't need the money now, but want to reduce RMDs later, one of the best moves might be converting a portion of your IRA to a Roth IRA each year. That can help reduce future required withdrawals and allow your money to grow tax-free, though there can be tax consequences for certain withdrawals. (A financial advisor can help guide you through the Roth conversion process and potentially avoid unwanted tax consequences.)
Maximizing Social Security Benefits
Delaying Social Security benefits until age 70 makes sense for certain people. That’s when you can receive the largest possible monthly payment. You can start collecting Social Security retirement benefits at age 62, but the monthly amount will be reduced by 30%.
For example, if your full retirement benefit would be $2,000, your payment at age 62 would be only $1,400. However, waiting until age 70 would give you a maximum monthly benefit of $2,480.
Still, there are some circumstances in which starting sooner can be more beneficial, such as:
• You need the money to make ends meet
• You're in poor health or have a shorter life expectancy
• You're completely done working
• Your spouse has been a higher earner and will delay their benefits
Remember, there's no right answer that works for everyone, and you should do what makes the most sense for your family. (And if you need help planning for Social Security, consider working with a financial advisor.)
Accounting for Required Minimum Distributions (RMDs)
Once you turn age 73, you have to start taking required minimum distributions – known as “RMDs” – from all of your traditional retirement accounts, including IRAs and 401(k)s. Your RMD is calculated based on your age, life expectancy and account balance according to IRS Uniform Lifetime Table. If you have multiple IRAs, you'll need to figure out the RMDs for each separately.
What happens if you don't take an RMD? The IRS charges you a penalty tax of 50% of the amount you were supposed to take. If you correct it and take the RMD within two years, the tax rate can drop to 25% or 10% depending on the circumstances. (If you need help calculating your RMDs, consider matching with a financial advisor.)
Taxes on IRA Withdrawals
Any time you withdraw money from a pre-tax retirement account like a traditional IRA, you'll pay income taxes on that withdrawal at your tax rate. Once you're past age 59.5 you won't be hit with the 10% early withdrawal penalty, but the money will become part of your taxable income.
In theory, if your total taxable income including the IRA withdrawal doesn't exceed your standard deduction, you wouldn't owe income taxes. The actual answer depends on your complete tax situation, which may change from year to year.
Minimizing RMDs and Taxes
There are a few things you can do now to minimize future RMDs and future tax bills.
One option is to take withdrawals from your IRA now to lower the balance and reduce your future RMDs. That can also make it easier to wait until age 70 to start receiving Social Security, maximizing those benefits. On the downside, you'll lose out on additional tax-deferred growth in your IRA and have a smaller nest egg to pull from later.
You can also convert some or all of your IRA to a Roth IRA. You'll pay taxes on the amount that’s converted, just like you would if you withdrew the money. But your money will continue to grow tax-free in the Roth account, which isn’t subject to RMDs. For an added bonus, Roth withdrawals won't count as taxable income, so they won't impact taxes on your Social Security benefits. One caveat: Roth IRA conversions come with a strict five-year rule. To preserve complete tax-free status, you can't generally make withdrawals for at least five years from the time of conversion.
Finally, if you don't need the money from your IRA, you can directly donate your RMD to a qualified charity – a strategy called qualified charitable distributions (QCDs). This direct donation bypasses taxable income completely. If you were going to make donations, this is the way to do it. (If you have more questions about your future tax liability, consider speaking with a financial advisor.)
Bottom Line
There are things you can do now to minimize your future RMDs, but each strategy will have a different effect on your overall financial picture. You may consider making withdrawals from your IRA, converting your IRA into a Roth account or even donating your RMD to charity, eliminating your tax bill on the money in the process. Just keep in mind that the option you choose may affect taxes on your Social Security benefits.
Tips for Finding a Financial Advisor
A financial advisor can help you plan for RMDs and make other important decisions for retirement. Finding a financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.
Consider a few advisors before settling on one. It's important to make sure you find someone you trust to manage your money. As you consider your options, these are the questions you should ask an advisor to ensure you make the right choice.
Michele Cagan, CPA, is a SmartAsset financial planning columnist and answers reader questions on personal finance and tax topics. Got a question you'd like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.
Please note that Michele is not a participant in the SmartAdvisor Match platform, and she has been compensated for this article.
Photo credits: ©iStock.com/Andrii Dodonov, ©iStock.com/mixetto
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Personal Finance & Financial Education
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Jeremy Hunt will use his autumn statement to announce a US-inspired scheme aimed at developing homegrown science and technology investors focused on ensuring UK innovations have a commercial payoff.
Amid concern in government that Britain too often fails to exploit scientific breakthroughs, the chancellor is expected to announce plans for a fellowship programme that will train a new generation of science and technology venture capitalists.
Hunt believes a modest investment can nurture specialist venture investors who will help boost growth and generate breakthroughs in areas such as vaccines, robotics and artificial intelligence.
The £3m scheme – which will offer up to 20 places – is based on the highly successful Kauffman Foundation in the US, which has trained more than 800 investors who represent funds managing worth more than $1tn.
A Treasury source said: “The British science and technology industry holds the key to exponential growth that will turbocharge our economy for decades to come.
“This scheme will produce a new generation of investment experts that will enable us to meet our science superpower ambitions – drawing on the eminent success of similar programmes across the pond.”
The scheme will be developed by the Department for Science, Innovation and Technology, and follows a recommendation from the prime minister’s Council for Science and Technology, a body made up of science experts.
Hunt believes his scheme will address the council’s point that the UK’s venture capital industry needs to continue to develop deep science and technology expertise if the government is to achieve its aim of making the UK a science superpower. Traditionally, Britain has lagged behind other countries – particularly the US – in commercially exploiting its scientific breakthroughs.
Treasury sources said the fellowship programme was the latest step in achieving the Mansion House reforms announced by Hunt in July 2023. These seek to unlock more pension capital into high-growth companies, including within the UK’s science and tech sectors, to the benefit of savers and the economy.
A source from the Department for Science, Innovation and Technology said: “Science and technology hold the keys to a vast range of benefits and opportunity, from radically improving healthcare to creating whole new industries in fields from AI to quantum.
“But too often, groundbreaking innovations in the UK remain purely academic or are snapped up by investors abroad.
“By boosting the pool of investors with deep knowledge of the science and tech sectors, we can unlock real financial firepower for the world-class innovation that is happening in the UK and build British-based industries in the technologies of the future.”
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Banking & Finance
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Armin, 24, used to live a fairly ordinary life back home in Iran: he lived with family and worked in a shoe shop, going to the gym in his spare time. But after he converted to Christianity, he was identified by the local Basij “morality police” and repeatedly arrested and subjected to psychological torture.
He fled to the UK four years ago and was finally granted refugee status last month. But celebrations soon soured when he received a letter giving him 10 days to leave his Home Office accommodation. Asked where he would go, he said: “I don’t know. I don’t have anywhere.”
In August, in an attempt to tackle the ever growing asylum backlog, the government slashed the number of days before notice is given to those awarded refugee status to leave their Home Office accommodation from 28 to about seven. The Red Cross warned it could result in 50,000 refugees in the UK being made homeless by the end of the year.
Armin turned to the Merseyside Refugee Support Network for help. Until recently, refugees who approached the charity were given advice and the necessary referrals to start their new lives. Now, some are given tents and sleeping bags. “We used to be a refugee charity, now we’re a homelessness charity,” said Seana Roberts, the manager of the centre.
Each morning, the small church where the charity is based is packed with people granted refugee status who are now seeking help for homelessness. Some have been on the streets for weeks while others arrive in bewilderment after receiving a letter telling them to leave their accommodation in the next seven or so days.
Those granted refugee status need a biometric resident permit card before they can open a bank account, apply for work or sign a tenancy agreement, which they only have a week to arrange.
Roberts said that previously, two or three refugees a year would ask the charity for help because they were homeless; since August, there have been about 150. “We know there’s hundreds more to come,” she said.
AlHussain Ahmed, who himself fled Sudan and sought asylum in the UK a decade ago, is a support worker at the charity and handles most of the homelessness cases. He jogs in the mornings in a nearby park and often sees clients sleeping rough.
After Armin was granted refugee status, Ahmed helped him apply for universal credit and referred him to Liverpool council’s housing department. “The reality is [he is] going to be street homeless because there are people before him. There’s a big waiting list,” Ahmed said.
Armin’s Home Office accommodation is a room in a dilapidated shared house with about a dozen other people, sleeping on a mattress on the floor. Yet the prospect of leaving is terrifying. “I get depressed and cry,” he said. “I try everything I can. I ask everyone I know to do something for me. The problem weighs very heavy on me because there is no accommodation available in many places.”
Liverpool is one of the largest Home Office dispersal accommodation areas in the UK. The council said it expected more than 1,000 asylum seekers in the area to receive decisions from the Home Office by Christmas, and fears hundreds could end up homeless.
The city is already in the grips of a housing crisis, with landlords quitting the private rental market because of soaring mortgage repayments. Sarah Doyle, Liverpool city council’s cabinet member for housing, was herself served a no-fault eviction earlier this year.
Three years ago, the council spent about £250,000 on temporary accommodation a year; by the end of 2023, it expects to spend £19m.
Liam Robinson, the leader of the Liverpool city council, said local services face added strain because the Home Office had offices in the city where final appeal decisions were made, meaning people made homeless after being granted leave to remain approached the local council, even if they had come from elsewhere in the UK.
“We won’t turn our backs on anyone but we need to see government have a much more thorough plan on this. Every local authority should be compelled to take its per capita requirements of asylum seekers and refugees. It’s basic humanity,” Robinson said.
Meanwhile, Roberts and the team at the Merseyside Refugee Support Network expect many more cases as Christmas approaches. “It feels like a hopeless situation,” she said. “I think a lot of people are very resistant to the idea of seeing an actual refugee camp. It feels like that’s what’s going to happen. I genuinely think we’re going to see people dying in the parks and on the streets. We’ve granted these people refugee status, let’s get on and treat them like human beings.”
Two days before his move-out date, Armin had not yet found a place to live. Since his eviction date the Guardian has lost direct contact but understands he was on the streets for a period before securing hostel accommodation.
The Home Office said: “Once someone has been informed that their asylum claim has been granted, they get at least 28 days to move on from their asylum accommodation. Support is offered by Migrant Help and their partners.”
Additional reporting by Christopher Cherry, Adam Sich and Maeve Shearlaw.
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Nonprofit, Charities, & Fundraising
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Labour will need to override local opposition to deliver its plans for more housing, Sir Keir Starmer has warned.
The Labour leader told the BBC he would "bulldoze away" restrictive planning rules, and take on MPs and councils to build more homes.
He added that previous governments had been too fearful of local opposition to deliver the homes the country needs.
Building more housing is a question of "social justice," he said.
He added that it was understandable that individual MPs would want to "stand up" for residents in their local areas.
But he added: "The role of government is obviously different. The role of government is to deliver on big projects."
In his speech to the party's annual conference in Liverpool on Tuesday, Sir Keir promised that, if elected, Labour would deliver more homes as part of a "decade of renewal".
At the heart of the speech was a plan to use dedicated state-backed companies to build a wave of new towns near English cities, echoing those built by Labour after the Second World War.
He also said he would restrict the ability of councils to stop developments on under-used urban land, where developers can meet the criteria in a new planning rulebook encouraging Georgian-style townhouse blocks.
Speaking on to the BBC, he said the "very localised" nature of England's planning system was "one of the problems we have".
"There isn't the ability to look across a wider area and say: 'Where would the best place be for this development?'," he added.
Delivering more homes, he conceded, would sometimes require taking on MPs and local councils opposed to new developments.
Asked if he would be prepared to tell local opponents of projects: "We hear you, but I'm afraid we're ignoring you," the Labour leader replied: "Yes. We're going to have to do that."
He added, however, this would not be a "crude exercise", insisting the government would have to get the "balance right" when it came to factoring in opposition to plans.
"We are going to have to do things that previous governments haven't done," he said, including "bulldozing away" restrictive planning rules.
"Otherwise we'll end up where we are now, which is talking about housing - this is the story of the last 13 years - but not actually getting very much done."
'Bombproofed' target
The Labour leader has not said where or how many "new towns" it would build, saying it would run a six-month consultation inviting bids from councils.
Local authorities taking part would be able to put the affordable housing built towards meeting their housing quotas, under the party's plans.
Labour has set a target to build 1.5m homes in England in five years if elected, broadly matching the government's current ambition of delivering 300,000 new units a year from the mid-2020s.
Asked how Labour's plan was different, Sir Keir said it had accompanied its proposals with a "plan for delivery".
Adding that his commitments had been "robustly tested," he said he was only prepared to put "bombproofed" proposals before voters at an election.
He added he was confident a future Labour government would get "more bids than we think" from councils to take part in its new homes programme.
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Real Estate & Housing
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Bottom Line: Beer Institute tops up lobbying operation
Alcohol
The Beer Institute, a national trade association representing the $409 billion beer industry, hired Cornerstone Government Affairs to lobby on economic, budget, tax and appropriations policies impacting large beer producers. The Beer Institute recently launched StandWithBeer.org, which alleges large liquor companies exploit tax loopholes to lower their effective tax rate. John Sandell, former tax counsel to the House Ways and Means Committee, will work on the account.
Finance
The National Association of Mortgage Brokers hired the Williams Group to lobby on federal mortgage reform. Latrice Powell, former assistant cloakroom manager for the Democratic House Cloakroom, will work on the account.
Agriculture
The American Wood Council hired Torrey Advisory Group, formerly Michael Torrey Associates LLC, to lobby on tall wood buildings, forest inventory analysis and climate data in the farm bill. Tara Smith, former senior professional staff member for the Senate Agriculture Committee, will work on the account.
Health
The Children’s Hospital Association, formerly the National Association of Children’s Hospitals, hired Brownstein Hyatt Farber Schreck LLP to lobby on general issues related to children’s hospitals. Will Dunham, former deputy chief of staff for policy to House Speaker Kevin McCarthy (R-Calif.), will work on the account.
Tourism
Expedia Group hired Monument Advocacy to lobby on issues related to Federal Aviation Administration reauthorization. Kate Mills, former assistant director of the Office of Congressional Relations at U.S. Immigration and Customs Enforcement and senior counsel to Rep. Zoe Lofgren (D-Calif.), will work on the account.
Immigration
Colorado Business Roundtable hired Cornerstone Government Affairs Inc. to lobby the Colorado congressional delegation on workforce and immigration issues, and share the Centennial State business community’s views. The state affiliate of the national Business Roundtable is a member of the Colorado Business Coalition for Immigration Solutions, a statewide group of more than 45 businesses, industry and trade organizations pushing the congressional delegation to enact federal immigration policy to modernize the immigration system and safeguard communities and borders. Kara van Stralen, former director of policy and research for Gov. Jared Polis (D-Colo.), will work on the account.
Bottom Line is a weekly column documenting lobbying contracts filed with Congress.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Consumer & Retail
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Birmingham City Council has gone bust, with a £760m black hole. It follows Woking Council earlier this year and Thurrock and Croydon (for the third time) in 2022.
Councils technically can't go bankrupt - but they can issue what's called a section 114 notice, where they can't commit to any new spending, and must come back with a new budget within 21 days that falls in their spending envelope.
And when they do, it often means an impact on residents with severe cuts to frontline services.
Councils are required by law to have a balanced budget each financial year and provide "Best Value" to residents.
But more and more councils are finding it harder to do so.
Twelve section 114 notices have been issued since 2018 - compared to just one before, in the year 2000. Two of those notices were due to misallocation of funds, however, rather than financial challenges.
"With every council that issues a section 114 there are specific circumstances, there are decisions that have been made that have lead them to that point," says Jonathan Carr-West, chief executive of think-tank the Local Government Information Unit.
"And it's appropriate in those cases to ask questions about decision making, governance, and accounting."
In Birmingham, those circumstances are a bill for equal pay claims going back over a decade and a botched new IT system.
Thurrock invested hundreds of millions in commercial investments including a renewable energy scheme that had been overvalued.
Woking also invested in commercial schemes like development projects, while a report found that Croydon has poor governance and invested in a delayed housebuilding scheme.
"But there's also been a systemic problem with local government financing. Over the last 13 years, we've seen the amount of money that central government gives to local government reduced by more than 40%," says Mr Carr-West.
Spending power dipped
A reduction in money given to councils by central government doesn't necessarily mean that a council's spending power drops by the same level, as councils have built up other local income.
But their spending power has also dipped significantly.
The Institute for Government think-tank estimates that between 2009/10 and 2021/22 the average fall in spending power for local authorities was 31% when not including Covid grants. A report by spending watchdog the National Audit Office found that between 2010/11 and 2019/20 average spending fell by 10% - but when removing social care, it fell by 25%.
Demand for adult social care is now at a record high, with requests almost reaching two million people last year, according to health think-tank The King's Fund.
"We spend 70% of our budget on adult's and children's social care," says Peter Oakford, deputy leader and cabinet member for finance on Kent County Council.
Councils must provide social care by law, so meeting the increased demand means cuts elsewhere.
"All of our money is spent on social care, meaning areas such as education, highways, youth services, the voluntary sector all suffers," says Mr Oakford.
The government says they've provided around £2bn in additional grant funding for social care in 2023/2024.
"You've got this incredible pressure on councils who are effectively trying to deliver £110 worth of services for £80," says Professor Tony Travers, an expert in local government at the London School of Economics. "They're spending less than they were 13/14 years ago, whereas the NHS - itself in trouble - spending is up 20% in real terms."
At the same time as spending power has been reduced, demand on council services has been growing.
"Partly because of demographic pressures, partly because of the pandemic, partly because of the cost of living crisis. And of course, like all of us, councils are subject to inflation, subject to higher energy costs," says Mr Carr-West.
"So you've got a perfect storm, where a council's costs are rising, the demand on their services is rising, just as their resource, their income is getting both smaller and harder to predict over multiple years."
Council funding from local sources
The way in which local government is funded has also changed over the last 13 years. Councils used to get around most of their money from central government, but now they get most from local sources.
That includes council tax, retained business rates, and charges for services like parking, swimming pools, and planning applications. It also includes making commercial investments, which is where some councils have got into difficulty.
Additional funding from central government can also come through competitive funding bids, but all this means that funding is now largely based on local economic factors, rather than an area's need.
Mr Carr-West says that means a council could have a larger than average number of people who require around the clock care but funding doesn't take into account of that.
"We've lost that link between demand on your services and the way you're funded."
The government says that the majority of funding councils receive from them is not ringfenced, to allow local authorities to allocate it depending on local needs.
A spokesperson for the Department for Levelling Up, Housing and Communities, which looks after local government, said: "Councils are responsible for the management of their own finances.
"The Local Government Finance Settlement for 2023/24 makes available up to £59.7bn for local government in England, an increase in Core Spending Power of up to £5.1bn or 9.4% in cash terms on 2022/23.
"Through the 2023/24 Local Government Finance Settlement, the most relatively deprived areas of England will receive 17% more per household in available resource than the least deprived areas."
Funding settlements to local government are now on a yearly basis, rather than the previous three-yearly basis.
"One year settlements do not help anybody...I used to manage a big business, and at the very minimum we had a three year plan and a three year budget," says Mr Oakford of Kent County Council.
When a council goes bust and makes cuts, it means prioritising services they're required to provide by law, while other 'discretionary' services like arts and voluntary funding face the brunt.
But those services required by law can still be cut. For example, while councils are legally required to provide library services, there's no legally defined level. "One library in the town centre - is that a library service? You've got quite a lot of freedom to decide what level of service," says Professor Travers.
"We saw judicial reviews in several councils around school transport for children with special educational needs [that they're required to provide by law], but the council decides who qualifies for it, which children get how much of it," says Mr Carr-West.
Council tax hikes possible
It can also mean a big hike in council tax - Croydon raised theirs by 15%, while Thurrock and Slough, which has also issued a section 114 notice, both raised theirs by 10%.
Analysts at financial rating firm Moody's last week said they expect more local authorities to "fail over the near term" due to lost in value of commercial property, high inflation, interest rates and service demand.
They named 20 councils with high debt levels including Spelthorne, Warrington, Guildford, and Surrey Heath. They also said that more councils may fail as they complete their delayed financial audits.
Failing councils can have a knock on effect on other services like the NHS and the police as well, as they have to pick up some of the slack.
Although Mr Oakford says Kent is not in the position of issuing a section 114 notice, he can't be sure that won't change in 18 months' time - "if we have another couple of years like last year, then we won't be in a strong position," he says.
As budgets are crunched, services being stripped right back, says Mr Oakford. "Local government will become a provider of statutory services [â¦] everything else will disappear. Local government will become meaningless."
"The question is, how much further can you go?" asks Mr Carr-West. "And I think what many people in local government would say is look, you know, people keep saying you need to trim the fat.
"Well, we trimmed the fat a decade ago. And then we trimmed the flesh. And now we are just right down to the bone."
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United Kingdom Business & Economics
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Binance’s Market Share Is Stuck Near One-Year Low
Binance’s spot trading market share was little changed at 56% through June 19 from each of the two months prior, Kaiko data shows.
(Bloomberg) -- Binance is reeling under the impact of increased regulatory scrutiny, with the exchange platform’s market share languishing near a one-year low, according to data from research firm Kaiko.
Binance’s spot trading market share was little changed at 56% through June 19 from each of the two months prior, Kaiko data showed. That’s the lowest since August, when it fell to 53.7%, Kaiko said. The world’s largest cryptocurrency exchange suffered a blow after the US Securities and Exchange Commission filed a lawsuit against the firm and its founder Changpeng Zhao on June 5.
Its daily market share plunged to as low as 47% on on April 6, just after a separate lawsuit from the US Commodity Futures Trading Commission. The pressure on crypto exchanges like Binance has also increased after deep-pocketed traditional finance players like BlackRock Inc. applied for permission to start offering spot Bitcoin exchange-traded funds, seeking to lure investors looking for regulated institutions.
“Centralized exchanges will find themselves in a squeeze between decentralized exchanges and traditional-finance players entering the market,” said Alex Svanevik, chief executive officer of crypto intelligence firm Nansen.
Read more: Why Crypto Flinches When SEC Calls Coins Securities: QuickTake
US-based Coinbase, which is also being sued by the SEC, has seen its market share fall to 6.8% in June from 7.6% in January. Binance’s US entity lost almost all its market share after the lawsuits from the CFTC and the SEC, according to Kaiko. Binance’s share of trading in euro pairs has also tumbled, Kaiko data showed.
Binance’s market share has also been hurt after it halted a popular zero-fee promotion in March. The exchange recently announced a new promotion for stablecoins, including True USD, BUSD, Tether’s USDT and Circle’s USDC, starting June 30.
A spokesperson for Binance said the company will “continue to maintain our strong financial performance. Our primary objective is to deliver for our users by maturing our products and services and continuing to invest in compliance processes for a new era of regulatory certainty.”
Binance is far from the only centralized exchange hurting. Overall global trading volume has shrunk across crypto exchanges as the regulatory onslaught dented investor sentiment.
“The regulatory risk applies to all centralized exchanges. Binance is bearing the brunt of regulatory actions,” said Cici Lu, founder of blockchain adviser Venn Link Partners. “It’s going to be challenging times ahead for Binance to regain market share while meeting compliance requirements.”
Regulatory Woes
The onslaught of regulatory and banking hurdles has forced Binance to exit several countries. The company announced its exit from the Netherlands on June 16, citing a failed registration attempt. It was also probed by French authorities earlier this month, after it established the country as its European base. On June 23, Belgian authorities ordered Binance to cease operations there.
In April, the Australian Securities and Investments Commission canceled Binance’s license for its derivatives business. Local banks and payment partners later halted their services to Binance Australia. And last month Binance said it was going to exit Canada after the country began rolling out new crypto regulations.
Size Advantage
Yet even after losing market share for most of 2023, Binance remains bigger than all other crypto exchanges combined. That gives Zhao’s firm an added advantage of offering deeper market liquidity and trading.
Binance is also the biggest holder of customer tokens with reserves of $59.2 billion, according to crypto data provider DefiLlama.
“Without other sounder alternatives available currently, investors might still see Binance as the go-to exchange for transaction purposes, as it has the track record of providing the highest liquidity and market depth for trading which could limit the downside to their market share,” Lu of Venn Link Partners, said.
--With assistance from Sidhartha Shukla.
(Adds comment from Binance in seventh paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
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Crypto Trading & Speculation
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One in five customers are now forced to make a round trip of more than an hour to visit their nearest bank branch, data reveals.
As outlets continue to close at an alarming rate, many users – especially the elderly and the vulnerable – face increasingly long journeys to access basic banking services.
Almost a quarter of those living in Northern Ireland have to travel more than an hour to visit their nearest branch, while 23.9 per cent in the East Midlands face a similar journey.
Some face a gruelling round trip of more than three hours to visit their nearest branch, a poll of 2,000 people carried out by Newcastle Building Society showed.
Residents in Yorkshire and the Humber, Scotland and the North West spend the most time travelling to access services – typically facing a journey of 29 minutes.
In the past eight years, the number of bank branches has more than halved.
Many towns and villages no longer have a single one remaining, leaving communities without access to cash and the elderly and vulnerable without a financial lifeline.
Since 2015, banks and building societies have axed 5,201 sites – 53 per cent of all branches, analysis from the consumer rights group Which? shows.
So far this year, 263 branches have closed or are slated for closure, leaving households with no choice but to make hour-long journeys for simple tasks such as cashing in a cheque or speaking to a staff member in person.
Michael Conville, acting chief customer officer at Newcastle Building Society, said: ‘The stark reality is that as branch closing increases, a growing proportion have to travel longer distances, at increasing expense, to reach their local financial services and access cash.
‘This rise in branch closures is a concern for many as the trend continues across Britain and more communities become cut adrift.’
Almost three times more people now have a digital-only bank account than three years ago as customers are forced to access services online.
About 24 per cent have an account that is managed using online banking or a phone application instead of in branch – up from 9 per cent in 2019, according to a survey by price comparison website Finder.
More than half of those aged over 74 said not having access to a bank branch was the main reason they had moved to digital-only banking.
It recently emerged that Rutland will soon become the first county in England to not have a single bank branch, when HSBC closes its Oakham outlet in June.
With the closure of high street bank branches, people are more reliant on taking out cash from ATMs – but these are also closing at an alarming rate.
Almost a quarter of free-to-use ATMs – more than 12,000 – have been removed since 2018, research by Which? has found.
Rural areas are worst hit as they tend to have a higher proportion of elderly residents, who are sometimes reluctant to use internet banking and payment by card.
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Banking & Finance
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It’s getting cold, which means that many disabled people will, once again, have to choose whether to keep warm or charge their wheelchairs. Only this winter, they won’t be getting any additional help with the cost of living.
Last year, the government allocated cost of living payments to those on low incomes, and to disabled people who receive personal independence payment (Pip), the main disability benefit. And yet, as the next round of low-income payments start to go out this week, that separate disability payment has been quietly scrapped. If it wasn’t so nakedly cruel it would be absurd.
This is hardly the first cruelty. When the original payments were made last autumn and again in June this year, the disability-specific one was less than half the amount of the low-income one. And this despite the fact that disabled people face astronomical costs in order to make the world more accessible to them. The source of these costs varies from person to person; from care costs to taxi fares or prepared food.
In 2019, before Covid and the inflation crisis, the charity Scope found these extras amounted to £583 a month on average, rising to more than £1,000 a month for one in five disabled people. Now, Scope puts that figure at £975 a month for households that include one disabled child or adult, or £1,248 for households with two disabled adults. The charity’s research shows that disability-related extra costs are equivalent to 63% of a disabled household’s income, after housing costs. For those with the most complex needs, costs will be much higher.
In a crisis born of rising energy prices, it’s important to note the disproportionate effect soaring bills have on disabled people. A wheelchair user with a chronic lung condition may need to work from home to protect themselves from common illnesses – meaning that, if it’s cold, they have the heating on all day. If they get cold their breathing gets worse, so they put the heating on earlier in the autumn than most people, with the thermostat set higher. It’s not hard to see how their gas bill takes up a huge chunk of their income. Add in increased electricity bills associated with charging electric wheelchairs and other equipment, and those figures from Scope start to make a lot of sense. As do recent survey results from the Trussell Trust, which found three-quarters of people referred to food banks say that they or a member of their household are disabled. There is a real crisis here.
Which takes us to the other cruelty in government policy on disability benefits – one that existed long before the current decision on who gets cost of living payments was made: Pip isn’t fit for purpose. Not only is it unreasonably hard to claim the benefit, it doesn’t come remotely close to achieving its purported aim, which is to cover those exorbitant extra costs of disability to level the playing field – just a little – for disabled people. The truth is, Pip has never been enough and over time the proportion of the costs it does cover has fallen and fallen. Pip is generally increased each year in line with inflation, but the cost of disability-related essentials, such as energy, has been rising much faster than the average increase. We’re not so much levelling the playing field as we are leaving disabled people to scale a cliff face.
A series of exceptional cost of living payments over the next few months is not going to undo the decade-long devaluing of Pip. A payment of a few hundred pounds wouldn’t make up for the relentless inaccessibility, ableism and failure of government services that has created all those extra costs in the first place. But it wouldn’t hurt either.
If, as the continuation of payments to those on low incomes would indicate, we recognise that we are still in an acute cost of living crisis that requires at least some mitigation, we must recognise that disabled people are in desperate need of the same help.
Lucy Webster is a political journalist and the author of The View From Down Here: Life as a Young Disabled Woman
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Inflation
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Stand up for the facts!
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Bureau of Labor Statistics figures show that Hispanic or Latino unemployment was 9.3% in December 2020, President Donald Trump’s last full month in office. That rate fell from 8.5% in January 2021, the month Joe Biden was sworn in, to 4.9% in August 2023.
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Biden’s campaign said it calculated the Hispanic unemployment rate by comparing the three-month average before Biden took office, 8.9%, with the most recent three-month average, 4.5%.
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Unemployment among Latinos spiked at the beginning of the COVID-19 pandemic. The current unemployment rate is similar to what it was in 2019 under Trump before the pandemic.
In honor of National Hispanic Heritage Month, President Joe Biden’s reelection campaign launched a series of ads targeting Latinos and Hispanics.
"Since he has taken office, unemployment in our community has been cut in half," the narrator says in the ad, which the campaign says is part of a 16-week, $25 million advertising push. Hispanic Heritage Month began Sept. 15.
PolitiFact looked at the Bureau of Labor Statistics’ "Hispanic or Latino" monthly unemployment rate figures and found that they fell from 8.5% in January 2021, the month Biden took office, to 4.9% in August 2023, the last month with available data. In December 2020, former President Donald Trump’s last full month in office, the rate was 9.3%.
By that monthly measure, the Hispanic or Latino unemployment rate has fallen close to half, but not fully half, since Biden took office.
Unemployment in this community spiked at the beginning of the COVID-19 pandemic, following national trends. The current Latino or Hispanic unemployment rate is similar to what it was in 2019 before the pandemic.
Although presidents can influence economic policies, the factors that contribute to unemployment are complex. The effects of pandemics such as COVID-19 carry more weight than whoever is in the White House.
The Biden campaign told PolitiFact that it calculated the unemployment rate, comparing the three-month average before Biden took office, with the most recent three-month average. This would mean comparing the 8.9% average of October 2020 to December 2020, with the 4.5% average of June 2023 to August 2023.
That’s just shy of half.
The unemployment rate captures the number of people who are currently employed or actively looking for work. Although economists and the public track this statistic widely, no single data point can capture labor force trends perfectly.
"Unemployment federal data can be misleading because it doesn’t factor in people who stop looking for jobs," said Victor Narro, expert on immigrant rights and low-wage workers at UCLA.
Mark Hugo Lopez, race and ethnicity research director at the Pew Research Center, a nonpartisan think tank, said the U.S. Latino population was heavily affected by the COVID-19 pandemic.
Unemployment rates among people who identify as Hispanics or Latinos had been consistently low recently, but that changed when the COVID-19 pandemic prompted service industry shutdowns and slowed construction. About 24% of Latinos or Hispanics were employed in hospitality in 2019, before the pandemic hit; 16.4% were in natural resources, construction and maintenance.
A Biden campaign ad said that "since he has taken office, unemployment in our (Latino) community has been cut in half."
Calculated conventionally, using monthly data, the decline was close to half, but not quite half. Using the three-month average before Biden took office to the most recent three-month average, as the Biden campaign did, the decline was also close to half.
The current Hispanic or Latino unemployment rate is similar to what it was under Trump before the pandemic.
We rate this claim Mostly True.
Federal Reserve Bank Of St. Louis, Unemployment Rate - Hispanic or Latino, accessed Sept. 19, 2023
Joe Biden on YouTube, It’s Us | Biden-Harris 2024, Aug. 24, 202
Federal Reserve Bank of St. Louis, Unemployment Rate - Hispanic or Latino, accessed Sept. 21, 2023
U.S. Bureau of Labor Statistics, Labor force characteristics by race and ethnicity, 2019, accessed Sept. 21, 2023
ABC News, US poverty rate jumped in 2022, child poverty more than doubled: Census, Sept. 13, 2023
Phone interview with Mark Hugo Lopez, Pew Research Center, Sept. 18, 2023
Phone interview with Victor Narro, Project Director at UCLA Labor Center, , Sept. 18, 2023
Email interview with Maca Casado, spokesperson and Hispanic Media Director of Biden for President, Sept. 18, 2023
U.S. Census Bureau, Distribution of Total Population and Poverty by Race Using the Social Poverty Measure: 2022, accessed Sept. 18, 2023
X, post by the Council of Economic Advisers, Sept. 19, 2023
Pew Research Center, Latinos have experienced widespread financial challenges during the pandemic, Jul. 15, 2021
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In a world of wild talk and fake news, help us stand up for the facts.
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Unemployment
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Meta's long-awaited Twitter alternative is here, and it's called Threads. The new social media app launches at a time when alternatives, like Bluesky, Mastodon, and Spill, are vying for users who are dissatisfied with Elon Musk's handling of Twitter's user experience, with its newly introduced rate limits and an uptick in hate speech.
Meta owns Facebook, Instagram, and WhatsApp, so the company’s attempt to recreate an online experience similar to Twitter is likely to attract plenty of normies, lurkers, and nomadic shitposters. Meta is working to incorporate Threads as part of the online Fediverse, a group of shared servers where users can interact across multiple platforms.
If you’re hesitant to share your personal data with a company on the receiving end of a billion-dollar fine, that’s understandable. For those who are curious, however, here’s what we know about the service’s privacy policy, what data you hand over when you sign up, and how it compares to the data collected by other options.
Threads
Threads (Android, Apple) potentially collects a wide assortment of personal data that remains connected to you, based on the information available in Apple’s App Store, from your purchase history and physical address to your browsing history and health information. “Sensitive information” is also listed as a type of data collected by the Threads app. Some information this could include is your race, sexual orientation, pregnancy status, and religion as well as your biometric data.
Threads falls under the larger privacy policy covering Meta’s other social media platforms. Want to see the whole thing? You can read it for yourself here. There’s one caveat, though. The app has a supplemental privacy policy that’s also worth reading. A noteworthy detail from this document is that while you’re able to deactivate your Threads account whenever, you must delete your Instagram if you fully want to delete your Threads account.
Below is all the data collected by Threads that’s mentioned in the App Store. Do you have the Facebook or Instagram app on your phone? Keep in mind that this data collection by Meta is comparable to the data those apps collect about you.
For Android users, the Google Play Store doesn’t require you to hand over the same amount of extensive data to try out Threads. You have more control than Apple users, since you can granularly toggle what personal data is shared with apps.
Data linked to you
Third-party advertising:
- Purchases (Purchase History)
- Financial Info (Other Financial Info)
- Location (Precise Location, Coarse Location)
- Contact Info (Physical Address, Email Address, Name, Phone Number, Other User Contact Info)
- Contacts
- User Content (Photos or Videos, Gameplay Content, Other User Content)
- Search History
- Browsing History
- Identifiers (User ID, Device ID)
- Usage Data (Product Interaction, Advertising Data, Other Usage Data)
- Diagnostics (Crash Data, Performance Data, Other Diagnostic Data)
- Other Data
Developer's advertising or marketing:
- Purchases (Purchase History)
- Financial Info (Other Financial Info)
- Location (Precise Location, Coarse Location)
- Contact Info (Physical Address, Email Address, Name, Phone Number, Other User Contact Info)
- Contacts
- User Content ( Photos or Videos, Gameplay Content, Other User Content)
- Search History
- Browsing History
- Identifiers (User ID, Device ID)
- Usage Data (Product Interaction, Advertising Data, Other Usage Data)
- Diagnostics (Crash Data, Performance Data, Other Diagnostic Data)
- Other Data
Analytics:
- Health & Fitness (Health, Fitness)
- Purchases (Purchase History, Financial Info, Payment Info, Other Financial Info)
- Location (Precise Location, Coarse Location)
- Contact Info (Physical Address, Email Address, Name, Phone Number, Other User Contact Info)
- Contacts
- User Content (Photos or Videos, Audio Data, Gameplay Content, Customer Support, Other User Content)
- Search History
- Browsing History
- Identifiers (User ID, Device ID)
- Usage Data (Product Interaction, Advertising Data, Other Usage Data)
- Sensitive Info
- Diagnostics (Crash Data, Performance Data, Other Diagnostic Data)
- Other Data
Product Personalization:
- Purchases (Purchase History)
- Financial Info (Other Financial Info)
- Location (Precise Location, Coarse Location)
- Contact Info (Physical Address, Email Address, Name, Phone Number, Other User Contact Info)
- Contacts
- User Content (Photos or Videos, Gameplay Content, Other User Content)
- Search History
- Browsing History
- Identifiers (User ID, Device ID)
- Usage Data (Product Interaction, Advertising Data, Other Usage Data)
- Sensitive Info
- Diagnostics (Crash Data, Performance Data, Other Diagnostic Data)
- Other Data
App functionality:
- Health & Fitness (Health, Fitness)
- Purchases (Purchase History)
- Financial Info (Payment Info, Credit Info, Other Financial Info)
- Location (Precise Location, Coarse Location)
- Contact Info (Physical Address, Email Address, Name, Phone Number, Other User Contact Info)
- Contacts
- User Content (Emails or Text Messages, Photos or Videos, Audio Data, Gameplay Content, Customer Support, Other User Content)
- Search History
- Browsing History
- Identifiers (User ID, Device ID)
- Usage Data (Product Interaction, Advertising Data, Other Usage Data)
- Sensitive Info
- Diagnostics (Crash Data, Performance Data, Other Diagnostic Data)
- Other Data
Other purposes:
- Purchases (Purchase History)
- Financial Info (Other Financial Info)
- Location (Precise Location, Coarse Location)
- Contact Info (Physical Address, Email Address, Name, Phone Number, Other User Contact Info)
- Contacts
- User Content (Photos or Videos, Gameplay Content, Customer Support, Other User Content)
- Search History
- Browsing History
- Identifiers (User ID, Device ID)
- Usage Data (Product Interaction, Advertising Data, Other Usage Data)
- Diagnostics (Crash Data, Performance Data, Other Diagnostic Data)
- Other Data
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Consumer & Retail
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Don’t pass the ‘American Farmers Feed the World Act’
On June 22, four U.S. House members introduced the American Farmers Feed the World Act, most likely hoping to add its content to the upcoming farm bill. Reps. Tracey Mann (R-Kan.), John Garamendi (D-Calif.), Rick Crawford (R-Ark.), and Jimmy Panetta (D-Calif.) announced that the bill would ensure that the Food for Peace (FFP) program, managed by the U.S. Agency for International Development, would operate as Congress had intended it to function in 1954.
That is, it would reserve at least half of its budget to purchase American-grown commodities and ship them overseas to dispose of domestic surpluses.
While well-meant, the provisions of the America Feeds the World Act will not restore the original intent of the FFP, which raised domestic prices for corn, wheat, soybeans and other row crops by shipping excess grain to low-income countries as aid.
Today, world commercial markets for agricultural commodities function very differently than they did seventy years ago. Which is why these provisions will undermine USAID’s ability to use FFP to reduce hunger in low-income countries and foster goodwill toward the U.S. by adding to the program’s current restrictions, and making it much less efficient than it is today.
Many of the bill’s provisions reflect a lack of understanding of the chaotic global economic and policy environment in which FFP was first established. They miss how government policies have adapted and FFP has evolved to remain efficient and effective in meeting Congress’s intent within existing statutory restrictions.
During World War II, international commercial markets were highly unreliable. Food production in Europe had collapsed. In that context, American farmers were encouraged by federal authorities to increase agricultural output so that the government could provide food to U.S. and allied troops serving overseas, as well as civilian populations in those countries.
Between 1940 and 1945, areas harvested for U.S. corn, wheat, and oat increased by 9, 15, and 22 percent, respectively. Between 1948 and 1951, food shipments to Europe under the Marshall Plan — worth about $43 billion in today’s prices — obscured the long run implications of much higher U.S. domestic production. These did not become apparent until the early 1950s when agricultural production recovered in Europe and elsewhere. Moreover, as the price support programs introduced in the 1948 farm bill took effect, the federal government began to accumulate large stocks of unwanted grain.
The 1954 Agricultural Trade Development and Assistance Act, which authorized FFP, was partly a response to these increasing surpluses. Its major purpose, however, was to provide food to developing countries who had few or no resources to pay for it. In the program’s first two decades, most of the aid was provided as development assistance to help such countries improve their economies. That effort was quite successful. Many early beneficiaries, such as Japan, Indonesia, and Peru, are now important commercial customers for U.S. food and agricultural products. Until the 1990s, most food aid shipments were made through concessional loans to low-income countries and were less expensive than the direct donations of commodities currently being made under the FFP.
In the 1950s and early 1960s, commodities shipped under FFP contributed significantly to total U.S. agricultural exports. For example, in 1957, food aid shipments accounted for about 30 percent of U.S. exports. In stark contrast today, U.S. commercial exports are flourishing. There are almost no government-held grain stocks, and food aid shipments in total account for less than 2 percent of total U.S. agricultural exports.
The proposed act’s provisions will hurt those in need. Capping (to 50 percent of the total) all funding to be used for activities other than purchasing commodities in the U.S. and transporting them to overseas ports, will constrain the mix of commodities that can be used. This provision favors bulk raw commodities over processed commodities that often provide more nutritional benefits. It also could limit how much can be spent on moving commodities to people living in inland locations, who are often worse off and harder to reach.
This legislation will be even more harmful to the operation of non-emergency, development aid provided under the program. This is an ironic consequence, given that Congress intended this form of aid to be key in the early decades of FFP. The share of funds provided as cash to the organizations that implement these non-emergency aid programs would be reduced. These funds cover non-food expenses such as salaries for staff conducting these development activities. Instead, those organizations would be forced to quit altogether or resort to monetizing the commodities they receive under FFP. That monetization process is known to be a substantial and unfortunate waste of money. It typically generates proceeds that are 25 to 30 percent less than the cost of obtaining, processing, and shipping the commodities.
If the Act’s real objective is to discourage agricultural development assistance in order to squeeze out a negligible increase in the volume of U.S. commodities purchased for food aid, it will be a failure, having no impact on domestic crop prices received by U.S. grain and other farmers. The ultimate goal of non-emergency agricultural aid projects is to help small farmers in developing countries become more productive and thus more resilient in the face of external shocks such as bad weather or civil conflict.
Extensive research shows that investment in such resilience-enhancing activities reduces the likelihood that a country will need emergency humanitarian assistance in the future. Those investments are also an important source of goodwill towards the U.S. among recipient countries, and an important contribution to our nation’s national security.
Vincent H. Smith is a nonresident senior fellow and the director of Agricultural Policy Studies at the American Enterprise Institute and Professor Emeritus at Montana State University. Stephanie Mercier is a former Chief Economist of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, and a principal at Agricultural Perspectives, an agricultural policy consulting firm.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Agriculture
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A leading London financier faces a driving ban just a few weeks after the collapse of his hedge fund amid sexual assault allegations.
Crispin Odey, 64, was forced out of Odey Asset Management, the City firm he founded, after a series of women came forward to accuse him of sexual misconduct and harassment. Last month, it was announced the hedge fund — which had around £3.6 billion in assets prior to the scandal — would be wound down.
Odey himself is now facing new legal difficulties after he was caught speeding through London in a Range Rover twice in the space of six weeks. Court papers reveal he already has nine penalty points on his licence, and after admitting two new charges he is likely to face a six-month road ban.
The sexual allegations against Odey broke in June after the Financial Times and Tortoise Media revealed they had spoken to 13 women who claimed they were abused or harassed while working for — or having professional dealings — with Odey. He was swiftly ousted from the hedge fund he founded in 1991. In 2021, he was found not guilty in a court case in which he was accused of an indecent assault that allegedly happened in 1998.
Odey has denied the sexual allegations. The Financial Conduct Authority launched an investigation into whether he is a “fit and proper person” to work in financial services.
The first speeding offence was committed on April 15 on the A3 through Putney Heath, when a police officer recorded Odey driving at 62mph in a 40mph zone. A fixed penalty fine was initially sent to Odey’s Chelsea home, but the case moved to a full prosecution when police noticed he already has points on his licence.
The second offence happened on May 31 when Odey was driving at 28mph along the 20mph Chelsea embankment. The two cases were initially dealt with behind closed doors via single justice procedure but they have now been adjourned for an open court hearing at Lavender Hill magistrates court on December 1.
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Stocks Trading & Speculation
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The UK Prime Minister has urged homeowners and borrowers to "hold their nerve" over rising interest rates aimed at bringing down stubborn inflation.
Rishi Sunak told Sunday with Laura Kuenssberg: "I want people to be reassured that we've got to hold our nerve, stick to the plan and we will get through this."
This week the Bank of England raised interest rates to a 15-year high of 5%.
Millions of people are facing higher mortgage repayments following the rise.
Meanwhile, those who rent could face higher payments or the prospect of squeezed landlords selling their property, according to the National Residential Landlords Association.
Mr Sunak continued to back the Bank of England despite some Conservatives saying it has not done enough to bring inflation back to its 2% target.
Inflation - which measures the rate at which prices are rising - remained at 8.7% in May despite the Bank raising interest rates 13 times since December 2021.
"I can tell you as prime minister, the Bank of England is doing the right thing," Mr Sunak told the BBC. "The Bank of England has my total support. Inflation is the enemy."
Mr Sunak has pledged to halve inflation by the end of the year.
But former Treasury Minister Andrea Leadsom accused the Bank of doing "too little, too late".
While Karen Ward, a member of chancellor Jeremy Hunt's economic advisory council, said the Bank had "been too hesitant" in its interest rate rises so far and called on it to "create a recession" to bring inflation under control.
Mr Sunak said: "I've never said that it's not challenging. I've never said that this isn't going to be a difficult time to get through. But what I want to give people the reassurance and confidence is, that we've got a plan, the plan will work and we will get through this."
In recent weeks, banks and building societies have been withdrawing mortgage deals in anticipation of higher interest rates.
The average two-year fixed residential mortgage is now 6.19% while the five-year rate is 5.82%. In June last year, those rates were closer to 3%.
Last week, Chancellor Jeremy Hunt met with UK banks who have agreed that borrowers will be able to make a temporary change to their mortgage terms.
It will allow homeowners to just pay the interest on their mortgages and Mr Hunt said this would not affect borrowers' credit scores.
The Labour Party has set out a five point plan which it said would ease what it termed "the Tory mortgage penalty" and help limit repossessions.
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Interest Rates
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Four months before FTX collapsed into bankruptcy, Sam Bankman-Fried told the jury Monday at his federal fraud and conspiracy trial he confronted Caroline Ellison with concerns Alameda Research -- his companion hedge fund -- could become insolvent.
He testified that he told Ellison, who was then co-chief executive of Alameda and is Bankman-Fried's ex-girlfriend, that the hedge fund should have hedged against some of its risky investments.
"She started crying," Bankman-Fried said. "She also offered to step down."
Part of Bankman-Fried's defense strategy is to deflect blame for the FTX collapse. Ellison pleaded guilty to criminal charges and testified under a cooperation agreement with federal prosecutors in New York. She has testified that she committed fraud with Bankman-Fried and at his direction.
She also testified earlier this month that Bankman-Fried thought there was a "5% chance he would become president," and that he believed in utilitarianism and thought rules against lying or stealing inhibited his ability to maximize the greatest benefit for the most people.
Bankman-Fried conceded on the witness stand Monday he made mistakes but testified that he committed no fraud.
"Did you defraud anyone?" defense attorney Marc Cohen asked. "No, I did not," Bankman-Fried answered.
"Did you take customer funds?" Cohen asked, to which Bankman-Fried responded: "No."
Bankman-Fried is on trial for what federal prosecutors have described as "one of the biggest financial frauds in American history." The former crypto billionaire faces seven counts of fraud, conspiracy and money laundering centered on his alleged use of customer deposits on the crypto trading platform FTX to cover losses at his hedge fund, pay off loans and buy lavish real estate, among other personal expenses.
He has pleaded not guilty to all counts. If convicted, he could face a sentence of up to 110 years in prison.
The defense has tried to convince the jury that Bankman-Fried was unaware of how dire his company's finances were. He testified he traveled to the Middle East in October 2022 because he felt Alameda was solvent and in no danger of going bankrupt. Otherwise, he said, "I would have been in full-on crisis mode."
Earlier this month, prosecutors explored Bankman-Fried's unusual living arrangements and the luxurious lifestyle he'd been living in the Bahamas that was allegedly paid for, illegally, with customer and investor money.
Bankman-Fried stepped down from his role at FTX in November 2022 amid a rapid collapse that ended with the company declaring bankruptcy. Prosecutors charged Bankman-Fried the following month with an array of alleged crimes focused on a scheme to defraud investors.
In an interview with ABC News' George Stephanopoulos in November 2022, Bankman-Fried denied knowing "there was any improper use of customer funds."
"I really deeply wish that I had taken like a lot more responsibility for understanding what the details were of what was going on there," Bankman-Fried said at the time. "A lot of people got hurt, and that's on me."
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Crypto Trading & Speculation
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This is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:
The chart of the day
What we're watching
What we're reading
Economic data releases and earnings
As I have often told people who care to ask, the external environment should be one's observation deck for possible investments.
To that end, I splurged on a $120 pair of low-top Nike dunks on July 4 weekend. What better to show off how cool your aging 40-year-old-plus self is in the office than rocking a pair of sweet Nike dunks a day after the manufacturer serves up lackluster guidance and the stock sinks.
Interestingly, the Foot Locker store where I got these pricey fountains of youth was generally empty. Usually, July Fourth weekend is usually a hotbed of buying activity for things you don't really need but rather want. And maybe it was in other states, just not this particular store at this particular moment in time.
What wasn't empty on July Fourth weekend? The two no-frills Marshalls (owned and operated by TJX Companies) locations I popped into for some silverware — one on Saturday and the other on Sunday. Both stores looked as if angry bulls had run amok in the aisles — everything was that messy and picked over. Cut in line at your own risk, the places were mobbed with deal-seekers.
These three holiday occurrences sent me back to reconnect on the state of consumer stocks ahead of the pivotal back to school shopping season.
I was reminded how hated consumer names are right now, as seen in new Bank of America data.
Consumer discretionary stocks are at the lowest exposure among hedge fund managers and long-only managers in the history of Bank of America's data set.
"Resilient consumption in the face of inflation pressures, a slackening labor market and a host of other factors is seen as unsustainable by most portfolio managers," said BofA's top equity strategist Savita Subramanian.
Subramanian added "faith in the consumer is waning."
Ouch.
The top 20 most-shorted S&P 500 stocks — as presented by BofA — is dominated by companies deemed consumer discretionary.
The top five includes Dish Network (you definitely don't need expensive Dish Network services); Ralph Lauren (don't need an $80 polo shirt from Macy's); CarMax (you can live with your 100,000 mile road warrior a little longer in a land of higher financing costs); Paramount (do you really need Paramount+); CH Robinson (a logistics play that ships stuff you probably don't need).
This positioning wreaks of investors banking on a second half consumer collapse.
But perhaps all of this negativity on the consumer shouldn't come as a surprise.
The jobs market is slowing. Stories about AI taking jobs continue to populate (here's what musician and tech investor Will.I.Am told us recently on the topic). Headline grabbing layoffs continue to rip through the economy (see Disney's ESPN "talent" cuts).
Further, nagging inflation has eaten into the trillions of dollars in pandemic savings.
The personal savings rate sits at 4.6%, down from double-digits at the height of the pandemic and below the long-run average of 8.3%.
Can't spend much if your paycheck is barely making ends meet and your savings account is as dried up as the Sahara.
Should you be using this juncture to go against the crowd and scoop up retailers and other consumer-centric stocks. Beats me, I just buy Nike dunks and do news — I don't pick stocks anymore.
I will say this though: it's hard to get too excited about many of these names in front of potentially two more interest rate hikes, a downtrending personal savings rate, and sticky inflation.
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Consumer & Retail
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Jasmine Johnson thought she was planning ahead when she rang her local nursery at 20 weeks pregnant to arrange a place for her baby - only to be told it was full until September 2025.
Her baby will be almost two years old before a place becomes available - and Jasmine will miss out on the first year's worth of funded childcare for which she is eligible.
Experts are warning nurseries and childminder places are becoming even harder to find for parents because of the plan to expand government-funded childcare hours for working parents in England over the next two years.
BBC News analysis estimates demand is likely to rise by about 15% - equivalent to more than 100,000 additional children in full-time care.
Jasmine, a primary-school teacher from a village with just one nursery, hoped to return to work in September 2024 but says she now has "no other choice" but to ask her parents for help and apply for reduced hours at work.
If her application for flexible working is refused, she will have to resign from her job.
"When the announcement [of the increase in funded hours] happened, I thought, 'This is brilliant timing for me and will help me get back to work,'" Jasmine says. But the situation now is making her "anxious even thinking about it".
Parents of three- and four-year-olds are currently entitled to 30 hours per week of funded childcare for 38 weeks of the year (during school term time).
By September 2025, that offer, sometimes known as "free" hours, will be extended to all pre-school children aged nine months to two years.
The Department for Education (DfE) says childminders and nurseries have "time to prepare", because the increase in funded hours is being rolled out in stages.
Thousands of parents are anxiously awaiting the expansion of funded hours, so they can increase the hours they work, according to Pregnant Then Screwed founder Joeli Brearley.
But she now fears what had seemed like a positive development for parents will result in "incredibly long waiting lists and even more uncertainty".
How much will demand increase?
A 15% increase in childcare usage in England works out at more than four million hours a week, BBC News analysis estimates, the equivalent of more than 100,000 extra children in childcare for 40 hours a week.
And this is before any parents not currently working find a job - one of the main reasons the government is taking on the cost of funding childcare.
Gillian Paull, from Frontier Economics, says the increase is likely to be "challenging", as providers face financial strains and difficulty recruiting staff, "but not infeasible".
"Even if there is unmet demand for places, many working parents will see substantial financial benefits from lower childcare costs," she says. "And if the expansion encourages more mothers with young children to work, it would be another small step towards greater gender equality."
At Eagley School House Nurseries, in Bolton, many parents who will be eligible for the additional funded hours are already putting requests in for extra days. But with a waiting list until March 2025, the nursery is having to say no to anyone asking for additional hours - even its own staff.
Sophie Eckersley, 31, who works at the nursery part-time and is taking her final university exams this year, was hoping to increase her two-year-old daughter's hours in April.
Having some government-funded childcare will help a lot "especially moneywise", Sophie says, but her boss, nursery owner Julie Robinson, is finding it challenging trying to fulfil parents' requests for extra hours.
"We just don't have the places," Julie says.
Neil Leitch, from the Early Years Alliance, says the BBC News analysis shows the expansion is set to be "wholly undeliverable in practice".
Some providers will have to limit the funded places they are able to offer and others will "opt out" completely, unless there is "adequate support, and crucially, increased funding".
For the sector to expand, it also needs to overcome its biggest challenge - staffing.
There were 9,800 fewer people working in childcare in 2022 than in 2019, with the number of childminders down by more than a fifth.
Nursery provider Busy Bees, which looks after 40,000 children, is already training 1,300 apprentices but will need more.
"We need to recruit an additional 1,500 people to meet that demand in two years' time," European Chief Executive Chris McCandless says.
He welcomes the investment the government is putting forward to help parents but says it "needs to cover the cost of childcare". And parents should put their names down fast, as places "will be hard to come by in the future".
Earlier this year, the charity Coram found a drop in childcare availability across England, with only half of local areas having enough available spaces for children under the age of two.
Councils are in charge of monitoring whether there is enough childcare provision across their borough, as well as distributing the funding to nurseries and childminders on behalf of the government.
Louise Gittins, who chairs the Local Government Association's (LGA) Children and Young People Board, says provision is already insufficient , particularly "in deprived areas and in rural areas", and is concerned "there is a relatively short amount of time" to get everything ready before the rollout.
"We can't control new providers coming into areas that already have sufficient provision," she says. "And then other areas not having enough provision will create a system of inequality - and parents will be disappointed."
Some fear it could also put extra pressure on parents of children with special educational needs and disabilities (SEND) finding suitable places, which is already difficult.
"Historically, each time such a change has been made, it has led to a decrease in provision for children with SEND," Dingley's Promise chief executive Catherine McLeod says.
A DfE official said the department was delivering "the single biggest investment in childcare in England's history... backed by £8bn a year once fully rolled out".
The government said it was "already investing hundreds of millions of pounds to increase hourly funding rates" and would allocate £100m in capital funding for more early-years and wraparound places and spaces, with a nationwide recruitment campaign "in the new year".
About the data
BBC News used data from the government's Family Resources Survey to work out eligibility based on the age of the children and whether their parents were already working and earning the equivalent of at least 16 hours a week at the national minimum wage.
Then, we used the government's own estimates of take-up to estimate how many more hours a week parents were likely to use once funded childcare expanded.
By using the survey data, we were able to estimate usage on a child-by-child basis.
We calculated the increase based on hours used, rather than the number of places, because different families will use a different amount of childcare.
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Workforce / Labor
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Food prices in the UK continued to surge at the fastest rate in nearly 45 years in April, with staples like sugar, milk and pasta up sharply.
The rate at which grocery prices rose slowed marginally in the year to April, but at 19.1% is close to record highs.
It comes as the overall UK inflation rate fell sharply to hit single figures for the first time since last August.
However, it did not decline as much as expected and the chancellor said food prices remained "worryingly high".
Inflation is a measure of the cost of living and to calculate it, the Office for National Statistics (ONS) keeps track of the prices of hundreds of everyday items, known as a "basket of goods".
The rate has shot up over the last 18 months, as food and energy prices have soared, leaving many household feeling squeezed.
Inflation was 8.7% in the year to April - down from 10.1% in March but above the 8.2% figure expected.
However, it does not mean prices are coming down, only that they are rising less quickly.
Chancellor Jeremy Hunt told the BBC the sharp fall was "welcome", but admitted: "There are things underneath those numbers which show that this battle is far from over.
"We've got a long way to go."
Inflation has dropped due to the fact that energy price rises are slowing from the extreme hikes seen a year ago just after Russia, a major oil and gas producer, invaded Ukraine and was hit with sanctions.
Ukraine is also a big producer of grains and sunflowers, which are used in everything from bread to oil and animal feed. Wholesale food prices have risen because the war has disrupted Ukraine's shipments.
Extreme weather has also hit crops, including the beets used to make sugar as well as some vegetables.
However, while food price continue to rise at near-record rates, the prices of staples like bread, cereal, fish, milk and eggs are rising slightly less quickly.
"If you look at what prices businesses are facing and how much they're paying for domestic food materials, that has come down from over 15% annually last month to under 10% this month," ONS chief economist Grant Fitzner said.
The prices that companies are paying for imported foods have also fallen "considerably".
However, he said: "Of course, those aren't reflected on supermarket shelves yet."
Retailers claim that falling wholesale prices take time to filter through to supermarket shelves due to the long-term contracts they typically sign with food producers.
On Wednesday M&S boss Stuart Machin said the retailer had invested in protecting customers from the full force of inflation, which had impacted its profit margin, but said it was the right thing to do.
The regulator has opened an investigation into the pricing of food and fuel at UK supermarkets.
Despite the fall in inflation, so-called core inflation - which strips out food and energy prices - continued to rise, sparking fears that soaring prices could persist.
Inflation is higher in the UK than other advanced countries such as Germany, 7.6%, France, 6.9%, and the US, 4.9%.
Labour's shadow chancellor, Rachel Reeves, said that families would be worried that food prices and the cost of other essentials were still so high.
"They will be asking why this Tory government still refuses to properly tackle this cost of living crisis, and why they won't bring in a proper windfall tax on the enormous profits of oil and gas giants."
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Inflation is still four times higher than the Bank of England's 2% target.
It has raised interest rates 12 times since December 2021 to try and tackle this.
In theory, the higher cost of borrowing means people will buy fewer things, especially if they are having to pay more for things like mortgages, which should help prevent prices rising as quickly.
It also makes it harder for firms to borrow money and expand.
Since March, the Bank of England has slowed the pace of rate rises, but following Wednesday's inflation figures, investors were betting rates could climb by a further percentage point to 5.5% by the end of the year.
On Tuesday, the market was predicting 5.1% would be the peak.
It is not just households who are being hit by surging price rises. Welsh farmer Llyr Jones said the last 12 months had been "challenging" with the price of feed, fertiliser, diesel and electricity increasing.
Mr Jones, 44, runs Derwydd Farm in Corwen and has 32,000 hens and also raises cattle.
He told the BBC that Russia's war with Ukraine has added to the pressures because he buys feed from global markets.
But Mr Jones said there was "a slight glimmer of hope for the next few months" because of the cost of fuel and diesel had started to fall.
How can I save money on my food shop?
- Look at your cupboards so you know what you have already
- Head to the reduced section first to see if it has anything you need
- Buy things close to their sell-by-date which will be cheaper and use your freezer
How have you been affected by high food prices? Email your experiences haveyoursay@bbc.co.uk.
Please include a contact number if you are willing to speak to a BBC journalist. You can also get in touch in the following ways:
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Inflation
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ST. LOUIS (AP) — A player in California won a $1.765 billion Powerball jackpot Wednesday night, ending a long stretch without a winner of the top prize.
The winning numbers were: 22, 24, 40, 52, 64 and the Powerball 10. The winning ticket was sold at Midway Market & Liquor in Frazier Park, according to the California Lottery.
WATCH: How France is leveraging a lottery to finance historic preservation
Phone calls Wednesday night and Thursday morning to Midway Market & Liquor went unanswered. Frazier Park is an unincorporated mountain community of about 2,600 residents. It’s about 75 miles (121 kilometers) north of Los Angeles.
“The phone’s been ringing off the hook, people saying congratulations. Pretty crazy,” the store’s night worker, identified only as Duke, told KCAL-TV.
“Somebody owes me a truck,” he said with a smile. “A lot of customers come in, you know they come in every day to get their tickets, religiously. And a lot of them … said: ‘Oh, if I win I’m gonna get you a new truck.’ So where’s my truck? I’ll be waiting.”
He expected the winner will be a local resident.
Before someone won the giant prize, there had been 35 consecutive drawings without a big winner, stretching back to July 19 when a player in California matched all six numbers and won $1.08 billion.
The jackpot is the world’s second-largest lottery prize after rolling over for 36 consecutive drawings. That streak trails the record of 41 draws set in 2021 and 2022. Final ticket sales pushed the jackpot beyond its earlier advertised estimate of $1.73 billion for Wednesday night’s drawing.
The only top prize that was ever bigger was the $2.04 billion Powerball won by a player in California last November.
Powerball’s terrible odds of 1 in 292.2 million are designed to generate big jackpots, with prizes becoming ever larger as they repeatedly roll over when no one wins. And wins in recent months have been few and far between.
That didn’t bother those eager to plunk down their money on Wednesday for a long-shot chance at instant wealth.
Robert Salvato Jr., a 60-year-old electrician, bought 40 Powerball tickets at a hardware store in Billerica, Massachusetts.
“I would take care of family and give my cat that extra leg that she needs and make her a good kitty,” said Salvato, who got married on Saturday.
“I could give her a ring on every finger, I guess,” Salvato said of his new wife.
Nevada is among the five states without Powerball, so friends Tamara Carter and Denise Davis drove from Las Vegas across the state line into California to buy tickets. But the line was so long at their first stop that they gave up and went in search of another store.
“The line was about three hours long,” Carter estimated. “I was waiting for maybe a half hour, and it didn’t move.”
The jackpot has grown enormous due to a long dry spell. The previous winning Powerball ticket was sold on July 19, and it was worth $1.08 billion after 39 drawings without a jackpot win.
At the same hardware store as Salvato, Kevin Button seemed to understand the long odds as he bought a ticket.
“I only buy them usually when the jackpot’s high,” Button said. “Seems to have been pretty high quite often lately. So I’ve tried quite a few times and haven’t even won a free ticket. But maybe tonight’s the night.”
In most states, a Powerball ticket costs $2 and players can select their own numbers or leave that task to a computer.
The $1.765 billion jackpot is for a sole winner who opts for payment through an annuity, doled out over 30 years. Winners almost always take the cash option, which for Wednesday night’s drawing was estimated at $774.1 million.
Winnings would be subject to federal taxes, and many states also tax lottery winnings.
Powerball is played in 45 states, as well as Washington, D.C., Puerto Rico and the U.S. Virgin Islands.
Rodrique Ngowi in Billerica, Massachusetts, and Ty O’Neil in California, near Primm, Nevada, contributed to this report.
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Consumer & Retail
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Jeremy Hunt risks condemning Britain to a decade in the doldrums unless he uses this month’s autumn statement to announce a £30bn-a-year investment plan to upgrade public infrastructure, a leading thinktank has warned.
The National Institute for Economic and Social Research (NIESR) said the chancellor should ignore calls by Tory MPs for pre-election tax cuts and instead focus on measures to boost growth through improvements to transport, digital networks, skills and housing.
In their quarterly update on the state of the economy, researchers at the thinktank said Hunt had more scope for a bold package than generally believed, because the freezing of income tax allowances and thresholds at a time of high inflation had resulted in stronger-than-expected growth in government revenues.
They said the chancellor should set out immediate plans to raise the level of annual public investment from 2% to 3% of gross domestic product and that there was scope to do so in the autumn statement. “In its absence, the UK is set for a decade in the doldrums and poor prospects for regional regeneration,” the thinktank said.
NIESR said it was more optimistic about the state of the public finances than the government’s own watchdog, the Office for Budget Responsibility, and said if current tax and spending plans were kept to there would be scope to raise spending or cut taxes by up to £90bn in five years’ time.
Prof Stephen Millard, NIESR’s deputy director for macroeconomic modelling and forecasting, said the UK would avoid slipping into recession and predicted that the Bank of England would not need to increase interest rates further from their current level of 5.25%.
“Although the good news is that the monetary policy committee have done enough to bring inflation down to target, the bad news is that the UK’s sluggish growth performance continues,” Millard said. “It is up to the government to increase public investment and encourage private investment so that UK productivity growth may return, and standards of living improve.”
The thinktank said the inflation-adjusted incomes of the poorer half of working families – those earning less than £32,000 a year – would be 5% lower in 2023-4 than they had been five years earlier, and not return to pre-pandemic levels until the end of 2026.
The squeezed living standards for those in the bottom half of the income distribution was likely despite the boost for the lowest-paid workers from an expected increase in the national minimum wage of about 10% next year.
Prof Adrian Pabst, NIESR’s deputy director for public policy, said: “Higher real wages this year are a welcome boost, especially for low-income working families, who have been hit hardest by the Covid and inflation shocks. But a return to pre-pandemic living standards will require sustained real wage growth, including further increases in the ‘national living wage’. All this should be aided by targeted investment in physical and digital infrastructure, skills and housing.”
Hunt has strongly hinted that the poor state of the public finances and the need to avoid further increases in interest rates from the Bank of England rule out a big stimulus package on 22 November. The chancellor will instead focus on measures to boost investment, improve public sector productivity and increase participation in the labour force by people who are long-term sick or disabled.
NIESR also called on Hunt to increase investment incentives for businesses, and to revise the government’s fiscal rules so that tax and spending decisions can respond to economic shocks.
Pabst said: “Only a rethink of economic and social policy can avoid another period of protracted stagnation where the UK falls further behind other advanced economies and regional disparities continue to widen.”
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United Kingdom Business & Economics
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The minimum unit price (MUP) for alcohol in Scotland could rise to 65p per unit under proposals from ministers.
The MUP was set at 50p per unit when it was introduced in 2018 and the current term will end on 30 April next year.
Drugs and alcohol policy minister Elena Whitham is proposing to push up the unit price to 65p in a consultation launched on Wednesday.
The proposed rise is in line with demands from groups including Alcohol Focus Scotland.
It comes after figures released in August showed 1,276 people died from alcohol last year, the highest number since 2008.
Ms Whitham said: "The recent rise in alcohol-specific deaths highlights the need for more to be done to tackle alcohol-related harm.
She said the Scottish government's "world-leading MUP policy" had "saved hundreds of lives, likely averted hundreds of alcohol-attributable hospital admissions each year, and also contributed to reducing health inequalities".
Ms Whitham said the proposals in the consultation "strike a reasonable balance between public health benefits and any effects on the alcoholic drinks market and subsequent impact on consumers".
Wales brought in a 50p MUP in March 2020, while that same month the government in Westminster said there were "no plans for the introduction of MUP in England".
The Scottish government said it settled on 65p as it believes this price will bring the most health benefits while minimising interference in the market.
It said a price of 70p or more would result in "a more significant distortion to the market", with some premium products being included.
Under the 65p MUP, a 700ml bottle of Scotch whisky would cost a minimum of £18.20.
The same volume of vodka or gin would have a minimum price of £17.07.
A pack of four 440ml cans of cider would cost at least £5.15, while a pack of four beer cans of the same size would cost at least £5.72.
The consultation will continue for nine weeks, after which ministers will make a final decision on whether MUP should continue and what the unit price will be.
Ms Whitham said she wanted to "hear from all sides".
Responding to the plans, Liberal Democrat MSP Willie Rennie said his party was the first "to call for this change, so I am glad that ministers have listened".
"If MUP doesn't move with inflation then the ambition of the policy is eroded.
"More than 20 people a week are dying in Scotland due to alcohol misuse."
Conservative health spokesman Dr Sandesh Gulhane highlighted that the Scottish government had recently updated a press release on the benefits of MUP after he complained about it to the UK Statistics Authority.
He said: "Ministers had to amend a press release boasting of its success and were criticised for cherry-picking from one particular study to try and suit their narrative."
He also said: "The launching of a second consultation shows even SNP ministers have concerns over any significant changes to their flagship minimum unit pricing policy.
"Increasing it to 65p per unit would only hit responsible drinkers during a cost-of-living crisis."
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Consumer & Retail
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RBI's New Guidelines To Have Capital Impact Of 55 Basis Points, Says SBI Chairperson
The norms have to be seen in the context of the regulator's concerns over the growth of unsecured loan book, says Dinesh Khara.
State Bank of India expects an overall impact of 55 basis points due to the central bank's new guidelines of increased credit risk weights on unsecured consumer loans, according to Chairperson Dinesh Khara.
The Reserve Bank of India's recent guidelines have come in response to high growth in the unsecured loans segment. Among several guidelines, the circular mentioned that consumer loans for banks and non-banking financial companies—barring home loans, education loans, vehicle loans, microfinance and gold loans—will attract a credit risk weight of 125% as compared with the previous 100%.
Based on its calculations, the bank would require an additional capital allocation of 130 bps, Khara told BQ Prime in a conversation.
"Even if we look at loans to (the) NBFCs, there will be another 25 bps that is expected," he said. "If we look at our half-year profit that we have earned till now, it would have added to our capital adequacy ratio by 109 basis points."
Overall, the lender doesn't envisage any challenge on account of these norms, Khara said. "We have sufficient growth capital, and we will be in a position to grow well."
The RBI's guidelines have to be seen in the context of concerns being expressed by the regulator in terms of growth of unsecured loan book. A lot of it is coming from fintech lending and 'buy now, pay later' kind of things, according to Khara.
Khara said the impact on borrowing costs for the NBFCs would depend on the blend of resources that they have.
"If they are dependent upon corporate bonds, perhaps, it will help them in reducing their cost," he said. "There will be (an) impact but how much... will depend."
The regulator also requires banks and NBFCs to define their exposure limits for unsecured loans. These limits will not only be at the segment level but even at the sub-segment level.
"We have been having internal exposure limits and sector limits... It is a guiding principle and already in place," Khara said.
Since frontline NBFCs and fintech lenders are expected to be the most impacted by these guidelines, Khara said one needs to wait and watch to understand how it will play out. "The normal expectation is that the cost for them will go up and it will have an impact on lending."
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Banking & Finance
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CCI Approves Deal Involving Niva Bupa Health Insurance
Bupa Singapore Holdings is a shareholder of Niva Bupa and a subsidiary of international healthcare group The British United Provident Association Ltd.
Fair trade regulator CCI on Thursday approved the acquisition of an additional stake in Niva Bupa Health Insurance Company by Bupa Singapore Holdings Pte.
Bupa Singapore Holdings is a shareholder of Niva Bupa and a subsidiary of international healthcare group The British United Provident Association Ltd.
The transaction relates to the secondary purchase of shares by Bupa Singapore Holdings in the Niva Bupa Health Insurance Company from Fettle Tone LLP.
After the transaction, the shareholding of Bupa Singapore Holdings will increase to 63% in Niva Bupa Health Insurance.
Niva Bupa Health Insurance provides insurance policies in India, while Fettle Tone LLP is a special purpose vehicle (SPV) set up by private equity firm True North Fund.
The Competition Commission of India (CCI) said it has cleared the deal under the green channel route.
"Apart from the Bupa Singapore Holdings's (Acquirer) and Bupa’s existing interests in Niva Bupa (Target), there are no horizontal overlaps, vertical overlaps, or complementary businesses between the Acquirer / Bupa and the Target, the transaction is unlikely to raise any competition concerns, the relevant product and geographic markets may be left open.
"The transaction is being notified under the green channel route," according to an update on the competition watchdog's website.
Under the green channel route, a transaction which does not raise any risk of an appreciable adverse effect on competition is deemed to be approved on being intimated to the fair-trade regulator.
In September, True North announced that it would be selling a 20% holding in health insurer Niva Bupa for Rs 2,700 crore. The U.K.-headquartered Bupa is picking up the stake to become a majority shareholder in the venture post-deal.
True North became Niva Bupa’s majority shareholder in 2019 after it had acquired a 51% stake in the company from Analjit Singh's Max India.
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Banking & Finance
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Downing Street is drawing up plans for retailers to introduce price caps on basic food items such as bread and milk to help tackle the rising cost of living, The Telegraph can disclose.
Rishi Sunak’s aides have started work on a deal with supermarkets akin to an agreement in France in which the country’s major retailers charge the “lowest possible amount” for some essential food products.
The move would amount to the biggest attempt to manage supermarket prices since controls established by Edward Heath in 1973. However, No 10 insists that any action by retailers would be voluntary.
It comes amid growing concern in government about sustained pressure on household finances from inflation and the rising cost of borrowing.
A Treasury source said: “Food inflation is much more resilient and difficult to get rid of than we anticipated.”
The Telegraph can also disclose that continued inflation and increases in gilt yields are throwing into doubt Mr Sunak’s aspiration to cut personal taxes before the next general election.
Official data published last week showed core inflation in the UK economy, which strips out volatile food and energy prices, increased to 6.8 per cent in April, its highest level in 31 years.
Ten-year gilt yields are at 4.33 per cent, having peaked at 4.54 per cent, following Liz Truss’s mini-Budget.
A government source repeated Mr Sunak and Jeremy Hunt’s mantra that “we need to address high inflation and high borrowing first” before cutting taxes. A Cabinet source added: “If you haven’t got growth you haven’t got the money [for tax cuts], it’s as simple as that.”
A minister said that tax cuts were now highly unlikely until next spring at the earliest.
The Prime Minister is thought to be preparing to address the state of the economy in public remarks this week, as officials prepare fresh advice on how long high inflation is likely to persist.
The proposal for a French-style agreement on food price caps has been quietly discussed within Whitehall and among industry figures in the last fortnight.
In France, the supermarkets that signed up to the deal with the government each identified items in their own shops that would be subject to price freezes or reductions. In many cases own-brand items were selected on the basis that retailers found it easiest to control their costs.
But one source briefed on the plan warned that it would be “anti-market” and could harm smaller retailers who would lose business to the supermarkets offering cut-price items.
The source added: “It’s very easy to point the finger at retailers and say they are making a fortune, but some of the margins they are operating at are not that big. It is quite tight.”
A No 10 source said that the proposals were at a “drawing board” stage.
The source said that there was a recognition that supermarkets were “not operating on big profit margins”, but added: “The pressures are such that we are working with retailers on anything that can be done at their end to bring down prices for consumers.” Talks with retailers were at “early stages”.
The French government’s deal with retailers was announced in March, when Bruno Le Maire, the finance minister, said that a deal in which retail groups had agreed to cut prices would turn the period between April and June into an “anti-inflation quarter”.
Earlier this month, Mr Le Maire said the initiative was being extended for another quarter, with food inflation running at a record 15 per cent. He later threatened to raise taxes on retailers “to recover profits unfairly made on the back of consumers” if they refused to lower prices further.
Last week it emerged that UK inflation had fallen by less than expected in April, with consumer prices increasing by 8.7 per cent in annual terms, down from 10.1 per cent in March.
Britain has the joint highest rate of inflation among the G7, alongside Italy. On Saturday, three former Bank of England rate-setters warned that interest rates, which increased to 4.5 per cent earlier this month, will need to rise as high as 6 per cent to stamp out inflation.
Separately, UK bond yields have returned to the levels that contributed to the departure of Ms Truss as prime minister in October, as traders bet on more rate hikes by the Bank in order to get inflation under control.
Since his campaign to become Conservative leader, Mr Sunak has insisted that he wants to cut taxes but only once he has succeeded in reducing inflation and getting borrowing under control.
The approach marked a dividing line with the strategy of Ms Truss, who said that tax cuts were needed immediately to help grow the economy.
Now, the economic outlook is leading Mr Sunak’s advisers to question whether he and Mr Hunt can afford to implement personal tax cuts ahead of an expected election next year, in the absence of a dramatic improvement.
Last week Mr Hunt said he was comfortable with Britain falling into recession if it resulted in lower inflation.
One minister said: “All the Tory Party want tax cuts… it’s in our DNA. I just want them at the right time.
“We just need to get our house in order first. We’re going to wait for the Budget next year. ”
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Inflation
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Dividends are payments that some companies make to shareholders to reward them for investing in them. Dividends can provide regular, predictable income to investors who also preserve the chance of profiting from price appreciation. Dividends can qualify for advantageous capital gains tax treatment if stocks are owned long enough. Avoiding all income taxes on dividends is more complicated. Options include owning dividend-paying stocks in a tax-advantaged retirement account or 529 plan. You can also avoid paying capital gains tax altogether on certain dividend-paying stocks if your income is low enough. A financial advisor can help you employ dividend investing in your portfolio.
Dividend Basics
Dividends are payments investors get from owning shares of some companies. Companies that are profitable may distribute some of their profits as cash payments or stock dividends as a way to reward shareholders for investing in the business.
Dividend-paying stocks are popular alternatives to bonds for investors who want to generate passive income. Retirees often invest in dividends so they can pay their living expenses without having to sell stocks.
If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Like all income, dividends are subject to taxes. The tax rates depend on whether dividends are considered qualified or non-qualified. Ordinary or non-qualified dividends are paid by stocks that are owned for less than the required holding period. These dividends are taxed at an investor’s ordinary income tax rate. Qualified dividends, which are paid by stocks that are owned for at least the required holding period, are taxed as capital gains.
Capital gains rates are generally lower than ordinary income rates and range from 0% to 20%. Rates are based on the taxpayer’s income and most taxpayers are in the 15% capital gains bracket. As an example, an investor who earned $10,000 from qualified dividends typically would owe capital gains taxes of $1,500, reducing their after-tax gain to $8,500.
How to Avoid Taxes on Dividends
There are a few strategies for avoiding taxes on your dividends, depending on whether they’re qualified or ordinary dividends:
Roth retirement accounts. A Roth IRA is funded with after-tax money. Once a person reaches age 59 ½, money can be withdrawn tax-free. So any dividends paid out by stocks owned in a Roth account would be free of taxes, as long as the dividends were withdrawn after age 59 ½ and at least five years after the account was opened.
Qualifying for zero capital gains tax. Capital gains taxes are graduated, with higher-income investors paying higher rates. Investors in the lowest income bracket owe zero capital gains taxes. Brackets change annually. For example, a married couple filing jointly with 2023 taxable income of $89,250 or less would pay no capital gains tax on dividends. Strategies such as contributions to retirement accounts and health savings accounts (HSAs) may reduce your income below the zero-capital gains tax threshold. As a result, you wouldn’t owe any taxes on qualified dividends.
Education plans. Tax-advantaged 529 plans allow tax-free growth and withdrawals as long as the money is used to pay qualifying education expenses. So placing funds into a 529 plan and using the money to buy dividend-paying stocks will allow you to accumulate funds tax-free and also withdraw the money without owing taxes. However, this only works if the withdrawal amounts go for qualified education expenses such as tuition and books.
Other retirement accounts. Other retirement accounts, like traditional IRAs and 401(k)s can offer partial relief from income taxes. These accounts are funded with pre-tax money. An investor can deduct money contributed to a traditional account from their current taxable income. But unlike Roth accounts, withdrawals are taxed as ordinary income. Holding dividend-paying stocks in a traditional IRA or 401(k) won’t eliminate your tax liability, but it could reduce it.
Bottom Line
Investing in dividend-paying stocks can generate income while also preserving the potential for capital appreciation. Dividend income may be taxed at capital gains rates that are lower than tax rates on ordinary income as long as the shares are held for at least a year. You may be able to avoid all income taxes on dividends if your income is low enough to qualify for zero capital gains if you invest in a Roth retirement account or buy dividend stocks in a tax-advantaged education account.
Investing Tips
Consider checking with a financial advisor for suggestions about tax-efficient ways to generate income through dividend investing. SmartAsset’s free tool matches you with up to three vetted financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
To plan well for your financial future, you need to have some idea of how much your investments will be worth in the future. SmartAsset’s Investment Return & Growth Calculator can help you estimate how much your portfolio could be worth. Provide the amount of money you’re starting with, the additional contributions you plan to make, your expected rate of return and how long you want to let the money grow. The calculator will then give you the future estimated value of your portfolio.
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Personal Finance & Financial Education
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NEW YORK (AP) — Former President Donald Trump returned to a New York City courtroom Tuesday to watch the civil fraud trial that threatens to disrupt his real estate empire, renewing his claims that the case is a baseless and politically targeted distraction from his 2024 campaign.
After attending the trial’s first three days earlier this month, the Republican front-runner initially planned a return to coincide with testimony by Michael Cohen, his attorney turned foe. But Cohen’s planned appearance on the witness stand was delayed until at least next week.
READ MORE: Trump’s fraudulent financial statements were key to getting loans, former bank official says
Instead, Trump sat in on testimony from one of his company’s accountants, Donna Kidder.
New York Attorney General Letitia James’ lawsuit against Trump alleges that he and his company deceived banks, insurers and others by massively overvaluing his assets and inflating his net worth in paperwork used in making deals and securing financing.
Trump denies any wrongdoing, says his assets were actually undervalued and maintains that disclaimers on his financial statements essentially told banks and other recipients to check the numbers out for themselves.
“We built a great company — a lot of cash, it’s got a lot of great assets, some of the greatest real estate assets anywhere in the world,” he said as he headed into court, dismissing the lawsuit as “a witch hunt by a radical lunatic attorney general” bent on dragging down his presidential run. While he’s attending the trial by choice, Trump complained it was taking him off the campaign trail.
WATCH: Trump amplifies violent rhetoric against his perceived enemies as civil fraud trial begins
The attorney general, a Democrat, started investigating Trump in 2019 after Cohen testified to Congress that the billionaire politician had a history of misrepresenting the value of assets to gain favorable loan terms and tax benefits. She didn’t comment as she arrived Tuesday.
Cohen said Monday on X, formerly known as Twitter, that he isn’t dodging Trump. In a text message, he said he has an “incredibly painful” medical condition but anticipates testifying as soon as the pain subsides.
“When I do testify, I am certain Donald will be in attendance, sitting with his lawyers at the defendant’s table,” Cohen wrote.
On Tuesday, Trump heard Kidder discuss his company’s finances, including a mention of a prior tangle with New York state’s lawyers: former Attorney General Eric Schneiderman’s 2013 lawsuit over the now-defunct Trump University real estate seminar program. In explaining a spreadsheet, Kidder noted an entry about a loan that the Trump Organization took out to pay a $25 million settlement of lawsuits from Schneiderman and others alleging that Trump University defrauded students.
State lawyers on Tuesday are also expected to call Jack Weisselberg, the son of former longtime Trump Organization finance chief Allen Weisselberg. The son arranged financing for Trump while an executive at Ladder Capital.
Outside court, Trump recapped his various criticisms of the case and about Judge Arthur Engoron, a Democrat who’s hearing it without jurors. The suit was brought under a state law that doesn’t allow for a jury.
Trump used his Truth Social media platform early Tuesday to blast Engoron as radical and “highly political,” but the former president took a more temperate tone outside the judge’s courtroom doors a few hours later. Trump said that he had come to like and respect Engoron but believed that Democrats were “pushing him around like a pinball.”
READ MORE: These new poll numbers show why Biden and Trump are stuck in a 2024 dead heat
After Trump maligned a key court staffer on social media during the trial’s first days, the judge called him into a closed-door meeting and issued a limited gag order, warning participants in the case not to smear members of his staff. The judge also ordered Trump to delete the post.
Trump also faces a narrow gag order in his Washington, D.C., election interference criminal case. Imposed Monday, the order bars the former president from making statements targeting prosecutors, possible witnesses and court staff. Trump has said he will appeal the restriction, and he complained Tuesday that “my speech been taken away from me.”
In a pretrial decision in the New York civil case last month, Engoron resolved the top claim, ruling that Trump and his company committed years of fraud by exaggerating the value of Trump’s assets and net worth on his financial statements.
As punishment, Engoron ordered that a court-appointed receiver take control of some Trump companies, putting the future oversight of Trump Tower and other marquee properties in question. An appeals court has since blocked enforcement of that aspect of the ruling for now.
The trial concerns six remaining claims in the lawsuit, including allegations of conspiracy, insurance fraud and falsifying business records.
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Nation
Oct 16
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Real Estate & Housing
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Senior Treasury figures have discussed holding an early Budget next February in a move that will fuel speculation that there could be a snap general election in the spring.
Bringing forward the date of the Budget, which is usually held in March, would allow more time for any tax cuts to improve voters’ finances before they go to the ballot box.
The emergence of the discussions comes amid heightened speculation that Rishi Sunak could choose to call the next election in the spring rather than autumn.
February is the earliest the next fiscal statement could be held from now, as the Office for Budget Responsibility, which produces forecasts, must be given a minimum of 10 weeks notice.
On Thursday night, a Treasury source played down the prospect, insisting that Jeremy Hunt, the Chancellor, was planning for the Budget in March “as normal”.
Some political commentators argued that an early election was made more likely by Wednesday’s giveaway Autumn Statement, which saw £20 billion of tax cuts.
George Osborne, the former chancellor, said Mr Hunt was “opening the door” to a May election but was “unlikely” to walk through it.
Mr Hunt timed his biggest personal tax measure, a 2p reduction in the main rate of National Insurance, to take effect on Jan 6 rather than April, the start of the financial year. Doing so means people will feel the financial benefit of the tax cut for months rather than weeks if a spring 2024 election is called.
Tory election strategists are hoping cutting taxes in the run-up will help convince voters to give them another term in office.
But on Thursday, think tank analysis revealed the scale of tax rises since the 2019 election. Taxes have been increased by £90 billion since 2019, dwarfing Wednesday’s cut.
It has emerged that Isaac Levido, the Tory campaign manager in 2019 who will hold the same role for the next election, is planning to join Conservative Campaign Headquarters full-time from January and would therefore be in place for any early election.
However, past Tory campaign managers have joined full-time much earlier than a year out from a vote, suggesting that joining in January for an autumn election would not be unusual.
Multiple Tory sources have pointed to the huge lead Labour has over the Conservatives in the average opinion polls – 20 percentage points – as proof a spring election was unlikely.
Many Conservative MPs are still privately predicting that autumn is the most likely election date – the same message Government figures involved in campaign planning have been relaying.
Since 1950, almost no governing party has called an early election when trailing in the opinion polls, Resolution Foundation analysis, released on Thursday, found. The Tories were the only exception in 1992, when they trailed Labour in the polls by only a few percentage points.
Mr Hunt has said he has not discussed an early election with Mr Sunak. Sir Keir Starmer, the Labour leader, said his party was ready for an election if one was called.
The Prime Minister has the power to decide when to call a general election, within certain time limits. The next election has to take place by January 2025 at the latest.
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Interest Rates
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Labour has rowed back on its pledge to invest £28bn a year in green industries, saying it needs to be "responsible" with the public finances.
In 2021 Labour promised to invest £28bn a year until 2030 in green projects.
Instead shadow chancellor Rachel Reeves said the party would now ramp up the investment over time if it wins power, reaching £28bn a year by 2027.
She told the BBC that after the Tories "crashed the economy" it was important not to be "reckless" with spending.
Ms Reeves added that after prices and interest rates increased "financial stability has to come first".
Factors including the war in Ukraine have seen inflation soar and the Bank of England has increased interest rates, making borrowing more expensive, in an attempt to tame rising prices.
Former PM Liz Truss's mini-budget last year, which included billions of pounds of unfunded tax cuts, also prompted turmoil in the financial markets and led to interest rates rising further.
"The truth is I didn't foresee what the Conservatives would do to our economy," Ms Reeves told BBC Radio 4's Today programme.
"We will get to the investment that is needed. But we've got to do that in a responsible way."
However, pressed on how much investment there would be in the first year of a Labour government, Ms Reeves would not commit to a figure, arguing the economic backdrop would not be clear until closer to the time.
Announcing the party's Green Prosperity Plan in 2021, Ms Reeves said the £28bn would come from borrowing and would be spent on projects like offshore wind farms and developing batteries for electric vehicles.
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Renewable Energy
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Labour would use artificial intelligence to help those looking for work prepare their CVs, find jobs and receive payments faster, according to the party’s shadow work and pensions secretary.
Jonathan Ashworth told the Guardian he thought the Department for Work and Pensions was wasting millions of pounds by not using cutting-edge technology, even as the party also says AI could also cause massive disruption to the jobs market.
Both Ashworth and Lucy Powell, the shadow digital secretary, are making speeches on Tuesday about AI as the party hones its policies concerning one of the fastest-moving areas in the technology industry. But while Ashworth will talk up the potential benefits of the technology for public services, Powell will say it can leave workers disempowered and excluded.
Ashworth will say AI could make as big a difference to job-seeking as when the Blair government set up Jobcentre Plus in 2002. “Jobcentre Plus services was an important reform of the Blair/Brown years, but it needs to get better at getting people back into work,” he will say.
“DWP broadly gets 60% of unemployed people back to work within nine months. I think by better embracing modern tech and AI we can transform its services and raise that figure.”
Both Labour and the Conservative government have been rushing to update their AI policies in recent weeks to keep up with how quickly the technology is developing. The advent of ChatGPT, coupled with warnings from some of those at the forefront of the industry about the damage it could do to humans, have forced both parties to look into how it should both be regulated and used by the public sector.
Speaking at an AI industry event in London on Tuesday, Powell will say the technology could trigger a second deindustrialisation, causing major economic damage to entire parts of the UK. She will highlight the risk of “robo-firing”. There was a recent case in the Netherlands where drivers successfully sued Uber after claiming they were fired by an algorithm.
She will say in her speech: “Workers can either be empowered or excluded by technology, finding themselves on the wrong side of biased algorithms and robot firing.” Powell has previously called for a licensing regime for those working on large datasets for AI tools, which would force them to provide transparency to users and policymakers about what they are using and how.
Ashworth will strike a more upbeat note on the possibility of algorithms reshaping public services.
He will say Labour would use AI in three particular areas. Firstly, it would make more use of job-matching software, which can use the data the DWP already has on people looking for work to pair them up more quickly with prospective employers. Secondly, the party would use algorithms to process claims more quickly. And thirdly, it would use AI to a greater extent to help identify fraud and error in the system. DWP already has a pilot scheme to use AI to find organised benefits fraud, such as cloning other people’s identities.
Ashworth said, however, humans would always be required to make the final decisions over jobs and benefit decisions, not least to avoid accidental bias and discrimination.
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Workforce / Labor
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If passed, the measure could affect more than four million Americans, including numerous veterans and tens of thousands of Defense Department civilian employees. But the bill faces long odds of becoming law, and is certain to face significant opposition from other members of Congress whose districts include large numbers of federal workers.
Gaetz promoted the measure as a way to rein in the “weaponized” national security state. He also accused federal workers of abusing their positions to “control and influence” Americans’ political beliefs, with a bias against conservatives and former President Donald Trump.
The penalties would cover public discussion by any worker who has passed “a security clearance investigation, periodic reinvestigation, or other determination of eligibility to access classified information by an authorized adjudicative agency.”
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It would not include disclosing that information for federal employment or government contracting purposes.
Gaetz made headlines this week for spearheading an effort to oust Rep. Kevin McCarthy, R-Calif., from his former Speaker of the House leadership post. The legislative proposal comes as the process for maintaining security clearances is getting an overhaul.
Earlier this week, officials from the Office of Personnel Management — which helps facilitate background investigations required to obtain and maintain clearances — announced they will expand “continuous vetting” for federal employees in non-sensitive positions.
Continuous vetting allows for constant monitoring of employees’ files for eligibility changes instead of relying on lengthy periodic reinvestigations. The policy is already in place for the national security workforce.
Now, the goal is for the low-risk population to be fully enrolled this fiscal year, according to OPM.
About 4.2 million government and contract personnel hold a security clearance, of which most are DoD-clearance holders, according to data by Clearance Jobs.
No timeline has been announced for when Gaetz’ bill may be considered by a congressional committee or on the chamber floor.
Reporter Molly Weisner contributed to this report.
Leo covers Congress, Veterans Affairs and the White House for Military Times. He has covered Washington, D.C. since 2004, focusing on military personnel and veterans policies. His work has earned numerous honors, including a 2009 Polk award, a 2010 National Headliner Award, the IAVA Leadership in Journalism award and the VFW News Media award.
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Workforce / Labor
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Employer-sponsored health insurance is growing costlier in the US, according to new data.
According to the Kaiser Family Foundation (KFF)’s 25th Employer Health Benefits Survey, the average annual premium for employer-sponsored health insurance as of July 2023 was $8,435 for individual coverage and $23,968 for family coverage, marking a 7% increase for each over the last year.
Workers are contributing a greater amount to premiums too. In 1999, workers contributed $318, or 14.4%, to the average annual premium for individual coverage of $2,196. In 2023, worker contributions reached $1,401 out of $8,435 total, or 16.6% of the overall premium.
“I think it just sort of demonstrates the continued strain that employees and employers are facing when it comes to being able to afford to both offer health insurance to employees and then for employees to afford that coverage," Andrea Ducas, vice president of health policy at the Center for American Progress, told Yahoo Finance. "It’s sort of untenable.”
What's driving up the cost?
Healthcare affordability is still a major issue in the US overall.
An October 2023 survey from the Commonwealth Fund indicated that 38% of US adults in the past year delayed or skipped healthcare or a prescription drug because they couldn’t afford it, including 54% of those with employer-sponsored coverage.
"I think that even for working people, but particularly for low-wage workers, many of the cost-sharing provisions required by employer-sponsored health plans raise real affordability issues [for] what their ability is to actually use the plan," Matthew Rae, associate director of the healthcare marketplace project at KFF, told Yahoo Finance.
Ducas explained that health insurance companies determine the cost of premiums based on how much they expect to spend on a particular insured population. Healthcare utilization rates and the cost of that care are two major drivers, she added.
Though inflation has cooled in recent months, the Commonwealth Fund survey found that nearly two-thirds of working-age adults reported that price inflation had some type of impact on their family’s ability to afford healthcare in the past year, including 60% of those with employer-sponsored coverage. Among that 60%, those earning less than 200% of the federal poverty level reported struggling the most with inflation and healthcare costs.
Rae speculated that part of the bump in premiums could be due to an increase in utilization of healthcare services that people were put off during the pandemic, along with new treatments that cost more money.
"We have healthcare markets that are increasingly consolidated, and providers have more power to get higher prices," he added. "That’s also contributing to higher premiums over time."
'The labor market really matters here'
Rae also noted the role of the tight labor market in rising premium costs as employers want to ensure they offer benefits that attract talent.
"I think that to cover lots of things, have a wide selection of providers, and have low cost-sharing, all of that contributes to higher premiums," he said, noting that employers are becoming more selective when it comes to cutting benefits. "The labor market really matters here."
Though the cost of premiums is still increasing, the growth in deductible costs, the amount a person pays for covered healthcare services before their insurance plan starts to pay, has slowed in recent years. The average deductible for single coverage in 2023 was $1,735, only 10% higher than five years ago (compared to 53% higher than 2013).
"This relatively low growth may reflect employer concerns about the ability of workers to afford higher out-of-pocket costs, particularly for workers with lower wages," the KFF survey stated, adding: "Employers may also be reluctant to reduce the value and attractiveness of their coverage offerings during this low period of low unemployment and intense competition for labor."
The KFF survey found that 90% of US workers have a deductible compared to 55% in 2006. Rae stated that this highlights the growing complexities of cost-sharing over the years.
According to the survey, 25% of employers with 50 or more employees believe their employees have a "high" level of concern about the affordability of cost-sharing, while 33% believe the employees have a "moderate" level of concern.
"It’s becoming so unaffordable for people to use their coverage, and it’s becoming harder and harder for employers to offer it," Ducas said. "And there’s so much that needs to happen to bring down the cost of care."
Adriana Belmonte is a reporter and editor covering politics and healthcare policy for Yahoo Finance. You can follow her on Twitter @adrianambells and reach her at adriana@yahoofinance.com.
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Consumer & Retail
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DHS Issues Proposed Rule to Modernize H-2 Temporary Visa Programs and Strengthen Worker Protections
WASHINGTON – Today, the Department of Homeland Security (DHS) took steps to strengthen protections for temporary workers through the H-2A temporary agricultural and the H-2B temporary nonagricultural worker programs (H-2 programs). In a notice of proposed rulemaking (NPRM) published today, DHS proposed modernizing and improving the H-2 programs by providing greater flexibility and protections for participating workers, and improving the program’s efficiency. This would include strengthening protections for workers from exploitative conduct by employers, including the addition of whistleblower protections.
“For years, H-2A and H-2B temporary worker visa recipients have been essential to our seasonal and agricultural economies,” said Secretary of Homeland Security Alejandro N. Mayorkas. “These proposed reforms will help U.S. employers address worker shortages through new program flexibilities. They will also help provide this vulnerable population of workers with the protections they deserve. Alongside our partners across the Biden-Harris administration, DHS is committed to safeguarding our economy, our security, and our American values.”
The H-2 programs allow certain U.S. employers or agents to bring foreign nationals to the United States to fill temporary jobs for which there are not enough U.S. workers who are able, willing, qualified and available to do the temporary work. The employer or agent must file Form I-129, Petition for a Nonimmigrant Worker, on the prospective worker’s behalf accompanied by a certification from the Department of Labor that states why qualified U.S. workers are not available to fill the job opportunity and why a foreign worker’s employment will not adversely affect the wages and working conditions of similarly employed workers in the United States.
Under the proposed regulations, employers who violate H-2B program requirements, including employers who fail to demonstrate an ability and intent to follow the program requirements, may be ineligible for the limited number of available visas. To improve program integrity and better protect vulnerable workers, the proposed rule would clarify prohibitions on employer-imposed fees. It also strengthens the prohibition on, and consequences of, such prohibited fees being collected by employers or recruiters at any time from H-2 workers, protecting workers from incurring exploitive debts and preventing abuse. Further, DHS is proposing greater flexibility for H-2 workers by extending grace periods for seeking new employment, preparing for departure from the United States, or seeking a change of immigration status, which will provide increased clarity and worker flexibility, mobility, and protections.
This rulemaking would also offer several benefits to employers, including making H-2 portability permanent, which would allow employers who are facing worker shortages to hire H-2 workers who are already lawfully in the United States while the employer’s H-2 petition for the worker is pending.
The H-2 programs have experienced significant growth in recent years. The Biden-Harris Administration has expanded access to the H-2 programs as part of its overall strategy to manage safe, orderly, and humane migration to this country and to address labor shortages facing U.S. businesses.
The 60-day public comment period starts following publication of the NPRM in the Federal Register.
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Workforce / Labor
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Tech hype comes in waves, and while the focus constantly changes (first crypto, then metaverse, and now AI), some things—like tech’s critics—remain the same. SEC Chair Gary Gensler has been the crypto community’s public enemy no. 1 for a few years now, but now he’s offering his somewhat caustic assessment on Silicon Valley’s latest heartthrob: artificial intelligence.
During a talk at the National Press Club conference on Monday, Gensler told the crowd that “AI may heighten financial fragility.” He offered some rather staid comments we’ve heard plenty of times before—that AI is the most transformative technology since the printing press—and so on. But he also said his agency was working to suggest new regulations that could stymie the potential for AI to abuse investors.
“AI may play a central role in the after-action reports of a future financial crisis,” Gensler said.
The biggest issue, he said, was that all the “downstream actors,” AKA all the retail investors, venture capitalist firms, advisors, and so on, could all be getting the same financial information and advice from very few base-layer generative AI models. This, he said, would create a “monoculture” of economics, which puts the entire economy at risk if, let’s say, everybody bets big on the housing market, which then tanks because everybody was basing their decisions on the same mortgage data.
Regulations could be based on individual models as well as AI as a whole, he said, but that’s just the investor end of the issue. The next is how bad actors can abuse generative AI for mass deception. The SEC head mentioned in his speech how a piece of AI-generated text from a bot Twitter account promoted the rumor that he had resigned from office. Gensler also shared his concerns about the way AI is just the next big tool for getting naive folks wrapped up in the next big financial fraud scheme, as now campaigns can be personalized to the individual based on personalized AI algorithms.
“With AI, fraudsters have a new tool to exploit… we all used to get spam, but it was all the same spam,’ he said. “Now communications can be individualized.”
Gensler should know about financial fraudsters. His agency has gone after some of the biggest lingering crypto companies like Binance and Coinbase. The SEC has also filed civil complaints against the alleged perpetrators of crypto-based fraud such as Celsius co-founder Alex Mashinsky and fuzzy-haired FTX ex-CEO Sam Bankman-Fried.
Rather than a large language model-based AI chatbot like ChatGPT, Gensler said the biggest use case for AI in making money is pattern recognition and its ability to make predictions about individuals, AKA the increasingly sophisticated models used to directly advertise and sell products to customers. If targeted ads weren’t already the dark side of machine learning algorithms, Gensler also mentioned how these models could be used by insurance companies to determine who might get access to medical treatment based on who is more likely to live.
He also shared his concerns that the algorithms themselves could simply reflect racial biases resulting from malformed training data. He said that AI models used to offer financial advice “must be in the best interest of clients and retail investors not… place the AI model’s interest ahead of the investors.”
Though crypto bros have considered the SEC as a main antagonist for years now, the agency chair took time before he fully became the Thanos-like figure to fintech tans. Though Gensler was originally “intrigued” by the nature of blockchain infrastructure as a “powerful force for good,” he eventually came to regard crypto as irrelevant, saying “We don’t need more digital currency.”
Perhaps Gensler’s opinion about AI will sour even more over time as the hype cycle wanes and the well-known limits of current AI become even more plain. But as with crypto, we’ll likely need to wait until the next big exploit drains investors of millions of hard-earned dollars before regulators truly decide to curtail this technology.
Want to know more about AI, chatbots, and the future of machine learning? Check out our full coverage of artificial intelligence, or browse our guides to The Best Free AI Art Generators, The Best ChatGPT Alternatives, and Everything We Know About OpenAI’s ChatGPT.
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Banking & Finance
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Ola Electric Converts To Public Entity Ahead Of IPO
Ola Electric hasn’t generated profit yet to fund its own operations.
The Bhavish Aggarwal-led Ola Electric has converted to a public company ahead of an imminent public listing.
Ola Electric Mobility Pvt., the pure-play electric vehicle manufacturing arm of ride-hailing giant Ola, converted to Ola Electric Mobility Ltd., according to filings with the Registrar of Companies, Bengaluru, on Friday.
This comes ahead of a public listing by the firm, which raised as much as Rs 3,200 crore in October in a mix of equity and debt.
Ola Electric has grown to become India’s leading manufacturer of electric vehicles and stands to have a market share of almost 35% in about two years of operation.
BQ Prime had earlier reported that Ola Electric's spending requirements to scale up its various businesses make it the right time to go public.
“The timing is perfect for an IPO, as investors are looking for opportunities to bet on greener and more sustainable businesses, while the company itself may be under pressure because of too many unknowns and its high capex requirements going forward,” Puneet Gupta, director at S&P Global, told BQ Prime.
Ola Electric hasn’t generated profit yet to fund its own operations. In FY22, the company posted a revenue of Rs 373.4 crore, up from Rs 86 lakh in FY21, when it was a pre-revenue company.
The loss widened to Rs 784.1 crore in fiscal 2022 from Rs 199.2 crore in FY21. The expenses jumped to Rs 1,240.4 crore in FY22 from Rs 305.4 crore in the year-ago period, corporate filings showed.
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Stocks Trading & Speculation
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French Minister for Economy, Finance, Industry and Digital Security Bruno Le Maire arrives to attend the weekly cabinet meeting in Paris, France, July 4, 2022. REUTERS/Benoit Tessier/File PhotoRegister now for FREE unlimited access to Reuters.comAIX-EN-PROVENCE, France, July 10 (Reuters) - The French government is preparing for a total cutoff of Russian gas supplies, which it sees as the most likely scenario in its forward planning, French Finance Minister Bruno Le Maire said on Sunday.With about 17% of its supply coming from Russia, France is less dependent on Russian gas than some of its neighbours, but the government has been preparing contingency plans.A cutoff is particularly problematic now because France's nuclear power generation would struggle to pick up the slack as many reactors are currently down for maintenance.Register now for FREE unlimited access to Reuters.com"I think that a total cutoff of Russian gas supplies is a real possibility ... and we need to prepare for this scenario," he said on the sidelines of a business and economics conference in southern France."It would be totally irresponsible to ignore this scenario," he said. Earlier in the conference he described such a Russian gas cutoff the "most likely scenario".Le Maire said the first line of defence was for households and businesses to cut energy consumption, then the construction of new infrastructure like a floating plant that will be able to regasify liquid natural gas shipments from overseas.More drastically, the government is also looking company by company to see which can be forced to lower production to save energy if necessary, Le Maire said.Register now for FREE unlimited access to Reuters.comReporting by Leigh Thomas;
Editing by Alison Williams, William MacleanOur Standards: The Thomson Reuters Trust Principles.
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Energy & Natural Resources
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Senior Conservatives are said to be discussing abolishing inheritance tax - at an annual cost of £7billion to the Treasury - in a bid to win over voters ahead of the next election.
Downing Street is in talks about whether to scrap the levy in an attempt to shore up votes in so-called "blue wall" seats ahead of a general election in 2025.
Supporters say it could be a "gamechanger" in the south of England, where the Tories fear losing seats to opposition parties, according to The Times.
The discussions are being held just days before three Conservative by-elections take place on Thursday.
The votes could see Rishi Sunak become the first prime minister since Harold Wilson in 1968 to concede three seats at by-elections on the same day.
As the party trails Labour in official polls, axing inheritance tax could be considered a manifesto pledge rather than a policy to be implemented next year.
A source told the newspaper: "It's about being an aspirational country.
"You work hard, play hard and pass on your wealth. It's a live discussion."
Read more:
Everything you need to know about by-election battlegrounds
Inheritance tax is a charge on the estate - including property, money and possessions - of a person who has died.
People with an estate worth less than £325,000 usually do not have to pay inheritance tax, however, the value should still be reported.
Anyone with an estate above that value is liable to pay a standard 40% tax on the amount over the £325,000 threshold.
However, if you give away your home to your children or grandchildren, the threshold can rise to £500,000.
Two people co-habiting with joint home ownership could only have inheritance tax liability when one person dies and the value of the property exceeds £650,000.
A spouse or civil partner can pass on up to £1m including their home without any inheritance tax liability.
The average house price is £285,000, according to the latest official figures.
But abolishing inheritance tax could cost the Treasury up to £7bn a year as the nation continues to battle a cost of living crisis and inflation remains high.
A Treasury spokesperson said the vast majority of estates do not pay inheritance tax, with more than 93% of estates forecast to have zero inheritance tax liability in the coming years.
However, they added: "The tax raises more than £7bn a year to help fund public services millions of us rely on daily."
Talks about inheritance tax come days after the government pledged to give millions of public sector workers including teachers and doctors a 6% pay rise.
Read more:
Millions of public sector workers get pay rise
'On me personally' if inflation isn't halved, says PM
The pay increase will not be funded by borrowing, Chancellor Jeremy Hunt has insisted.
A Downing Street source said of the inheritance tax claims: "The PM has repeatedly said that he wants to cut taxes for people.
"As Conservatives that is obvious, we want people to keep more of their own money.
Click to subscribe to The Ian King Business Podcast wherever you get your podcasts
"But the current economic situation means that the government is completely focused on halving inflation - to help people have more in their pockets at the end of each month.
"This kind of future-scoping speculation just isn't on the PM's mind at the moment and requires a different kind of economic environment to the one we are operating in."
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United Kingdom Business & Economics
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New technology coming to stores could stop theft and ease customer access.
Recently, we showed you how a pioneering North Bay grocery store is using artificial intelligence to catch shoplifters. But that’s not the only local tech aimed at stopping non-stop stealing. A Bay Area innovation is poised to change the look of stores everywhere.
Since retail thefts are still happening lots, lots of stores now lock up lots of merchandise.
“To see padlocks and chains and rudimentary security measures, that really has to be an indicator that something is wrong here,” said David Johnston of the National Retail Federation.
Get a weekly recap of the latest San Francisco Bay Area housing news. Sign up for NBC Bay Area’s Housing Deconstructed newsletter.
Veteran loss prevention expert David Johnston studies theft trends for the National Retail Federation.
“Retailers don’t want to lock up their merchandise. They know it’s an inconvenience for the shoppers,” Johnston added.
These security barriers in stores make it tougher to steal and shop.
“What’s happening today isn’t solving the problem,” said David Ashforth.
Like a lot of us, Ashforth wanted to buy an item at a drugstore that was locked up.
“I had to find someone with a key. It was that moment when the lightbulb went off,” Ashforth recalled.
Ashforth is no ordinary shopper. In Sebastopol, he heads a company called Digital Media Vending International. It’s machines are everywhere -- in places like hotels and airports -- stocked with electronics or toiletries that maybe you forgot to pack. So, when this vending machine guru went to the store and encountered merchandise that a worker had to unlock, he saw an opportunity to redesign stores.
“I thought, ‘Huh. My machine could fit right here and then I wouldn’t have to find a manager with a key anymore,” Ashforth said.
His company is investing new shelving for stores. Basically: huge, modular vending machines that can replace entire aisles.
Ashforth’s team calls this an “automated retailer.” Merchandise is stocked safely behind glass-- to stop thieves. At the same time, honest shoppers get self-service access that’s faster than waiting for a manager.
“The machine will deliver their products to them in real-time, instantly,” he said.
Ashforth showed us how it works: you pay in advance online or at an in-store kiosk.
“It prints you a receipt or a pickup code,” Ashforth explained.
Punch in the pick-up code.
Then, a robot activates.
There is a train track running inside the machine, within 15 seconds or so the robot fetches your item and delivers your merchandise.
No waiting, no stealing.
And yes, because today’s most brazen thieves smash and grab, Ashforth told us some clients are curious about customizing machines with essentially bulletproof glass.
We asked Ashforth what message he’s sending to would-be thieves.
“It’s over,” he said.
These modular machines can cost tens of thousands of dollars each. But stores are losing even bigger money to theft. The National Retail Federation’s newest data shows stores’ losses jumped from $94 billion in 2021 to $112 billion in 2022. The federation surveyed 177 brands. More than half say they’re now boosting security budgets.
“Retailers are asking for help,” said Johnston with the National Retail Federation.
“They’re looking for new and innovative ideas. They’re looking at technology to prevent theft,” he continued.
DMVI can’t share names. But it did tell us there are stores -- whose names you and I would recognize -- that are interested in buying these machines to shut down shoplifting.
“There’s about 44 that we’re speaking to right now,” said Ashforth with DMVI.
Other companies make vending machines, too, but David says his team’s the only one targeting theft on a large scale.
So, will the store of tomorrow put everything behind glass? And will stores have to limit your choices?
Ashforth doesn’t think so. He estimates just ten percent of items make up 80 percent of what crooks steal. That ten percent will be stocked on robotic shelves, the rest stays on traditional aisles.
“In a big retail store, you maybe have 50 aisles. Maybe between one and five of those will be automated,” Ashforth said.
Inside his warehouse, Ashforth showed us a prototype -- wrapped up and ready to ship. It’ll land at a large chain store -- with hundreds of locations -- for beta testing.
“This particular retailer wants to move very quickly and make a decision to solve that problem,” Ashforth said.
How quickly will stores change? Ashforth expects it will be just a few months until you see self-service shelves stopping thieves and serving shoppers like you.
“This technology is coming to stores near you,” he said.
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Consumer & Retail
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The Bank of England may need to increase interest rates further to tackle inflation, despite mounting pressure on households from the rising cost of borrowing, a senior Threadneedle Street policymaker has warned.
Jonathan Haskel, an external member of the rate-setting monetary policy committee (MPC), said the central bank could not rule out more hikes given concerns about stubbornly high rates of inflation.
Suggesting the pinch felt by households from surging borrowing costs on mortgages and loans was a price worth paying to tackle inflation, Haskel wrote in the Scotsman on Monday: “As difficult as our current circumstances are, embedded inflation would be worse.”
Haskel, a professor of economics at Imperial College’s business school, said the Bank of England recognised the pressure households and businesses were under, but warned persistently high inflation had wider economic costs as well.
“As policymakers, we are required to make difficult judgements,” he said. “My own view is that it’s important we continue to lean against the risks of inflation momentum, and therefore that further increases in interest rates cannot be ruled out.”
The Bank has raised interest rates 12 times in succession since December 2021, from a record low of 0.1% to 4.5% – the highest level since the 2008 financial crisis.
Financial markets give a 100% probability of rates being raised further at the next meeting of the MPC on 22 June to at least 4.75%, with the expectation that rates hit close to 5.5% before the end of this year.
Britain’s housing market has come under increasing strain in recent months amid expectations that the Bank will increase interest rates further because of UK inflation remaining persistently high. Inflation fell by less than expected to 8.7% in April, as a stabilisation in energy prices was offset by the soaring price of food and drink. The Bank’s inflation target is 2%.
High street banks have pulled mortgage deals for new borrowers because of a surge in demand before expected interest rate rises, while housebuilders have cut back on the construction of new homes.
Some economists argue that further rate increases are not required to bring down inflation, amid signs of a slowdown in the UK’s jobs market and the fact that many households are yet to feel the full impact of previous hikes. This is because people with fixed-term mortgages, which were struck when rates were lower, will not see the effect of previous increases on their repayments until their deals end.
James Smith, an economist at the Dutch bank ING, said expectations in financial markets for growth in UK workers’ wages was among the reasons investors expected interest rates would increase further. With near-record numbers of job vacancies, average wage growth has risen sharply – but remains below inflation.
Smith said: “UK wage growth is peaking and on its own, that doesn’t scream a need for the Bank of England to keep hiking much further,” he said.
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Interest Rates
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Hidden fees are on the rise and killing budgets everywhereNew fees are being tacked onto hotel bills, airfare, restaurant checks and pretty much everywhere else. It's another form of inflation and it's costing consumers $65 billion a year.
Hidden fees or "junk fees" are on the rise, as companies work to bring in more money while keeping prices looking low. U.S. consumers pay more than $65 billion in fees each year (Photo Illustration by Scott Olson/Getty Images)
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Scott Olson/Getty Images
Hidden fees or "junk fees" are on the rise, as companies work to bring in more money while keeping prices looking low. U.S. consumers pay more than $65 billion in fees each year (Photo Illustration by Scott Olson/Getty Images)
Scott Olson/Getty Images
It started out innocently enough: Lazy Monday, working late, nothing in the fridge. I decided to splurge and order a burger and fries for delivery.
Subtotal for my meal? $14.07. A little pricey, but it's a good burger and $14 seemed like a totally acceptable price for dinner, especially when it's delivered to my door.
Then came the fees:
Delivery fee: $5.49 Service fee: $3.00 Tip: $4.00 Tax: $1.25
Grand total for my delivery burger: $27.81
My lazy Monday went from costing me $14 to almost $30. The price had doubled. What was going on?
"It's fees — fee-flation" says Jeff Galak, professor of marketing at Carnegie Mellon University's Tepper School of Business. "Fees are a way to raise prices without raising prices."
This is what's known as stealth inflation.
Basically, a price hike lurks, shark-like, just beneath the surface, waiting for you to click on that tantalizing $200 airfare deal or order that refreshing $4 iced coffee. Then it strikes: one fee, another fee, a 20% tip.
Before you know it, you've just paid 30 bucks for a hamburger.
"By the time the fee is tacked on, it's too late," says Galak.
"It's either actually too late, like 'I'm standing at the hotel check-in desk, I don't have a choice anymore.' Or it's apparently too late. You're not gonna hand a coffee back to a barista if you see a 20% service charge, right?"
"Something that's weighing down family budgets: Unnecessary hidden fees...junk fees," Biden said in a speech to the White House Competition Council. "Like finding out you have to pay a $50 processing fee for a hotel room."
President Biden has named "junk fees" as a top concern for the White House. He has cracked down on banks, airlines and rental companies.
YouTube
The federal government has been targeting some of the most fee-heavy industries:
And just last week, the Biden administration announced that Zillow and other housing sites will disclose fees that get tacked onto monthly rents, like rental application fees, parking fees, or pet fees.
The case for fees
But some businesses say fees aren't always the evil tools they're made out to be, but, rather, a way to stay afloat.
Troy Reding owns Rock Elm Tavern in Plymouth Minnesota, which is known for its burgers and tater tots with bacon-ketchup (yes, that is ketchup that tastes like bacon).
During the pandemic, as the price of bacon, ketchup and everything else spiked, and workers became harder (and more expensive) to find, Reding scrambled to keep the restaurant's doors open:
He raised prices, and raised them again, as high as he thought his customers would bear: More than 20%.
"If I charge too much, they'll quit using me," says Reding. "They'll go elsewhere."
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Inflation
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Letitia James condemns ‘the Donald Trump show’ as former president leaves fraud trial
Former Trump Organization CFO Allen Weisselberg is expected to testify today in the New York civil fraud trial against Donald Trump.
The former president’s longtime finance chief was jailed for around three months earlier this year for tax evasion at the organisation.
He is now named alongside Mr Trump, his adult sons and other executives in the $250m civil case which could result wipe out the former president’s business empire in the New York.
The former president is not expected to return to court to see Weisselberg testify in the case, coming hours after he appeared at a rally in New Hampshire where he called the attacks on Israel “incredible” and claimed it never would have happened under his watch.
“What happened yesterday was incredible,” he said on Monday.
“Vicious. Young children just slaughtered... When I was your president, we had peace through strength, and now we have weakness, conflict and chaos. The atrocities we’re witnessing in Israel would never have happened if I was president.”
GOP lawmaker dismisses possibility of Speaker Trump
A Republican lawmaker has dismissed the possibility that Donald Trump could replace Kevin McCarthy as House speaker.
Rep Ken Buck, who voted last week to oust Mr McCarthy as speaker of the House of Representatives, insisted the former president doesn’t stand a chance of taking the gavel after far-right Republicans including Marjorie Taylor Greene and Matt Gaetz floated the idea he could be appointed to the role.
When asked on ABC’s “This Week” about some Republicans calling for Mr Trump to become the next speaker, Mr Buck said “that’s not going to happen”.
“It shouldn’t happen, and we have a lot of talent inside the House,” he said.
Last week, the former president claimed that ‘a lot of people’ had asked him about becoming speaker
Trump mocked over claim he has ‘better body’ than Biden
The 77-year-old former leader made the brash comments while addressing a crowd at a rally in Waterloo, Iowa, on Saturday.
“He’s got a consultant somewhere — this is the worst consultant in politics — that thinks he looks good in a bathing suit, right?” Mr Trump began.
“He spends so much time at the beach. I mean, how do you do that?”
Mr Biden, 80, has previously been pictured in swimming trunks while holidaying at his beach house in Delaware.
Mr Trump went on to detail why he doesn’t partake in similar activity despite his body confidence.
Former President took a jab at how the pair would fare in a fight
Fox reporter suggests military aid to Israel could be affected by Tuberville’s intransigence
Among the organisations affected is the US Navy, with a new Chief of Naval Operations still unconfirmed due to Mr Tuberville’s objections. Admiral Lisa Franchetti – who is expected to be confirmed – is among those held up by his stonewalling. In the aftermath of the Hamas attack on Israel, in which more than 700 people are believed to have died, the senator has said he will not drop his campaign.
Speaking on Fox News at the weekend, the station’s national security correspondent, Jennifer Griffin, said that she would expect some of the $2b of US weaponry caches held in Israel to be released to help replenish Israeli stockpiles, but that the US Senator’s action continued to impact military operations, including those of the navy.
RFK Jr announces independent 2024 run for White House
“I’m here to declare myself an independent candidate for President of the United States,” the anti-vaxxer scion of America’s most famous political family said on Monday.
“But that’s not all, I’m here to join you and make a new Declaration of Independence for our entire nation,” Mr Kennedy added. “We declare independence from the corporations that have hijacked our government.”
Mr Kennedy originally positioned himself to run against Joe Biden, but the Democratic National Committee is not holding debates and is fully supporting the president’s run for a second term in the Oval Office.
Mr Kennedy made the official announcement at Philadelphia’s Independence Mall, with campaign signs reading “Declare your Independence”.
Continued:
Mr Kennedy made announcement at Philadelphia’s Independence Mall, with campaign signs reading ‘Declare your Independence’
ICYMI: Trump gets laugh for ‘Wayne’s World’ joke about good friend Putin
Mr Trump repeated one of his favourite stories to the audience in Waterloo, claiming that the Russian president would not have invaded Ukraine on his watch.
“I said, ‘Vladimir, you and I are friends. We’re good friends. But if you go in, we’re gonna hit real hard’,” Mr Trump said.
“He said, ‘No way you would do that, there’s no way’. I said, ‘Way’,” drawing a laugh from the crowd as he appeared to mimic a line from the 1992 Mike Myers comedy Wayne’s World.
Read more:
Former president repeated his fawning praise for Russian leader
Why Mar-a-Lago’s valuation matters
In her lawsuit against Trump, New York Attorney General Letitia James argued that Mar-a-Lago was one of multiple assets Trump overvalued in financial statements given to banks and others.
On those statements, Trump valued Mar-a-Lago as high as $739 million — a figure James said ignored deed restrictions requiring the property to be used as a social club — not a private home. Her lawyers have argued that in his financial statements, Trump should have valued Mar-a-Lago the same way the county does, based on its club status.
Trump’s financial statements, the New York lawyers wrote, valued the club “based on the false and misleading premise that it was an unrestricted residential plot of land that could be sold and used as a private home, which was clearly not the case.”
Trump’s lawyers have said no trickery was involved, and that banks probably didn’t rely on his financial statements anyway when determining whether to lend him money.
So how did Palm Beach County come up with such a low tax assessment?
The county gives Mar-a-Lago its current value for taxation of $37 million based on its annual net operating income as a club and not on its resale value as a home or its reconstruction cost. It is one of nine private clubs in the county taxed that way.
Becky Robinson, the tax assessor’s spokesperson, said that method is used because private clubs are so rarely sold or built, making it impossible to set their tax rates by comparing them to similar properties. Mar-a-Lago’s property tax bill will be $602,000 this year, county records show.
U.S. Rep. Jared Moskowitz, a South Florida Democrat, wrote the county saying if Trump claims Mar-a-Lago is worth $1 billion, he should be taxed accordingly. If Mar-a-Lago had a $1 billion assessed value, it’s property tax bill would be approximately $18 million.
Robinson said the county bases its assessments on the law and its formulas, not the value owners claim.
So what is Mar-a-Lago worth?
That’s hard to say. The biggest problem is there are no comparable properties. No one builds mansions in Palm Beach like Mar-a-Lago anymore and those that did exist were demolished long ago, broken up or turned into a museum.
Trump, in an April deposition, justified his belief that Mar-a-Lago could be worth $1 billion by comparing it to the price the Mona Lisa or a painting by Renoir would command — the ultra-wealthy will pay a premium to buy something that’s one-of-a-kind.
Eli Beracha, chair of Florida International University’s Hollo School of Real Estate, agreed it’s difficult to assess the value of any unique property. The fact that Trump owned Mar-a-Lago would likely increase its sale price.
“Some people are going to argue that not everyone likes Trump — some people would actually pay less because of that. ... But the high bidder is probably going to be a person who buys it because it belonged to Trump,” Beracha said.
Pulitzer said the rock-bottom price for Mar-a-Lago would be $300 million. Thomson said at least $600 million. If uber-billionaires got into a bidding war, they said, a sale of a billion dollars or more would be possible.
The much smaller Palm Beach compound once owned by the Kennedy political dynasty sold for $70 million three years ago.
What is Mar-a-Lago?
The 126-room, 62,500-square-foot (5,810-square-meter) mansion is Trump’s primary home. It is also a club, private beach resort, historical artifact and banquet hall with a ballroom that features gold leaf. It is where Trump stored government documents federal prosecutors say he took illegally after leaving office in 2021.
While Trump has long admitted using “truthful hyperbole” in his business dealings, he is not exaggerating when he calls Mar-a-Lago unique.
Built in 1927 by cereal heiress Marjorie Merriweather Post and her second husband, financier E.F. Hutton, she gave the property its name — Spanish for “sea-to-lake” — because its 17 acres (7 hectares) stretch from the Atlantic Ocean to the Intracoastal Waterway.
Post kept the mansion after the couple’s divorce, using it to host opulent galas. In 1969, Mar-a-Lago was designated a National Historic Landmark.
Post, who died in 1973, bequeathed the property to the U.S. government as a winter get-away for presidents, but Richard Nixon, Gerald Ford and Jimmy Carter never used it. The government, citing the high upkeep costs, returned it to Post’s foundation in 1981.
The property fell into disrepair. Trump bought it in 1985 for about $10 million, the equivalent of $30 million today. He invested heavily in its refurbishment.
By the early 1990s, however, Trump was in financial distress after several of his businesses flopped. He told Palm Beach town officials he couldn’t afford the $3 million annual upkeep, and proposed subdividing the property and building mansions. The town rejected the plan.
Negotiations continued and in 1993 the town agreed he could turn the estate into a private club, giving him cash flow he could use for maintenance. He built the ballroom, but signed away development rights.
The agreement limits the club to 500 members — the initiation fee is $500,000 with annual dues of $20,000.
Trump typically lives at Mar-a-Lago from October to May before summering in New Jersey.
Trump on trial: Is Mar-a-Lago really worth $1bn as former president claims?
How much is Donald Trump‘s Mar-a-Lago worth? That’s been a point of contention after a New York judge ruled that the former president exaggerated the Florida property’s value when he said it’s worth at least $420 million and perhaps $1.5 billion.
Siding with New York’s attorney general in a lawsuit accusing Trump of grossly overvaluing his assets, Judge Arthur Engoron found that Trump consistently exaggerated Mar-a-Lago’s worth. He noted that one Trump estimate of the club’s value was 2,300% times the Palm Beach County tax appraiser’s valuations, which ranged from $18 million to $37 million.
But Palm Beach real estate agents who specialize in high-end properties scoffed at the idea that the estate could be worth that little, in the unlikely event Trump ever sold.
“Ludicrous,” agent Liza Pulitzer said about the judge citing the county’s tax appraisal as a benchmark. Homes a tenth the size of Mar-a-Lago on tiny inland lots sell for that in the Town of Palm Beach, a wealthy island enclave.
“The entire real estate community felt it was a joke when they saw that figure,” said Pulitzer, who works for the firm Brown Harris Stevens.
“That thing would get snapped up for hundreds and hundreds of millions of dollars,” said Rob Thomson, owner of Waterfront Properties and a Mar-a-Lago member. “There is zero chance that it’s going to sell for $40 million or $50 million.”
In the ongoing trial over the lawsuit, though, what a private buyer might pay for a place like Mar-a-Lago isn’t the only factor in determining whether Trump is liable for fraud.
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Real Estate & Housing
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(Bloomberg) -- WeWork Inc. shares fell as much as 42% in premarket trading following a report in the Wall Street Journal that the company plans to file for bankruptcy.
Most Read from Bloomberg
WeWork may file its Chapter 11 petition in New Jersey as early as next week, the Journal reported, citing people familiar with the matter who it didn’t name.
The company had one of the most dramatic trajectories of the last startup boom — reaching a valuation of $47 billion before a disastrous attempt at an initial public offering and challenges to its co-working model during the pandemic.
The shares declined to as low as $1.33 in early trading before US markets opened on Wednesday. The stock had closed down 12% to $2.28 on Tuesday giving it a market value of $165.7 million.
A spokesperson for the company said it would “not comment on speculation,” and pointed to a Tuesday filing, which said WeWork had been holding discussions with creditors about “improving its balance sheet” and taking steps to “rationalize its real estate footprint.” On Monday, the company entered into a forbearance agreement with its creditors that will end in seven days.
The forbearance agreement will give the company “time to continue in the positive conversations with our key financial stakeholders and engage with them to implement our ongoing strategic efforts to enhance our capital structure,” said the spokesperson, adding that the company has “a clear, long-term vision for the future.”
The New York-based co-working company debuted in 2010, just as the market for venture capital was beginning a decade-long boom. With co-founder Adam Neumann as its charismatic pitchman, WeWork raised billions of dollars and grew rapidly, often doubling in revenue each year. At its peak, it was one of the country’s most valuable startups and operated offices around the world.
It also dabbled in somewhat tangential projects, like a private elementary school called WeGrow, two residential buildings called WeLive, and a gym concept called Rise By We.
Most Read from Bloomberg Businessweek
©2023 Bloomberg L.P.
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Banking & Finance
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- U.S. regulators on Thursday unveiled a sweeping set of proposed changes to banks' capital requirements to address evolving international standards and the recent regional banking crisis.
- While the heightened requirements apply to all banks with at least $100 billion in assets, the changes are expected to impact the biggest and most complex banks the most, the regulators said.
U.S. regulators on Thursday unveiled a sweeping set of proposed changes to banks' capital requirements to address evolving international standards and the recent regional banking crisis.
The changes, designed to boost the consistency and accuracy of regulation, will revise rules tied to risky activities including lending, trading, valuing derivatives and operational risk, according to a notice from the Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation.
related investing news
As expected, the changes will broadly raise the level of capital that banks need to maintain against possible losses, the agencies said. While the heightened requirements apply to all banks with at least $100 billion in assets, the changes are expected to impact the biggest and most complex banks the most, they said.
"Improvements in risk sensitivity and consistency introduced by the proposal are estimated to result in an aggregate 16% increase in common equity tier 1 capital requirements for affected bank holding companies," the regulators said in a fact sheet.
The industry's tier 1 common capital levels measure an institution's presumed financial stability should a recession or trading blowup occur. The biggest U.S. banks recently weathered a severe recession scenario while maintaining required capital levels in the Fed's latest stress test.
In response to the failure of Silicon Valley Bank in March, the proposal would force more banks to include unrealized losses and gains from certain securities in their capital ratios, as well as compliance with additional leverage and capital rules.
That effectively eliminates a regulatory loophole that regional banks enjoyed; while larger firms with at least $250 billion in assets had to include unrealized losses and gains on securities in their capital ratios, regional banks won a carveout in 2019.
This story is developing. Please check back for updates.
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Banking & Finance
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Welcome to Startups Weekly. Sign up here to get it in your inbox every Friday.
If you’ve been following along with this newsletter, you’ll have noticed that I’ve been a little bit curious about AI — especially generative AI. I’m likely not the first person to make this observation, but AIs are extremely, painfully average. I guess that’s kind of the point of them — train them on all knowledge, and mediocrity will surface.
The trick is to only use AI tools for stuff that you, yourself, aren’t very good at. If you’re an expert artist or writer, it’ll let you down. The truth, though, is that most people aren’t great writers, and so ChatGPT and its brethren are going to be a massive benefit to white-collar workers everywhere. Well, until we collectively discover that a house cleaner has greater job security than an office manager or a secretary, at least.
On that cheerful note, let’s sniff about in the startup bushes and see what tasty morsels we can scare up from the depths of the TechCrunch archive from the past week. . . .
Okay, fine, let’s start with AI
I know, this happens every damn week: I start with the intention of writing this newsletter without going up to my eyelashes into the AI morass, and every week, y’all keep reading our AI news as if your livelihood depends on it. Because, well, it’s entirely possible it does, I suppose.
The GPT Store, introduced by OpenAI, enables developers to create custom GPT-based conversational AI models and sell them in a new marketplace. This initiative is designed to expand the accessibility and commercial use of AI, similar to how app stores revolutionized software distribution. Developers can not only build but also monetize their AI creations, opening up a new avenue for innovation and entrepreneurship in the field of artificial intelligence. Of course, that little update — and the platform now natively being able to read PDFs and websites — is a substantial threat to startups that had previously filled this gap in ChatGPT’s offerings, especially those whose business models are based on such features. It’s a reminder that building a business around another company’s API without a sustainable, stand-alone product is, perhaps, not the shrewdest business move.
AI is, of course, not just for startups. During Apple’s Q4 earnings call, the company’s CEO, Tim Cook, emphasized AI as a fundamental technology and highlighted recent AI-driven features like Personal Voice and Live Voicemail in iOS 17. He also confirmed that Apple is continuing to develop generative AI technologies — tellingly, without revealing specifics.
Heinlein would be horrified: Elon Musk announced that Twitter’s Premium Plus subscribers will soon have early access to xAI’s new AI system, Grok, once it exits early beta, positioning the chatbot as a perk for the platform’s $16/month ad-free service tier.
Brother, can you spare a GPU?: AWS introduced Amazon Elastic Compute Cloud (EC2) and Capacity Blocks for ML, a new service that enables customers to rent Nvidia GPUs for a set period, primarily for AI tasks like training or experimenting with machine learning models.
From zero to AI founder in one easy bootstrap: In “How to bootstrap an AI startup” on TC+, Michael Koch advises founders on maintaining control over their startup’s strategy and product by bootstrapping — yes, even in the oft-capital-intensive world of AI startups.
The rocky ocean of venture-backed startups
WeWork, once a high-flying startup valued at $47 billion, has filed for Chapter 11 bankruptcy protection, highlighting a staggering collapse. The company, which has over $18.6 billion of debt, received agreement from about 90% of its lenders to convert $3 billion of debt into equity in an attempt to improve its balance sheet and address its costly leases. On TC+, Alex notes what we kinda knew all along: that the core business just didn’t make sense.
In other venture news . . .
Ex-Twitter CEO raises third venture fund: 01 Advisors, the venture firm founded by former Twitter executives Dick Costolo and Adam Bain, has secured $395 million in capital commitments for its third fund, aimed at investing in Series B–stage startups focused on business software and fintech services.
Happy 10th unicornaversary: Alex reflects on the tenth anniversary of the term “unicorn,” which was initially coined right here on TechCrunch, to describe startups valued at over $1 billion.
You get a chip! You get a chip!: In response to a shortage of AI chips, Microsoft is updating its startup support program to offer selected startups free access to advanced Azure AI supercomputing resources to develop AI models.
Let’s talk Sam Bankman-Fried
Look, I’m not going to lie, I think most crypto is dumb, and I’ve seen only a handful of startups that use blockchains in a way that makes any sense whatsoever — most of them would have done just fine with a simple database — so I’ve been following Jacquelyn’s coverage of Bankman-Fried’s trial with a not insignificant amount of schadenfreude. It’s human to make mistakes, and startup founders are human, but if you’re defrauding the fuck out of people, you deserve all the comeuppance you can get.
Sam Bankman-Fried was the co-founder and CEO of the cryptocurrency exchange FTX and the trading firm Alameda Research (named specifically to not sound like a crypto company). He has been found guilty on all seven counts of fraud and money laundering.
The charges were related to a scheme involving misappropriating billions of dollars of customer funds deposited with FTX and misleading investors and lenders of both FTX and Alameda Research. After the five-week trial, the jury spent just four hours to reach its verdict.
The collapse of FTX and Alameda Research, which led to the indictment of Bankman-Fried about 11 months ago by the U.S. Department of Justice, was significant, with the executives allegedly stealing over $8 billion in customer funds.
Sentencing will happen next March, but if he gets smacked with the full weight of his actions, he will face a total possible sentence of 115 years in prison.
Jacquelyn did a heroic job covering the trial for TechCrunch, and it’s worth taking an afternoon to read through it all — the details are mind-boggling.
Top reads on TechCrunch this week
The house sometimes wins: Mr. Cooper, a mortgage and loan company, experienced a “cybersecurity incident” that led to an ongoing system outage. The company says it has taken steps to secure data and address the issue.
Can’t think of any downsides of the Hindenburg: The world’s largest aircraft, Pathfinder 1, is an electric airship prototype developed by LTA Research and funded by Sergey Brin. It was unveiled this week, promising a new era in sustainable air travel.
Arrival’s departure: The EV startup Arrival, which aimed to revolutionize electric vehicle production with its micro-factory model, is now facing severe operational challenges, including multiple layoffs, missed production targets, and noncompliance with SEC filing requirements, resulting in a plummet from a $13 billion valuation.
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Crypto Trading & Speculation
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Numerous European countries are among the world’s most attractive retirement destinations, and the United Kingdom (U.K.) is no exception. With its rustic villages, historic landmarks and lower cost of living, the U.K. can offer retirees the exact right amount of relaxation, excitement, and access to other European countries. Although the UK government recently closed its retirement visa program, it’s still possible to retire in the UK through other visa types. Here’s how to do so and how to weigh the financial implications of retiring outside the United States.
A financial advisor can help you plan for retirement, wherever it may take you. Find an advisor today.
How Much Does It Cost to Retire in the United Kingdom?
From lush countryside to bustling cities, the United Kingdom offers both tranquility and adventure to retirees. Whether you find rustic villages or a cultural center like Edinburgh more appealing, you’ll generally enjoy lower costs for travel, food, and housing than in the U.K.
According to cost of living data aggregator Numbeo, the cost of living in the UK is 15.3% lower than the U.S. on average. In addition, rent is nearly 35% cheaper. That said, costs vary around the country. For example, you can live in the town of Bangor for a fraction of the cost of living in London.
In terms of dollars, a retired couple can expect to spend about $1,500 for monthly living expenses, not including the price of housing. Depending on where you live, a one-bedroom apartment will roughly cost between $840 and $1,1o0 per month. Therefore, your budget should be around $2,500 a month, but your location will influence your food and housing costs. Furthermore, trips and excursions would incur additional expenses.
Of course, if you have a budget far exceeding $2,500, retiring in the U.K. provides you with an excellent home base for vacationing in other European nations. A monthly income of $5,000 or more would potentially allow you to maintain your home in the U.K. while eating tapas in Barcelona or wandering the streets of Rome.
Housing and Food
As stated above, a typical one-bedroom apartment in the U.K. costs between $840 and $1,100 per month, according to Numbeo. However, if you want more space for storage or hosting visitors, a three-bedroom apartment costs more. Specifically, you’ll pay between $1,470 and $1,950 on average. These costs range widely, with a three-bedroom apartment costing almost $2,800 in Oxford. Similarly, food costs vary by region. For example, a meal for two in Aberdeen costs an average of $63.92, while the same meal would cost $88.22 in Bath.
You can compare London to New York for another perspective on costs. Numbeo estimates that rent costs one-third less in London. For example, a one-bedroom apartment in the U.K.’s capital costs about 2,480 per month, while a one-bedroom rents for around $3,800 in New York City.
Likewise, the average dinner for two costs $85.02 at a mid-range restaurant in London, 15% less than a meal in The Big Apple. Overall, Numbeo reports consumer prices being about 25% cheaper in London. Therefore, retiring in a U.K. metropolis will likely be less expensive than in the biggest cities in the U.S.
Getting an Initial Retirement Visa for the United Kingdom
The U.K. recently closed its retirement visa program, meaning retirees don’t have a straightforward way to get into the country. Fortunately, the U.K.’s other visa avenues are still open. So, retired couples can apply for work, ancestry or family visas. These visas have varying costs and requirements.
For example, the work visa involves committing to work for several years, with specific visas for doctors and religious ministers. You also can qualify for a visa through other types of work, such as skilled labor or business investment.
On the other hand, you can qualify for an ancestry or family visa by proving a family tie to a citizen of the U.K. Ancestry visas are granted to those with a parent or grandparent from the U.K., while a family visa means you have a spouse, fiancée, civil partner, child or parent who is a U.K. citizen.
So, retiring in the U.K. is more challenging than a country like Thailand, which has straightforward income requirements. To retire in England, Scotland, Wales or Northern Ireland, you generally have two options: commit to investing in a business or working for five years, or prove a family tie to a U.K. citizen. If you choose the former option, you could move to the U.K. five years before you intend to fully retire to make your last five years of work count toward your retirement plans.
Next Steps on Your Visa
If you secure a work, family or ancestry visa, you’ll need to live in the country for five years. Upon hitting this milestone, you can apply for permanent settlement status, granting you indefinite leave to remain (ILR) in the UK. Similarly, if you obtained a retirement visa before the U.K. shuttered its policy, you can also acquire ILR after living in the country for five years.
Healthcare in the United Kingdom
The U.K. has a nationalized healthcare system, meaning most healthcare expenses come from taxes. As a result, accessing healthcare is inexpensive, but you might wait longer to get in for a procedure, especially if it’s elective. On the other hand, as an industrialized country, the U.K. has excellent health outcomes and cost control.
Plus, unlike Medicare, the U.K.’s National Health Service (NHS) has no age requirements. Therefore, you can retire in the U.K. at any age and have health insurance, guaranteed. That said, certain forms of care, such as diabetes treatments and hip replacements, are more accessible in the U.S.
Taxes in the United Kingdom
You will generally pay taxes on your retirement income if you live in the U.K. However, like the U.S., the U.K. grants several tax deductions called “allowances” like self-employment and marriage. Below, find the U.K.’s tax rates by income level, converted from pounds to dollars:
Income Level (Band) Taxable Income Tax Rate Personal Allowance $0-$15,095 0% Basic Rate $15,101-$60,371 20% Higher Rate $60,371-$150,285 40% Additional Rate Over $150,285 45% Reasons You May Not Want to Retire in the United Kingdom
As the table above displays, taxes might be a reason to avoid retiring in the U.K. For example, you’d pay ordinary income taxes of 12% in the U.S. with an income of $65,000 if you are married and filing jointly. On the other hand, this income level would incur a 40% tax rate in the U.K. Plus, the US government will likely tax your pensions and Social Security income regardless of where you settle down.
Likewise, transferring your retirement accounts to the U.K. and converting them to pounds can incur additional fees. As a result, your retirement accounts likely don’t represent an apples-to-apples comparison in pounds. It’s wise to consult a financial advisor about the financial implications of retiring in the U.K. with your unique circumstances.
Lastly, retiring in the U.K. now requires you to work if you don’t have a close relative or spouse with citizenship. This dynamic complicates retirement plans, as you’ll have to work for five years before applying for indefinite leave to remain to secure your place in the U.K.
The Bottom Line
Your retirement goal to reside in the U.K. during your golden years is achievable, despite the U.K. government tightening its visa regulations. If you’re willing to work for five years or you have a relative with U.K. citizenship, you can qualify for a visa to get into the country. With a lower cost of living, historic sites and an extensive coastline, it’s an excellent place to enjoy your golden years.
However, if you have a chronic health condition, you may experience worse health outcomes than in the U.S. In addition, the U.K. levies higher income taxes, decreasing your ability to afford city living and travel. All that said, the U.K. is an English-speaking, industrialized country with plenty of attractions, activities and quiet corners. It’s best to discuss your retirement plans with a financial advisor to see if living in the U.K. is viable for you.
Tips for Retiring in the United Kingdom
Retiring at home or abroad requires sufficient income. A financial advisor can help you create or modify a financial plan, optimally manage assets and navigate your unique tax situation. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Retiring modestly in the UK could cost about $2,500 per month. The average Social Security distribution for a newly retired 65-year-old is around that amount. To see how far your benefit could take you, try our Social Security calculator.
Photo credit: ©iStock.com/CHUNYIP WONG, ©iStock.com/dave_valler, ©iStock.com/HerbySussex
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Personal Finance & Financial Education
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Financials Sector Check - RBI Increases Risk Weight On Consumer Loans: Motilal Oswal
CET-1 to get impacted by 30-85 bp; retail growth momentum may moderate
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
The Reserve Bank of India has increased risk weight on credit card/personal loan/consumer durable loans by 25% across banks and non-banking financial companies, while segments like housing, vehicle, education, gold loans and micro finance will continue to attract the same risk weight.
The revised risk-weights will be applicable to both new and outstanding loans and will impact capital ratios of underlying banks and NBFCs.
While the measure is prudential in nature, it will impact the capital ratios of lenders and compel them to increase interest rates on such products to mitigate the impact on return on equity.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
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Banking & Finance
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The real cause of skyrocketing food prices is corporate greed and market concentration—and one group of farmers has the receipts.
The National Farmers Union (NFU) has submitted data to the House of Commons agriculture committee which details how much retail food prices have risen compared to the prices that farmers receive for their goods. In fact, the union says retail prices have been completely “decoupled” from corresponding food inputs.
This means that while grocery store prices reach record highs, the farmers who stock their shelves are not seeing any of those profits—and a small group of processing and retail corporations are lining their own pockets instead.
“We need to be real about where the money is going,” NFU president Jenn Pfenning, who farms organic vegetables near Kitchener, Ont., told The Breach.
Retailers and processors are taking larger portions of the money spent on food, while farmers are stuck with rising costs and stalled prices.
“At the end of the day, retailers are posting record profits,” Pfenning said. “Farmers are, in many cases…posting either record or close-to-record losses and low margins.”
“From 2003-2016, bread prices rose steadily, far outpacing the minor increases in farmgate wheat prices,” NFU’s submission from last week explained. Farmgate prices are the prices of goods bought directly from farmers without markup added by retailers.
The union says the costs borne by consumers have been completely detached from the prices paid to farmers since the 2000s.
“Farmgate prices for wheat did increase in 2021 and 2022, potentially driven by the war in Ukraine and other factors. However, they did not come close to narrowing the gap that has steadily widened since the beginning of this data series.”
Another example about the costs of corn and corn flakes shows an even more dramatic example of the “decoupling” of retail prices from the prices of farmers’ goods.
The trend extends to other markets: the price of bacon has risen at a completely different rate than the price of hogs. At one point, the price of hogs actually fell while the price of bacon increased.
This massive disparity has been growing for decades. The trend suggests that it’s not the prices farmers are charging, the COVID-19 pandemic or the war in Ukraine driving the biggest rises in food prices. It’s the processors, packers and retailers who—in heavily concentrated markets—have the power to raise prices and take larger profit margins.
Grocery chains double their profits
Supermarkets have doubled their profits since 2019, economist Jim Stanford of the Centre for Future Work reported in a separate submission to the agriculture committee.
Grocery executives have done this while blaming the pandemic, the war and their suppliers, as Sobeys CEO Michael Medline and Metro CEO Eric La Flèche did in their appearances before the committee.
But these companies have actually hiked their prices “above and beyond” what would be necessary to cover their increased costs, Stanford said. And big corporate processors like Cargill and PepsiCo have done the same thing.
“Like the supermarkets, food processors have also increased prices more than justified by their own increased costs,” Stanford’s report said. “Food manufacturing profits have grown notably since the pandemic: up 42% in the latest 12-month period, compared to 2019.”
Meanwhile, food banks say they’re at their “breaking point” as they try to feed more Canadians than ever before.
Small bloc of companies exerts control
These corporations get away with it because they have high levels of control. Canada’s food retail and processing markets are heavily concentrated, which means a small number of companies control both the prices they pay to suppliers and the prices they charge consumers.
Five retailers—Loblaw, Sobeys, Metro, Costco and Walmart—control 75 per cent of Canada’s food retail market. In processing, the Canadian market is even more consolidated in some cases. Just two corporations—one of which was owned by Loblaw parent company George Weston Ltd. until recently—control 80 per cent of the bread-making market, for example.
The result is that farmers are facing dire financial circumstances, Pfenning said. They’re struggling with increased costs for virtually everything they need to grow food: land, equipment, soil amendments and more. Yet the prices they’re paid are virtually stagnant.
“Farmers and consumers are clearly in the same boat,” NFU vice president Stewart Wells said in a press release about the new data, “dealing with a highly consolidated processing and retail sector that can set prices to suit themselves and award enormous salaries to corporate CEOs.”
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Inflation
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Naresh Goyal’s ‘Incessant Siphoning Off Of Funds For Personal Gains’ Among Reasons Behind Jet Downfall: ED
It alleged that Goyal blatantly siphoned off funds from the loss-making Jet Airways (India) Ltd., drained it out of funds and kept on infusing money into the related entities owned by his family members, both in India and abroad.
Jet Airways founder Naresh Goyal's "resistance" in diluting his stakes and "incessant siphoning off of funds for personal pecuniary gains" led to the downfall of the airline, the Enforcement Directorate said in its chargesheet filed before a court here in the alleged fraud of Rs 538 crore at the Canara Bank.
The ED claimed that the airline could have survived had Goyal kept aside his 'ulterior motive' and allowed professionals to make quick and strategic decisions to change the operating cash flow of the company.
It alleged that Goyal blatantly siphoned off funds from the loss-making Jet Airways (India) Ltd., drained it out of funds and kept on infusing money into the related entities owned by his family members, both in India and abroad.
The probe agency on Tuesday filed its chargesheet against Naresh Goyal, his wife Anita Goyal and four companies - JIL, Jetair Pvt., Jet Enterprises Pvt. and Jet Airways LLC, Dubai - in connection with the case.
Special judge M G Deshpande, hearing cases related to the Prevention of Money Laundering Act (PMLA), took cognisance of the chargesheet on Wednesday.
Goyal in his statement to the ED said that the JIL was grounded as it incurred huge losses due to major factors, including high fuel prices, along with taxes in India, high landing navigation charges and airport charges and predatory pricing.
However, in its chargesheet the ED said its probe has established that reasons attributed for the downfall of JIL inter alia include the irrational decision taken by top executives in running the affairs of the airline, resistance of Goyal in diluting his stake and incessant siphoning off of funds from the JIL for personal pecuniary gains.
"Due to mounting debt to the creditors and huge wasteful expenditure, the company needed to be recapitalised. Unfortunately, in this regard even the board was seemingly powerless because this was a shareholder matter and without the proactive agreement of the largest shareholder, i.e. the promoter of JIL, this matter would not go forward," it said.
Because of the adamant stand taken by the promoter of JIL to suit his needs, the largest shareholder chose not to dilute his share in the company until, again, the fate of the airline was sealed, it claimed.
The chargesheet further said its investigation revealed that there were few strategic investors who had shown interest to infuse equity in the airlines, namely Tata, TPG (Private Equity) as well as Etihad, but it did no materialize as it would entail dilution of the equity of Goyal, which he was not inclined to do.
The chargesheet claimed that Naresh Goyal was blatantly siphoning off funds from JIL which was already a loss-making entity for a long time.
He drained JIL out of funds and kept on infusing money into the related entities which were personally owned by his family members, both in India and abroad without any financial rationale, the charge-sheet said.
It mentioned that his family was living an 'ultra-luxurious life' and receiving 'obnoxious' amounts of funds from the JIL indirectly without contributing anything to the JIL.
The probe agency's complaint claimed that Naresh Goyal has created foreign trusts and is holding expensive assets abroad and is totally non-cooperative and evasive in his conduct during its investigation.
Its probe into the role of Goyal is complete and hence this prosecution complaint is being filed. Efforts are on to trace all the proceeds of the crime earned by him and parked in multiple entities, it added.
The money laundering case stems from an FIR of the Central Bureau of Investigation against Jet Airways, Goyal, his wife Anita and some former company executives of the now grounded private airline in connection with an alleged Rs 538-crore fraud case at the Canara Bank.
The FIR was filed on the bank's complaint which alleged that it sanctioned credit limits and loans to Jet Airways (India) Ltd to the tune of Rs 848.86 crore of which Rs 538.62 crore was outstanding.
The ED, in its chargesheet said that since this amount was obtained from different banks as loan was diverted and siphoned off in the garb of inter alia malafide professional and consultancy expenses, diversion of funds for personal expenses of the Goyal family, lending to related parties and subsequent writing off these loans etc, resulted in turning the loan accounts into NPA.
The investigation revealed that the JIL under Naresh Goyal used similar modus operandi for all the consortium loans. Therefore, public money worth Rs 5716.34 crore obtained from the Consortium of Banks led by SBI and PNB is considered to be the total proceeds of crime, generated out of criminal activities relating to commission of scheduled offences by JIL and its promoters.
On the role of his wife Anita Goyal, the ED mentioned that she is a beneficiary in several trusts of Naresh Goyal in foreign jurisdictions. She has also been associated with several related entities of JIL in India and foreign jurisdictions from which she derived remuneration/consultancy.
The ED claimed that Anita Goyal was appointed as consultant to the CEO of Jetair Pvt. in March, 2015 for a yearly contract of Rs 1,15,00,000. Her contract was renewed in March 2016, with a sharp increment in her consultancy fee to Rs 2,40,00,000 per annum.
The contract kept on renewing till date. Moreover, it is noteworthy that there is no document evidencing the services rendered by Anita Goyal to Jetair. The consultancy given by Anita Goyal was based on oral commands, it said.
Until March 2023, she had collected a consultancy fee of Rs 12,20,00,000, the charge-sheet claimed.
The ED arrested Naresh Goyal on Sept. 1 under the PMLA. He is currently in judicial custody and locked at Arthur Road jail here.
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Banking & Finance
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- Walmart's website and mobile app have a new look.
- The redesign comes as shoppers spend less on discretionary purchases, such as clothes and TVs.
- Online sales now drive more of Walmart's business after a Covid pandemic-fueled push.
Walmart's digital store has a new look.
Starting this week, all customers who browse the company's website and app will see bigger and glossier photos, videos and social media-inspired content that Walmart hopes will nudge more purchases.
Tom Ward, Walmart's chief e-commerce officer, said the goal is to make shopping online easier and more engaging.
"When you walk into a store, you get inspired and excited by what you see," he said. "And so we thought, 'How do you drive that same inspiration and excitement in our closest store — in our app?'"
The big-box retailer's online makeover comes as consumers become more reluctant to buy discretionary merchandise, such as clothing and consumer electronics, while paying higher prices for necessities like food and housing. Sales of discretionary general merchandise in the U.S. have fallen 4% in dollars and 5% in units year over year as of February, according to Circana, the merged market research firms formerly known as The NPD Group and IRI.
Walmart has felt that, too. Its sales have increasingly come from groceries, rather than general merchandise, in recent quarters. Walmart CFO John David Rainey told CNBC in February that consumers' more budget-conscious mentality factored into the company's outlook for this year.
Walmart expects weaker sales in the months ahead. It anticipates same-store sales for Walmart U.S. will increase between 2% and 2.5% excluding fuel, in the fiscal year ahead. The company projects that adjusted earnings per share for the fiscal year will range from $5.90 to $6.05, excluding fuel.
That would represent a drop from the past fiscal year, when same-store sales grew 6.6% for Walmart U.S. and adjusted earnings per share were $6.29, excluding fuel.
Ward acknowledged that "there's lots of wants and needs conversations going around right now." He said along with offering low prices, Walmart wants to catch customers' attention by putting fresh, trendy and seasonal items in front of them, such as spring dresses, patio furniture and toys for Easter baskets.
He said the website and app's new look could also lift sales for third-party sellers that have joined or could join Walmart's marketplace. Along with selling its own merchandise, Walmart has riffed off the playbook of Amazon by using a third-party marketplace to expand its assortment of items online and to make money by selling fulfillment services.
E-commerce has become a more significant part of Walmart's business, especially after a Covid pandemic-fueled push. Online sales accounted for about $53.4 billion — or nearly 13% — of Walmart U.S.' total net sales in the past fiscal year, which ended in late January, according to company filings. That's a jump from $15.7 billion or roughly 5% of Walmart U.S.' total net sales in 2019.
Online sales for Walmart U.S. rose by 17% year over year in the holiday quarter and 12% year over year for the full fiscal year.
The retailer is expected to share its latest forecast and strategy at an investor day this week in Tampa, Florida.
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Consumer & Retail
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Income Tax Data: Income Mobility Of India’s Rich Is On the Climb
In FY23, individual tax filers who disclosed an income below Rs 5 lakh per annum stood at 4.65 crore.
India's income mobility has grown post-pandemic due to detailed tax data collection by the tax department and strong economic growth, according to tax analysts.
In FY23, individual tax filers who disclosed an income below Rs 5 lakh per annum stood at 4.65 crore, making it the highest category of tax filers, income tax data showed. The category that disclosed income above Rs 5 lakh per annum but below Rs 10 lakh was the second highest, standing at 1.1 crore tax filers. The highest tax-paying income range of Rs 1 crore had 1.69 lakh individuals.
More people have entered the taxable income and higher income slab categories because of better compliance and data collection through annual income statements, data collection by survey and other means linked to deductions claimed, and strong economic growth in the country, with an increasing push towards digitisation in the economy post-Covid, according to tax analysts.
Growth Of Highest Value Taxpayers
The growth in the number of taxpayers in the income bracket above Rs 50 lakh has been the highest compared to other income brackets.
Prior to the pandemic, this stood at 3.42 lakh tax filers before taking a hit during the pandemic to 2.63 lakh filers. This rose to over 5 lakh tax filers in FY23.
There could be a combination of factors behind the rise in tax filers, from better data collection to more compliance measures that necessitate declaring all sources of income, according to Kuldip Kumar, partner at Mainstay Tax Advisors LLP.
"It could be a combination of various factors, viz., the government now having easy access to all the financial details of tax payers, including overseas financial assets, by virtue of an information sharing agreement with a number of countries," he said.
He also notes that the growth of the Indian capital market since the pandemic period also adds to the statistic, as it would have benefited the high-net-worth individuals who had investments in stocks or mutual funds.
However, this is still not an accurate picture of high-net-worth individuals, according to Kumar.
"...The number of taxpayers in that category, nearly 5 lakh (in FY23), may still not satisfy the government, as against the number of luxury cars running on Indian roads and the individuals undertaking foreign travel," he said.
Only a little over 5 lakh individual return of income filers during FY23 have disclosed income above Rs 50 lakh, says Bahroze Kamdin, partner, Deloitte India.
"The number of such filers has grown post-pandemic years, and their share of the sum of the gross total income of all individual filers has also grown. However, it is still minuscule, at just around 0.77% of total individual filers during FY23," she said.
Kumar expects that the government will use the latest technologies and automated processes with the aid of artificial intelligence to tighten compliance.
"We are already seeing the salaried class getting notices, where there is suspicion of fake claims in the returns. We may see further growth in these income brackets going forward too, because of the tightening of compliance and India's growth story in the times to come," Kumar of Mainstay Tax Advisors said.
Rise in Zero Return Filers
Zero-return filers are those who have nil tax liability but are mandated to file their returns in line with the reporting norms of the department.
Under the old tax regime, the laws allowed a tax rebate for those earning below Rs 5 lakh, making their effective tax liability nil. This rebate has now been extended to include those who earn below Rs 7 lakh per year without any deductions under the new tax regime.
Prior to the pandemic, this category of filers stood at 4.63 crore. However, during the pandemic, the number of filers under this category rose by over 14.5% to 5.31 crore, before settling at 4.65 crore in FY23.
Factors contributing to the rise of zero-return filers include the provision introduced in FY20, where even when one's income is below the taxable threshold, he or she is required to file a return of income.
The department has mandated filing in instances where one is spending more than Rs 1 lakh on electricity consumption in a year or has spent over Rs 2 lakh on foreign travel, even if the individuals have income below the taxable threshold, Kumar said.
Individuals are mandated to file returns even if they want to claim the refund of the tax deducted at source for the interest received on fixed deposits and similar transactions through the requisite form 15G/15H, Kumar said. This is mandatory again, even in cases where the income is below the taxable threshold.
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India Business & Economics
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Looking for an immigration bill that can pass? It’s health care
In a surprise turn of events this month, Sen. Lindsey Graham (R-S.C.) derailed a Judiciary Committee hearing on banned books to talk about immigration. His calls were promptly echoed by Sens. Dick Durbin (D-Ill.), John Cornyn (R-Texas), Amy Klobuchar (D-Minn.), and Sheldon Whitehouse (D-R.I.). Despite this bipartisan signaling, the Senate Judiciary hasn’t marked up a single immigration bill in years. With border issues, parole and DACA firmly in the hands of the judiciary, passing a bipartisan health care focused immigration bill could profoundly impact the ability of hospitals and nursing homes to meet their workforce needs.
The forecast for health care workers in the U.S. is dire. A physician shortage of 124,000 is estimated for 2033, and 200,000 new nurses yearly will be needed to replace the retiring workforce. For rural America, the impacts are especially dire. Even without substantial increases in annual immigration, a narrow bill could establish near and long-term solutions to these troubling demographic trends while restoring public faith in Congress’s ability and willingness to play an active role in immigration policy.
First, we must increase investments into programs that train Americans to meet our labor needs without burdening American taxpayers. The American Competitiveness and Workforce Improvement Act (ACWIA) requires employers hiring foreign specialized workers on the H-1B visa to pay a fee ranging from $750 to $1500 per petition to fund the upskilling of Americans. This fee should also be mandatory for employers sponsoring foreign workers for the L-1 intracompany transferee visa.
So far, $78 million in H-1B fees has shored up programs to train, recruit and retain nurses, and an additional $40 million was dedicated to rural health care workforce investments. In FY2019, USCIS approved over 30,000 L-1 petitions, so requiring the fee for L-1 petitions could generate up to $45 million to fund additional workforce training programs for Americans.
Retaining the talent we train in the U.S. is critical to our health care system. We must ensure that individuals educated in our medical schools can finish their training and practice in the U.S. by adding M.D. and D.O. programs to programs designated for STEM-OPT. Optional practical training (OPT), is an optional extension of the student visa that allows international students to continue their education through practical application in the workplace. Graduates of STEM-OPT eligible programs are permitted an additional two years of training work authorization beyond graduates of other non-STEM programs.
Veterinary preventive medicine, pharmaceutical sciences, and molecular medicine graduates are all eligible to take advantage of the STEM-OPT extension, but medical school graduates are not. As a result, many struggle to secure work authorization and have no choice but to complete their residency outside the U.S. Residency is an essential part of a doctor’s medical training, with resident physicians working over 60 hours per week on average and treating 80 percent of level 1 trauma care cases in the U.S. Retaining the physicians that provide such high levels of specialized patient care is critical.
Similarly, DACA recipients who have completed a medical degree in the U.S. or have been working in the health care field for at least three years should be given a permanent pathway to live and work in the U.S. An estimated 29,000 DACA recipients work in health care, and since 2018, over 240 have enrolled in U.S. medical school to begin their physician training.
Keeping these workers in limbo will only accelerate the workforce shortage. Critically, it will also make it easier for the many other wealthy countries also experiencing a health care worker shortage to poach U.S.-educated medical graduates. Though meaningful protection for Dreamers is unlikely to precede a Supreme Court decision, we should act in the interim to protect this crucial subset.
States should also have a say in filling their health care needs. The Conrad State 30 and Physician Access Reauthorization Act has attracted bipartisan interest. Conrad 30 incentivizes international medical graduates studying in the U.S. on a J-1 visa to practice in medically underserved areas or with medically underserved populations. Each state manages the program based on local needs and can host up to 30 graduates annually in unfilled medical roles. Although this program has benefited more than 44 million patients in the U.S., it will expire on Oct. 1. It should be reauthorized to ensure continuity of care, and states with the greatest needs should be permitted to petition the federal government for additional slots left unused by other states.
Finally, rural hospitals and nursing homes should be exempt from the annual H-1B cap for the next five years. The H-1B visa is a temporary visa for specialized workers, requiring most employers to enter a randomized lottery. This year, a mere 25 percent of lottery registrants were invited to apply for a visa. Non-profit hospitals affiliated with universities already benefit from a lottery exemption. Rural hospitals, typically located far from prominent universities, lack similar access to necessary talent. Exempting them from the cap would ensure they can meet their needs in the short-term while investments made through the aforementioned fees establish a domestic pipeline of workers that can continue to meet their needs in the long-term.
Together, these provisions have the potential to significantly improve hospital capacity, patient care, and workforce readiness in the United States. If Graham is looking for a bipartisan immigration bill that can pass, this should be the first.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Workforce / Labor
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Follow me on Twitter @Jacqmelinek for breaking crypto news, memes and more.
Welcome back to Chain Reaction.
Got coin? No? Well, Worldcoin did.
Tools for Humanity, the team building Worldcoin, raised $115 million in a Series C round led by Blockchain Capital.
The crypto-focused project was co-founded by OpenAI CEO Sam Altman with a three-part mission: create a global ID, a global currency and an app that enables payment, purchases and transfers using its token — alongside other cryptocurrencies and traditional assets.
Worldcoin has faced some concerns from people worried about privacy risks because it requires scanning a billion people’s eyeballs with a five-pound chromatic sphere called “The Orb” in exchange for its token.
“For good reason, folks get concerned and sensitive when it comes to biometrics — particularly so when you add a dose of crypto,” Spencer Bogart, general partner at Blockchain Capital, wrote in a post on Wednesday.
“However, what’s actually happening under the hood is that the orb takes a picture of an iris and the device subsequently generates a unique encoding of the randomness of the iris (an ‘iris code’),” Bogart added. “Per default, the original biometric is immediately destroyed and the iris code is the only thing that leaves the orb.”
While the public may be hesitant, investors are still diving into the project as it’s one of the few crypto companies still receiving hefty sums of capital amid an ongoing bear market.
Other investors in the Series C round include a16z, Bain Capital Crypto and Distributed Global. In March 2022, Worldcoin raised $100 million at a $3 billion valuation.
In 2021, Worldcoin CEO Alex Blania told TechCrunch that the currency is part of a larger effort to drive a more unified and equitable global economy driven by the internet economy, something cryptocurrencies notably haven’t nailed in their first several years.
The latest raise will go toward bot detection, research and development and expanding its Worldcoin project and application. Worldcoin is currently in beta testing and has onboarded about two million users across five continents.
Bogart and Blockchain Capital believe that Worldcoin could become the biggest onramp to crypto and the World App could become the most widely adopted crypto wallet. All of this is TBD.
This week in web3
Following a bankruptcy process, the assets of the failed crypto lender Celsius Network are about to be acquired by a consortium called Fahrenheit. Behind this name, you will find a group of bidders led by investment firm Arrington Capital. The other members of the consortium are crypto mining firm US Bitcoin Corp., Proof Group, Steven Kokinos and Ravi Kaza.
In Wolf’s Clothing (Wolf), a startup accelerator launched by asset management firm Stone Ridge, wants to bolster Bitcoin-focused applications and use cases. Its first cohort, Wolfpack 1, consisted of eight teams and 23 founders from 10 countries, and they presented their ideas on Wednesday during a demo day, exclusively covered by TechCrunch+.
A high court in Montenegro overrode a lower court’s previous decision that would have released Terraform Labs founder Do Kwon on bail. The ruling comes nearly two weeks after Montenegro’s Basic Court agreed to release detained Kwon and his former colleague Chang-joon Han on bail.
While the web3 world has seen a significant influx of capital, innovation and talent, more work is needed to ensure traditional players — as well as new ones — can enter the ecosystem confidently. “People look at crypto and think of it as an investment, but there’s a whole sector that’s a lot more useful for financial industries as a whole,” said Raj Dhamodharan, Mastercard’s EVP and head of crypto and blockchain, during a blockchain-focused panel at the company’s North America Innovation Day event. “The technology itself holds a lot of promise.”
As the artificial intelligence market continues to heat up, a number of crypto players — big and small — are diving in. The Solana Foundation, the nonprofit organization behind the layer-1 blockchain Solana, has officially integrated AI into its network with a ChatGPT plug-in developed by Solana Labs, the team exclusively told TechCrunch+. (Solana Labs is the team building products and tools for the blockchain.)
The latest pod
Chainlink is also known as a web3 services platform that connects people, businesses and data with the world of web3. And for good reason — it has enabled over $7 trillion in transaction volume across DeFi, gaming, NFTs and other major industries.
Prior to co-founding Chainlink, Nazarov co-founded four other businesses, most recently SmartContract — which focused on smart contracts.
We discussed a number of things surrounding smart contracts, oracle networks, cross-chain interoperability and Nazarov’s long-term vision for Chainlink.
We also dove into:
- Unexpected smart contract use cases
- Cryptographic guarantees
- How traditional companies can tokenize assets
- AI and blockchain technology
- CCIP updates
Follow the money
- Dispersion Capital launches $40 million fund focused on decentralized infrastructure
- Decentralized science startup LabDAO raises $3.6 million
- Openfort raises $3 million to make “frictionless” crypto accounts for gamers
- Institutionally-focused digital assets platform PYOR raises $4 million
- App automation platform Fastlane raises $2.3 million
This list was compiled with information from Messari as well as TechCrunch’s own reporting.
To get a roundup of TechCrunch’s biggest and most important crypto stories delivered to your inbox every Thursday at 12 p.m. PT, subscribe here.
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Crypto Trading & Speculation
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Understanding different safe investment options available to you during retirement, and the pros and cons of each, can help you make smart decisions about how to manage your money after you leave the workforce. Here are five common safe investments that can help you grow your wealth in retirement.
A financial advisor can guide you in picking investments for your specific retirement needs.
1. Bonds
Bonds are fixed-income securities that pay interest to the bondholder at regular intervals. Issued by governments and corporations, they are often considered a safe investment. Bonds can offer income stability through regular interest payments and therefore provide a predictable income stream to cover living expenses. Bonds also come with a lower risk of principal loss when compared with stocks.
Diversification strategies for retirement portfolios often include bonds as a stabilizing asset that aims to reduce overall risk. With their fixed interest rates and maturity dates, bonds provide predictability and ease of financial planning and they can help preserve capital.
Bonds are generally less volatile than stocks, which can be particularly appealing to retirees seeking stability in their investments. Additionally, bonds offer liquidity, allowing retirees to access their funds when needed.
It’s important to consider that the safety of bonds can vary based on the issuer’s creditworthiness. Government bonds, particularly from financially stable countries, are often considered the safest. Corporate bonds may carry more risk, depending on the financial health of the issuing company. Retirees should assess their risk tolerance, investment goals and time horizon before investing.
2. Certificates of Deposit (CDs)
Certificates of Deposit (CDs) are time-bound deposits held with banks that offer a fixed interest rate. CDs can also be a safe investment choice for retirees, primarily for the following reasons. First, CDs offer income stability through fixed interest rates and predictable maturity dates. Retirees can rely on regular interest payments, which can help cover living expenses and maintain financial stability.
Second, they come with a high degree of principal protection. The initial investment in a CD is typically insured up to a certain limit by the Federal Deposit Insurance Corporation (FDIC) in the United States, providing a strong safety net for retirees against potential losses.
Like bonds, CDs offer capital preservation and are generally less volatile than stocks, making them a suitable option for risk-averse retirees looking to safeguard their savings. However, the liquidity of CDs is less than other investments like bonds, as those assets are generally considered to be more liquid than CDs because they can trade on a secondary market.
However, the drawback is that the returns on CDs are usually lower when compared with other investment options, like stocks or bonds. Retirees should carefully consider their financial goals and risk tolerance when incorporating CDs into their retirement strategy, keeping in mind that they may trade higher returns for increased security and stability in their investment portfolio.
3. Dividend-Paying Stocks
Dividend-paying stocks are shares in established companies that distribute part of their profits to shareholders. These stocks can be a valuable component of a retiree’s investment portfolio for several reasons. They offer a consistent income stream through regular dividend payments, helping retirees cover their living expenses while potentially enjoying income growth over time. These stocks also have the potential for capital appreciation, which can help retirees keep pace with inflation and potentially grow their wealth.
Including dividend-paying stocks in a retirement portfolio could also add diversification, spread risk and enhance overall returns. And some tax advantages may be available for qualified dividend income, further benefiting retirees. However, it’s important to recognize that dividend-paying stocks come with greater volatility and risk when compared with bonds and certificates of deposit. Their value can fluctuate with the stock market and there is no guarantee of continued dividend payments. Therefore, you should carefully consider of the financial health and track record of a company before investing.
4. Preferred Stock
Preferred stocks can be a distinctive addition to a retiree’s investment portfolio. Known for fixed dividend payments that provide a reliable income stream, these assets also typically offer higher yields when compared with traditional bonds and common stocks, making them an appealing choice for retirees seeking income.
Additionally, preferred stockholders enjoy priority in asset claims over common stockholders in cases of a company’s financial distress or liquidation, adding an extra layer of security to these investments. Including preferred stocks in a portfolio can also contribute to diversification, helping to spread risk and potentially improve overall returns.
However, it’s essential to recognize that preferred stocks generally do not offer significant capital appreciation potential like common stocks. While their dividend payments are more predictable than common stock dividends, they may be less secure than bond interest payments. They can be subject to suspension or reduction if a company faces financial difficulties.
5. Annuities
Annuities are insurance contracts that can provide a guaranteed income stream, which could make them an attractive option for some retirees. These financial products provide tax-deferred growth, which can help retirees maximize their savings and potentially reduce their tax burden, contributing to long-term financial security.
Additionally, some annuities offer guaranteed income options and flexible payout choices, allowing retirees to tailor their investments to their specific needs and preferences. Nevertheless, annuities come with certain drawbacks, including fees and expenses that can reduce overall returns and potential surrender charges for early withdrawals.
Furthermore, annuities may limit liquidity and flexibility, as they often tie up a significant portion of assets. It’s vital for retirees to thoroughly evaluate their financial goals, risk tolerance and the terms of the annuity contract before making a commitment.
Bottom Line
Having a clear understanding of these investment options can help you craft a secure, balanced retirement plan. However, as there is no one-size-fits-all solution, the right balance will depend on your unique circumstances and goals.
Tips for Retirement Planning
A financial advisor can help you make a retirement plan, from determining how much you need to live the retirement you want and then help you choose the right investments to get you there. Once you hit retirement, a financial advisor can help you maintain the amount you need in your retirement fund. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
A retirement calculator can help you find the estimated number that you’ll need to hit in order to reach your long-term financial goals.
Photo credit: ©iStock.com/BrianAJackson, ©iStock.com/zamrznutitonovi, ©iStock.com/bojanstory
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Personal Finance & Financial Education
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WASHINGTON -- Democrats in Congress are pushing for a new round of money to keep the nation’s child care industry afloat, saying thousands of programs are at risk of closing when federal pandemic relief runs out this month.
Legislation being introduced in both chambers on Wednesday would provide $16 billion a year over the next five years, awarded as grants to help child care programs cover everyday costs. It’s meant to replace $24 billion in relief that was passed in 2021 in the American Rescue Plan and is set to expire Sept. 30.
With no Republican support, the bill faces an uphill battle in Congress.
Without a new lifeline, child care programs serving millions of families could close or increase prices. For many, the federal aid only postponed the financial turmoil that threatened their survival before the pandemic.
"There was a child care crisis even before the pandemic — and failing to extend these critical investments from the American Rescue Plan will push child care even further out of reach for millions of families and jeopardize our strong economic recovery,” said Sen. Patty Murray, D-Wash., a sponsor of the bill.
Other sponsors include Sen. Bernie Sanders of Vermont and Rep. Catherine Clark of Massachusetts.
A June report from The Century Foundation found that without additional money, about 70,000 child care programs would probably have to shut down after this month. That amounts to a third of all programs that received the federal pandemic grants. States distributed the aid in different ways, and many providers already have spent their grants. Either way, the last of it must be spent by Sept. 30.
Arkansas, Montana, Utah, Virginia, West Virginia and Washington, D.C., are at risk of seeing half their licensed programs close, the think tank reported. In total, the programs in jeopardy serve about 3.2 million children.
Hoping to buffer the industry against the upheaval of the pandemic, Congress created a child care stabilization program in 2021. States were given a total of $24 billion to distribute to local programs. It helped more than 220,000 programs, often being used to pay staff or cover rent and utilities, according to the Department of Health and Human Services.
The grants helped Cynthia Davis keep her child care center open through the pandemic, serving eight children at her home in Washington, D.C. When the economy stalled, income stopped coming in. Davis used her personal savings to pay staff and buy safety supplies. She was nearing the end of her savings when she received about $70,000 in federal grants and other relief.
“It really was a breath of fresh air for a lot of us, because those dollars gave me money I could put back into my savings and my retirement,” she said.
Still, inflation and safety costs have taken a toll. Davis had to lay off one worker, leaving her with just one other. Without more relief, she figures her center will close within a year.
“I just don’t know what’s going to happen to a lot of programs,” she said. “We already are stretched to the limit.”
The money was seen as a steadying hand for an industry that badly needed it. In the first two years of the pandemic, about 20,000 programs closed, roughly the equivalent of 10% of pre-pandemic levels, The Century Foundation said.
But even before then, the industry was struggling. The number of providers has been on the decline for years as workers fled the industry and its persistently low pay. Yet demand has remained high, pushing programs to raise prices and, in some places, resulting in child care “deserts” where demand far exceeds available spots.
The average annual price for U.S. child care in 2022 was $10,800 per child, according to Child Care Aware of America, a nonprofit advocacy group.
President Joe Biden has called for expanded child care support, but his biggest proposal stalled amid a polarized Congress and Democratic infighting.
Under Biden’s Build Back Better Act in 2021, parents earning up to 250% of a state’s median income would have paid no more than 7% of their income on child care. But that that bill failed to win support from Democratic holdouts, and the child care plan was later stripped from a slimmer package approved by Congress.
In a statement, Clark said the pandemic relief allowed parents to return to work and paved the way for economic recovery.
“We can’t turn back now," she said. “Child care is economic infrastructure — it is critical to growing the economy by growing the middle class.”
___
The Associated Press receives support from the Overdeck Family Foundation for reporting focused on early learning. The AP is solely responsible for all content.
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Consumer & Retail
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Country Garden, the biggest builder in the Chinese property market, has failed for the first time to pay $15.4 million interest on its dollar bonds.
Chinese property developer Country Garden has failed to pay interest on a $500 million (€472 million) note due in 2025, in the latest sign of distress in the Chinese property industry.
The deadline, including a 30-day grace period after missing the initial deadline 17 September, to pay the $15.4 million interest passed last week. Therefore, the event “constitutes an event of default,” according to a notice to holders from trustee Citicorp International seen by Bloomberg News.
The company warned its creditors earlier this month that it would not be able to repay a separate HK$470 million (€57 million) loan, explaining that its sales were under “remarkable pressure”.
Country Garden's shares have lost more than two-thirds of their value this year.
The nervousness around the company raised rumours that its founder and chairman had both left China, but these claims were rejected in a company statement at the end of last week.
The builder, among the world’s most indebted developers, is now likely facing one of the nation’s biggest-ever restructurings, according to Bloomberg.
Following the default and restructuring of China's Evergrande, the world's most heavily indebted property firm, Country Garden's shaky finances are the latest blow to the Chinese property market which, along with related industries, accounts for about 20% of gross domestic product of the world's second-largest economy.
Following Citicorp's note, the Credit Derivatives Determinations Committees will meet to discuss if a failure-to-pay credit event occurred. If this is the case, it opens the door to having the so-called credit default swap contracts come into effect, which are used by traders to hedge against non-payment by a government or company in case of a default.
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Bonds Trading & Speculation
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Special internet deals for those on benefits should be free of VAT to get more people online, peers have urged.
Those without internet are at a disadvantage when looking for jobs, for example, a report by a Lords committee said.
"The government does not have a credible strategy to tackle digital exclusion," the report said.
But the government said it is committed to ensuring no one is left behind in the digital age.
It says it has worked "to bring a range of social broadband and mobile tariffs, available across 99% of the UK and starting from as low as £10 per month".
Social tariffs are discounted deals offered by firms to people on benefits.
But 1.7 million households have no mobile or broadband internet at home, and up to a million people have cut back or cancelled internet packages in the past year, the House of Lords communications and digital committee said.
Services from benefits to banking are increasingly moving online and 90% of jobs are only advertised online.
Bella, who is 18, grew up in a single parent household which struggled for money, "especially during this cost-of-living crisis and Covid".
She told the BBC that for some of her time in school she didn't have a laptop of her own to do homework on - "so I had to spend a lot of time in the library at the weekends".
Matt, who spent time in care, and now works and also helps raise awareness of the issues care-leavers face, told the BBC he had never lived in a home with broadband internet.
Katherine Sacks-Jones, chief executive of children-in-care charity Become, said many care-leavers face "a real struggle".
Many can't afford wi-fi "or they can't buy the data on their phone, because they're having to pay for other things like feeding themselves, like keeping the electricity on," she said.
People who can't afford data have told the BBC of difficulties managing benefits claims, or having to juggle work hours with library opening hours to fill in forms or print things out.
Lewa had to make savings after her husband passed away.
She decided to "cut back on the wi-fi to focus on gas and electricity and water costs," but she didn't realise how data-dependent her family had become.
"Life is a struggle. If you want data for four people it costs a lot and I was always overdrawn," she said.
"There were times when I was literally crying because it was a struggle, especially when your doctor says fill in the form online.
"You need that data. It's vital. I have days when I can't go out and I need to do shopping online. How do you get by if you can't access the internet? It's hard.
"I had to send my kids to my neighbour so they could do their homework. I felt embarrassed."
Eventually the Good Things Foundation, which works to end digital exclusion, provided the family with a tablet and data.
The chair of the committee, Baroness Stowell, told the BBC that people without internet often missed out on online deals "so in a cost-of-living type situation, they are also not getting the full advantage of any savings", she said.
'Political lethargy'
The report accused the government of taking its "eye off the ball".
It said the government's ambition to make the UK a "technology superpower" and boost economic growth was being undermined by high levels of digital exclusion.
That includes people who can't afford internet, who can't access it, or lack key digital skills.
It said the scale of the problem was a "direct consequence of political lethargy".
The increasing use of AI in the delivery of public services may also mean that digitally excluded people may face bias.
People who do not post online often may be poorly represented in the datasets - often drawn from material on the internet - used to train such systems, the report said.
Peers want to see more use of social tariffs. At the moment just 5% of the 4.3 million households who are eligible use them.
The committee also called for the chancellor to remove VAT from social tariffs "straight away", Baroness Stowell said, adding that she wanted Ofcom to do better in forcing companies to advertise these tariffs.
The report comes as Chancellor Jeremy Hunt met with regulators including Ofcom about the cost-of-living crisis.
Following that meeting Dame Melanie Dawes, Ofcom's chief executive, said it would be "urging telecoms firms to take immediate steps to raise awareness of social tariffs".
Till Sommer from the Internet Service Providers Association agreed with the committee that a new digital inclusion strategy was "long overdue".
He said there was a "real commitment" across the broadband sector to help more people get online through social tariffs and support for people struggling.
But he said there were areas where "only the government can move the dial - including reviewing VAT on broadband".
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Inflation
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Asda Group says it will acquire petrol station operator EG Group's UK and Ireland business, creating a company with combined revenues of nearly £30bn.
The news confirms a report by Sky News City editor Mark Kleinman last week, which said the "finishing touches" were being put on the deal.
Asda is the UK's third-largest supermarket, and - like EG - is owned by brother Zuber and Mohsin Issa and private equity group TDR Capital.
The deal will mean the acquisition of around 350 petrol stations and more than 1,000 food-to-go locations.
The resulting behemoth will have around 170,000 employees, nearly 600 supermarkets and 700 petrol forecourts.
Stuart Rose, Chair of Asda, said: "Asda's acquisition of EG UK and Ireland will create a consumer champion like the UK has never seen. Throughout my career in retail - one thing has always been true, that meeting the evolving needs of customers is the route to growth.
"This transaction is all about driving growth by bringing Asda's heritage in value to even more communities and accelerating the growth of its convenience retail business."
Asda co-owner Mohsin Issa said that the deal would be "positive news for motorists, as we will be able to bring Asda's highly competitive fuel offer to even more customers".
Talks about a combination of Asda and EG UK have been underway for more than six months, and were initially reported by The Sunday Times in January.
The GMB union raised concerns in April and earlier this month that the tie-up could threaten food supplies, increase fuel prices and "only benefit the super-wealthy elite".
Nadine Houghton, GMB national officer, said: "The billionaire Issa Brothers and the elite multi-millionaire private equity fund managers at TDR capital want to use ASDA as a cash cow to pay off their debts.
"This merger is wrong on so many levels - it is wrong for consumers and will increase food prices, it is wrong for drivers with a chilling effect on fuel prices, it is wrong for ASDA's workers and it is wrong for ASDA's business."
The Competition and Markets Authority said the ultimate owners of Asda are the same ultimate owners in the same proportion of ownership as EG Group and, as such, the merger would not qualify for a CMA review.
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Consumer & Retail
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Reddit's Contributor Program could earn you real money for your Reddit karma
- Code within the official Reddit app suggests that the company is working on a Contributor program.
- Redditors in the US could earn real money for the gold and karma that their posts and comments receive.
- This will likely be subject to minimum withdrawal thresholds.
Reddit has been in the news recently for its API changes that killed popular Reddit apps and the subreddit protests that followed the announcement. The company believes the official Reddit app is all you need for a great community experience. We say the Reddit app is good for giving us a sneak peek at what the company is working on. In the near future, Reddit could introduce a Contributor program that will reward community contributors with real-world money.
Reddit v2023.27.0 for Android includes code that suggests that the online community platform is looking for ways to incentivize the community to be more proactive. Similar to how other platforms reward creators, Reddit could be exploring ways that would let community members convert the gold and karma they have received from other community members into real-world money that they can cash out. Check out the references below.
Fake internet points are finally worth something! Now redditors can earn real money for their contributions to the Reddit community, based on the karma and gold they've been given. How it works: * Redditors give gold to posts, comments, or other contributions they think are really worth something. * Eligible contributors that earn enough karma and gold can cash out their earnings for real money. * Contributors apply to the program to see if they're eligible. * Top contributors make top dollar. The more karma and gold contributors earn, the more money they can receive.
The code suggests that the program will initially have two tiers: Contributor and Top Contributor. Top Contributors will have better rates.
Further, from what we can discern, the payout could use Reddit gold as a currency, while the karma accumulated could be used to improve the rate of exchange for Reddit gold into real-world money (possibly USD). Note that the community itself passes around Reddit gold and karma to each other. Reddit gold is purchased with real-world money, while karma is a net figure of upvotes and downvotes on comments and posts.
Before you get too excited, the program appears to have some constraints around eligibility:
Not just anyone can be a contributor. To join and stay in the program, contributors need to meet a few requirements: * Be over 18 and live in the U.S. * Only Safe for Work contributions qualify * Earn xx gold and karma each month * Provide verification information. You must have at least 10 gold and 100 karma to begin verification. * NSFW accounts aren't eligible for the Contributors Program
With a threshold of 10 gold and 100 karma for verification, the bare minimum is set at a high enough point to not be easy to game. Contributors will have to further earn an unspecified number of gold and karma each month to be eligible for payouts within the program.
Here is what could be the necessary information needed for verification:
Provide the following information to get verified for the program and start earning: * Email * Personal Information * Tax and bank account information
The verification appears to be powered by Persona and Stripe.
Once you hit the payment threshold, you'll automatically be paid out via your Stripe account. * Approximate calculation before fees. Exchange rate and payment thresholds are subject to change.
The payout threshold is not mentioned within the code, and neither is the monthly gold and karma requirement for being part of the contributor program.
Curiously, unlike the creator programs of other social platforms, Reddit’s purported Contributor Program will be routing community-purchased gold and karma back into the community. We could not locate any mentions of Contributors receiving any part of ad or subscription revenue from the platform, which is usually how the creator programs of other platforms work. In effect, the community would be incentivizing the community.
Do you think Reddit's contributor program is a good idea?
Note that the program, so far, does not explicitly mention any community moderators within its ambit, and no incentives have been carved out for them. However, since Reddit has not made any official announcements, things could change by the time the program goes live.
We’ve reached out to Reddit for comments and more information. We’ll update the article when we hear back from them.
Note: An APK teardown helps predict features that may arrive on a service in the future based on work-in-progress code. However, it is possible that such predicted features may not make it to a public release.
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Consumer & Retail
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You aren’t just imagining it: Your paycheck didn’t go as far last year as it did the year before — or the year before that.
Inflation surges outpaced the average pay raises of US workers in 2022 — the third consecutive year in which Americans have seen their standard of living take a tumble, according to fresh data from the US Census Bureau.
Inflation-adjusted median household income fell to $74,580 in 2022 — a 2.3% decline from the 2021 average of $76,330, the federal agency reported on Tuesday.
American incomes have been slipping gradually since 2020, when households enjoyed average earnings of $76,660.
This figure has dropped a whopping 4.7% since its peak in 2019, painting an ugly picture of how President Joe Biden’s economic policies have failed to counter pressures provoked by the pandemic — thus keeping inflation stubbornly high and wages gains too slow to keep up.
Householders who received their high school diploma — but not a college degree — saw an even larger year-over-year drop in income from 2021 to 2022, the Census Bureau found.
In 2021, these earners made an average of $54,350, which dropped a staggering 5.3% to $51,470 by 2022 when adjusted for inflation.
High earners who have obtained their bachelor’s degree or other advanced graduate degree experienced a 4.9% dip in earnings from 2021 to 2022 — from $124,500 to $118,300 on average.
Overall, the median annual spend for American households is $66,928 — meaning the average US family has less than $8,000 left over each year, according to Zippia.
On Wednesday, US inflation was higher than economists had expected, rising 3.7% in August versus a year earlier, according to the Bureau of Labor Statistics.
The core Consumer Price Index — a closely-watched measure of inflation that tracks changes in the costs of everyday goods and services, excluding food and energy prices — rose 0.3% from a month ago, slightly more than the 0.2% monthly gain in June and July.
The figures mean the Federal Reserve has more to accomplish in its aggressive tightening cycle if officials will get inflation down to their 2% target.
The hotter-than-expected inflation figures have left economists unsure if the Fed will hold interest rates steady next week following the central bankers’ highly-anticipated two-day meeting set for Sept. 19 and 20.
Whether Fed officials will raise its benchmark federal funds rate beyond its current range — between 5.25% and 5.5% — in November and December also remains up in the air.
One New Yorker feeling the squeeze is 32-year-old Indraja V., who moved from downtown Tampa, Fla., to Manhattan in April to take a job at a major tech consulting firm.
However, despite getting a $20,000 raise in base pay upon starting the new gig, bringing her base pay up to $131,000, Indraja told The Post that she “feels poor” in the inflation-riddled Big Apple.
“It would be a dream for a lot of people to achieve a six-figure salary, but it feels so small,” Indraja said, noting that after taxes and rent, she struggles to have enough funds to pay off her debt from obtaining her MBA, or for discretionary spending like gym memberships and plane tickets back to India to visit her family.
Indraja’s rent for her one-bedroom apartment is more than twice as expensive in NYC as it was in the Sunshine State.
She paid $2,000 for a one-bed abode in Tampa, but now dishes out $4,300 for her Manhattan digs.
“I give 65% of my salary to rent. It’s not an ideal situation,” she told The Post.
Also back in Tampa, “I would never think about how much I’m buying while grocery shopping, but a slice of watermelon is $11 near my apartment.”
“I sent a picture of it to my friends because I was so shocked,” Indraja said of the piece of watermelon, which was pre-sliced, plastic-wrapped and on sale for an eye-watering $11.74 at The Food Emporium.
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Inflation
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Drought causes North Texas ranchers to reduce herds, driving meat prices up
Missy Bonds is banking on a wet fall and spring for her family’s ranch near Saginaw. Business depends on it.
Running cattle means constantly keeping an eye on how much pasture the animals have to graze and how much water they have to drink. Bonds was able to manage the herd through the summer, but a nearly200-acre grass fire in Julythrew things into uncertainty.
The area still looks as if the fire happened yesterday, Bonds said. Not enough grass or water could mean the ranch has to sell some of their cattle.
“People are at this point — we’re down to kind of just the bare minimum,” Bonds said. “Trying to hold on to what they can.”
Pressures from years of widespread drought and rising costs of raising cattle are forcing ranchers in North Texas and across the U.S. to manage smaller herds. Beef production is expected to decline by 24.7 billion pounds, a historic low, according to the U.S. Department of Agriculture.With fewer cattle being raised, experts say consumers should expect the price of beef at grocery stores to rise to new highs.
A major culprit for raising fewer cattle is drought.
Almost the entire western half of the country experienced drought conditions last year, according to the University of Nebraska’s U.S. drought monitor. This year, themajority of Texas is experiencing abnormally dry to exceptional drought conditions this year, according to the monitor.
David Anderson, a professor of agricultural economics and extension economist with Texas A&M University AgriLife Extension, said the drought conditions forced ranchers across the country, including in Texas, to reduce their cattle herd.
“Cows are out on grass and ranges and pasture,” Anderson said. “If it doesn’t rain, you don’t get any grass. And so you can’t have as many cows.”
Economic conditions, such as high fertilizer prices and a lower selling price during the pandemic, also caused ranchers to reduce herds. Those factors are reflected in sale prices. The average price of a steak across cuts in August was $7.65 per pound, according to the Bureau of Labor Statistics. That’s slightly down from the all-time high from July, Anderson said, but consumers can expect the prices to remain high.
“Tighter supplies yet continued demand for the product by consumers has kept that retail price high,” Anderson said.
Every week, Kimberly Irwin, co-owner of Decatur Livestock Market LLC, has seen higher sales of cattle than normal. A normal sale would see about 1,200 head of cattle — but she said she can regularly see up to 2,200 now.
It’s not only a lack of green grass that’s spurring ranchers to sell. Available water is an issue, too. Groundwater tanks started to dry last year and never recovered. This summer, many rancher’s already low wells ran out, she said. Many ranchers sold their old cows first, in hopes of having a young herd to keep going forward. But she said many ranchers are selling young calves now to survive. Irwin, who has been running the market for 20 years, has seen droughts come and go over the years. This time is different.
“I haven’t seen it last this long … because it’s two summers in a row,” Irwin said. “It’s been real bad. It’s been bad before, but then we recover by the next spring.”
Less supply for cattle means ranchers are ultimately getting paid more, and processors are paying and selling the meat for more, Juan Alfonso Ramos, CEO and owner of Fort Worth Meat Packers, said.
“We charge a higher price than we would have in the past because our costs are higher,” he said.
Ramos, whose family owns a ranching company that operates in Texas, Oklahoma, New Mexico and Mexico, said drought conditions have posed a challenge. While they haven’t had to sell their cattle, they aren’t expanding either.
They have gotten rain in their area, which has relieved some pressure, he said. But while some places have gotten much-needed moisture to their pastures, he notices while driving across West Texas, New Mexico and Oklahoma that most places are dry. The longer it takes to replenish herds, the longer the higher prices will persist, he said.
“If we don’t have heifers turning into cows, to then have calves and then further regrowing the herd, it’s going to continue to be a very difficult situation for the live cattle herd to regrow,” Ramos said. “And that’s going to continue to put upward pressure on cattle prices … and meat prices for the consumer.”
Seth Bodine is a business and economic development reporter for the Fort Worth Report. Contact him at seth.bodine@fortworthreport.org and follow on Twitter @sbodine120.
At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.
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Agriculture
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The price of oil is the biggest factor in gasoline prices. But another factor has been pushing fuel costs higher for the last three years: gas station profit margins.
New research by economist Michael Havlin shows that the profit margin on gasoline is about 77% higher than in May 2019, the first month for which government data is available. Compared with February 2020 —the last month before the COVID pandemic erupted — gasoline margins are 62% higher. The latest numbers are for May 2023.
Last December, gasoline profit margins peaked at 120% above the 2019 baseline, or 102% above the 2020 pre-COVID level. The profit margin on gas was about 6.7% in 2019, so at current levels, it’s close to 12%.
At the current average price of $3.64 per gallon, about 43 cents per gallon goes to the retailer as gross profit. Were the 2019 margins still in place, drivers would be paying just 24 cents per gallon in profit. For a 10-gallon fill-up, the added cost is $1.90. For somebody driving 12,000 miles a year who averages 25 miles per gallon, the added cost would be about $91 per year.
The real-world difference is greater, because gas prices were lower in 2019 and 2020. In May 2019, for instance, gas prices were around $2.95. So the 6.7% margin represented a cost of about 20 cents per gallon to consumers. In February 2020, prices were slightly lower while margins were slightly higher, with the margin costing consumers about 18.6 cents per gallon. Since higher prices mean the dollar value of a marginal profit goes up, higher prices raise the profit margin buyers pay in dollars.
Are gas stations ripping off drivers?
It’s not as simple as it might seem. “Greedflation” does seem to be a real phenomenon, with some businesses cashing in on their ability to keep prices high. Havlin did research earlier this year, for instance, showing that higher markups at car dealerships have been a major contributor to automobile inflation. A January study by the Federal Reserve Bank of Kansas City found that many firms increased their markups because they anticipated higher costs, contributing substantially to inflation.
But not all businesses have the ability to keep prices high, and other factors besides greed contribute to pricing power.
Gross profit margins, simply put, are the difference between the wholesale price retailers pay and the price they charge consumers. For gasoline, wholesale and retail prices broadly move in the same direction. But they don’t always move by the same amount, and there are lags. Some consumers who follow the wholesale price of gasoline have been frustrated to see that when the wholesale price declines, retailers don’t always pass all the cost savings on to consumers.
“Retailers tend to hold back price increases, but when prices decline, they tend to hold back decreases and gain margin,” Jeff Lenard, a vice president at the National Association of Convenience Stores, told Yahoo Finance. When prices are volatile, as they have been, a drop in the price of oil gives gas stations a chance to boost profits by keeping the retail price up for as long as they can. Stable prices would provide fewer ups and downs to take advantage of.
Lenard also said consumers are becoming slightly less sensitive to gas prices relative to other reasons they choose a gas station. Better food options in the store, for instance, might draw shoppers less concerned about the cost of gas.
Demand and supply also affect retailers’ pricing power. Demand has been fairly strong since COVID vaccines became available and lockdowns ended in 2021. The United States has also lost refining capacity since 2020, which can create a bit of a bottleneck for gasoline supply even when oil prices are low. Overall, a solid economy and a ceiling on refining capacity have kept the gasoline market fairly tight. If demand softened — which is possible if the economy slumps — supply would build, and gas stations might have to cut profit margins or risk losing sales to competitors.
The COVID pandemic massively disrupted supply chains and spending patterns, and those kinks still aren’t fully ironed out. “As much as people like to drag on retailers, one of the challenges with inflation has been ultra-low inventories,” Havlin said. “A lot of those inventory shortages originate up the supply chain. It’s easy to blame dealerships or gas stations, but profit margins across economy are not likely to come down until inventories go up.”
In time, maybe.
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Energy & Natural Resources
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Feds search crypto exec’s home amidst stalking, hacking allegations: NYT
The FBI searched cryptocurrency magnate Jesse Powell’s home in March following allegations that the Kraken exchange founder hacked and cyber-stalked a nonprofit he had also founded, according to reports from The New York Times.
The criminal investigation focused on claims that Powell, 42, interfered in the digital accounts of and blocked the Verge Center for the Arts’s access to communications. Powell founded Verge, a contemporary arts space in Sacramento, Calif., in 2008.
Agents searched Powell’s Los Angeles home and seized his electronics, but Powell has not been accused of any crimes.
Powell was removed from the Verge board of directors in 2022, shortly after reports alleged that he attempted to ignite a “culture war” among employees with “hurtful” comments around race and gender in Kraken offices.
Verge alleged that Powell then blocked its staff’s access to its site and emails, and accessed confidential information.
A spokeswoman for Kraken told The Times that the Verge investigation had nothing to do with the cryptocurrency exchange, and that Kraken had no reason to believe prosecutors were investigating other potential issues.
Powell’s lawyer also told The Times that the investigation is not related to Powell’s cryptocurrency activity and denied the allegations of hacking and cyber-stalking.
Kraken is the world’s second-largest cryptocurrency exchange after Coinbase. Kraken has survived despite federal investigators’ crackdowns on several of its competitors, the most infamous of which being the collapse of FTX following fraud charges against its founder, Sam Bankman-Fried, in December 2022.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Crypto Trading & Speculation
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- Dollar Tree beat Wall Street's second-quarter earnings and revenue expectations.
- Its shares droppped as the discounter said consumers are spending mostly on food and essentials.
- The company raised its sales outlook but narrowed its profit guidance.
Shares of Dollar Tree fell on Thursday and hit a 52-week low, after the retailer said customers' shopping lists have largely narrowed to food and necessities.
The discounter joins a growing group of retailers catering to consumers who have become more price-sensitive and selective about spending. Macy's and Foot Locker also reported this week that sales have been hit as customers largely skip over discretionary items, as they deal with rising interest rates and juggling expenses like commuting, dining out and paying for more expensive groceries.
On a call with investors, Dollar Tree CEO Rick Dreiling said customers' shopping patterns reflect a tougher economic backdrop and a reversion to pre-pandemic spending habits.
"While the challenging macro environment continues to pressure our sales mix in both segments, I am pleased with the gains in traffic, new customers, and market share," he said.
Dollar Tree, which includes its namesake banner and more grocery-focused Family Dollar, saw its stock price fall 10% — even as it beat Wall Street's fiscal second-quarter expectations.
The company raised its full-year forecast for sales, but narrowed its outlook for earnings. Dollar Tree said the guidance reflects improved sales, and attributed the tighter profit range to more low-margin purchases such as food, ongoing challenges with shrink, the term used for lost, damaged or stolen goods, and higher diesel fuel costs.
Dollar Tree now expects consolidated net sales to range from $30.6 billion to $30.9 billion for the full fiscal year, and earnings per share to range from $5.78 to $6.08. It had previously forecast consolidated net sales of between $30.0 billion and $30.5 billion and diluted earnings per share of between $5.73 and $6.13. Dollar Tree's guidance disappointed Wall Street, as the lower end of its earnings forecast fell below consensus expectations.
Here's how the company did for the three-month period that ended July 29, compared with what Wall Street expected, based on a survey of analysts by Refinitiv:
- Earnings per share: 91 cents vs. 87 cents expected
- Revenue: $7.32 billion vs. $7.18 billion expected
Net income fell to $200.4 million, or 91 cents per share, from $359.9 million, or $1.61 per share, a year earlier.
Total revenue rose from $6.77 billion in the year-ago period.
Same-store sales rose 6.9% across the company. At the Dollar Tree chain, same-store sales increased 7.8% and for Family Dollar, same-store sales rose 5.8% year over year.
Dollar Tree is in the middle of a broader effort to revamp its stores and its price points. Dreiling, the former executive chairman of the company's board and ex-CEO of rival Dollar General, has spearheaded the turnaround since he was named chief executive of Dollar Tree early this year.
The company has expanded its range of items to include more that sell for a higher price point, such as frozen and refrigerated items that sell for $3, $4 and $5.
During the second quarter, Dollar Tree's margins got hurt by shoppers' emphasis on buying food and essentials, which tend to be less profitable. Along with that spending shift, the company's profits have gotten squeezed by higher expenses including wage increases for store employees, investments in store repairs and bigger utility bills due to hotter summer weather in much of the country.
Its margins also decreased compared with a year-ago period when it phased in price hikes from $1 to $1.25.
More retailers have called out shrink as a challenge, too, as some thieves steal goods to sell on third-party marketplaces. On a call with investors, Dreiling said the retailer is rolling out new approaches to try to prevent theft in the back half of the year. Those efforts include moving and locking up some merchandise and even discontinuing some heavily targeted items.
At both chains, shoppers made more frequent trips to stores in the second quarter. The Dollar Tree chain saw a nearly 10% jump in traffic, but the average amount spent by customers who visited the stores dropped by 1.6%. At Family Dollar, traffic rose by about 3% and average ticket increased by about 2%.
Separately, U.S. regulators announced a settlement this week with Dollar Tree and competitor Dollar General, which were both issued workplace safety violations. As part of the settlement, the retailers must fix hazards for employees, such as blocked exits and unsafe storage of materials.
In a statement, Dollar Tree COO Mike Creedon said the company is "implementing substantial safety policies, procedures, and training, all intended to safeguard the wellbeing of our associates."
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Consumer & Retail
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AngelList, an organization that started out by teaming up founders with early-stage investors, is expanding into the private equity space. And it’s acquired a Y Combinator-backed fintech startup in the industry to kickstart that effort.
Founded in 2010, AngelList started as a mailing list for high-quality angel investors before turning into one of the most powerful fundraising channels for early-stage startups. Over the years, it has evolved its model and today touts itself as an organization that “creates products and services for venture firms, investors, startups, and fund managers to accelerate innovation.” Earlier this year, venture capitalist Harry Stebbings, host of podcast “The Twenty Minute VC” podcast, shared his view that AngelList had transitioned from being an SPV (special purpose vehicle) provider to “slowly becoming the software platform for the entire industry venture and startup ecosystem.”
With its mid-June acquisition of Nova (only the company’s second buy since inception), which has built investor management software for institutional private funds, AngelList continues to broaden its scope.
Over the years, for example, AngelList has moved from solely serving micro-funds to launching SPVs to pioneering the concept of rolling funds, which are investment vehicles that raise money through a quarterly subscription from interested investors. Another offering is Stack, a suite of products designed to compete with Carta in providing services to help founders start, operate and maintain ownership over their companies.
The move into private equity might feel like it’s counter to AngelList’s original venture focus but CEO Avlok Kohli, who took the helm of the company in 2019, told TechCrunch in an exclusive interview that he believes the expansion into private equity was a logical and natural one.
“At the highest level, the way to think about what AngelList does is we’re really building the infrastructure that powers the startup economy, including all the infrastructure needed to run venture funds,” he said. “This includes serving the GPs and LPs in the funds…Over the years, we have continued to move up market.”
The expansion is also indicative of the lifecycle of a startup, which typically starts by raising capital from venture funds, Kohli added.
“As they mature, the scope of capital providers they can tap into expands into private equity and of course, even the public markets,” he said. “So, this is expanding the lifecycle of products AngelList can build to serve startups throughout their journey.”
Pradyuman Vig, 26, started Nova out of Austin after selling his previous startup, Asuna, to Swift Media. (Asuna, now known as Legends.ai, was a popular League of Legends statistics website). Nova was designed to help replace subscription paperwork “with flexible digital workflows that save time and reduce friction.” Among its customers are Van Eck, which has about $78 billion in assets under management; Pantera, which has about $3.5 billion in AUM; Broad Street Global (about $3 billion in AUM); Galaxy (about $2.5 billion in AUM) and BlockTower (which doesn’t disclose AUM).
Nova currently has over 10,000 investors with identities on Nova who invested billions of dollars through the system in the last year, according to Vig. Revenue tripled in 2022 and is on target to grow by 2x this year, they added.
The startup will continue to run as a business unit within AngelList and packaged within the Investor Management suite of products within AngelList to help the company expand into the larger private markets industry. Nova’s digital subscriptions offering has been rebranded to AngelList Transact, while its data room and investor portal too will become AngelList products.
“Like Nova, we’ve also seen firsthand the value funds place on replacing disparate products that don’t talk to each other with a unified software stack that just works. We’re integrating Nova’s investor management products with a series of other products we’re building for larger institutional funds such as Treasury and the rest of our software suite,” Kohli said. “As part of this push to serve institutional funds, we’ve found early success selling to private equity — given Nova’s historical focus, their customer base significantly expands our presence there and accelerates our growth in the larger private markets industry.”
The expansion follows a year of growth for AngelList. According to statistics shared by Kohli exclusively with TechCrunch, assets supported for investors on AngelList increased by 50% to $15 billion year-over-year in 2022. It took six years to reach $1 billion (in 2018), according to Kohli. Also last year, the number of startups funded on AngelList increased by 21% to 8,300. The organization also saw a 19% increase in fund managers in 2022 versus 2021 and a 17% bump in LPs invested into an SPV or fund supported on AngelList.
Data visualization by Miranda Halpern, created with Flourish
While Kohli did not reveal hard revenue figures, one can assume that since all these metrics were up in 2022, revenue, too, was up. AngelList makes money through a variety of sources, he said, including subscription & SaaS fees and carried interest.
“AngelList’s business is pretty diversified at this point. We’re operating at significant scale,” he said. “Going through a giant downturn basically leaves open the ability to consolidate the market. So AngelList is in a position to consolidate the market.”
In March of 2022, AngelList Venture (which became AngelList late last year as it took over the main brand) turned to venture to fund its own growth — raising a $100 million Series B co-led by Tiger Global and Accomplice at a $4 billion valuation.
Adding complexity
So why didn’t AngelList simply create its own private equity-focused product, rather than buy up a startup? As in the case of many acquisitions, AngelList recognized the value of buying an existing company with established customers. Plus, it already had its own version of a product in its Treasury offering, but even Kohli admits it was not as robust as what Nova developed.
“We had a close and flow built out but with Nova, we were able to add more complexity in a good way,” he said. “And while AngelList has primarily played in the venture space, and even though venture is a subset of private equity, we saw in Nova and Pradyman a way to absorb and accelerate our understanding of the PE space. Venture and private equity are closely related cousins in our view.”
The acquisition was at least one year in the making, though.
“When Pradyuman and I originally started talking, it was very clear where we’re seeing the world in the same way and at first I was just thinking about having him come in as a leader in the company,” he told TechCrunch. “But the timing wasn’t right.”
The pair kept in touch and the deal, for which financial terms were not disclosed, closed in June.
Now, Nova is getting integrated into AngelList’s business as part of its new Transact offering — the latest in a string of recent product releases for the company. It launched its AngelList Treasury offering a few weeks ago (which Transact is being folded into), in addition to Projector, a portfolio modeling tool, and, more recently, it launched Relay, an AI-driven portfolio Analyzer tool.
AngelList very quietly made its first acquisition about 18 months ago — a brand design agency that included the former head of marketing and design at Square.
For now, AngelList is not planning any more acquisitions, but Kohli says the company is open — for the right fit. Today, AngelList has 130 employees, not including the 50 workers employed by Bell Tower, a fully owned fund and tax administrator. Kohli said he could not comment on how many of Nova’s 12 employees would be joining AngelList.
History
Nova was technically founded in 2018, and went through YC in the summer of 2018. It raised about $2 million afterwards, led by Justin Kan. It was preempted on a $7 million Series A that closed in July of 2021 and was led by Avichal Garg at Electric Capital.
“From 2018-2021 we were experimenting, and then finally found success in 2021,” Vig told TechCrunch.
In 2021, Nova launched its digital subscriptions product that replaced subscription paperwork with digital workflows so that investors would not have “to spend hours sorting through conditionals and unfamiliar questions to complete their investment,” Vig said.
Once investors completed a subscription through Nova, they could reuse their Nova Identity on future subscriptions at any other fund that also used the product. The company called this the Nova Network.
Last year, Nova launched a data room product to help its customers market to their investors ahead of the subscription process. And this year, it created an investor portal so that investors can receive documents such as K-1s, see investment performance and make additional investments with Nova as well.
“By launching the portal, fund managers are able to handle their entire investor management process in the same system,” Vig said. “With these three products, our customers are now starting to refer to our product as a full stack Investor CRM — it’s a message we’ll be doubling down on as part of AngelList.”
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Banking & Finance
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There are a number of blockchains out there competing for market share. Some chains are generalists with a focus on growing the greater ecosystem, while others focus on scaling or changing the financial landscape.
Even as a handful of the big ones compete for the top slot, some think that working together toward a multichain world could be the answer to the bigger problems in the space.
“A multichain world makes it much easier for us to start moving the technology forward,” Grace Torrellas, VP of product and product lead at Polygon zkEVM, said during a panel at TechCrunch Disrupt 2023. Polygon is a layer-2 blockchain, which means it’s focused on scaling, in this case, the layer-1 blockchain Ethereum. “We are building an ecosystem of multichains that will be interoperable.”
Mo Shaikh, co-founder and CEO of layer-1 blockchain Aptos Labs, agreed. “I do think it’s a multichain world for sure. I think we’re starting to see the deep work that all of us have done really come to fruition.”
While that may be a view some blockchains have, others don’t feel the same.
“To keep things spicy, I’ll say there’s going to be a single chain,” said Anatoly Yakovenko, co-founder and CEO of layer-1 blockchain Solana, explaining that there’s going to be a single execution environment, so it won’t really matter how many other settlement environments there are. “It doesn’t matter which bank USDC actually settles in, but what matters is where all the peer-to-peer or merchant-to-consumer transactions occur.”
Stressing that he’s not saying so only to be a contrarian, Yakovenko added it’s a real possibility because the main purpose for blockchains today is to move all crypto transactions, and a large portion of financial transactions, into one “single unified layer-1” chain.
“Within 20 years, we are going to see 1,000x improvement in hardware, so we’re gonna see 1,000x more capacity on a layer-1 that’s a single giant atomics state machine,” Yakovenko added. “So you can imagine that you can fit everything into one place, and usually, things are cheaper and faster and kind of more composable when they’re in one place.”
While having everything in one place sounds nice, I think it could be a bit too… unified. Let’s take Google as an example: Sure, we use Google’s search engine, email, cloud storage and other services, but I don’t want it to be my banking app, too. We look to Google for a number of things and use other companies’ products for others… and that’s okay.
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Crypto Trading & Speculation
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Stock Market Today: All You Need To Know Going Into Trade On Nov. 22
Stocks in the news, big brokerage calls of the day, complete trade setup and much more!
U.S. stocks lost steam after a rally that put the market on pace for its best month since July 2022, with traders awaiting the Federal Reserve minutes and Nvidia Corp.’s results. Bonds and the dollar wavered, reported Bloomberg.
The S&P 500 Index and Nasdaq 100 fell by 0.18% and 0.62%, respectively, as of 1:01 p.m. New York time. The Dow Jones Industrial Average fell by 0.19%.
Brent crude was trading 0.38% lower at $82.01 a barrel. Gold was higher by 1.19% at $2,001.54 an ounce.
India's benchmark stock indices advanced on Tuesday, snapping two days of decline as Reliance Industries and HDFC Bank led.
The S&P BSE Sensex closed 276 points, or 0.42%, up at 65,930.77, while the NSE Nifty 50 ended 89 points, or 0.45%, higher at 19,783.40.
Intraday, the Nifty Midcap 150 and Smallcap 250 hit lifetime highs. Among sectoral indices, realty, metals, and consumer durables advanced the most, while fast-moving consumer goods and public sector banks faced pressure.
Overseas investors remained net sellers of Indian equities for the third consecutive session. Foreign portfolio investors offloaded stocks worth Rs 455.6 crore, while domestic institutional investors continued to remain buyers and mopped up stocks worth Rs 721.5 crore, the NSE data showed.
The Indian rupee ended flat at around 83.35, which was the lowest-ever close against the U.S. dollar on Tuesday.
Stocks To Watch
Reliance Industries: Chairman and managing director Mukesh Ambani said the company plans to invest Rs 20,000 crore in West Bengal in the next three years.
TCS: The U.S. Supreme Court rejected the company’s petition to appeal an earlier court verdict. The company will make a $125 million provision in its third-quarter earnings related to a case involving Epic Systems Corp.
Maruti Suzuki India: The company will consider the allotment of 1.23 crore equity shares of the company to Suzuki Motor Corp. on a preferential basis on Nov. 24.
SBI Bank: The government named Vinay M. Tonse as Managing Director until Nov. 30, 2025.
Jio Financial Services: The company denied news reports that it is planning its maiden bond issue. It has no plans to raise money by way of bond issuance or otherwise, and the news circulated is "speculative", it said.
Adani Enterprise: Unit Adani Defence Systems and Technologies signed a shareholders' agreement and share subscription agreement with Israel-based Elbit Systems. Pursuant to this, ESL will be subscribing to a 44% stake in Atharva Advanced Systems and Technologies.
KEC International: The company bagged multiple new orders worth Rs 1,005 crore.
Lupin: The pharma major received tentative U.S. FDA approval for its Dapagliflozin tablets. Dapagliflozin is a generic of Farxiga tablets.
Texmaco Rail & Engineering: The board approved the opening of QIP on Nov 21. The floor price of QIP is set at Rs 135.9 apiece.
Life Insurance Corp: The company's has increased shareholding in Bank of Baroda. The current stake stands at 5.031%.
Bharti Airtel: The Department of Telecommunications, Madhya Pradesh, imposed a penalty of Rs 1.31 lakh for an alleged violation of subscriber verification norms. The company's OneWeb also received a regulatory nod to launch its commercial satellite broadband services in the country.
BPCL: The board will meet on Nov. 29 to consider the proposal of declaring an interim dividend for FY24 and fixing the record date.
Aurobindo Pharma: The company's chief operating officer, Sanjeev I. Dani, died on Nov. 21.
AstraZeneca Pharma: The Central Drugs Standard Control Organisation gave permission to import pharmaceutical formulations of new drugs and permission for the additional indication of Olaparib film-coated tablets.
JK Tyre: The tyre manufacturer appointed Dr. Jorg Nohl as an additional director in the category of independent director for a term of five consecutive years w.e.f. Nov. 21, 2023.
NHPC: The company resumed head-race tunnel works at the Teesta-VI project in Sikkim.
Wipro: The IT Major announced a collaboration with NVIDIA to help healthcare companies accelerate the adoption of generative artificial intelligence through AI-driven strategies, products, and services.
Power Finance Corporation: PFC Consulting has incorporated a wholly owned subsidiary as Ramakanali B. Panagarh.
Genus Power: The company incorporated two wholly owned step-down subsidiaries, namely “Himachal Pradesh C Zone Smart Metering Pvt.” and “Garhwal Smart Metering Pvt.” on Nov. 21, 2023.
BPCL: The company's board will consider the proposal for the declaration of an interim dividend and the fixation of the record date on Nov. 29.
Sical Logistics: The company's arm, DSPL Mining, received an order worth Rs 135 crore from the Coal India unit.
JK Paper: The company received an income tax and penalty demand worth Rs 65.6 crore for AY 2020–21.
Titan: The Competition Commission of India approved the acquisition of an additional stake in CaratLane Trading by Titan.
IndusInd Bank: The bank denied the news report 'Hindujas raise Rs 8,000 crore by pledging IndusInd stake' factually incorrect. Promoter entities’ current pledge of 6.87% of the paid-up share capital of the bank has remained unchanged.
GMR Power and Urban Infra: The company acquired an additional 29.14% stake in subsidiary GMR Energy for $28.5 million. It raised the total stake in the subsidiary to 86.90%.
Auto Ancillaries Stocks: India is closing in on an agreement with Tesla that would allow the U.S. automaker to ship its electric cars to the country starting next year and set up a factory within two years, according to Bloomberg.
IPO Offerings
IREDA: The IPO was subscribed 1.96 times on day one. The bids were led by non-institutional investors (2.73 times), portion reserved for employees (2.11 times), retail investors (1.97 times), and institutional investors (1.34 times).
Tata Technologies: The IPO will open for bids on Wednesday. It will comprise a fresh issue of Rs 3,042 crore and an offer for sale of 6.08 crore shares. The price band is fixed at Rs 475–500 apiece. The company has raised Rs 791 crore from anchor investors.
Gandhar Oil Refinery: The IPO will open for bids on Wednesday. It will comprise a fresh issue worth Rs 302 crore and an offer for the sale of 1.18 crore shares, worth up to Rs 198.69 crore. The price band is fixed at Rs 160–169 per share. The company has raised Rs 150.2 crore from anchor investors.
Fedbank Financials: The IPO will open for bids on Wednesday. The offer has a fresh issue of Rs 600 crore, and the rest of it is an offer for sale. The price band is fixed at Rs 133–140 apiece. The company has raised Rs 330 crore from anchor investors.
Flair Writing Industries: The IPO will open for bids on Wednesday. The price band is fixed at Rs 288–304 apiece. It will comprise a fresh issue of Rs 292 crore and an offer for sale of Rs 301 crore. The company has raised Rs 178 crore from anchor investors.
Bulk Deals
Cressanda Solutions: Satyanarayan Jagannath Kabra bought 21.5 lakh shares (0.5%) at Rs 24 apiece.
Fiem Industries: Divya Mahesh Vaghela bought 75,489 shares (0.57%) at Rs 2012.79 apiece.
Insider Trades
Linc: Promoter Ekta Jalan bought 5,000 shares on Nov. 20.
Paisalo Digital: Promoter Equilibrated Venture Cflow bought 60,000 shares on Nov. 21.
Who's Meeting Whom
TVS Motor: To meet analysts and investors on Nov. 24.
Advanced Enzyme Technologies: To meet analysts and investors on Nov. 24.
Dodla Dairy: To meet analysts and investors on Nov. 24.
RR Kabel: To meet analysts and investors on Nov. 24.
Jammu and Kashmir Bank: To meet analysts and investors on Nov. 28.
Ashok Leyland: To meet analysts and investors on Nov. 24.
Antony Waste Handling Cell: To meet analysts and investors on Nov. 24.
Apcotex: To meet analysts and investors on Nov. 24 and Dec. 4.
Bosch: To meet analysts and investors on Nov. 27.
Rolex Rings: To meet analysts and investors on Nov. 23.
VA Tech Wabag: To meet analysts and investors on Nov. 28.
Minda Corporation: To meet analysts and investors on Nov. 24.
Shriram Finance: To meet analysts and investors on Nov. 24.
Piramal Pharma: To meet analysts and investors on Dec. 5.
Sapphire Foods: To meet analysts and investors on Nov. 24.
Trading Tweaks
Ex/record date interim dividend: Crisil, Ingersoll-Rand, IPCA Laboratories, National Aluminium, Oil India, Pearl Global Industries, and T D Power Systems.
Move into short-term ASM framework: Manoj Vaibhav Gems N Jewellers, Tata Investment Corp, Techno Electric & Engineering Co.
Move Out of short-term ASM framework: Orient Green Power
F&O Cues
Nifty November futures rose 0.45% to 19,841.30 at a premium of 57.9 points.
Nifty November futures open interest rose by 0.62% to 1260 shares.
Nifty Bank November futures rose 0.11% to 43791.85 at a premium of 102.7 points.
Nifty Bank November futures open interest fell by 8.85% to 12826 shares.
Nifty Options Nov 23 Expiry: Maximum call open interest at 19,800 and maximum put open interest at 19,700.
Bank Nifty Options Nov 22 Expiry: Maximum Call Open Interest at 45000 and Maximum put open interest at 43500.
Securities in the ban period: Bharat Heavy Electricals, Chambal Fertilizers, Delta Corp, Hindustan Copper, Indiabulls Housing Finance, India Cement, Manappuram Finance, MCX, NMDC, RBL Bank, and Zee Entertainment.
Money Market Update
The Indian rupee ended flat at around 83.35, which was the lowest-ever close against the U.S. dollar on Tuesday.
Disclaimer: AMG Media Networks Ltd. (AMNL) currently owns 49% stake in Quintillion Business Media Ltd. (QBML), the owner of BQ Prime Brand. AMNL has entered into an MOU to acquire the balance 51% stake in QBML. Post acquisition, QBML will become a wholly owned subsidiary of AMNL.
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Stocks Trading & Speculation
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RBI Busts The Personal Loan Party
The RBI Governor has been trying to get the banks and NBFCs to go slow on personal loans but in vain.
When caution and warning fail, action is needed. That’s what the RBI has done with the measures announced on Thursday evening to curb the relentless rise in consumer loans. The central bank has asked banks and NBFCs to make higher provisions to ring-fence the risk arising from unsecured personal loans and credit card loans. This measure is likely to have a system-wide impact.
But first, let’s take a look at the timing.
The announcement comes soon after the Diwali festivities have ended. It appears that the RBI did not want to disrupt the festive cheer.
The RBI did not wait for the monetary policy announcement on Dec. 8 to announce this measure. To that extent, there seems to be a sense of urgency.
There have been apprehensions that such personal loans are being diverted to speculative trading in the equities market, though the terms of the loans do not allow for it.
It’s the wedding season. Spending will rise in different forms.
It’s election season, too. The season of loan waivers and freebies arising from competitive populism.
The RBI Governor has been trying to get the banks and NBFCs to go slow on personal loans, but in vain. The only option was to make recalcitrant institutions fall in line. But the measures are so sweeping that they could have a considerable impact, both directly and indirectly, on the financial markets.
Now, for the impact on banks. Since the rules apply to new and old loans, banks have to set aside a substantial amount against such loans. Banks will be reluctant to lend more and rework their growth strategies.
One of the worst hits from this move will be unsecured retail-focused non-banks. Not only will they have to set aside higher capital for the lending they did, but bank lending towards these shadow lenders will attract a higher risk weight, pushing up their borrowing cost.
So, is the RBI shutting down the tap and the main water line?
The other thing the central bank did was introduce sub-segment limits for unsecured loans. This will force lenders to think about how they have been growing their unsecured book. Balance is of the essence.
It is unclear why the regulator felt the need to do this. If prudence were the guiding factor, every banker worth their salt would say that they were more prudent than the next guy.
The bigger question then is: Are lenders already facing huge defaults and hiding bad loans in a way that escapes scrutiny?
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Banking & Finance
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World's Oldest Salon Chain Diversifies Into High-Margin Retailing Business
The world's oldest salon chain plans to diversify into products as it has potential to become a far bigger business than services.
Truefitt & Hill, the salon chain that has been cutting people's hair for two centuries, is diversifying into retailing to build a meaningful revenue stream and remain profitable in the growing men's grooming space.
"Products, I believe, have the potential to become a far bigger business than services," said Prannay Dokkania, managing director at Lloyds Luxuries Ltd., which owns the master license for the Truefitt & Hill's chain in the country.
The acceptance of men's grooming products is impressive, which probably explains why so many brands have their eyes set on the space, Dokkania said.
"Male grooming, as a category, has grown exponentially in the last five years, with more and more men becoming more conscious about how they are looking and what they are wearing," he said. "We see huge interest in Indian men to be groomed and pampered, so we want to ensure our products are accessible in every nook and corner of the country."
In fact, the luxury market is also getting a boost from the country’s small towns with the explosion of e-commerce, said Dokkania. "Over the last six months, we have been partnering with several marketplaces and have also set up our website — all of which would take some time to reach this level. But as we scale up, we expect products to contribute in a big way to sales."
Currently, products comprise just 25% of the business.
The other reason why products have the potential to surpass services is sheer volume. "For instance, if just 2% of the country's 140 crore population, or 2.8 crore, consumes our products online, there is a bigger volume game in play, but that can't happen in services."
Truefitt & Hill is also in talks with third-party retailers to sell its products through physical outlets. "Discussions are on with the likes of Nykaa, Shoppers Stop, and Tata's beauty shopping app Tata CliQ Palette to expand our footprints... all these are a work in progress," Dokkania told BQ Prime.
Brand Legacy
Established in 1805, Truefitt & Hill has been certified as the oldest barbershop in the world by the Guinness Book of World Records. Its former clients include King George III and some former prime ministers. Charles Dickens and William Thackeray mentioned the shop in their novels.
It is known to have groomed nine generations of the British royal family, and according to Dokkania, several products manufactured by Truefitt & Hill were recovered from the ocean bed when the Titanic sank in 1912.
What's Next For Salon Business?
Inflation has been driving up the prices of everything in the country, ranging from food and fuel to fashion. Now it has also impacted the basic men’s haircut.
The uber-luxury heritage brand currently charges Rs 1,900 for a basic haircut, with no such extras as colouring or conditioning. And if you are looking for a "royal" haircut, then you will have to shell out Rs 2,900, excluding taxes. These prices are 15% higher than the previous year.
It also runs an annual membership model, which costs Rs 1 lakh.
Post-pandemic, the company has seen cost inflation of 20–25%. "We have passed on a part of the burden to consumers while absorbing the rest to maintain margins," Dokkania said, expecting margins to normalise by the end of 2024.
But "we offer a fair value for the kind of services we give," he said.
"We use products that the industry is still warming up to. For instance, a pre-shave oil, which is being imported from England, the experience starts in a private room for customers in an extremely serene environment. Unlike many other barber visits, which often feel like a chore, Truefitt turns a haircut into a thoroughly pleasant experience," he said.
In times of double-digit inflation concerns, an expensive haircut may prove counterintuitive. Dokkania is nonetheless surprised by the increase in demand for its services, which has led to the company expanding its footprint.
The trend also underscores the general boom seen in sales of luxury goods, thanks to the inflation-insulated scions of the super-rich.
"The Covid-19 pandemic had a major impact on the hair salon industry. Reduced demand due to the forced closure, followed by fear of contracting the virus, weighed on revenue and profit significantly," according to him.
But it has bounced back, Dokkania said, adding that the next three decades belong to India. "Factors like higher disposable income, the increasing propensity to spend on services such as haircuts and additional hair care treatments, and as people return to work, we expect the salon business to grow, and there's no two ways about that," he said.
Truefitt & Hill entered India in 2014, and since then it has grown from one to 31 stores, aided by a thriving male grooming market. Its revenue rose to Rs 34.5 crore as of March 2023 from Rs 20 crore in FY20, or pre-Covid level.
Almost 70–80% of the customers are repeat customers, said Dokkania. Currently, Mumbai is the largest market for the company, but it expects Delhi to overtake it as it opens more stores in the capital.
More Salons
Overall, the company plans to have at least 50 salons by 2025.
"Because we are a niche player even within the luxury segment, we plan to open a limited number of stores," he said. Currently, Truefitt & Hill is present in Mumbai, Delhi, Chennai, Hyderabad, Bangalore, Kolkata, and Surat.
"But we will now focus on tier 2 cities, as I am pleasantly surprised to see the surge in male customers and their willingness to spend in these markets," Dokkania said. Last month, it opened a salon in Guwahati and has plans to open a salon in Bhubaneswar in the next two to three months. However, it is unnecessary to scale up its services business beyond 50 doors over the next five to seven years as the market becomes saturated, Dokkania said.
"We don't think India needs more than 50 outlets in the next five to seven years, so we will instead focus on grooming products that have a larger opportunity."
Other than India, Lloyds Luxuries holds the rights of Truefitt & Hill for six more countries, viz., Nepal, Bangladesh, Vietnam, Sri Lanka, Bhutan, and Myanmar. Truefitt & Hill Worldwide is in 15 countries and is present in the following cities: London, Canberra, Sydney, Baku, Toronto, Beijing, Shanghai, Prague, Seoul, Salmiya, Sharq, Kuala Lumpur, Moscow, Singapore, Bangkok, and Chicago.
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Consumer & Retail
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Welcome to Startups Weekly. Sign up here to get it in your inbox every Friday.
Fri-yay indeed. We sigh, as humans spool up to take a break, while the semi-sentient machines continue writing their poetry in their air-conditioned underground data-center homes. In my column this week, I spent a bit of time thinking about the times that robots have had an impact on my life. That time I ran a chatbot company talking with people about death. That time I felt a connection with a game character. And that time I tried to imagine what it would be like to be a sentient AI knowing it was about to get shut off.
It’s a series of thought experiments I’ve been playing with for a long time, and the idea was reawakened by reading Becky Chambers’ excellent Wayfarers series. The second installment goes into great depth about what happens when an AI is rebooted — will she come back with all her memories intact? Or does something change when you go back to your default software? Well worth a read, if you want to be a philoso-fish, swimming in the philoso-sea.
Anyway, on with the news!
So, about those room-temperature superconductors
Over the past couple of weeks, the internet went positively bonkers over the possibility of superconductors operating without being chilled to near absolute zero, after a team of researchers in South Korea claimed they had something cooked up in the lab that worked. The problem, in part, was that they claimed to have used a material (lead apatite) that not only isn’t a known superconductor, but also isn’t, in fact, conductive at all. YHBT, YHL, HAND, as they used to say in the early days of the internet.
Still, for the briefest of glimpses, on TC+, Tim explored the potential of such a development and the vast-ranging impacts it would have on, well, everything we know about electricity, electronics, and much more. Of course, it seems it may not have been true, and reminded us of the iffy claims made by another company back in March, also involving the elusive room-temp superconductivity.
Alas, ’twas not to be this time either, but the hunt continues.
Less confusion, more fusion: Tim is basically single-handedly carrying this entire section this week — well done, squire — reporting how scientists repeat a breakthrough fusion experiment, netting more power than before, bringing us one baby step closer to usable fusion power.
If you love yourself some sustainability, get your behind (and the rest of you, please. If you turn up at the doors, just a pair of levitating buttocks, we have achieved some sort of superconduction, but you’ll have made an ass of yourself, and security will probably turn you away) to TechCrunch Disrupt, where we have a whole Sustainability Stage planned!
Crypto is . . . maturing? Maybe?
As Bitcoin is back nudging $30,000, web3 is maturing and people are finally able to have some conversations about blockchains without talking about the abjectly stupid pyramid schemes that collectable digital primates represented (I sniggered all the way through “The Beanie Bubble” and then laughed out loud when the final punchline hit). It made me come up for air for a moment and look at what’s happening out in crypto land.
Investment into the sector certainly isn’t much to shout about right now, with venture funding declining for seventh straight quarter (TC+). A charitable read would be that the bubble is gone and that investors are now only making clearheaded investments into the companies that make sense. Or maybe the “invest while it’s hot” crew have just pivoted their attention to AI, and the hard core believers are left standing.
My unveiled cynicism and abject lack of faith in the sector aside, there’s some interesting movement in the space:
AI, meet web3. Web3, AI: Always worth paying attention when Goliath shifts on his throne, and Jacquelyn’s report that Microsoft partners with the Aptos blockchain (TC+) to marry AI and web3 got a huge amount of attention — and traffic — on TechCrunch this week.
Contractually smarter: About nine months after raising its Series A, SettleMint’s launches its AI assistant, which aims to help web3 developers write better smart contracts.
Followin’ the money: Tracking who invests in what and when is an ever-green effort. Our estranged sibling site Crunchbase does it for VC and startups, and EdgeIn jumps in to be a faster, community-driven version of the same, especially focused on web3.
Oh, governments. They do try ever so hard.
Watching legal systems trying to wrap their heads around even pretty basic technology continues to be cringe-musing, and there was a lot of that sort of thing going on this week.
The Chinese government is in uproar after Biden bans U.S. funding flowing into semiconductors and microelectronics, quantum computing, and artificial intelligence.
In India, the government decided that it would restrict laptops, tablets, and other personal computers to boost local manufacturers but was met with the appropriate mix of uproar and ridicule, and quickly announced it would delay that particular harebrained idea from taking hold. Also in India, the IT minister resurrected a previously abandoned data privacy bill and is pushing ahead with it, despite criticism.
The EU wasn’t going to be outdone, though, and stuck its oar in as well. TikTok is launching a “For You” feed aimed at the European market but without its algorithm. Worldcoin’s official launch triggers privacy scrutiny, and it turns out the European Commission (EC) isn’t too psyched about Adobe’s $20 billion Figma acquisition, either, confirming an in-depth probe into the deal. Finally, Meta says it will offer European users a choice to deny tracking.
More? Fine.
There’s a lesson there: Dominic-Madori takes a dive into the U.K. venture landscape and argues that the U.S. could learn a lot from how the U.K. is crafting DEI (diversity, equity, and inclusion) policy for the industry.
Just can’t face it: The pervasive use of facial recognition technology across all facets of life in China has elicited both praise for its convenience and backlash around privacy concerns. Rita reports that China is considering measures that demand “individual consent” for facial recognition use.
Eye see you: A Kenyan government agency suspended Worldcoin’s activities, citing concerns with “authenticity and legality.” It plans to resume iris scans in Kenya, but the debate continues about whether the crypto-powered identification scheme is using the data it is collecting in accordance with local law.
Top reads on TechCrunch this week
Across the site, here are some of the startup stories y’all flocked to since the previous Startups Weekly.
Karma, karma, karma, karma, komeuppance: Apparently not entirely immune to irony, spyware maker LetMeSpy shuts down after hacker deletes server data.
That won’t have been cheap: The value domain AI.com, which until recently was pointing to ChatGPT, suddenly started sending traffic to Elon Musk’s X.ai this week. Ultimately, no one actually cares who owns AI.com, but speculation in the land of domain selling and buying ran rife as to how much money might have changed hands in the process.
You want how much for a ride to the airport?: Lyft wants to kill surge pricing, because “riders hate it with a fiery passion.” Yes, yes, we do.
We slipped into something more comfortable: Verizon dropped hundreds of millions on BlueJeans at the height of the pandemic lockdown, but three and a bit years later, the platform gives up the fight, announcing it is killing the app off altogether, citing “changing market demands.”
Get your TechCrunch fix IRL. Join us at Disrupt 2023 in San Francisco this September to immerse yourself in all things startup. From headline interviews to intimate roundtables to a jam-packed startup expo floor, there’s something for everyone at Disrupt. Save up to $600 when you buy your pass now through August 11, and save 15% on top of that with promo code STARTUPS. Learn more.
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Crypto Trading & Speculation
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Prime Minister Rishi Sunak has told the BBC he wants to cut taxes, but declined to say whether he would before the next general election.
Mr Sunak said his priority was easing living costs, after he faced calls to slash taxes on the first day the Conservative Party conference.
There is unrest among Tory MPs over tax and HS2 as they gather in Manchester.
And cabinet minister Michael Gove has told Sky News he would like to see taxes reduced before the next election.
This week, the Institute for Fiscal Studies (IFS) said tax levels in the UK were at their highest since records began 70 years ago - and were unlikely to come down soon.
In the days leading up to the conference, there were calls for tax cuts from some Tory MPs, including former Prime Minister Liz Truss and her allies. But Chancellor Jeremy Hunt - who will set out his economic plans in his Autumn Statement in November - said last week that tax cuts were "virtually impossible" at present.
In an interview with the BBC's Sunday with Laura Kuenssberg, Mr Sunak was asked three times whether he would commit to lowering taxes before the next election, which is expected next year.
Mr Sunak - at his first conference as party leader - said as a Conservative, he wanted to cut taxes, but gave no detail on when he would do so.
The prime minister said he thought halving inflation by the end of this year, which is one of his five pledges for government, was the "best tax cut" he could deliver.
Inflation - the rate at which prices are rising - was 10.7% in the three-month period between October and December 2022, which makes the government's target is 5.3%.
In August, the inflation rate was 6.7%.
Curbing inflation, Mr Sunak said, was his biggest priority.
"Change may be difficult, but I believe the country wants change and I'm going to do things differently to bring about that change," he said.
The government has limited tools to reduce inflation. The Bank of England says raising interest rates, which it controls, is the best way to make sure inflation comes down.
On the eve of the conference, the boss of Iceland supermarkets, Richard Walker, announced he was quitting the Conservative Party and accused the Tories of being "out of touch".
But facing questions about discontent within his party over tax, green policies and the future of the HS2 rail line, Mr Sunak rejected claims the Tories were drifting away from voters. His party trails Labour in the polls.
The prime minister told Laura Kuenssberg that Mr Walker had talked about net zero and prioritising working people, adding: "Change may be uncomfortable for people. People may be critical of it, but I believe on doing the right thing for the country.
"I'm not going to shy away from that."
Ahead of his party's four-day conference, Mr Sunak announced £1.1bn of cash for towns the government says have been "overlooked".
He declined to comment on speculation about the government potentially scrapping the Birmingham-to-Manchester leg of HS2, following suggestions the cost of the project could exceed £100bn.
Mr Sunak said his focus was on "long-term things that make people's lives better".
Labour and some Tory MPs have said scaling back HS2 would be a mistake, with two former Conservative prime ministers - Theresa May and Boris Johnson - among them.
Sunak tries to prove bleak Tory predictions wrong
Until recently, Mr Sunak had played it pretty safe since becoming Conservative leader and prime minister a year ago this month.
He took over from Ms Truss in October last year without one vote being cast by Tory members in a leadership content, or voters in a general election.
In the interview, Laura Kuenssberg asked Mr Sunak if he was relaxed with holding office without anyone voting for the changes he had made.
"Yes, because I'm doing what I believe is right," he said.
Mr Sunak appears be leaning into controversial decisions.
After almost a year of prioritising calm - both economic and political - the prime minister has moved on to a new period where he is doing more to set out his vision for the future.
Last month, he watered down green policies designed to reduce planet-warming carbon emissions to net zero by 2050, and in recent days has touted measures to help motorists.
Mr Sunak denied his changes to green polices were made for short-term political gain.
He said the UK government had "an obligation" to meet targets to reduce carbon emissions, but added "we can do so in a more proportionate and pragmatic way".
Some opinion polls have showed a modest Conservative recovery, but the party still lags far behind Labour.
"The mood among Conservative MPs is really bleak," one Conservative backbencher who had reluctantly travelled up to Manchester for their party conference told the BBC. "Most of us can see the polls and realise we are doomed."
It was clear from this morning's interview that Mr Sunak does not agree, as he repeatedly talked up himself as a "change" prime minister.
Expect more of that at his party's conference this week: attempts to draw clear dividing lines with Labour and spell out more of what Mr Sunak would do with a full term as prime minister.
Each of those new policies is also an attempt to prove wrong fatalistic Conservative MPs who think the election result is already a done deal.
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Inflation
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U.S. Completes Second Lottery Round For H-1B Visa, Successful Candidates Notified
Technology companies depend on H-1B visa to hire tens of thousands of employees each year from countries like India and China.
The U.S. has completed a second round of random lottery selection for the much sought-after H-1B work visa for foreign guest workers and the successful applicants have been notified, according to a federal agency.
The H-1B visa is a non-immigrant visa that allows US companies to employ foreign workers in speciality occupations that require theoretical or technical expertise.
Technology companies depend on it to hire tens of thousands of employees each year from countries like India and China.
"We now have randomly selected, from the remaining FY 2024 registrations properly submitted, a sufficient number of registrations projected as needed to reach the cap," U.S. Citizenship and Immigration Services said on Tuesday.
All the successful applicants eligible for the H-1B visas for the fiscal year beginning Oct. 1, have been notified about it, it said.
USCIS had to conduct an unprecedented second round of the H-1B lottery, which is held in the first week of April, mainly because of a large number of unqualified applications that were successful in the first H-1B lottery.
"The large number of eligible registrations for beneficiaries with multiple eligible registrations — much larger than in previous years — has raised serious concerns that some may have tried to gain an unfair advantage by working together to submit multiple registrations on behalf of the same beneficiary," USCIS said.
"This may have unfairly increased their chances of selection. We remain committed to deterring and preventing abuse of the registration process, and to ensuring only those who follow the law are eligible to file an H-1B cap petition," it said.
The federal agency said the H-1B electronic registration process, implemented in 2020 beginning with the fiscal 2021 H-1B cap, has dramatically streamlined processing by reducing paperwork and data exchange and provides overall cost savings to petitioning employers.
Historically, employers filed their full, and often voluminous, H-1B cap-subject petitions with USCIS during a five-day filing period, after which USCIS would select eligible petitions through a random selection process.
This process resulted in unnecessary paperwork and incurred mailing costs for both petitioners and the agency.
By streamlining the H-1B cap selection process with an electronic registration system, USCIS created cost savings for petitioners and efficiencies for the agency.
USCIS said during the initial registration period for the 2024 H-1B cap, it saw a significant increase in the number of registrations submitted compared to prior years.
"Generally, we saw an increase in the number of registrations submitted, the number of registrations submitted on behalf of beneficiaries with multiple registrations, and the number of registrations submitted on behalf of unique beneficiaries with only one registration. USCIS saw upward trends in the FY 2022 and FY 2023 H-1B registration periods as well," it said.
Based on evidence from the 2023 and 2024 H-1B cap seasons, USCIS has already undertaken extensive fraud investigations, denied and revoked petitions, and continues to make law enforcement referrals for criminal prosecution.
USCIS believes that the decreased filing rate for 2024 H-1B cap petitions as compared to the three previous fiscal years indicates that these investigations are having an impact, the federal agency said.
The H-1B programme is an essential part of our nation’s immigration system and our economy, and USCIS is committed to implementing the law and helping meet the ever-changing needs of the U.S. labour market, it said.
"We are working on an upcoming H-1B modernisation rule that will propose, among other improvements, bolstering the H-1B registration process to reduce the possibility of misuse and fraud in the H-1B registration system," it said.
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Workforce / Labor
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The U.S. Department of Agriculture has designated Vermont a natural disaster area from the catastrophic July flooding, making farms eligible for emergency federal loans, Republican Gov. Phil Scott announced Tuesday.
It’s the second USDA disaster declaration for Vermont this summer. In July, USDA Secretary Tom Vilsack approved Scott’s request for a disaster declaration for the May frost that hit many growers, including vineyards and apple orchards.
READ MORE: As storm moves on, Vermont and parts of Northeast still flooded
Since the July flooding, farmers have reported over $16 million in damage and losses, according to Vermont Agriculture Secretary Anson Tebbetts.
“Our farming community has faced a one-two punch this year that some may not survive,” Tebbetts said in a statement. “This designation can provide a lifeline to these important farm and food businesses with resources until next year’s growing season.”
The latest designation makes farms hit by the flooding eligible for emergency loans from the Farm Service Agency, Scott said. They have eight months from the date of the declaration to apply.
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Agriculture
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For most people, the type of bread they buy is rarely a matter of life and death.But for millions of Britons living with allergies eating the wrong food could see them hospitalised - or worse.
Amid the rising cost of living - and spiralling food prices that mean customers are left with little change from a fiver for a mere loaf of specialist bread - it is these families facing particular pressure.Cost of living latest: What does inflation falling mean for interest rates?The Bolton family, from Southampton, faces a double whammy of food restrictions.
Eli, aged 14, is allergic to dairy and soya while his older sister, Darshi, aged 17, has coeliac disease - which means a single crumb of gluten can leave her feeling like "all her internal organs are being squeezed".This means the family cannot eat something as simple as the same loaf of bread. More on Cost Of Living Labour pledge to 'extend' windfall tax to protect families from soaring energy bills Cost of living: Shoppers curbed Christmas spending in blow to struggling retailers Currys boss says sales of energy saving gadgets helped offset slump in demand for Christmas tech A comparison of foods by Allergy UK in December found it costs on average 157% more for some free-from alternatives.Bread had one of the sharpest price differences, with the allergy alternative up to 254% more costly. "All gluten-free bread normally has egg or soya in it," said mum Lisa. "So I have to buy two loaves."We have to have different milk, we have to have separate butter - my daughter has to have her own butter because the smallest grain of bread will make her so ill, so she can't even use the same knife."And getting it wrong can quickly turn deadly."My son has anaphylaxis so he could potentially die if he ingested dairy or soya," said Lisa, adding that they are "generally not taken seriously, and that breaks my heart". Image: The Bolton family Families spend an extra 40 days a year dealing with allergiesAll of this specialist food comes at a cost.The Food Standards Agency found food hypersensitivity households - those living with a food allergy, intolerance and coeliac disease - spend an additional 12 to 27% more on their weekly food shop.They also spend an additional 40.37 days per year on activities related to food, including researching, shopping for suitable items and discussing their condition.For Lisa, there is no such thing as a single weekly shop."I have to go to at least three on a weekly basis," she told Sky News. When her son was first diagnosed she said she "could have cried every time" she stepped into a supermarket.The number of products that listed food as "may contain" was "soul-destroying", she said.While some people living with allergies may be able to eat food that is made in the same factory - and labelled "may contain" - for those with more severe reactions, this is not possible.Around 2.6 million people in the UK live with a diagnosed food allergy, affecting between five and seven percent of children.From pre-baking birthday cake and freezing it so her four-year-old daughter isn't left out, to providing her own sweets at the end of term, Rebecca Bull is always on alert to the risk of allergies."I think of every scenario where food might crop up, but occasionally you miss something."I've been at a party where an entertainer just threw sweets out to the kids, I hadn't anticipated that."And when you do that to a four-year-old, the temptation is massive. She just grabbed one and I had to jump up straight away." Image: Rebecca Bull said she is always on alert to her daughter's allergies. Pic: Annie Crossman Why it is more expensive"When manufacturers and brands swap out ingredients, the allergen-friendly option will often be more expensive," said Bari Stricoff, a registered dietitian."This is due to the increased difficulty in sourcing the ingredients, as well as the demand."Your average gluten-free flour will be nearly double the price as the standard flour, and almond flour could be 3x as high as the standard plain flour."Many allergen-friendly foods are produced by speciality brands."Because these are often smaller or newer brands, it means their costs are higher. They're not able to produce their items at scale and struggle to get into the larger retailers. This means they’ll have higher price tags to cover their margins." Image: Darshi and Eli Bolton Knives, forks, and extra dishwashingHand-in-hand with the need to buy different food for each child comes a hidden energy cost."We have the cost of cooking most things twice," she said."If we cook pizza, we have to do them in two separate ovens."If we are making sandwiches to go out, we have to use about five different knives because you have to use a different knife for each person."Alongside that comes the extra fuel cost for the multiple supermarket visits. Shopping with allergies - how to keep costs down Bari Stricoff, a registered dietitian who works at WellEasy – an online platform aimed at making specialist diets easier – advises buying in bulk and cooking from scratch to keep costs down. "Sometimes, stocking up on the specific ingredients you need can be a cost effective method,” he told Sky News. "When something is on offer or it makes financial sense to avoid multiple shipping charges. "If you need to avoid specific foods due to an allergy or intolerance, cooking from scratch is a great option. "An IBS friendly far of pasta sauce can cost you £3.95, where you can make it at home in double or even triple quantities for half of the price." WellEasy stocks 3,500brands and offers 35% off the RRP to members, with filtering options to find the best food for allergies and intolerances. 'We don't have a choice': Food on prescriptionIn England, some gluten-free bread and flour mixes are available on prescription, although this can be a postcode lottery.While Darshi does qualify, Lisa said: "When you go to the chemist you have to order in batches of 20 loaves, so it's not practical to do that."And then when you order stuff they can't tell you when it's coming in."There is currently no similar programme for those living with food allergies."I think it should be anybody who has food restrictions," said Lisa."I understand that it's more expensive for manufacturers to make. So they should have some help in bringing it into line with everybody else."Because it's not a choice. We don't have any choice." 52 fewer bagels: The allergy premiumHolly Holland, co-founder of Financelle - an online financial wellness platform, said she is "new to the allergy and intolerance game" and can't eat gluten or lactose."People don't realise how much stuff they are in," she told Sky News."Even if you pick up a pack of Doritos, lactose is used as a coating and powder. It's in cakes, it's in biscuits."And nine times out of 10 the package will just say 'may contain' anyway, so if you are battling a serious allergy, you can't even risk it." Image: Holly Holland For Holly, bagels are a prime example of the allergy premium.A pack of five from Asda costs her 95p, yet going gluten-free will set her back £2.50 for a pack of four. That's 63p a bagel compared to 19p."If I bought a pack of bagels each week for the rest of the year that's £130 compared to my gluten-eating friends forking out just £49.40," she said."And I would have 52 less bagels in 12 months."She said bread items are some of the most expensive because they are so "heavily processed".The extra costs have forced Holly to be more creative with cooking."Arguably, it forces you to have any more fresh things because you can just pick up a packet of fish fingers or whatever it might be," she said.But her weekly shop, which used to be around £40 for a family of four (with top-ups during the week) has now gone to £60.Over the course of the year, this seemingly small amount adds up to £780 extra. Flourish Due to your consent preferences, you’re not able to view this. Open Privacy Options 'It's not a good thing the gap has narrowed'Sarah Knight from The Allergy Team - who also lives in an allergen household - said when the basics of your weekly shop remain so high, it's hard to keep costs down."Whether that's fortified dairy-free milk, whether that's gluten-free or wheat-free bread or dairy-free spread, when they are so high then makes it really hard to get the sort of overall price of your shop down."The organisation tracked the price of 10 of these basics at the four main supermarkets last year.Read more:Grocery staples rise by 30%The cost of living mental health emergencyDebt extension for those struggling with crisis Image: Sarah cooking with her children Freddie and Will Food inflation hit a record annual rate in December as cash-strapped households prepared for Christmas."At the beginning of last year the allergy stuff was going up disproportionately higher," she said."Now that other food has sort of caught up. It's not a good thing that the difference between an allergy basket and a non-allergy basket now is narrower because it is only because the non-allergy basket has also gone up."And so families living with food allergies are just hit super hard by any of this price inflation because they're already living with such inflated prices just trying to get the basics in."
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Inflation
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A growing percentage of Americans are falling behind on their car payments, squeezed by rising auto loan interest rates, stubborn inflation and the end to federal pandemic aid.
Recent data from Fitch Ratings found that 6.1% of subprime borrowers were delinquent, or at least 60 days past due, on their auto loan as of September — the highest share recorded by the credit rating agency since it first started tracking the figure in 1994.
"Delinquencies are climbing and have been increasing incrementally since government stimulus from the pandemic ended," Margaret Rowe, senior director at Fitch Ratings, told CBS MoneyWatch. "More recently, persistent inflation, the erosion of real income and the exhausting of pandemic-related savings are making it harder for subprime borrowers to service their debt."
Most Americans who saved money during the pandemic have exhausted those funds, according to the Federal Reserve Bank of San Francisco. Meanwhile, the typical price of a new vehicle hasn't budged, hovering around $48,000 over the past year, according to Kelley Blue Book data. Those prices have left a growing number of car owners making payments of .
Interest rates on auto loans continue to climb this year, almost in lockstep with the Federal Reserve increasing its benchmark rate in an effort to tame inflation. The interest rates for a new vehicle loan hit 10.48% in September, up from 9.51% in January, according to Cox Automotive. The average financing rate for a used vehicle was 11.4% last month, according to Edmunds.
All told, Americans carried a total of $20 billion in auto loan debt in the second quarter this year, according to the most recent data from the Federal Reserve Bank of New York.
Delinquent car payments aren't just a problem for drivers. Banks with a high proportion of auto loans in their portfolio could see rising losses if Americans can't pay off their vehicle debt, according to analysts from S&P Global Ratings.
"A variety of factors — such as high interest rates, high loan balances, falling used car prices, consumers' declining savings rates and a likely economic slowdown — will result in further deterioration in auto loan and lease performance," S&P Global Ratings said.
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Inflation
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Whistleblowers beg leaders to 'stop the chaos' as more than 900,000 Texans are kicked off Medicaid
Since pandemic-era protections for health care coverage ended in March, more than 900,000 Texans have lost Medicaid coverage. For the first time in three years, many families and kids are caught up in the state’s re-enrollment process, a multi-step system of complex paperwork, deadlines and financial requirements.
Now, whistleblowers who say they work in the Texas Health and Human Services Commission (HHSC) are alleging people have been denied coverage in error because of mismanagement within the agency.
How does Texas determine Medicaid eligibility?
Texas is one of only 10 states that hasn’t expanded Medicaid eligibility, which means only specific groups can access it, like kids, the elderly, pregnant people and people with disabilities. According to HHSC, about 6 million people use Medicaid across Texas – about a third of whom were added since 2020.
Medicaid is comprehensive health care that covers everything from doctor’s appointments to prenatal vitamins. It also requires re-enrollment every year, which can mean submitting forms online or in-person to confirm things like identity, address, income, and employment.
The state sent out renewal packets through the mail to about 1.4 million Texans earlier this year to prepare people for the process, along with robocalls, texts, emails and messages online at YourTexasBenefits.com.
But Diana Forester with Texans Care for Children told KERA back in March she was worried people might not receive a notice because they changed addresses since enrolling.
“The bad address thing really hampers the ability for people to receive information timely and to be able to respond timely,” she said.
Applications can also be rejected because of procedural reasons, like someone not returning paperwork, missing deadlines, or not submitting the correct eligibility forms. Since the Medicaid unwinding process started in April, more than 70% of people lost Medicaid because of procedural reasons, not because they weren’t eligible anymore.
The state also determines enrollment on an “ex parte basis,” which the Centers for Medicare and Medicaid Services (CMS) also calls auto-renewal or administrative renewal.
Ideally, this process streamlines renewals by comparing electronic data to check eligibility, like SNAP, the DMV, state unemployment, and Women, Infants and Children Program. People with Medicaid then confirm or update missing details to be re-enrolled.
Typically, applications take about 45 days to either be accepted or rejected (which is also called “disposed”). But Texas had issues with completing applications within that time frame before this renewal process even started. Back in March, the state was processing a little over half of new Medicaid applications on time.
People can fight denials, delays or reductions in benefits through an appeals process, which can take up to 90 days for a decision.
How does Texas Medicaid re-enrollment compare to other states?
Children and pregnant people were among the first cohort of Medicaid recipients HHSC reviewed in the renewal process.
Most pregnant people who lost Medicaid no longer qualified for coverage. Since the state hasn’t expanded Medicaid, pregnant people only have insurance for two months postpartum.
But pregnancy complications, including postpartum depression, can manifest up to a year after giving birth. Texas is among the worst states in the country for maternal mortality, with bleeding, mental health issues and chronic conditions as some of the leading causes of death.
This year, Texas lawmakers passed HB 12, a bill that extends postpartum Medicaid coverage to a year. But passing the law doesn’t automatically extend this coverage for pregnant Texans: the state has to submit documents called a State Plan Amendment to CMS, which CMS then has to approve it before the law goes into effect.
HHSC Press Officer Tiffany Young said the extension “is expected to occur in early 2024,” depending on CMS approval, but said HHSC has not submitted the State Plan Amendment yet. A spokesperson for CMS confirmed the department has not received any plans from Texas as of Sept. 18.
But the largest group that has lost coverage is Texas children. The state already has the highest rate of uninsured children in the nation, around 11%.
According to a report by the Kaiser Family Foundation (KFF), almost 70% of people disenrolled from Medicaid during the unwinding in Texas were kids. That’s as if everyone in Arlington and Garland lost health insurance. Nationally, it’s closer to 40%.
Texas has also purged the most people from the Medicaid rolls in the country: about 917,000 people. Florida is second highest with a little over 700,000 people. Other states like Arkansas, Ohio and New York have disenrolled between 330,000 and 375,000 people.
The state also has the second-lowest ex parte renewal rate: About 9% of all renewals were done that way. In comparison, North Carolina had the highest rate, with 99% of renewals done on an ex parte basis, according to KFF data.
Why has Texas kicked the most people off Medicaid in the country?
Whistleblowers claiming to work for HHSC have said it’s because the department is unprepared to handle this many renewals at once.
The letters, sent between July and September to Gov. Greg Abbott and HHS Executive Commissioner Cecile Young, detail a department that is plagued by IT issues, erroneously denying thousands of applications, and taking well beyond 75 days to process new applications.
The group calling themselves “Concerned Texans” allege in May 2023, HHSC errors caused about 68,000 people to lose coverage, which was then reinstated in August. It left people without health insurance for three months.
The whistleblowers also allege close to 6,000 pregnant people had their Medicaid denied and did not receive the two months of coverage during the postpartum period.
In the latest letter from Sept. 19, the Concerned Texans said they needed “help” and “leadership" as the "health and well-being of innocent Texans hang in the balance."
“We will continue to bring these critical issues to our agency's leadership in hopes someone has the fortitude to stop the chaos,” they wrote.
The high rate of children being kicked off Medicaid also concerned CMS, which sent a letter in August to every state Medicaid director in the country.
Since Texas has not expanded Medicaid, the eligibility requirements are some of the strictest in the United States. For parents and caretakers of kids who are covered by Medicaid, a family of four with two parents has to make at or below $285 a month to be eligible.
CMS reported states may be incorrectly removing children who would have coverage because their ex parte procedures are looking at the entire family, rather than just the members who would be eligible. CMS also said some states are disenrolling everyone in a household when renewal forms aren’t returned promptly.
HHSC hasn’t admitted fault with the procedures or any of the delays, but has to submit monthly data to CMS on how Medicaid unwinding is going in the state.
How can Texas fix this?
Both the whistleblower letters and CMS suggest a need for the state to pause the redetermination process until they’ve corrected the errors.
In August, 15 organizations from across the state, including the Texas Medical Association, the Texas Pediatric Society and the Texas Hospital Association, sent a letter to HHSC Executive Commissioner Young outlining their recommendations to fix Medicaid unwinding.
They recommend the agency increase the number of ex parte renewals; upgrade the YourTexasBenefits website to allow clients to finish their renewals if they were denied for procedural reasons; and modify the timetable for Texas to process these applications.
The organizations said these changes will minimize loss of coverage, which “will be beneficial not only for individuals, but also for HHSC eligibility workers and the health care delivery system.”
Texas will be reviewing these applications until June 2024, with hundreds of thousands of people each month sorting out their eligibility. HHSC encourages people to update their information to ensure there’s not a gap in coverage. People can do so online, through the mail, by calling 211, or by visiting an HHSC office or community partner.
Got a tip? Email Elena Rivera at erivera@kera.org
KERA News is made possible through the generosity of our members. If you find this reporting valuable, consider making a tax-deductible gift today. Thank you.
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Nonprofit, Charities, & Fundraising
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Proposals to eliminate duty-free imports are akin to levying new taxes on Americans
Cyber Monday is the biggest online-shopping day of the year. In 2022, Americans spent $11 billion dollars on Cyber Monday alone. But a number of new proposals seeking to restrict trade could increase price tags, limiting the bargains of those Cyber Monday deals.
While Cyber Monday and holiday sales in general provide consumers with substantial discounts, processing packages requires sophisticated and efficient logistics, especially at U.S. ports. Millions of shipments enter America’s ports every day, and processing these shipments is onerous as U.S. Customs and Border Protection (CBP) must both review extensive paperwork and handle inspections to ensure imports comply with U.S. law.
To reduce the burden of processing imported packages, most countries have a “de minimis” threshold — a set value that one person can import per day free from customs duties and taxes.
The U.S. has the highest de minimis threshold in the world, allowing American consumers and businesses to purchase goods from abroad valued at up to $800 without needing to pay any duties or taxes. Put differently, the de minimis threshold frees up resources for CBP as it reduces red tape and the time spent dealing with customs duties and sales taxes.
Somehow, the de minimis threshold has become part of the protectionist narrative. Opponents claim it is a “loophole” in U.S. customs law. They argue it permits small, low-value packages to enter the U.S. without inspection, allowing illegal drugs like fentanyl, counterfeit goods, and products made with forced labor to sneak into the country with ease and no consequence.
However, these claims are unsubstantiated. There is no evidence that these products are more prevalent in de minimis shipments than larger, non-de minimis shipments.
More importantly, the de minimis threshold does not exclude shipments from U.S. laws or information requirements, including inspections. In fact, CBP screens all parcels with technological equipment to detect illegal and dangerous merchandise. CBP even provides publicly available data on the types of seizures made on de minimis shipments, including narcotic seizures, which covers fentanyl.
Yet, some policymakers are trying to capitalize on the false claims that de minimis is a loophole supporting illegal trade.
One proposal seeks to amend de minimis by lowering thresholds on a reciprocal basis, meaning the U.S. threshold should match that of trading partners. But it is important to remember that people trade, not countries or their governments, and Americans trade with over 150 countries. When paying tariffs, traders need to use an already nightmarish document—the U.S. tariff schedule. De minimis saves many American businesses and consumers from needing to navigate this complex document.
Reducing the de minimis threshold is akin to imposing a new tax on Americans and could have the unintended consequence of incentivizing customs duty circumvention. Moreover, trying to match other countries’ bad policy is simply foolish.
Other proposals seek to scale back or eliminate de minimis to punish adversaries. Doing so would require more CBP resources. The National Foreign Trade Council (NFTC) estimates that without de minimis, CBP would need 22,000 additional personnel, costing the agency—and thereby taxpayers—millions.
Enforcing U.S. law against illicit trade, counterfeits, and products made with forced labor are legitimate policy concerns. As previously noted, CBP already uses surveillance equipment to detect narcotics and other illegal merchandise in de minimis shipments as well as all other imports. Private couriers also use sophisticated equipment to detect and ban illegal packages. So, it’s unlikely a lower threshold would provide any marginal benefit. Congress would do better to address actual enforcement gaps, for example by providing CBP with resources to modernize through machine learning, artificial intelligence, or other technologies that could help identify illicit activity.
The intention of de minimis is explicitly to lessen the administrative burden, thus amendments to reduce the scope of de minimis would simply be punitive. Americans would incur more paperwork costs and brokerage fees. The NFTC calculates that without de minimis, a $50 package would require about $27 in paperwork, a brokerage fee of $20, plus tariffs and taxes. Therefore, without de minimis, a $50 package could cost almost $100. These costs will be added to prices paid by American consumers and businesses, impacting low-income households and small business most.
International trade exposes small businesses to more products at different prices. On the flip side, it also provides more access for their exports. Since small businesses do not need to import in bulk to manufacture their products, de minimis provides them with rapid border clearance and lower logistics costs, and their customers with faster and cheaper goods.
As you enjoy those Cyber Monday deals, keep de minimis in mind. Channel the Thanksgiving spirit for the U.S.’s de minimis threshold, which provides you the freedom to order from almost anywhere in the world at a lower cost and gives small businesses more choice for their inputs to keep American exports competitive.
Gabriella Beaumont‐Smith is a policy analyst at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies.
Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Consumer & Retail
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The thing that stood out about the prime minister's speech was he wasn't unveiling a whole bunch of guaranteed crowd pleasers.
These are ideas that provoke and divide, including within the Conservative Party - let alone the wider country.
Take HS2. The Conservative Mayor of the West Midlands Andy Street, who thinks Rishi Sunak has made a big mistake, told me he had contemplated ripping up his Tory party membership card because of all this.
The former Conservative prime minister David Cameron added that it was "wrong" and "throws away 15 years of cross-party consensus, sustained over six administrations, and will make it much harder to build consensus for any future long-term projects".
Boris Johnson, another former leader, chimed in and said "I agree." Ouch.
Then take banning smoking in England for the next generation.
For some, the very idea of banning things - the state stopping people doing things, particularly if others are allowed to - is deeply un-Conservative. The former prime minister Liz Truss has let it be known she will vote against the change.
So, opposition from three former Conservative prime ministers and a sitting Conservative mayor before you even get going.
What, then, is the strategy here?
The prime minister and his senior advisers got together over the summer and realised something had to change. They had steadied the ship of government but still looked set to lose the next election.
There was a feeling that circumstance had stood in the way of Mr Sunak being himself politically. The pandemic and then politics had intervened, but now there was space for change.
This, they claim, is Mr Sunak unleashed - the authentic him, grabbing politics by the scruff of the neck and forcing those who disagree to set out an alternative.
Portraying himself as the advocate of change is an audacious pitch, Mr Sunak being the fifth prime minister of a so-far 13-year run of Conservative government. Plus his diagnosis of a generation of political failure has raised eyebrows.
A former Conservative cabinet minister rang me and said "it's a bit rich going round saying all your predecessors were crap when you haven't even got a mandate". Remember Mr Sunak didn't even win the support of Conservative Party members, let alone the country.
There is also an obvious tension here: a prime minister talking about the long term, but with a general election in the short term.
And so there are big questions about believability.
Can a prime minister who announces the scrapping of a long term project be trusted to deliver other long term projects - albeit ones with shorter timeframes? And they won't all be down to him anyway - as many will have a timescale that stretches beyond the next election.
A final observation. We have spent the last few days in Manchester, prior to the prime minister's speech, being told no decision had been taken on HS2.
And yet, no sooner had Mr Sunak made his announcement, a video appeared on his social media accounts spelling out the detail of what he had just said.
But it had been recorded in⦠Downing Street. A place he's been away from since Saturday. So - it appears - he had in fact decided beforehand all along.
Folk around the prime minister insist technically it was a cabinet decision, with the transport secretary (currently Mark Harper) the legal decision maker and sometimes stuff is filmed but not used if no decision is reached.
The cabinet did meet in Manchester, just before the prime minister's speech. Was it really possible ministers wouldn't sign it off at that point and a whole segment of the address would be binned with minutes to go?
I'll leave it to you to judge if that is an explanation you buy.
From Manchester, the next stop: Liverpool, as the roadshow of party conference season trundles on, and we hear from the man hoping to replace Mr Sunak as prime minister - Sir Keir Starmer.
How will he respond to what he, and we, have heard in Manchester?
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United Kingdom Business & Economics
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Lemon Tree Q2 Results Review - Yet Another Strong Quarter: IDBI Capital
Best placed amongst mid-scale hotels, 'Hold' with a target price of Rs 129
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
IDBI Capital Report
Lemon Tree Hotels Ltd. reported yet another strong quarter on key parameters. Though Q2 result was below estimates (owing to higher renovation cost than earlier estimated), we believe the company is poised to continue its strong earnings trajectory in near term.
Aurika, Mumbai’s opening is another feather in the cap for Lemon Tree and the management has guided incremental 15% revenue growth due to Aurika, Mumbai in FY25E.
Further, robust inventory addition through management contract bodes well for sustainable margin improvement in mid-long term.
We have broadly maintained our earnings estimates for FY24E/FY25E. Post sharp rally in the stock price, potential upside is limited from current level.
We downgrade the stock to 'Hold' with a revised target price of Rs 129 (earlier Rs 110), assigning 17 times enterprise value/Ebitda to FY25E.
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This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
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Stocks Trading & Speculation
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New research suggests that net zero is not viewed as a major factor driving up taxes and cost of living, with factors including Brexit, Covid and Liz Truss’ time in office cited more frequently.
The data, sourced by Public First for centre-right think tank Onward, showed that, out of ten options given, net zero was the last to be blamed by the public (16 per cent) as a contributor to a higher cost of living.
Compared to net zero, those polled suggested that increased global demand and price of energy (43 per cent), the cost of the conflict in Ukraine (41 per cent), Brexit and trade barriers with the EU (36 per cent), debt due to Covid-19 and lockdowns (34 per cent) were more significant driving factors.
Very few of those polled considered net zero as a the reason for taxes going up. Net zero was the last reason for the public, and ninth among Conservative voters (24 per cent) — Brexit came tenth with 21 per cent.
For Conservative voters, higher taxes were more likely to blamed on Covid-19 and lockdowns (51 per cent), the welfare state (36 per cent), British support for Ukraine (35 per cent), and mistakes by Liz Truss (32 per cent).
When asked if they expected part of their taxes to go towards fighting climate change, +39 net of the public and +32 net of Conservative voters agreed.
Meanwhile, the research suggested 53 per cent of the public are willing to accept costs to tackle climate change, while 40 per cent are not.
However, focus group participants were overwhelmingly negative about the ULEZ expansion to Greater London, which they saw as an unjust tax on the poor disguised as an environmental policy.
In light of the research, Onward argues the government should not mistake scepticism against single unfair policies for opposition to environmental policy in general.
Onward’s new report entitled Hotting Up – How we get to net zero in a way that brings people with us comes after Rishi Sunak watered down his government’s approach to net zero last week.
The prime minister outlined that the ban on the sale of new petrol and diesel cars will be moved back five years to 2035 and that the transition to heat pumps has also been delayed.
Sunak said Wednesday last week: “I’m confident that we can adopt a more pragmatic, proportionate and realistic approach to meeting that zero that eases the burdens on working people”.
Responding to Onward’s report Simon Clarke MP, former Levelling Up Secretary, said: “The public overwhelmingly supports net zero, and we Conservatives must lead efforts to tackle climate change. As Onward’s research shows, voters want to see Government action to build renewables, help people insulate homes and make electric vehicles more affordable. Delivering on these popular policies would show that our party is committed to tackling climate change, securing new clean industries, and protecting our planet for future generations.”
Conservative MP Siobhan Baillie MP added: “This Onward research shows Rishi was right to put families’ finances first when it comes to our net zero ambitions.
“Everybody wants to do their bit to help protect the environment and many are already doing so. But many also will also need help to upgrade their homes and switch to electric cars, not to be taxed and forced to change at great expense and worry when the technology or infrastructure is simply not there yet.
“It’s clear from this poll that Conservatives can lead on this pragmatic, ‘stepping stone approach’ to meet the target and they should continue to focus on real life net zero policies that help, not force, people to go green.”
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Inflation
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A disabled ex-police officer has been unable to access his money for more than a month after Santander froze his card over unauthorised withdrawals.
Tony Hawkins, of Llandysul, Ceredigion, found more than £2,000 had been taken from his account.
His friend David Morgan, who contacted Santander on his behalf, called the bank "uncaring" for failing to resolve the issue.
Santander said it was "reviewing the right support options" for him.
The unauthorised withdrawals have since risen to more than £3,200, forcing Mr Hawkins to borrow from friends in order to afford food.
It has been reported to Dyfed-Powys Police, which said it was investigating.
Mr Hawkins's debit card was frozen by Santander in August, leaving him without access to funds to pay for food and other essentials, while the bank investigated.
He uses a wheelchair because of spinal problems and he has very limited speech and movement after a series of strokes.
He was awarded the British Empire Medal in 2018 for his campaigning work on behalf of disabled people.
Mr Morgan, 72, a retired police inspector, was first alerted to problems by his friend in July.
"Tony pointed out he'd had deductions made from his bank account," he said.
"He showed me his mobile phone. He told me he hadn't authorised these. I kept asking him 'are you absolutely certain', and he said 'yes'."
Mr Morgan contacted Santander on 2 August but the bank said it could not discuss it as he was not the account holder.
He also reported the matter to Action Fraud, the UK's national reporting centre for fraud and cybercrime, but was told there were "no useful lines of inquiry".
Mr Hawkins is unable to use online banking because of his disability. A few days later, a carer who purchases goods for Mr Hawkins, informed him that his debit card no longer worked, leaving him without access to funds.
Mr Morgan said it had caused real difficulties, with Mr Hawkins having to borrow money from the local authority and friends to pay for essentials.
"She (the carer) was not able to draw out money to buy food for him," said Mr Morgan.
"He has been relying on loans from friends and we got in touch with his social worker at Ceredigion council and she arranged for a loan for Mr Hawkins while we're trying to sort this problem out with Santander.
"The strange thing is despite stopping the use of his card, money is still going out of his account - sums he has not authorised."
Santander told Mr Hawkins it would discuss the matter only in person with him. Mr Morgan accompanied his friend to the branch in Carmarthen for an appointment on 30 August, but the matter could still not be resolved.
"Mr Hawkins informed me he had no forms of identity as his driving licence had gone astray," said Mr Morgan.
"Santander said (to) take correspondence from the local authority, utility bills and on top of that I found, on the internet, an article from the Tivyside Advertiser which included a photo of Mr Hawkins being awarded the British Empire Medal.
"I got a local solicitor to sign and stamp it as a true likeness. They (the branch) said it wasn't enough and they couldn't deal with the matter."
Mr Morgan said the case highlighted the difficulties faced by disabled people trying to resolve banking issues.
He has applied for power of attorney over his friend's financial affairs, but the application still has not been completed.
Santander said it was unable to provide any detailed comment about Mr Hawkins's case as it did not have his permission.
Santander said: "We are reviewing the right support options for our customer.
"Santander has a range of options in place for customers who need more tailored support, and we would encourage customers to contact us to discuss these either in branch, over the phone or via our digital channels."
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Banking & Finance
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'Unfair': Pet store owners react to Bunnings' surprise expansion announcement as hardware giant moves into petting industry
Independent pet store owners have told the hardware giant to “stay in their own lane” amid news of an expansion into the multibillion-dollar sector.
Independent pet store owners have reacted with dismay at Bunnings’ move into the multibillion-dollar pet care sector.
The hardware giant announced earlier this week it would be expanding its offerings to include food, toys and other accessories for the millions of pets across the country.
But scores of independent pet store owners haven’t taken kindly to the behemoth’s decision, with concerns Bunnings could price many small retailers out of existence.
Daz White, from Engadine’s family-run pet store Lazy Lab, said he was “really taken aback” by news Bunnings was moving into the sector.
"All I can see them doing is stocking cheap Chinese made garbage like their Wesfarmers sister chains Kmart and Target,” he told SkyNews.com.au.
“But with their big advertising budgets and tricky marketing campaigns, people will get hoodwinked into thinking they are getting something good for cheap, when in real terms, cheap is all they are getting.”
Mr White said while he wasn’t concerned for his own business, which sells sustainable Australian pet treats, he was frustrated on behalf of other small pet store owners.
“I think what Bunnings is doing is unfair on the independent Australian pet industry as a whole,” he said.
“And they should stay in their own lane.”
Another small business owner echoed Mr White’s sentiments, telling SkyNews.com.au she was concerned about the quality of pet food the retail giant would stock.
“You’re going to be asking a staff member who is not trained in nutrition for advice,” she said of Bunnings stores.
“It is setting back the pet food industry, who are only just coming back around to the way dogs are meant to be cared for and meant to eat; to thrive and not survive.
“I wouldn’t give advice on which hammer is the best for the job, why are they giving advice for our pets?”
Bunnings Managing Director Mike Schneider told The Australian on Tuesday the chain would bring a “very competitive offer” into the lucrative industry.
“What we are going to be bringing to life in our stores over the next four weeks is quite a comprehensive step change in our pet range, probably the biggest category expansion in Bunnings for 20 years,” he said.
“If you look at the last few years I think it is 60 per cent of Australians now own at least one pet, it has become a very important part of many, many families across Australia and we think that connection that people have with the Bunnings brand, bringing those pets into the store, creates a great advantage.”
Stores will start stocking pet food, bedding and accessories from late March.
SkyNews.com.au has contacted Bunnings for comment.
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Consumer & Retail
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Let’s start with where Coutts was within its rights to dump Nigel Farage. The former Ukip leader, according to the memo of the meeting of the “Wealth Reputational Risk Committee”, was about to fall below the qualifying threshold to be a customer.
That threshold is maintaining borrowings or investments of more than £1m, or more than £3m in savings. Farage was soon to pay off his mortgage, presenting Coutts with a choice. It could keep him as a customer and overlook the qualifying criteria. Or it could put him on a “glide path”, in the language of the committee, to being removed. It opted for removal.
And one cannot call this a case of being “debanked”, as Farage is spinning it, because he was glided towards another entity within the same group. NatWest, hardly an obscure outfit, offered him a personal account and a business account. Thus, if one wishes, one can enjoy some sport at Farage’s expense: at one level, he is merely complaining about having to bank with the common people.
Except the tale is not that straightforward. The minutes of Coutts committee’s meeting make two things clear. First, Farage was still regarded as wealthy enough to be a profitable customer. “The client’s EC [economic contribution] is now sufficient to retain on a commercial basis,” it says, noting that he had been downgraded to “lower risk” in the classification of “politically exposed persons”.
Second, the choice to get shot of Farage was motivated by Coutts’ objections to his views. “The committee did not think continuing to bank NF [Nigel Farage] was compatible with Coutts given his publicly stated views that were at odds with our position as an inclusive organisation.” He failed a political or inclusivity test and was regarded as a risk reputation-wise.
Are we really happy with the idea of bank committees passing inclusivity judgments on customers and then not explaining their decisions? It is surely possible to disagree profoundly with Farage’s views on most issues and find Coutts’ stance alarmingly illiberal.
The Financial Conduct Authority (FCA), the chief financial regulator, doesn’t see much a problem, it should be said. Its chair, Ashley Alder, told the Treasury select committee that regulated firms must treat customers fairly but added: “For banks as well as other commercial enterprises, it’s fundamentally up to them to choose who they do business with.” He went on: “I’m not aware of anything in the FCA rulebook that goes to the point around how banks judge their own attitude to reputational risk, if that’s what it comes down to.”
Well, OK, banks are private businesses (even NatWest, 39%-owned by the state) and they can choose their customers. But it is also reasonable to expect some accountability and transparency in the process. It is, for example, hard to pin down how the stated purposes and values of NatWest and Coutts lead them to consider, among other things, Farage’s contact with non-vaccinated Novak Djokovic or his retweeting of a Ricky Gervais trans joke.
Here’s one of NatWest’s descriptions of its purpose: “We champion potential, helping people, families and businesses to thrive. Because when they thrive, so do we.” That’s just blurry. As for Coutts, the front page of its website boasts that it wants clients who are “disrupters and challengers”, two descriptions that, perversely, could be applied to Farage.
In money-laundering cases and suchlike, it isn’t possible for banks to explain why a customer has been ditched. The regulatory demands for secrecy are rightly strict. But there is a problem if requirements for confidentiality elsewhere are used as cover for excluding accounts of politicians whose views the bosses of banks find distasteful.
Farage makes a difficult case because so many other people understandably regard him as objectionable. But Coutts’ position here is odd. It seems to amount to this: if we find your views lawful but offensive, we’ll do nothing if you’ve got £1m on deposit; but we may dump you without explanation if you’ve got less. How does that align with those fluffy corporate values?
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Banking & Finance
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Michael Burry, who famously shorted subprime mortgages during the 2008 financial crisis, closed his bets against the S&P 500 and the Nasdaq 100 in the third quarter.
But he also found another industry to short: semiconductors.
Burry's hedge fund Scion Capital disclosed Tuesday in a federal filing with the SEC that it had closed out 'put' positions on the SPDR S&P 500 ETF (SPY) and Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100 index, as of the end of September.
Those bearish bets amounted to more than $1.6 billion as of the the last trading day of the second quarter. Each of the indexes fell 3.6% and 3%, respectively, during the third quarter.
Burry gained fame for his moves during the 2008 crisis, a severe downturn that began with a US housing bust. Burry predicted a collapse in residential real estate prices as early as 2007 and then shorted a number of subprime deals through the use of credit default swaps.
He became a central figure in Michael Lewis’s 2010 book "The Big Short," and Christian Bale later portrayed Burry in a 2015 film adaptation of the Lewis book.
Scion Capital broadly shrank its exposure to the stock market in the third quarter, according to its new SEC filing, selling 76% of the stocks it disclosed at the end of the second quarter.
But Scion re-opened positions in JD.com and China-tech giant Alibaba (BABA) after selling out of the companies in the second quarter.
The hedge fund also eliminated its remaining exposure to regional lender New York Community Bank (NYCB). In the first quarter, Scion spent more than $23 million betting on financial stocks during a chaotic period marked by several prominent bank failures.
Burry, however, isn't finished shorting stocks.
Scion opened two new positions, one shorting 100,000 shares of BlackRock's semiconductor ETF, the iShares Semiconductor ETF (SOXX) and another 2,500 shares betting against online travel website, Booking Holdings Inc. (BKNG).
The firm also purchased 1,500 shares of Booking Holdings Inc. outright.
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Stocks Trading & Speculation
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Cedar Fair and Six Flags Entertainment on Thursday agreed to merge to spur a post-pandemic recovery that smaller US amusement park operators have been chasing as leisure spending remains low amid an uncertain economic outlook.
The park brands have been struggling as recent investments to bolster attendance and customer spending have not yielded desired results, with return to pre-pandemic profitability remaining elusive.
The deal will help with “a strong revenue and cash flow generation profile” amid competition from rivals like SeaWorld Entertainment and Disney’s theme parks, Cedar Fair and Six Flags said in a statement.
It will also “mitigate the impact of seasonality and reduce earnings volatility through a more balanced presence in year-round operating climates,” they said.
Macquarie analyst Paul Golding said the deal would be “beneficial to shore up … regional access and pricing arena, potentially leaving only SEAS and the more expensive destination parks outside of a new network.”
Shares of Six Flags were up more than 4.3%, while Cedar Fair was down 2.2%.
Under the terms of the deal, each Six Flags share will be worth 0.58 shares of the combined company, which values Six Flags at about $2 billion.
That is higher than the company’s equity value of $1.75 billion as of Wednesday’s close, while Cedar Fair’s valuation stood at about $1.92 billion.
The stocks had jumped roughly 6% on Wednesday following a Reuters report that the duo was exploring a potential merger. They have each lost about 10% of their value this year.
The combined company will operate 27 amusement parks, 15 water parks and 9 resort properties across 17 states in the United States, Canada and Mexico.
The merger is expected to close in the first half of 2024, following which Cedar Fair shareholders will own about 51.2% of the combined company and Six Flags shareholders the rest.
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Consumer & Retail
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- Public, the U.S. brokerage startup, is rolling out its platform in the U.K. on Thursday.
- The company will offer British users the ability to trade 5,000 U.S.-listed securities, including stocks and ETFs.
- The move will see Public compete with a flurry of well-established digital brokerage platforms, as well as upstarts like Revolut and Freetrade.
American stock brokerage startup Public launched its services in the U.K. Thursday, marking its first international expansion its launch in 2017.
The app, backed by celebrities including Will Smith and skateboarding legend Tony Hawk, will offer U.K. users commission-free trading in over 5,000 U.S.-listed stocks during the country's regular trading hours.
Public hopes to broaden its U.K. offering over time to include other asset classes already available in the U.S., such as ETFs, U.S. government bonds, and cryptoassets. The company also plans to launch an "investment plans" tool in the future that lets users come up with customized recurring investments.
Public's U.K. debut will see it compete with a flurry of well-established digital brokerage firms like AJ Bell and Hargreaves Lansdown, which make money from commission charges and management fees, as well as upstarts such as Revolut, Freetrade and eToro, where revenue comes mainly from subscriptions and other fees.
It is a heavily congested market — but Leif Abraham, Public's co-CEO, touted the company's lower foreign exchange fees as one element separating it from the pack in the U.K.
"Most of our competitors in the U.K. will charge currency conversion fees on every single trade," Abraham told CNBC in an interview. "We only do it with the money deposited, and our fees are going to be dramatically lower than most of our competitors."
Public will charge 30 basis points, or 0.3%, on each deposit to convert British pounds into U.S. dollars.
The firm has European roots, having been founded in September 2019 by Jannick Malling and Abraham, from Denmark and Germany, respectively, who now serve as co-CEOs.
The platform, which lets people build portfolios and invest in stocks and cryptocurrency, hit more than 1 million users in 2021.
It benefited significantly from the GameStop saga of early 2021, which saw the share price of the U.S. game retailer and other heavily-shorted companies skyrocket on the back of buzz from an online community of investors.
The period shone a light on the controversial "Payment for Order Flow" (PFOF) practice, where brokerages are paid by market makers like Citadel Securities to route customer orders to the firm.
In 2021, Public removed PFOF from its platform, concerned it was driving customers to unhealthy day trading habits. It also added "safety labels" to certain stocks to inform users when certain companies are facing heightened bouts of volatility or the risk of bankruptcy.
PFOF is already banned in the U.K., while the European Union is planning to follow suit with its own prohibition of the practice.
Public has gone down the route of partnering with a firm that is already regulated to provide its services in the U.K., rather than apply for its own license. "A ton of fintechs have gone through this route," Dann Bibas, the company's head of international, told CNBC.
Public will operate in the U.K. as an appointed representative of Khepri Advisers Limited, which is authorized and regulated by the Financial Conduct Authority.
Bibas said that, for now, the U.K. is the only country Public is focusing on for its international expansion. In the future, it hopes to take learnings from its U.K. launch to open in other European markets. Public has offices in New York, Copenhagen, London, and Amsterdam.
Online brokerage platforms have had a tough time lately. The rising cost of living has made it tougher for consumers to part with the cash they were flush with during the days of Covid.
Freetrade, the U.K. brokerage startup, slashed its valuation by a whopping 65% last month to £225m in a crowdfunding round, citing a "different market environment."
Abraham said Public didn't face the same problems facing many retail brokerage apps, which have been left facing a funding crunch due to a rise in interest rates.
"We have a very healthy cash balance," Abraham said. "Hence why we can do things like expanding into the U.K., the U.S., and so on."
Public, he said, saw no reason to raise cash at this stage. It has already raised $300 million from investors including Accel, Greycroft and Tiger Global. The company was last valued at $1.2 billion, giving it coveted "unicorn" status.
Abraham said that higher interest rates have actually benefited Public to some extent, as it is earning yields on the cash customers deposit and seeing increased interest in other assets such as U.S. Treasurys.
Public is hoping to avoid the fate of its U.S. peer Robinhood, which abandoned its U.K. operation in 2020 to prioritize its home market. Abraham said he's convinced this won't happen in Public's case.
"We don't have to reinvent our business model in order to enter a new market," he told CNBC.
"It's not like – to take the other extreme – like the last-mile delivery company, where you have to now have a massive footprint," Abraham added. "We can actually expand in other markets with a fairly lean team that's responsible for that."
Robinhood does have plans to reenter the U.K., however – it is set to launch in the country at some point in the near future following its acquisition of cryptocurrency trading app Ziglu last year.
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Stocks Trading & Speculation
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Vedanta Nears Deal To Raise $1.25 Billion Via Private Loan
Vedanta Group is in advanced talks to raise a $1.25 billion private loan with an interest rate between 18% and 20% as it seeks to overhaul its debt.
(Bloomberg) -- Vedanta Group is in advanced talks to raise a $1.25 billion private loan with an interest rate between 18% and 20% as it seeks to overhaul its debt.
The Indian conglomerate is nearing a deal after weeks of negotiations with lenders including Cerberus Capital Management LP, Davidson Kempner Capital Management LP, Varde Partners Inc. and Ares SSG Capital Management Ltd., according to people familiar with the matter, who asked not to be named because the matter is private.
Click here for more details on the potential loan
Indian billionaire Anil Agarwal’s miner has been looking for fresh sources of cash to refinance around $3 billion of US-currency bonds coming due over the next two years. Bloomberg first reported on the company’s talks for a private loan of $1 billion on Sept. 21.
Representatives for Vedanta also proposed delaying payments on the dollar bonds, a plan that met with investor opposition, Bloomberg reported on Sept. 28.
Vedanta continues to work on the refinancing of maturing debt, a spokesperson told Bloomberg on Saturday.
“No comment can be made at this time about the outcome of the exercise but the company remains confident in its ability to effect a successful process,” the spokesperson said.
India is a hot market for private credit, in part because of rules that limit bank lending for transactions such as mergers and acquisitions. Deals often have floating rates of interest and pricing gets set up front.
--With assistance from Swansy Afonso and Abhinav Ramnarayan.
©2023 Bloomberg L.P.
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Banking & Finance
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