WASHINGTON (Reuters) – Negotiations with congressional leaders on how to step up enforcement at the nation’s southern border are on the right track, White House spokesperson Karine Jean-Pierre said on Tuesday. President Joe Biden invited congressional leaders to the White House on Wednesday to discuss the border and supplemental funding bill for Ukraine and Israel, Jean-Pierre said. More
WASHINGTON (Reuters) -The leaders of Congress tax-writing committees on Tuesday announced a nearly $80 billion bipartisan deal to enhance tax breaks for businesses and low-income families through 2025, but prospects for passage are unclear amid bitter fiscal divisions.The $78 billion package, agreed by Senate Finance Committee Chairman Ron Wyden, a Democrat, and House Ways and Means Committee Chair Jason Smith, a Republican, would temporarily expand the child tax credit and boost the low-income housing tax credit. It would restore business tax deductions for 100% of research and development expenses and capital expenditures for plant and equipment. The extensions would last until the end of 2025, aligning them with the expiration of personal tax cuts passed by Republicans in 2017 and raising the stakes for tax policy differences in November’s presidential election.The deal would increase the maximum “refundable” child tax credit — the amount available as a cash payment — by $200 per child to $1,800 for 2023, $1,900 for 2024 and $2,000 for 2025.Democrats have been trying to restore a much larger COVID-era expansion of the child tax credit of up to $3,600 per child, which expired in 2021.Wyden said the plan would benefit 15 million children from low-income families while enabling the construction of more than 200,000 affordable housing units.SHORT TIMELINE, UNCLEAR PATHWyden said he and Smith want to pass the package quickly so that families and businesses can take advantage of the breaks as they file tax returns this year. The filing season for 2023 income is due to start on Jan. 29. “I’m going to pull out all the stops to get that done,” Wyden said.But the early legislative calendar this year is consumed with bitter divisions over government spending, including another proposed stopgap to avert a federal shutdown until March to buy more time to pass funding measures. Smith emphasized the extension of business tax breaks, which Republicans have sought to extend as they began to phase out after 2022.”This legislation locks in over $600 billion in proven pro-growth, pro-America tax policies with key provisions that support over 21 million jobs,” Smith said.The lawmakers plan to offset the tax package’s cost by closing the COVID-era Employee Retention Tax Credit to new claims by the end of January 2024, rather than April 15, 2025. The early end of the troubled program, along with increased enforcement and higher penalties for fraudulent claims, is expected to save more than $70 billion, according to Joint Committee on Taxation estimates.According to a summary of the legislation, the deal also includes provisions to shield Taiwanese semiconductor manufacturers operating in the U.S. from dual taxation despite the lack of a U.S.-Taiwan tax treaty.It also includes tax breaks for disaster-related losses, including from certain wildfires.In a sign that changes would likely be needed, the top Senate Finance Committee Republican, Mike Crapo, called the Wyden-Smith deal “a thoughtful starting point” for the legislation, indicating that it needed changes. He said in a statement that he would work “to build broad, bipartisan support for a tax package that provides appropriate relief for working families and businesses.”The White House was still reviewing the agreement, spokesperson Michael Kikukawa said, noting that President Joe Biden “remains committed to fighting for the full expanded child tax credit.” More
Democratic Senate Majority Leader Chuck Schumer, Republican Senate Minority Leader Mitch McConnell, House Speaker Mike Johnson and House Minority Leader Hakeem Jeffries are expected to attend the meeting.White House Press Secretary Karine Jean-Pierre said on Tuesday that Biden will also host “key committee leaders and ranking members.” More
US forces on Tuesday carried out fresh strikes on targets linked with Houthi militants in Yemen, amid disruption to global trade caused by cargo ships diverting to avoid the Iran-backed group’s attacks in the Red Sea.The US military’s Central Command said its forces struck and destroyed four anti-ship ballistic missiles that the Houthis had prepared to launch from Yemen in the early hours of Tuesday. It was the third round of strikes by American forces on Houthi targets in Yemen in less than a week as the US seeks to deter the rebels’ attacks on shipping in the crucial waterway.However, the Houthis still succeeded hours later in launching a missile that struck the Zografia, a Greek-owned Maltese-flag ship for carrying dry bulk commodities, which was sailing towards the Suez Canal. That followed Monday’s missile strike on another bulk carrier in the Gulf of Aden. The latest Houthi strikes have prompted more categories of ships to avoid the key shipping route through the Red Sea, instead taking a longer journey between Asia and Europe via the Cape of Good Hope and delaying deliveries to companies.Automotive groups have been especially affected by delays to ships, which have so far mainly affected container vessels carrying manufactured goods and semi-finished components.Volvo Cars on Tuesday said it had halted production at its factory in Belgium after the shipping disruption delayed a delivery of gearboxes, while tyre manufacturer Michelin said Red Sea delays would lead to “occasional stoppages” at its European factories in January.Figures from Clarksons, the London-based shipping services company, suggested that more classes of ships were beginning to divert: between January 13 and 15, arrivals of dry bulk carriers in the Gulf of Aden, by the Red Sea, had fallen 25 per cent from the first half of December. Until last week, arrivals of such vessels had hardly been affected.That decline threatens delays and extra costs for industries including food manufacturing and metals that receive shipments of the many commodities transported in dry bulk carriers.Tuesday’s US action followed an initial wave of strikes by both UK and US forces on more than 60 Houthi targets in Yemen on Thursday and Friday nights, which the countries said aimed to deter the Houthis and stem the disruption to shipping.The Houthis have vowed to respond aggressively to the military action against them and to continue targeting ships. They insist their campaign is a response to Israel’s offensive against Hamas, the Palestinian militant movement, in Gaza.The Houthis fired their latest missile at about 1.45pm local time into “international shipping lanes” in the southern Red Sea, according to the US Central Command. The Zografia, which was empty of cargo when attacked, was “struck but seaworthy” and continued on its journey, with no injuries reported, the statement said.US forces also said on Tuesday that the country’s navy had seized Iranian-made ballistic missile and cruise missile components on January 11 from a vessel heading to “resupply Houthi forces in Yemen”. Two Navy Seals were lost at sea in the operation and the search for them continued, they said.The latest Houthi assaults raise the prospect that dry bulk shipowners will divert en masse away from the Red Sea route, as companies operating container ships have already done. Arrivals of container ships have fallen 90 per cent since early December, according to Clarksons.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.One large ship operator, Japan’s NYK Line, said on Tuesday it had “temporarily suspended” Red Sea navigation for all its vessels, which include dry bulk ships, tankers, liquefied natural gas (LNG) carriers and car-carrying roll-on, roll-off ships.“For vessels navigating near the Red Sea, NYK has instructed waiting in safe waters and is considering route changes,” the company said.Other natural gas tanker operators are also changing routes. Nils Kristian Strøm, managing director of Knutsen LNG, which operates six tankers for Shell, confirmed vessels operating for the company had been diverted to the longer route.Another three natural gas carriers working for Qatar’s state-owned QatarEnergy — which had been due to enter the Red Sea to sail on to Europe — had diverted to different routes, according to ship-tracking data from Kpler, an information service.Qatari Prime Minister Sheikh Mohammed bin Abdulrahman al-Thani said on Tuesday that the escalating attacks in the Red Sea had changed “how we view the international trade, how we view international shipping, how interconnected we are from east to west”.Speaking at the World Economic Forum in Davos, Sheikh Mohammed said: “I believe that if we want to address the issue, we need to address the real issue, the central issue, which is [the war in] Gaza, in order to get everything else defused.”Also at Davos, US national security adviser Jake Sullivan said his country had expected the Houthis to continue to threaten the US after its first strikes. More countries would need to confront the group, he said.“[This] comes down . . . to the broad set of countries, including those with influence in Tehran and influence in other capitals in the Middle East, making this a priority,” he said.Such steps would indicate the “entire world” rejected the idea that a group such as the Houthis could “basically hijack the world”, as they were doing, he said.Additional reporting by Peter Campbell in London and Sarah White in Paris More
Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.A top Federal Reserve official has said the US central bank is within “striking distance” of returning inflation to its 2 per cent goal, but cautioned rate-setters would “take our time” before cutting borrowing cuts from their current 23-year high. Christopher Waller, a governor on the Fed’s board, said at an online event hosted by Washington’s Brookings Institution on Tuesday that recent economic and jobs data showed the central bank’s effort to contain price pressures was bearing fruit.“Based on economic activity and the cooling of the labour market, I am becoming more confident that we are within striking distance of achieving a sustainable level of 2 per cent PCE inflation,” he said, referring to the personal consumption expenditures index. Waller also said job openings may have declined to a point where any further downturn in the labour market could trigger a sharp rise in unemployment. “From now on, the setting of policy needs to proceed with more caution to avoid over-tightening,” he said. But Waller also cautioned against a rush to slash interest rates, saying the bank must “take our time to make sure we do this right”. The cautionary tone despite Waller’s confidence on inflation points to the Fed’s unwillingness to commit to rate cuts as quickly as March, as some market participants expect.Waller’s remarks are being closely watched after a speech he made in November suggested he was increasingly sure the Fed now had the worst bout of inflation for a generation under control, enabling it to take a more dovish stance on interest rates. The bank’s more dovish shift emerged again at the Fed’s December meeting, which revealed policymakers planned to cut rates by as much as 0.75 percentage points in 2024, compared with current level of 5.25 per cent to 5.5 per cent.Those 2024 projections have boosted markets’ hopes of a cut as soon as March — although Fed officials have repeatedly rowed back against the idea that it could cut as soon as that. On the timing of the first cut, Waller said that while the Fed was “close” to achieving its 2 per cent goal, he would “need more information in the coming months confirming or (conceivably) challenging the notion that inflation is moving down sustainably towards our inflation goal”. It was “hard to believe” that waiting an additional six weeks — the time between rate-setters’ meetings — to cut rates “would have a huge impact on the state of the economy”, Waller added. He also signalled expectations by some investors that the central bank could make as many as six cuts next year were too aggressive, saying there was “no reason to move as quickly or cut as rapidly as in the past”. Market pricing of a March cut was barely changed on Monday, at about a 70 per cent probability. Treasury yields extended gains from earlier in the session following Waller’s remarks on Tuesday. The 10-year yield was up 0.09 percentage points on the day at 4.04 per cent, while the two-year yield was 0.09 percentage points higher at 4.23 per cent. Bond yields rise as their prices fall.The reaction in stock markets was muted, with Wall Street’s S&P 500 trading 0.3 per cent lower. Waller also played down data last week which showed inflation as measured by the consumer price index, which is not policymakers’ preferred gauge, had ticked up from 3.1 per cent in November to 3.4 per cent in December, suggesting revisions could show the measure overstated the rise in price pressures. “Recall that a year ago, when it looked like inflation was coming down quickly, the annual update to the seasonal factors erased those gains,” he said. “In mid-February, we will get the January CPI report and revisions for 2023, potentially changing the picture on inflation. My hope is that the revisions confirm the progress we have seen, but good policy is based on data, not hope.” Additional reporting Harriet Clarfelt in New York and Jennifer Hughes in Chicago More
This article was originally published on U.Today More
Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Big investors are turning to riskier assets such as emerging markets and high-growth companies as their confidence increases that global interest rates are set to tumble without a sharp economic downturn, according to a closely watched survey.Only 17 per cent of the fund managers polled by Bank of America expect a so-called hard landing — which typically implies a recession — for global growth, the smallest proportion in 19 months. The growing faith in a “soft landing” for the global economy, in which central banks succeed in bringing inflation under control without sparking a downturn, comes after large economies — most notably the US — outperformed expectations despite the effects of high interest rates.The overwhelming majority of investors now believe borrowing costs are set to fall, with 91 per cent of respondents saying short-term interest rates will be lower in 12 months’ time.“Investors have never been as bullish on short-term rates as in January 2024,” BofA analysts wrote, adding that “growth optimism over the past month has coincided with rising global equity prices”.The combination of falling rates and a benign economic outlook has led fund managers surveyed by BofA in January, who collectively manage $669bn in assets, to favour riskier assets.A quarter of fund managers said stocks with long-term growth prospects such as biotech and renewable energy companies would be the biggest beneficiaries of US Federal Reserve rate cuts, making them the most popular choice. Value stocks, such as banks and real estate companies, were chosen by just under a fifth of investors, while a similar proportion picked emerging market equities.Long-term US government debt dwindled in popularity compared with December’s survey following a big rally over the past month.Managers retained their overweight position in US equities, while remaining underweight UK and eurozone stocks. Small-cap stocks are expected to outperform large caps for the first time since June 2021.Meanwhile global investors’ pessimism on China’s economy deepened, with net growth expectations turning negative and dropping to levels last seen in May 2022. Short positions in Chinese equities were seen as the second most “crowded” trade after long positions in the Magnificent Seven megacap tech stocks that dominate US equity markets.Investors also said they were most concerned about the US shadow banking sector as the source of a systemic crisis, replacing a Chinese property crash as the number one risk, echoing recent warnings from regulators.Geopolitics again took the top spot as the biggest tail risk to markets, amid concerns about an escalation to conflict in the Middle East, US-China tensions and volatility in a year in which half the world’s population will vote. More
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