Aurelia Butler

Layoffs dropped to 1.5 million from August’s 1.7 million, further demonstrating the strength of the job market. The unemployment rate held steady at 3.8%, slightly above a historic low, highlighting an impressively robust labor market by historical standards.The Federal Reserve has hiked its benchmark interest rate 11 times since March last year in response to four-decade-high inflation. This has resulted in a year-on-year rise in consumer prices by 3.7% in September, exceeding the Fed’s 2% target but falling from June’s peak of 9.1%.In an attempt to achieve a ‘soft landing’, the Federal Reserve aims to raise rates just enough to keep price increases in check without inducing a recession. It is expected to leave its benchmark rate unchanged for the second consecutive meeting while assessing the impact of its measures.The Labor Department and FactSet project October’s jobs report to reveal a solid addition of approximately 189,000 jobs while maintaining unemployment at 3.8%. An employee at Hanwha Qcells Solar plant represents the current labor market conditions, further emphasizing the resilience of the US job market amidst ongoing economic challenges.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

In Yuxinzhuang village, a warren of narrow streets on Beijing’s outskirts known for its vibrant community of migrant workers, Zhou wolfs down noodles in a tiny Muslim restaurant.The 30-year-old father of one has a job setting up shell companies with fake cash flow for struggling small business owners, who then use them to raise new loans to pay off their previous creditors.But even this dubious line of business, which should thrive in a downturn, is suffering from China’s economic slowdown. Last month, Zhou’s income fell to a fraction of last year’s levels. Zhou, who did not want to give his full name, now plans to return to his family farm in the poorer central province of Henan and sell organic eggs.“I don’t know who to blame for the economic downturn but all I know is that this year the economy is really bad,” he says. “Lay-offs everywhere.”As China’s economic growth slows, stories such as Zhou’s abound. The country’s 296mn migrant workers are facing slowing wage growth, its new university graduates are struggling to find jobs, the urban middle class has lost money in a policy-induced property meltdown and the rich are reeling from Beijing’s crackdowns on the internet, finance and health sectors.National security regulations are worrying foreign companies, many of which have stopped investing. Only those working in some areas of the government or sectors deemed strategic, such as semiconductors, are being spared.Xi Jinping, China’s most powerful leader since Mao Zedong who embarked on an unprecedented third term in March, claims everything is going to plan. The country is marching towards “national rejuvenation” and “high-quality development” as the party’s “common prosperity” policy reduces inequality.But beneath the triumphant rhetoric, many observers wonder whether policymaking is adrift. The Communist party used to allow its people abundant economic opportunity in exchange for heavy restrictions on their political freedom. Now the so-called social contract is no longer clear. In the place of growth and opportunity are vague promises of security and “a better life”. But with about 600mn people struggling to get by on less than $140 a month, will that be enough? A once optimistic society now worries about the future. “The old contract was a pretty simple one which is: ‘We’ll stay out of politics, we won’t express sensitive opinions, provided we can expect to be prosperous in the future’,” says George Magnus, author of Red Flags: Why Xi’s China is in Jeopardy, and a research associate at the University of Oxford’s China Centre. That “has been undermined and not just by the fact that China’s old development model is not really working anymore but also by the government’s own culpability for not addressing the issues,” he says. “Fundamentally, it’s an issue of trust.”The promise of common prosperityAfter securing his second term as party secretary at the 19th party congress in 2017, Xi signalled a “new deal” for China, according to a paper at the time by Evan Feigenbaum, of the Carnegie Endowment for Peace. Chinese Marxists think in terms of contradictions — the dialectical opposition of different forces or influences, Feigenbaum wrote. During the reform and opening up period that followed the end of the Mao era, the party concentrated on economic growth, or resolving the “contradiction” between the people’s “ever-growing material” needs and the country’s “backward social production”, according to an account of Xi’s comments at the congress in state media. But Xi declared China was facing a new challenge. After decades of rapid growth, he said the “principle contradiction” was “between unbalanced and inadequate development and the people’s ever-growing needs for a better life”. A demolished housing settlement in Daxing district, Beijing. Some migrants suspect that buildings are being torn down as part of efforts to drive them out of the city More

DAKAR (Reuters) – The International Monetary Fund and Gambian authorities have reached a staff-level agreement on a new three-year support package of around $100 million, the Fund said in a statement on Wednesday.The program will support agreed economic policies and reforms. It aims to tackle inflation and foreign exchange pressures, reduce debt and foster growth in the West African country. More

LONDON (Reuters) – The Bank of England looks set to hold borrowing costs at a 15-year high on Thursday and signal that it does not plan to cut them anytime soon as it remains locked in a battle against the most elevated inflation rate among the world’s rich economies.Despite strain in the economy that some see as a sign of a recession starting, the BoE is expected to keep Bank Rate at 5.25% for a second meeting in a row after 14 back-to-back increases, a Reuters poll of economists showed last week.Last week the European Central Bank kept rates unchanged and the U.S. Federal Reserve did the same on Wednesday as they wait to see if the worst inflation outbreak in decades has really been quelled. The BoE’s Monetary Policy Committee is facing an inflation rate more than double that of the euro zone and almost twice the U.S. rate. It voted by only a narrow 5-4 margin in September to halt its run of increases in borrowing costs. But signs of a slowdown in much of the British economy have become clearer since then and some economists say a recession might already be under way.Mike Riddell, a senior portfolio manager at Allianz (ETR:ALVG) Global Investors, said the long lags between changes in rates and their impact meant most of the BoE’s increases in borrowing costs between late 2021 and August this year was yet to be felt.”The BoE will most likely therefore be keen to keep all options open, but seems set to wait and observe how much pain the previous hikes have caused before changing rates again in either direction,” Riddell said.SLOW FALL OF INFLATIONBoE Governor Andrew Bailey and other top officials at the central bank have acknowledged that their rate hikes to date are weighing on the economy. But they have also stressed they will not flinch in their task of bringing inflation down.The BoE – which some economists and politicians criticised for not sounding aggressive enough about quashing the surge in prices early on – has said it is determined to stamp out the long-term inflation risks to the economy, chief among them strong rises in pay growth.Although inflation has fallen from 11.1% just over a year ago to 6.7% in the most recent data, it remains more than three times the BoE’s 2% target. The central bank said in its last set of economic forecasts in August that inflation would only return to 2% in the second quarter of 2025. Inflation is expected to resume its fall in October after stalling in September but rising oil and gas prices since the start of the turmoil in the Middle East could slow its fall. The BoE will publish new forecasts on Thursday.Most investors believe it is now done with rate hikes and will keep borrowing costs on hold until at least August next year before starting to cut them. But Bailey and his MPC colleagues are likely to reiterate that they are ready to raise rates higher if needed.As well the data, the BoE is keeping an eye on political news: Prime Minister Rishi Sunak is under pressure from within his Conservative Party to cut taxes ahead of a national election expected next year. Sunak and his finance minister Jeremy Hunt have said they cannot offer major sweeteners to voters in a budget update on Nov. 22, given the need to focus on bringing down inflation. Sunak pledged in January to halve inflation this year.But Hunt is likely to have one more budget statement to deliver in the spring of next year before the election. More

(Reuters) -The Federal Deposit Insurance Corporation (FDIC) is investigating potential misconduct by executives and board members of First Republic Bank (OTC:FRCB), raising the prospect of stiff penalties for the failed bank’s former bosses.”We can confirm a D&O probe into First Republic is taking place,” a spokesperson told Reuters on Wednesday, referring to the bank’s directors and officers. The regulator did not provide further details.The investigation, which has not previously been reported, is the third the FDIC has opened into bank failures earlier this year which cost the federal government’s deposit insurance fund about $32 billion.FDIC Chairman Martin Gruenberg said in March the agency was also probing possible misconduct related to the collapses of Silicon Valley Bank (SVB) and Signature Bank (OTC:SBNY) New York. The FDIC has not provided updates on these investigations. The three banks, which combined held more than half a trillion dollars in assets, failed following depositor runs. Regulators have said they each exhibited weak risk management and ran high levels of uninsured deposits. As with SVB and Signature Bank, the FDIC is probing whether First Republic executives and board members broke rules that require them to act in the bank’s best interests. Under federal law, the FDIC can ban former directors and officers from the industry, and impose fines for breaching their fiduciary duty and unsafe or unsound practices that involve dishonesty or “willful or continuing disregard” for a bank’s well being. Former First Republic CEO and President Michael Roffler and former Executive Chairman James Herbert could not immediately be reached for comment. Attorneys representing the bank’s independent board members did not immediately return requests for comment.Roffler told lawmakers in May that regulators never expressed any concern about the bank’s strategy, liquidity or management and it had been “contaminated overnight” by the depositor panic from SVB and Signature Bank. While it is standard practice for the FDIC to probe bank failures, and not necessarily an indication of wrongdoing, the probe adds to regulatory scrutiny of the failed banks’ leadership.The U.S. Justice Department and Securities and Exchange Commission (SEC) are scrutinizing stock trades and statements made by First Republic ahead of the bank’s demise, according to a source with knowledge of the probe. Bloomberg previously reported the investigation.Massachusetts regulators are also investigating First Republic insiders’ stock sales, Reuters previously reported. Federal investigators are likewise probing the collapse of SVB, Reuters and others have reported. In congressional testimony, former SVB and Signature executives have denied wrongdoing or mismanagement of their banks. NO ACTIONThe March implosions of SVB and Signature Bank sparked a deposit run at First Republic. Despite efforts to stabilize the ailing lender, it failed in May and was sold to JPMorgan Chase & Co. (NYSE:JPM) It was the biggest bank failure since the 2007-2009 global financial crisis. A JPMorgan spokesperson declined to comment.First Republic was especially vulnerable because it relied excessively on uninsured deposits, grew rapidly with loans and funding concentrated in ways that increased risk, and failed to plan adequately for the possibility the Federal Reserve could raise interest rates sharply, the FDIC has said. In a September postmortem, the FDIC also highlighted decisions by First Republic’s board of directors in the second half of 2022 when they were confronted with serious warning signs.On at least two occasions, the board collectively decided “to take no further action” after learning one of its risk models was flashing red, causing FDIC supervisors to worry about the bank’s “lack of urgency” in confronting the problem. One model forecast that a 200 basis-point increase in interest rates could more than wipe out the bank’s equity. As the Fed raised rates in 2022, First Republic suffered mounting unrealized losses in its loan portfolio that ultimately exceeded its equity levels, which undermined public confidence, contributing to the fatal run on the bank, the FDIC said.PENALTIESIn the past, the FDIC has required board members of failed banks to help replenish the deposit insurance fund by ordering them to pay restitution personally or using payouts on their liability insurance coverage, said Michael Krimminger who was the FDIC’s general counsel from 2011-2012.The FDIC has recovered more than $4.4 billion from the directors and officers of more than 500 failed lenders in this way since 2008, according to its website. “The most severe penalty is to bar an individual from working for a bank in the future,” said Krimminger, noting this was reserved for “the more egregious cases.”FDIC bank failure probes can take years. Four years after IndyMac collapsed in 2008, the FDIC banned its former CEO Michael Perry from the industry, accusing him of negligence.In a settlement, the FDIC, which suffered a nearly $13 billion loss from IndyMac’s collapse, collected $11 million in an insurance payout and $1 million in Perry’s personal assets. Perry’s lawyers said he “steadfastly denied” the allegations. More

BRASILIA (Reuters) -Brazil’s central bank cut its benchmark interest rate by 50 basis points on Wednesday for the third time in a row and once again signaled more of the same for its upcoming meetings, but also flagged an “adverse” external backdrop for emerging economies.The bank’s rate-setting committee, known as Copom, unanimously reduced its Selic benchmark interest rate to 12.25%, a move expected by all 40 economists polled by Reuters.”If the scenario evolves as expected, the committee members unanimously anticipate further reductions of the same magnitude in the next meetings, and judge that this pace is appropriate to keep the necessary contractionary monetary policy for the disinflationary process,” said the central bank in its decision’s statement.However, despite its expectation of keeping its pace of rate cuts, the bank mentioned an “adverse” global outlook that “requires caution on the conduct of monetary policy.”The prospect of higher long-term U.S. interest rates has led to a tightening of global liquidity and strengthening of the dollar, adding to inflation pressures in emerging markets like Brazil. “Despite anticipating the next steps of 50 basis points, there appears to be less visibility and confidence regarding the overall extent of the cycle,” said Daniel Cunha, chief strategist at brokerage BGC Liquidez.In its statement, the central bank also highlighted the persistence of elevated core inflation in several countries, alongside emerging geopolitical tensions following the outbreak of the Israel-Palestine conflict.Policymakers again reiterated that the overall extent of the easing cycle over time will depend on a range of factors, including the inflation dynamics and the output gap, emphasizing the need to maintain a tight policy until the disinflationary process solidifies and inflation expectations meet targets.Uncertainties about the global scenario and concerns about leftist President Luiz Inacio Lula da Silva’s commitment to fiscal discipline had already caused economists polled by the central bank to tweak their estimates for the easing cycle, forecasting rates to end 2024 at 9.25%, up from 9% before.Last week, Lula said his government did not need to erase its primary budget deficit next year, as previously proposed to Congress under new fiscal rules, given the importance of public funding for priority projects and construction investments. His comments hobbled local markets and reignited concerns about a larger-than-estimated increase in Brazil’s public debt.The central bank, which had already been pointing to market distrust of the government’s fiscal targets as one of the reasons why long-term inflation expectations were not converging to the target, reaffirmed in its statement the importance of “firmly pursuing” the fiscal goals. Policymakers revised their inflation projections to 4.7% for this year, down from 5.0% before, now standing within the official target of 3.25% with a tolerance margin of 1.5 percentage points in either direction.Meanwhile, inflation forecasts for 2024 and 2025 have been increased to 3.6% and 3.2%, from 3.5% and 3.1% respectively. The inflation target for the upcoming year and beyond stands at 3%, with the same tolerance interval. More