Aurelia Butler

WASHINGTON (Reuters) – U.S. House of Representatives Speaker Kevin McCarthy on Sunday lauded the debt ceiling deal he negotiated with Democratic President Joe Biden, but a prominent House conservative warned that McCarthy has “credibility issues” that may prompt some Republicans to seek his ouster as the top Republican in Congress.Representative Ken Buck, a member of the far-right House Freedom Caucus, said the deal had failed to deliver the deeper spending cuts that McCarthy had promised his party when he ran for speaker in January. The debt ceiling deal keeps fiscal 2024 spending flat at this year’s levels, allowing a 1% increase for fiscal 2025. The non-partisan Congressional Budget Office estimates that the deal will cut deficits by about $1.5 trillion over a decade from its current-law baseline forecast.House Republicans in late April passed a bill demanding $4.8 trillion deficit reduction over 10 years in exchange for a debt ceiling hike, drawing Biden into negotiations that led to the deal’s Senate approval on Thursday. Asked whether the Freedom Caucus would seek a vote to oust McCarthy in response to the deal, Buck told CNN’s State of the Union program: “I don’t know if the motion to vacate is going to happen right away. I do know that Speaker McCarthy has credibility issues.” To win the speakership in a fractious election process in January, McCarthy agreed to rule changes that allow just one member to force a vote to oust him, making him unusually vulnerable to hardline Republican conservatives.Other Republicans rushed to McCarthy’s defense a day after Biden signed into law the legislation that suspends the debt ceiling until Jan. 1, 2025, averting what would have been a disastrous U.S. payments default that was expected on Monday. “Speaker McCarthy’s position is absolutely safe,” U.S. Representative Garret Graves, a Louisiana Republican who helped negotiate the debt ceiling deal, told CBS’ “Face the Nation”.McCarthy told Fox News Channel’s “Sunday Morning Futures” that the deal marks a rare reduction in non-defense discretionary spending, prevents the hiring of more Internal Revenue Service agents next year and increases funding for defense and veterans.”It’s not perfect but it is a beginning of turning the ship” on spending, he said. “Now we’ve got to do the rest of the job.”DEAL PASSES IN DIVIDED CONGRESSBuck said that McCarthy promised Republicans that he would cut spending levels to fiscal 2022 levels, not the higher 2023 levels agreed in the deal, making the deal a loss the party.To regain conservatives’ trust, Buck added that McCarthy’s future actions will need to “involve spending responsibly” and stop relying on the votes of Democrats as he did to pass the debt ceiling suspension.The deal was approved by 149 House Republicans and 165 Democrats, strong majorities of both parties. Roughly half the 76 Republican no votes were from the ultra-conservative Freedom Caucus, while 46 Democrats, mostly progressives, opposed the deal, saying it enforced stringent work requirements on poor families who receive food assistance or monetary aid and others who face obstacles to employment. They also criticized provisions that could lead to ending the student debt payment pause for younger people, and the streamlining of approvals for fossil fuel industry projects opposed by environmentalists, two key constituencies for Democrats.On Friday, Fitch Ratings it would keep the U.S. top tier credit rating on “negative watch” until the third quarter due to concerns over repeated brinkmanship over the debt ceiling, along with rising debt and deficits.Asked if she was concerned about a ratings downgrade, White House budget director Shalanda Young told CNN that the Biden administration does not control Fitch’s assessment process, but has warned about the potential costs of debt ceiling brinkmanship.”It’s bad for the country. It’s bad for the global economy,” added Young, who helped negotiate the deal. (This story has been refiled to fix the order of words in the headline) More

A meeting of the parties endorsed the nomination of Azour, currently director of the Middle East and Central Asia Department at the International Monetary Fund and also a former Lebanese finance minister.Lebanon has had no head of state since President Michel Aoun’s term ended at the end of October, deepening institutional paralysis in a country where one of the world’s worst economic crises has been festering for years.Pro-Iranian Hezbollah, the country’s main armed political force, and its Shi’ite ally Amal, had backed Franjieh, 56, heir of an old Lebanese Christian political dynasty and an ally of Syrian President Bashar al-Assad with strong ties to the ruling political establishment in Damascus.Anti-Hezbollah lawmaker Michel Mouawad, who had won the most votes in repeated unsuccessful presidential election votes, but not enough to win, said he had withdrawn his candidacy in favour of Azour.Opposition deputies said the consensus around Azour could help him garner the 65 votes needed in a secret ballot by lawmakers in the 128-member parliament to assume the post reserved for a Maronite Christian under the country’s complex sectarian power sharing regime.Azour has not declared his own candidacy but political sources say he has held discrete meetings with various parties and members of parliament to discuss his chances.In his Sunday sermon, a few hours before Azour was backed by opposition MPs, Lebanon’s top Maronite cleric Patriarch Beshara al-Rai said he welcomed “any step” towards ending the stalemate over the presidency.Hezbollah officials had accused those delaying Franjieh’s nomination of prolonging the crisis and serving the West.”This new candidate that was announced is for us a candidate for confrontation,” Hezbollah deputy Hassan Fadlallah said on Sunday, without naming Azour.Hezbollah and its allies have close ties to Syria and Iran, while their opponents in the Christian and Sunni Muslim communities traditionally look to the West and Sunni-led Gulf Arab states.Washington has warned that the administration was considering sanctions on Lebanese officials for their continued obstruction of the election of a new president and warned the paralysis could only worsen the country’s crisis. More

Chris Southworth is secretary general of the International Chamber of Commerce, United KingdomWe think of the world today as a digital one. But right now the global trading system is suffocating under a mountain of billions of paper documents. It doesn’t need to be that way. A recent Trade Barometer survey by Santander UK found 35 per cent of UK companies trading internationally say bureaucracy is a barrier to their business overseas. At the same time, 65 per cent said they will remove paper as soon as laws enable them to do so.Currently, a trade transaction can require up to 40 different paper-based trade documents, many of which ask for the same information over and over again. The process is slow and costly and can take up to two to three months to complete. As Commonwealth trade ministers gather in London this week, it is a golden moment to reform laws and digitalise trade across the Commonwealth. According to the Commonwealth’s own business case, this would deliver $1.2tn in economic growth by 2026. It would also reduce trade transaction costs by 80 per cent and enable more SMEs to participate. If combined with customs digitalisation, this number increases to $2tn, the equivalent to the Commonwealth’s trade target by 2030. Globally, we need to stop thinking about documents and start thinking about how to use data and technology more effectively. By simplifying the system and removing all the duplicative information requirements, there is real potential to remove swaths of paperwork completely. After years of advocacy by the International Chamber of Commerce, alongside organisations such as the Bankers Association for Finance and Trade, the UN, WTO, as well the UK government and others such as Singapore, we are seeing progress. Paper is falling out of use everywhere.In the UK, the electronic trade documents bill, currently completing its legislative journey, will remove all requirements to use paper trade documentation from this autumn. This includes 80 per cent of bills of lading worldwide. Legal barriers are being removed across 50 per cent of world trade. France, Germany, the US and UK will have removed all legal barriers by the end of this year. The ICC is expecting 90 per cent of world trade to be on a path to digitalisation from February 2024. This is too good an opportunity to pass up for the Commonwealth, who all share the same trade laws.We have significantly underestimated just how many companies want to ditch paper. Several test projects over the past 12 months have delivered between 40 per cent and 90 per cent efficiency gains and cost savings, enabling companies to increase the speed and flow of their international trade. This matters for all trading companies, but for some, such as those trading in perishable goods or just in time delivery systems, it really matters. In both examples, goods need to cross borders swiftly and without delay. It’s not just about trade, either. The electronic trade documents bill will enable new financial instruments such as electronic promissory notes (ePNs) to exchange money in far shorter timeframes to help drive local enterprise and growth. A recent Lloyds Bank pilot testing the use of these ePNs on a domestic land sale delivered an 88 per cent efficiency gain and all the associated cost reductions this brings. While free trade agreements win headlines and are important to enabling barrier-free trade, the economic gains they offer are dwarfed by the opportunity presented by removing paper and digitalising trade. This is our chance to radically upgrade how the UK trades with her international partners, all at once. This week we expect Commonwealth trade ministers to launch a programme of reforming laws and digitalise trade. We are truly on the cusp of a new trade revolution.  More

Hello and welcome to the working week.Apple will on Monday give us what has been billed as its biggest product launch since the iPad, 13 years ago.The new “mixed reality” headset was seven years in the making — twice as long as it took to create the first iPhone. Chief executive Tim Cook, who will be giving the keynote speech from the Apple headquarters in Cupertino, hopes it will guarantee him a legacy akin to that of the company’s smartphone. The FT’s Richard Waters sees it as a hedge against the eventual waning of enthusiasm for smartphones.Staying in the US, former Republican vice-president Mike Pence is expected to launch a presidential bid against his former boss Donald Trump on CNN.Pence hopes he can overcome anger among Republican voters — many of whom fault him for certifying Joe Biden’s election victory in 2020 — by taking credit for economic, immigration and trade policies implemented during the Trump administration.There are a couple of reports to watch out for this week. The World Bank unveils the summer edition of its Global Economic Prospects on Tuesday and the OECD releases its economic outlook on Wednesday.In the UK, the CBI’s membership will vote on Tuesday on whether to approve the British business lobbying group’s “programme of change” after a recent scandal.The week will finish with the men’s and women’s finals in the French Open tennis tournament, the Le Mans 24-hour motor racing contest and the Uefa Champions League final.Thank you for your comments about this newsletter. Email me at [email protected] dataWe have an inflation update from China, final gross domestic product revisions from the EU and Japan, plus a comparison of the performances of G7 nations with the latest purchasing managers’ index (PMI) figures on services.Rate decisions this week come from Australia and Canada. Some analysts expect the Bank of Canada to raise rates on Wednesday for the first time since pausing in January because of the country’s stronger than expected economic performance this year, but most see the central bank holding off until at least July.CompaniesThe run of earnings will begin slowly but gather pace as the week progresses with a mixed bag of budget airlines (Wizz Air), drinks and cigarette suppliers (Brown-Forman and British American Tobacco) plus mass transport operators (FirstGroup). Among the highlights is Inditex, the Spanish owner of high street fashion retailer Zara, whose first-quarter figures are expected to beat the market average, despite ongoing problems in the Russian market.London’s standing as a place to list companies will be back in the news, with CRH holding an extraordinary general meeting for shareholders on Thursday to vote on a proposed change of primary listing from London to New York for the Dublin-based building materials business.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayApple stages its Worldwide Developers Conference from its headquarters in Cupertino, CaliforniaGlobal airlines body Iata publishes its annual report into the industry at its annual meeting and World Air Transport Summit in Istanbul, TurkeyInternational Atomic Energy Agency board of governors meeting begins in Vienna, AustriaChina, EU, France, Germany, India, Italy, Japan, UK, US: Caixin/Cips/S&P Global final services purchasing managers’ index (PMI) surveyGermany, April trade balance figuresGreece, Orthodox Whitsun public holidayUS, April factory orders dataTuesdayAustralia, Reserve Bank interest rate decisionChina, 2023 Guangzhou International Automobile Technology Exhibition endsEU, monthly retail sales figuresGermany, SuperReturn private equity conference in BerlinSweden, National Day, financial markets closedUK, BRC-KPMG Retail Sales MonitorUK, Cips/S&P construction PMI surveyWorld Bank’s summer edition of its Global Economic Prospects reportResults: British American Tobacco trading update, Chemring H1, Ferguson Q3, N Brown FY, Paragon Banking Group H1, Speedy Hire FYWednesdayOECD Economic Outlook reportAustralia, Q1 GDP figuresCanada, central bank interest rate decisionGermany, April industrial production figuresUK, Halifax House Price IndexResults: Brown-Forman Q4, Campbell Soup Company Q3, Inditex Q1ThursdayCRH holds an extraordinary general meeting for shareholders to vote on shifting its primary listing from London to New YorkWaverley Borough council brings a legal challenge to the plan by UK Oil and Gas to drill for oil in the Surrey Hills Area of Outstanding Natural BeautyEU, Q1 GDP figuresIndia, central bank rate decisionJapan, revised Q1 GDP figuresUK, RICS house price indexResults: Crest Nicholson H1, FirstGroup FY, M&G Q1 trading statement, Mitie FY, Wizz Air Holdings FYFridayCanada, May unemployment rateChina, May consumer price index (CPI) and producer price index (PPI) inflation rate figuresRussia, May CPI inflation rate figuresUK, the GMB closes its union ballot of members working at the Amazon fulfilment centres in Rugeley and Mansfield for industrial action in a dispute over pay. This follows 14 days of strike action at Amazon’s Coventry depot, involving as many as 700 workersWorld eventsFinally, here is a rundown of other events and milestones this week. MondayWorld Environment Day will see events staged around the globe to increase awareness of worldwide environmental concernsEU, European Central Bank president Christine Lagarde presents her views on current economic and monetary policy at a hearing before the Committee on Economic and Monetary Affairs of the European parliament in BrusselsSwitzerland, the World Trade Organization secretariat holds a review of the EU’s trade policiesUS, president Joe Biden hosts Danish prime minister Mette Frederiksen at the White House. Discussions between the fellow Nato members are likely to include the Ukraine conflict, as well as climate change and energy securityTuesdayFrance, a 14th day of mass strikes and protests, called by the country’s main unions, are expected to demand the withdrawal of the pension reforms law. President Emmanuel Macron will make an official visit to Normandy on the 79th anniversary of D-DayGermany, chancellor Olaf Scholz and France’s president Macron meet for an informal dinner in Potsdam, where they are expected to discuss this month’s European Council and the Nato Summit in JulyKuwait, parliamentary electionsNetherlands, four days of hearings begin at the International Court of Justice in The Hague to consider Ukraine’s claim that Russia violated a UN treaty by supporting pro-Russian separatists, identified by a Dutch court as being responsible for the 2014 downing of Malaysia Airlines Flight MH17UK, CBI extraordinary general meeting. The business organisation announced in April that it was suspending all policy and membership activity until the EGM following a number of allegations made against it, including allegations by female staff of rape and sexual assault taking place at CBI eventsUS, British prime minister Rishi Sunak begins a two-day US visitWednesdayUK in a Changing Europe annual conference opens in London, reflecting on the seven years since the country voted to leave the EU and the impact this has had on British politics. Speakers include Labour party chair Anneliese DoddsUS, former Republican vice-president Mike Pence is set to launch a presidential bidThursdayCanada, Bank of Canada deputy governor Paul Beaudry to speak at the Greater Victoria Chamber of CommerceUK, a 14-day strike begins at Coca-Cola Europacific Partners, Europe’s biggest soft drinks plant, in a dispute over payFridayUK, London Fashion Week beginsUS, 76th Tony Awards to recognise achievements on Broadway theatre productions will be held at the United Palace in New YorkSaturdayThe Le Mans 24-hour endurance motor race begins in the French cityFrench Open tennis women’s singles final is played in Paris2022-23 Uefa Champions League final between Manchester City and Inter Milan is played at the Atatürk Olympic stadium, IstanbulUK, 12th Liverpool Biennial festival of contemporary visual art opens, marking the 25th anniversary of the UK’s largest contemporary visual arts festivalSundayFrench Open tennis men’s single final is played in ParisMontenegro, parliamentary elections More

“I am reasonably confident that we’ll be able to get through this peak summer without too much disruption,” Willie Walsh, director general of the International Air Transport Association, (IATA) said in an interview on Sunday.Airline leaders attending IATA’s annual meeting in Istanbul this week remain concerned about air traffic control disruption in Europe and the United States, however.”But as far as they are concerned, they have fulfilled their obligation to get their resources in place for this summer. Most of the airports I think, will be okay, as well; I think they’ve learned the lessons from last year,” Walsh told Reuters.A faster-than-expected rebound in air travel coupled with labour shortages caused chaos at several airports in Europe and North America last summer and prompted a row between airlines and airports over passenger caps designed to ease the pressure.Rising numbers of disputes between travellers and airlines globally have led to calls for passenger compensation.Legislation is under review in Canada, while the U.S. government is writing new rules and the European Union is pushing for stronger enforcement of its existing “Regulation 261″ which requires compensation for delays of more than three hours.”Ultimately it is the consumer who’s paying because this is of course being borne by the industry, but the industry can’t just absorb that,” Walsh said.”The more expense that airlines have to incur because of problems outside of their control, the more that’s going to be reflected in ticket prices, and it will drive ticket prices up. It is a very, very frustrating environment to be operating in”.Some passenger groups have accused airlines of skirting compensation by invoking an exemption for exceptional circumstances. EU rules allow such exemptions as long as airlines can show they have taken reasonable steps to prevent any delay.Airlines have reported strong bookings for this summer as air traffic returns towards pre-COVID levels.European air traffic control agency Eurocontrol warned late last year that 2023 could be “the most challenging year of the last decade” due to the Ukraine conflict, possible strikes, rising numbers of aircraft and the reopening of Asian markets. More

NEW YORK (Reuters) -As the U.S. stock market continues its climb, investors holding shares of the massive tech and growth companies leading the charge are debating whether to cash out or stay on for the ride. A record $8.5 billion flowed into tech stocks in the latest week, data from BofA Global Research showed, as investors piled into a rally that has seen the tech-heavy Nasdaq 100 gain 33% in 2023. The benchmark S&P 500 has risen 11.5% this year and stands at a 10-month high.Yet others see reasons for caution. Among them is the narrowness of the market’s rally: the five largest stocks in the S&P 500 have a combined weighting of 24.7% in the index, a record high dating back to 1972, Ned Davis Research said in a recent report. The heavy weightings could mean more significant fallout for broader markets should those names falter.”We had this big run and the essential question is, do you believe it’s going to continue or do you believe things are going to return to the mean?” said Peter Tuz, president of Chase Investment Counsel.Excitement over advances in artificial intelligence is a key factor fueling gains in megacap stocks. Big movers include shares of Nvidia (NASDAQ:NVDA), which are up about 170% this year, while Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT), the top two U.S. companies by market value, have both climbed nearly 40%.Jay Hatfield, CEO of hedge fund InfraCap, believes excitement over AI will keep boosting megacap stocks. He is overweight megacaps, including Nvidia, Microsoft and Google-parent Alphabet (NASDAQ:GOOGL). “We 100% believe in the AI boom,” Hatfield said. “I would be shocked if by the end of the year these stocks are not significantly higher.”Data on Friday showed U.S. job growth accelerating in May, even as a jump in the unemployment rate suggested labor market conditions were easing, boosting investors’ appetite for stocks amid hopes that the Federal Reserve will be able to bring down inflation without badly hurting growth. The S&P 500 rose 1.45%.Megacap stocks led markets for much of the decade after the financial crisis and betting against them has been a perilous strategy in 2023. Investors’ allocation to cash is higher than it has been historically, data from BofA showed, which some market observers believe leaves plenty of fuel to push the rally further.Strong momentum can also continue to propel stocks higher.Michael Purves, CEO of Tallbacken Capital Advisors, wrote earlier this week that technical analysis showed the Nasdaq 100 is overbought, a condition that can make an asset more vulnerable to sharp declines. However, the index managed to rally another 10% over three months when it reached the same condition two years ago, according to Purves. The recent surge in Nvidia showed how a stock can keep climbing even after posting hefty gains. Shares were already up 109% heading into its May 24 earnings report, but rose another 30% in the past week after the chipmaker’s surprisingly upbeat sales forecast. Kevin Mahn, chief investment officer at Hennion & Walsh Asset Management, said shares of Nvidia, which now trade at 44 times forward earnings estimates, according to Refinitiv Datastream, have become “a little rich.” “I still like the technology sector over the next two years, but I now have to be a lot more focused on valuation given the run up in a lot of these megacap stocks,” said Mahn, who says Microsoft shares remain attractive due in part to the company’s impressive cash flow and healthy dividend yield.Others are growing wary, citing factors such as rising valuations and signs that the rest of the market is languishing while a small cluster of stocks soars. The performance of just seven stocks, Apple, Microsoft, Alphabet, Amazon (NASDAQ:AMZN), Nvdia, Meta Platforms and Tesla (NASDAQ:TSLA), accounted for all of the S&P 500’s 2023 total return through May, according to S&P Dow Jones Indices.At the same time, only 20.3% of S&P 500 stocks have outperformed the index on a rolling three-month basis, a record low dating back five decades, according to Ned Davis. Levels below 30% have preceded weaker performance for the broader market, with the S&P 500 rising 4.4% over the next year versus an average of 8.2% for all one year periods, the firm’s research showed. David Kotok, chief investment officer at Cumberland Advisors, in recent days pared back holdings of the iShares semiconductor ETF following the latest spike in shares of Nvidia. Kotok views narrowing breadth as an ominous sign for the broader stock market, saying that equities also look less favorable in certain asset valuation metrics. In one commonly used valuation metric, the S&P 500 is trading at 18.5 times forward earnings estimates compared to its historic average of 15.6 times, according to Refinitiv Datastream.”You can have (market) concentration and it can go on for a while,” he said. But, he said, “for me, the narrowing is a warning.” More

Willie Walsh, director general of the International Air Transport Association, told Reuters the topic had been raised by “every single one” of the airline CEOs he had met as the industry gathers for a three-day annual meeting in Istanbul.Airlines “are not concerned about the macroeconomic environment, they’re concerned about the access to spare parts for their existing aircraft and the delivery of new aircraft. So it’s definitely got to hold back capacity growth,” he said.”It’s frustrating because airlines can see strong demand, but they’re not able to match supply with demand in many markets. And this is something we want to see resolved.”Airbus and Boeing (NYSE:BA) have blamed supply chains for delivery delays, while bottlenecks in a network of engine repair shops have also forced airlines to ground dozens of jets.The gathering comes two weeks before the Paris Airshow, where supply pressures are likely to overshadow new orders. More