Evelyn Reynolds

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    The N.C.A.A. Agreed to Pay Players. It Won’t Call Them Employees.

    The argument is the organization’s attempt to maintain the last vestiges of its amateur model and to prevent college athletes from collectively bargaining.The immediate takeaway from the landmark $2.8 billion settlement that the N.C.A.A. and the major athletic conferences accepted on Thursday was that it cut straight at the heart of the organization’s cherished model of amateurism: Schools can now pay their athletes directly.But another bedrock principle remains intact, and maintaining it is likely to be a priority for the N.C.A.A.: that players who are paid by the universities are not employed by them, and therefore do not have the right to collectively bargain.Congress must “establish that our athletes are not employees, but students seeking college degrees,” John I. Jenkins, the president of the University of Notre Dame, said in a statement when the agreement was announced.It is the N.C.A.A.’s attempt to salvage the last vestiges of its amateur model, which for decades barred college athletes from being paid by schools or anyone else without risking their eligibility. That stance came under greater legal and political scrutiny in recent years, leading to the settlement, which still requires approval by a judge.On its face, the argument may seem peculiar. Over the past decade, public pressure and a series of court rulings — not to mention the reality that college athletics generated billions of dollars in annual revenue and that athletes received none of it — have forced the N.C.A.A. to unravel restrictions on player compensation. A California law that made it illegal to block college athletes from name, image and licensing, or N.I.L., deals paved the way for athletes to seek compensation, some of them receiving seven figures annually.At the same time, college sports have become an increasingly national enterprise. Regional rivalries and traditions have been tossed aside as schools have switched conference allegiances in pursuit of TV money. Individual conferences can now stretch from Palo Alto, Calif., to Chestnut Hill, Mass., meaning many athletes in a variety of sports are spending more time traveling to games and less time on campus.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    British retail sales plunge 2.3% in April, missing estimates

    Economists polled by Reuters expected a smaller fall of 0.4%.
    March’s figure was revised from flat to a 0.2% decline.
    Sales were up 0.7% across the three months to April compared to the previous three months following a weak December and holiday season, but were down 0.8% year on year.

    People walk in the rain over the London Bridge in central London on March 12, 2024.
    Lucy North – Pa Images | Pa Images | Getty Images

    LONDON — U.K. retail sales volumes dropped 2.3% in April as wet weather deterred shoppers, the Office for National Statistics said Friday.
    Economists polled by Reuters expected a smaller fall of 0.4%.

    “Sales volumes fell across most sectors, with clothing retailers, sports equipment, games and toys stores, and furniture stores doing badly as poor weather reduced footfall,” the ONS said. March’s figure was revised from flat to a 0.2% decline.
    Sales were up 0.7% across the three months to April compared to the previous three months following a weak December and holiday season, but were down 0.8% year on year.

    Kris Hamer, director of insight at the British Retail Consortium, pointed to bright spots in the data in cosmetics and computer sales.
    “With summer around the corner, and inflation fast approaching the Bank of England’s 2% target, retailers are hopeful that consumer confidence will improve, and spending will pick up once again,” Hamer said in a note.
    Consumer confidence did improve in May across both personal finances and the outlook on the wider economy, according to a survey released by GfK on Friday.

    Headline inflation in the U.K. cooled to 2.3% in April from 3.2%, figures published Wednesday showed. However, stickiness in core and services inflation led markets to push back bets for the first BOE interest rate cut from June to August or September.
    Phil Monkhouse, U.K. country manager at financial services firm Ebury, said the surprise General Election announced this week for July 4 might add “fresh uncertainty” into the minds of consumers who are already dealing with higher interest rates.
    “Preparing for the warmer weather, ensuring ready access to finance and putting in place hedging arrangements will be essential for retailers wanting to ride out any future sales volatility,” Monkhouse said. More

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    Auto insurance rates are jumping the most since the 1970s, but there could be relief soon

    Soaring auto insurance costs have been a principle driver behind inflation over the past year, but there could be relief on the way, according to Bank of America.
    Motor vehicle insurance cost was up 22.6% from a year ago, the largest annual increase since 1979, according to Bank of America.
    Recent trends probably do not “mean that your premium will fall, but we think the rate of increase should slow,” BofA economist Stephen Juneau said.

    Rows of new Tesla cars are seen in a holding area near a customer collection point on April 15, 2024 in London, England.
    Leon Neal | Getty Images

    Soaring auto insurance costs have been a principle driver behind inflation over the past year, but there could be relief on the way, according to Bank of America.
    The bank’s economists see several driving factors behind the run-up in costs to ease in the months ahead, possibly taking some of the heat off a category that has pushed the Federal Reserve to keep up its inflation fight.

    “The turbocharged increases in motor vehicle insurance premiums are a response to underwriting losses in the industry. Insurers saw losses,” BofA economist Stephen Juneau said in a note. However, he added, “There are signs that many insurers are getting back to profitability.”
    Primarily, the hit to insurers, which has been passed on to consumers, arose from three sources: higher vehicle prices, increased costs for repairs and “more accidents as driving trends returned to normal,” Juneau said.
    There’s some good news on that front.
    Sales prices for new and used vehicles have been trending lower in recent months and are down 0.4% and 6.9%, respectively, on a 12-month basis, according to Bureau of Labor Statistics data through April. Also, repair and maintenance services costs were flat in April though still up 7.6% from a year ago.

    Motor vehicle insurance costs, though, continued to soar.

    The category rose 1.8% in April on a monthly basis and was up 22.6% from a year ago, the largest annual increase since 1979, according to Bank of America.
    In the CPI calculation, auto insurance has a weighting of nearly 3%, so it’s a significant component.
    The recent trends probably do not “mean that your premium will fall, but we think the rate of increase should slow,” Juneau said.
    That has been the general story with inflation: prices are not falling, but the rate of increase is well off the pace of mid-2022 when inflation hit its highest level in more than 40 years. Overall CPI inflation ran at a 3.4% annual rate in April.
    There’s one other tidbit of good news when it comes to Fed policy.
    The central bank’s primary inflation barometer is the Commerce Department’s measure of personal consumption expenditures, not the consumer price index from the BLS. In the PCE gauge, auto insurance has a smaller weighting, meaning it is less of an inflation driver.
    If the BofA forecast for insurance disinflation is accurate, it could at least give the Fed more confidence to start cutting rates later this year. Current market pricing is indicating an expected first cut in September, with one more possible before the end of the year.
    “We think further improvement in this aggregate is one key for the Fed to become more confident in the disinflationary process and start its cutting cycle,” Juneau said. “Until then, we expect the Fed to keep rates in park.”

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    What Trump 2.0 Could Mean for the Federal Reserve

    A second Trump administration could shake up personnel and financial regulation at America’s central bank, people close to his campaign said.Former President Donald J. Trump relentlessly criticized the Federal Reserve and Jerome H. Powell, its chair, during his time in office. As he competes with President Biden for a second presidential term, that history has many on Wall Street wondering: What would a Trump victory mean for America’s central bank?The Trump campaign does not have detailed plans for the Fed yet, several people in its orbit said, but outside advisers have been more focused on the central bank and have been making suggestions — some minor, others extreme.While some in Mr. Trump’s circles have floated the idea of trying to limit the Fed’s ability to set interest rates independent of the White House, others have pushed back hard on that idea, and people close to the campaign said they thought such a drastic effort was unlikely. Curbing the central bank’s ability to set interest rates without direct White House influence would be legally and politically tricky, and tinkering with the Fed so overtly could roil the very stock markets that Mr. Trump has frequently used as a yardstick for his success.But other aspects of Fed policy could end up squarely in Mr. Trump’s sights, both former administration officials and conservative policy thinkers have indicated.Mr. Trump is poised to once again use public criticism to try to pressure the Fed. If elected, he would also have a chance to appoint a new Fed chair in 2026, and he has already made it clear in public comments that he plans to replace Mr. Powell, whom he elevated to the job before President Biden reappointed him.“There will be a lot of rhetorical devices thrown at the Fed,” predicted Joseph A. LaVorgna, the chief economist at SMBC Nikko Securities America, an informal adviser to the Trump campaign and the chief economist of the National Economic Council during Mr. Trump’s administration.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    JPMorgan CEO Jamie Dimon says can’t rule out ‘hard landing’ for the U.S., stagflation will be ‘worst outcome’

    JPMorgan Chase’s chairman and CEO Jamie Dimon says a “hard landing” for the U.S. cannot be ruled out.
    Speaking at the JPMorgan Global China Summit in Shanghai, he told CNBC that the worst outcome for the U.S. economy will be a “stagflation” scenario, where inflation continues to rise, but growth slows amid high unemployment.
    Dimon said interest rates could still go up “a little bit.”

    JPMorgan Chase’s chairman and CEO Jamie Dimon says a “hard landing” for the U.S. cannot be ruled out.
    When asked by CNBC’s Sri Jegarajah about the prospect of a hard landing, Dimon replied: “Could we actually see one? Of course, how could anyone who reads history say there’s no chance?”

    The CEO was speaking at the JPMorgan Global China Summit in Shanghai.
    Dimon said the worst outcome for the U.S. economy will be a “stagflation” scenario, where inflation continues to rise, but growth slows amid high unemployment.
    “I look at the range of outcomes and again, the worst outcome for all of us is what you call stagflation, higher rates, recession. That means corporate profits will go down and we’ll get through all of that. I mean, the world has survived that but I just think the odds have been higher than other people think.”
    However, he said that “the consumer is still in good shape” — even if the economy slips into recession.
    He pointed to the unemployment rate, which has been below 4% for about two years, adding that wages, home prices and stock prices have been going up.

    JPMorgan Chase & Co CEO Jamie Dimon arrives for a Senate Banking, Housing, and Urban Affairs Committee hearing on Capitol Hill September 22, 2022 in Washington, DC.
    Drew Angerer | Getty Images

    That said, Dimon pointed out that consumer confidence levels are low. “It seems to be mostly because of inflation …The extra money from Covid has been coming down. It’s still there, you know, at the bottom 50% it’s kind of gone. So it’s I’m gonna call it normal, not bad.”
    Minutes from the Fed’s May meeting released Wednesday showed that policymakers have grown more concerned about inflation, with members of the Federal Open Market Committee indicating they lacked confidence to ease monetary policy and cut rates.

    Timing of Fed cuts

    Dimon said interest rates could still go up “a little bit.”
    “I think inflation is stickier than people think. I think the odds are higher than other people think, mostly because the huge amount of fiscal monetary stimulus is still in the system, and still maybe driving some of this liquidity.”
    Is the world prepared for higher inflation? “Not really,” he warned.

    According to the CME FedWatch Tool, about half of traders polled are pricing in a 25 basis points cut by September. The Fed has predicted three quarter-percentage cuts throughout 2024, but only if the market allows.
    Asked about the prospect and timing of rate cuts, Dimon said that while market expectations “are pretty good. They’re not always right.”
    “The world said [inflation] was gonna stay at 2% all that time. Then it says it will go to 6%, then it said it’s gonna go to four … It’s been a hundred percent wrong almost every single time. Why do you think this time is right?”

    JPMorgan uses the implied curve to estimate interest rates, he said, adding: “I know it’s going to be wrong.
    “So just because it says X, doesn’t mean it’s right. It’s always wrong. You go back to any inflection point of the economy ever, and people thought X and then they were dead wrong two years later,” he said. More

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    Fed Minutes Show Officials Were Wary About Inflation at May Meeting

    Federal Reserve policymakers were still willing to raise rates if the economy surprised them, notes from their most recent meeting suggested.Federal Reserve officials were wary about the recent lack of progress on inflation and remained willing to lift interest rates if conditions made it necessary as of their two-day meeting that ended on May 1.Minutes from the gathering, released Wednesday, showed that “many” officials expressed uncertainty about how much today’s interest-rate setting — 5.3 percent, up sharply from near zero in early 2022 — was weighing on the economy.Officials have been clear that they expect to leave interest rates unchanged for now, hoping that they are tapping the brakes on economic growth enough to quash inflation over time. And central bankers have repeatedly emphasized that they expect the next move on interest rates to be a reduction, not an increase.But policymakers have stopped short of ruling out a future rate increase, allowing that it’s a possibility if inflation proves surprisingly rapid. The minutes underscored that caveat.“Various participants mentioned a willingness to tighten policy further” if needed, the release showed.Stock indexes fell after the release of the minutes, as investors fretted that the Fed’s wariness about inflation could keep interest rates higher.Fed officials have received some comforting news since their last gathering: Inflation cooled slightly in April, a sign that the surprisingly stubborn price pressures at the beginning of the year will not necessarily become a permanent trend. Policymakers have continued to emphasize that they are happy to keep interest rates at today’s levels for an extended period as they wait to make sure that price increases are fully decelerating.“We’re just going to need to accumulate more information,” Loretta Mester, the president of the Federal Reserve Bank of Cleveland, said in an interview this week at the Federal Reserve Bank of Atlanta’s Financial Markets Conference in Florida. She noted that improvements to supply chains lowered inflation quite a bit last year and said that was unlikely to repeat itself this year.When it comes to stamping out price increases enough to lower rates, “I do think it’s going to take longer than I had thought,” Susan Collins, the president of the Federal Reserve Bank of Boston, said in an interview, also in Florida. “I think policy is restrictive, but I think it’s only moderately restrictive.” More

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    UK inflation comes in hotter than expected, slashing June rate cut bets

    U.K. inflation fell to 2.3% in April, the Office for National Statistics said on Wednesday, coming closer to the Bank of England’s target rate even while missing expectations.
    Core inflation, excluding energy, food, alcohol and tobacco, dipped to 3.9% in April from 4.2% in March.

    The war between Russia and Ukraine — both major producers of food commodities and energy — has disrupted global production, trade and supply in these areas, leading to a surge in prices.
    Solstock | E+ | Getty Images

    LONDON — U.K. inflation came in hotter than expected with a drop to 2.3% in April, the Office for National Statistics said Wednesday, prompting traders to pull back from bets on a June interest rate cut from the British central bank.
    The headline reading declined from 3.2% in March. The April print marked the first time inflation has been below 3% since July 2021 and brings it within touching distance of the Bank of England’s 2% target.

    Economists polled by Reuters had nevertheless expected a steeper drop to 2.1%.
    Services inflation — a key measure being watched by the BOE because of the dominance of the sector in the U.K. economy and its reflection of domestically-generated price rises — eased only slightly to 5.9% from 6%. That missed a forecast of 5.5% from both a Reuters poll and the BOE.
    Core inflation, excluding energy, food, alcohol and tobacco, dipped to 3.9% in April from 4.2% in March.
    A dramatic drop in the headline rate was widely expected because of the year-on-year decline in energy prices. Investors were instead set to focus on core and services inflation, after BOE policymakers indicated they would be willing to cut interest rates some time in the summer, but stressed that the timing would depend on fresh data.

    Following the print, money markets slashed the probability of a June rate cut to just 15%, down from 50% earlier in the day. The likelihood of an August cut was seen at 40%, down from 70%.

    June cut ‘unlikely’

    Both core and services were “disappointing,” said Suren Thiru, economics director of the Institute of Chartered Accountants in England and Wales.
    “Lingering concerns over underlying inflationary pressures mean a June rate cut is unlikely. However, these figures may convince more rate setters to vote to ease policy, providing a signal that a summer rate cut is still possible,” Thiru said in a note.
    That positions the European Central Bank as potentially the next major central bank likely to start bringing down rates, as its policymakers continue to suggest it would take a big shock to prevent a June cut. Members of the U.S. Federal Reserve have meanwhile struck a significantly more hawkish tone in recent weeks, pushing back market expectations for a cut stateside until after September at the earliest.
    Paul Dales, chief U.K. economist at Capital Economics, said the latest inflation data has made a June rate cut from the Bank of England unlikely, and “casts some doubt over August too.”
    That is particularly due to the high services figure, Dales said in a note, which “suggests the persistence in domestic inflation is fading even slower than the BOE had assumed.”
    U.K. Prime Minister Rishi Sunak said on social platform X that “inflation is back to where it should be.”
    Sunak’s ruling Conservative Party has been hoping for signs of an improving economic environment, as it lags in the polls ahead of a national election that must take place before the end of January 2025. The U.K. economy exited a shallow recession in the first quarter of the year, recording 0.6% growth.
    BOE Governor Andrew Bailey has stressed that the central bank will remain politically independent in deciding the timeline of the next rate cut, irrespective of the forthcoming election. More

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    Fed officials seem like they have ‘no idea’ what is going on with U.S. inflation, strategist says

    Federal Reserve officials appear to have “no idea” what is happening when it comes to the inflation picture in the U.S., GAM’s Julian Howard told CNBC.
    Policymakers have in recent days and weeks been suggesting that inflation remains too high and has fallen by less than previously expected, urging patience when it comes to interest rate cuts.
    “Inflation is notoriously difficult to predict and I don’t think they have any real idea what’s happening,” Howard said.

    The Marriner S. Eccles Federal Reserve building during a renovation in Washington, DC, US, on Tuesday, Oct. 24, 2023.
    Valerie Plesch | Bloomberg | Getty Images

    Federal Reserve officials appear to have “no idea” what is happening when it comes to the inflation picture in the U.S., according to Julian Howard, lead investment director of multi-asset solutions at GAM.
    His comments come as policymakers have in recent weeks been urging patience over interest rate cuts, arguing that inflation has fallen by less than previously expected and is still too sticky for the Fed to press ahead with easing monetary policy.

    “I think the message that’s coming through is that they have no idea what’s going on,” Howard said on CNBC’s “Squawk Box Europe” on Wednesday.

    The Fed declined to comment.
    Fed Governor Christopher Waller on Tuesday said that he needed to see further data evidence that inflation was softening before supporting rate cuts.
    “In the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy,” he said at an event at the Peterson Institute for International Economics in Washington.
    Waller’s comments were echoed by other Fed officials on Tuesday, including Boston Fed President Susan Collins.

    “I think the data has been very mixed … and it’s going to take longer than I had previously thought,” she said at a conference hosted by the Atlanta Federal Reserve. “We’re in a period when patience really matters.”

    ‘A credibility problem’

    But Fed officials have not come out with a clear message about their expectations or to address why inflation remains elevated, GAM’s Howard said.
    “Inflation is notoriously difficult to predict and I don’t think they have any real idea what’s happening,” he noted.
    “To be honest, there’s a credibility problem,” Howard said.
    Policymakers initially suggested inflation would be subdued when it first started rising, Howard said, explaining that the rate then spiked.
    “And now [policymakers] think inflation is coming down but its not coming down fast enough,” he said.
    Data released earlier this month showed that the U.S. consumer price index came in at 3.4% for April on an annual basis. This was a slight dip from March’s 3.5% figure, and far below the 9.1% reading recorded in June 2022 when the inflation cycle peaked — but also remained above the Fed’s 2% target.

    “Inflation did start coming down but then it seems to have just got stuck at around 3.5% and everyone is trying, is struggling to find a narrative to why’s it got stuck at 3.5% and I think that’s, that’s the challenge,” GAM’s Howard said.
    He added that stock markets appear to be handling the elevated inflation levels and have also adjusted their expectations for interest rate cuts to now price in far fewer than earlier in the year.
    Howard attributes the subdued reaction from markets to changes among mega-cap stocks. Those companies currently have high cash levels, which can be invested relatively risk-free, for example in short-term Treasury bills, he explained.
    “They’ve become this sort of all-weather type structure at the top of the market,” Howard said. “If rates come down, it’s great for the revenue. … If rates go up, or they don’t come down as expected, it doesn’t matter because [of] the cash level, the cash levels mean that they’re making this huge amount of money on an annual basis risk-free.” More