Evelyn Reynolds

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    G7 Finance Ministers Aim to Use Russia’s Frozen Assets to Help Ukraine

    Western economic officials projected a united front, and braced for retaliation, as they prepped tougher sanctions and tariffs.Top finance officials from the world’s advanced economies moved toward an agreement on Saturday over how to use Russia’s frozen central bank assets to aid Ukraine and warned against China’s dumping of cheap exports into their markets, aiming to marshal their economic might to tackle twin crises.The embrace of more ambitious sanctions and protectionism came as finance ministers from the Group of 7 nations gathered for three days of meetings in Stresa, Italy. The proposals under consideration could deepen the divide between the alliance of wealthy Western economies and Russia, China and their allies, worsening a global fragmentation that has worried economists.Efforts by the Group of 7 to influence the two powerful adversaries have had limited success in recent years, but rich countries are making a renewed push to test the limits of their combined economic power.In a joint statement, or communiqué, released on Saturday, policymakers said they would stay united on both fronts as geopolitical crises and trade tensions have emerged as the biggest threats to the global economy.“We are making progress in our discussions on potential avenues to bring forward the extraordinary profits stemming from immobilized Russian sovereign assets to the benefit of Ukraine,” the statement said.Regarding China, the finance ministers expressed concern about its “comprehensive use of nonmarket policies and practices that undermines our workers, industries, and economic resilience.” They agreed to monitor the negative effects of China’s overcapacity and “consider taking steps to ensure a level playing field.”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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    G7 Finance Ministers Close Ranks as Tensions with Russia and China Fester

    Western economic officials projected a united front, and braced for retaliation, as they prepped tougher sanctions and tariffs.Top finance officials from the world’s advanced economies moved closer to an agreement on Saturday over how to use Russia’s frozen central bank assets to aid Ukraine and pledged to unite against China’s dumping of cheap exports into their markets, aiming to marshal their economic might to tackle twin crises weighing on the global economy.The embrace of more ambitious sanctions and protectionism came as finance ministers from the Group of 7 nations gathered for three days of meetings in Stresa, Italy. The proposals under consideration could deepen the divide between the alliance of wealthy Western economies and Russia, China and their allies, worsening a global fragmentation that has worried economists.Efforts by the Group of 7 to influence the two powerful adversaries have had limited success in recent years, but rich countries are making a renewed push to test the limits of their combined economic power.In a joint statement, or communiqué, that was set to be released on Saturday, policymakers said they would stay united on both fronts as geopolitical crises and trade tensions have emerged as the biggest threats to the global economy.“We are making progress in our discussions on potential avenues to bring forward the extraordinary profits stemming from immobilized Russian sovereign assets to the benefit of Ukraine,” the statement, which was reviewed by The New York Times, said.Regarding China, the finance ministers expressed concern about its “comprehensive use of nonmarket policies and practices that undermines our workers, industries, and economic resilience.” They agreed to monitor the negative effects of China’s overcapacity and “consider taking steps to ensure a level playing field.”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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    The Fed probably won’t be delivering any interest rate cuts this summer

    It looks increasingly unlikely that the Federal Reserve will be cutting interest rates after a batch of stronger-than-expected economic data coupled with fresh commentary from policymakers.
    Economic growth is at least stable if not on the rise, while inflation is ever-present.
    Central bankers still lack the confidence to cut and even an unspecified few say they could be open to hiking if inflation gets worse.

    Traders work on the floor of the New York Stock Exchange during morning trading on May 24, 2024 in New York City. 
    Michael M. Santiago | Getty Images

    Investors likely will have to sweat out a summer during which it looks increasingly improbable that the Federal Reserve will be cutting interest rates.
    A batch of stronger-than-expected economic data coupled with fresh commentary from policymakers is pointing away from any near-term policy easing. Traders this week again shifted futures pricing, moving away from the likelihood of a reduction in rates in September and now anticipating just one cut by the end of the year.

    The broader reaction was not pleasant, with stocks suffering their worst day of 2024 on Thursday and the Dow Jones Industrial Average breaking what had been a five-week winning streak ahead of the Memorial Day break.
    “The economy may not be cooling off as much as the Fed would like,” said Quincy Krosby, chief global strategist at LPL Financial. “The market takes every bit of data and translates it to how the Fed sees it. So if the Fed is data dependent, the market is probably more data dependent.”
    Over the past week or so, the data has sent a pretty clear message: Economic growth is at least stable if not on the rise, while inflation is ever-present as consumers and policymakers alike remain wary of the high cost of living.
    Examples include weekly jobless claims, which a few weeks ago hit their highest level since late August 2023 but have since receded back to a trend that has indicated companies have not stepped up the pace of layoffs. Then there was a lower-profile survey release Thursday that showed stronger than expected expansion in both the services and manufacturing sectors and purchase managers reporting stronger inflation.

    No reason to cut

    Both data points came one day after the release of minutes from the last Federal Open Market Committee meeting indicating central bankers still lack the confidence to cut and even an unspecified few saying they could be open to hiking if inflation gets worse.

    On top of that, Fed Governor Christopher Waller earlier in the week said he would need to see several months’ worth of data indicating that inflation is easing before agreeing to lower rates.
    Put it together, and there’s not much reason for the Fed to be easing policy here.

    “Recent Fedspeak and the May FOMC minutes make it clear that the upside inflation surprises this year, coupled with solid activity, are likely to take rate cuts off the table for now,” Bank of America economist Michael Gapen said in a note. “There also seems to be strong consensus that policy is in restrictive territory, and so hikes are probably not necessary either.”
    Some members at the most recent FOMC meeting, which concluded May 1, even wondered whether “high interest rates may be having smaller effects than in the past,” the minutes stated.
    BofA thinks the Fed could wait until December to start cutting, though Gapen noted a number of wildcards that could come into play regarding the mix between a potentially softening labor market and easing inflation.

    Incoming data

    Economists such as Gapen and others on Wall Street will be looking closely next Friday when the Commerce Department releases its monthly look at personal income and spending that also will include the personal consumption expenditures price index, the inflation gauge that draws the most focus from the Fed.
    The informal consensus is for a monthly gain between 0.2% and 0.3%, but even that relatively muted gain might not give the Fed much confidence to cut. At that rate, annual inflation likely would be stuck just shy of 3%, or still well above the Fed’s 2% goal.
    “If our forecast is correct, the [year-over-year inflation] rate will drop by only a few basis points to 2.75%,” Gapen said. “There is very little sign of progress towards the Fed’s target.”
    Markets agree, if reluctantly.
    Where traders at the beginning of the year had been anticipating at least six cuts, pricing Friday afternoon moved to a roughly 60% likelihood that there now will be only one, according to the CME Group’s FedWatch Tool. Goldman Sachs pulled back its first expected cut to September, though the firm still expects two this year.
    The central bank’s benchmark fed funds rate has stood at 5.25% to 5.50% since last July.
    “We continue to see rate cuts as optional, which lessens the urgency,” Goldman economist David Mericle said in a note. “While the Fed leadership appears to share our relaxed view on the inflation outlook and will likely be ready to cut before too long, a number of FOMC participants still appear to be more concerned about inflation and more reluctant to cut.” More

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    The NCAA 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

  • 138 Shares119 Views

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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