Raphael Stevens

Median FTSE 100 CEO pay (excluding pension) currently stands at £3.81 million ($4.84 million), 109 times the median full time worker’s pay of £34,963.
The Trades Union Congress, which represents 48 member unions across the U.K., said Thursday’s figures showed the Conservative government was presiding over “obscene levels of pay inequality.”

Skyscrapers in the Canary Wharf financial, business and shopping district in London, UK.
Bloomberg | Bloomberg | Getty Images

The average FTSE 100 CEO will have earned more this year than the median full-time worker’s annual salary by 1 p.m. London time on Thursday, according to estimates from the High Pay Centre think tank.
The U.K.’s top bosses will surpass the milestone an hour earlier than they did in 2023, the calculations suggest, while leading bankers will exceed it on Jan. 17.

The calculations are based on the High Pay Centre’s analysis of the most recent available CEO pay figures from British blue chip companies’ annual reports, compared with government data on pay levels across the U.K. economy.
Median FTSE 100 CEO pay (excluding pension) currently stands at £3.81 million ($4.84 million), 109 times the median full time worker’s pay of £34,963, the think tank said. This represents a 9.5% increase on median CEO pay levels as of March 2023, while the median worker’s pay has increased by 6%.
“Lobbyists for big business and the financial services industry spent much of 2023 arguing that top earners in Britain aren’t paid enough and that we are too concerned with gaps between the super-rich and everybody else,” said High Pay Centre Director Luke Hildyard.
“They think that economic success is created by a tiny number of people at the top and that everybody else has very little to contribute. When politicians listen to these misguided views, it’s unsurprising that we end up with massive inequality, and stagnating living standards for the majority of the population.”
Leading business and finance figures in the U.K. in 2023 called for an increase in remuneration for British CEOs. The High Pay Centre highlighted that in December, Legal and General Investment Management adjusted its executive pay guidelines to permit companies it invests in to offer more generous incentive payments.

In May, London Stock Exchange CEO Julia Hoggett argued that pay levels for top executives were too low, and pose a risk to the U.K.’s ability to attract and retain elite domestic and international talent, in turn jeopardizing the economy.
“And yet, very often, this talent objective is hampered by the advice and analysis of the proxy agencies and some asset managers voting against executive pay policies even when those pay levels are significantly below global benchmarks,” she said in a post on the exchange’s website.
“Often the same proxy agencies and asset managers that oppose compensation levels in the UK support much higher compensation packages in different jurisdictions, notably in the U.S.”
S&P 500 CEOs stateside earned an average of $16.7 million in 2022 compared to an average full-time worker’s annual salary of $61,900, according to the American Federation of Labor and Congress of Industrial Organizations.
Hoggett said a “constructive discussion with all stakeholders about a topic that tends to generate emotion and strong views” was essential if the U.K. is to be placed on a competitive footing internationally.
‘Obscene levels of pay inequality’
The Trades Union Congress, which represents 48 member unions across the U.K., said Thursday’s figures showed Britain’s ruling Conservative government was presiding over “obscene levels of pay inequality.”
“While working people have been forced to suffer the longest wage squeeze in modern history, City bosses have been allowed to pocket bumper rises and bankers have been given unlimited bonuses,” TUC General Secretary Paul Nowak said in a statement.
A spokesperson for the U.K. Treasury was not immediately available to comment when contacted by CNBC.
U.K. workers and households have endured a historic cost of living crisis over the last two years, while the tax burden continues to grow and is expected to hit a post-war high of 37.7% of gross domestic product in 2028/29, according to the independent Office for Budget Responsibility. This is despite recently announced cuts to National Insurance tax on workers.
Sharon Graham, general secretary of Unite, one of the U.K.’s largest unions with over 1.2 million members, said the union would “not tolerate employers who want one rule for the bosses and another for the workers.”
“These CEOs need to get their snouts out of the trough and give their employees a proper piece of the pie. Unite is on a mission to make work pay in this country and where employers have ability to pay, we will continue to demand and win proper pay rises for our members,” she added. More

Scrapped cloud IPO plans and management shakeup in the last year reflect bigger problems for a company that has served as a bellwether for foreign investors in China.
The stock has plunged to below $77, down from more than $300 a share in 2020.

Signage for Alibaba Group Holding Ltd. covers the front facade of the New York Stock Exchange November 11, 2015.
Brendan McDermid | Reuters

BEIJING — It’s been a tumultuous 12 months for Alibaba, casting doubt on the future of the tech giant just as artificial intelligence is taking off.
The company’s cloud computing unit was poised to capture AI’s growth for investors in a public listing, until Alibaba pulled those plans in November. The Group’s U.S. market value fell below that of e-commerce rival PDD, signaling struggles in the industry that had propelled Alibaba onto the global stage with the world’s largest IPO in 2014.

On the political front, Alibaba was a poster child for China’s crackdown on internet tech companies — receiving a record fine of $2.8 billion for alleged monopolistic behavior in 2021. Slowing economic growth hasn’t helped its business either.
But the scrapped cloud IPO plans and management shakeup in the last year reflect bigger problems for a company that has served as a bellwether for foreign investors in China. Alibaba’s stock has plunged to below $77 a share, down by 75% from more than $300 in 2020.
“I think there are some deep internal issues. And so there must now be … a clear internal fight between how they’re going to get out of this because they’re really slipping,” said Duncan Clark, an early advisor to Alibaba and now chairman of Beijing-based investment advisor BDA.
“The core to me is their eroding market position, what they are doing in terms of video, livestream and how they respond to Douyin, plus how they manage all these disparate groups and all the management turmoil,” Clark said. ”It’s a mess basically.”

Douyin, the domestic Chinese version of ByteDance’s TikTok, has taken off in China as a platform for the surging livestream sales industry. Chinese consumers, who are increasingly hunting for bargains, have also turned to bargain hunting on Pinduoduo.

Founded in 1999 by Jack Ma, Alibaba is a far older company than ByteDance or PDD.
“Personnel-wise there are people that are leaving the company, they may feel the company is so big and bureaucratic, that is a reality,” said Brian Wong, former Alibaba Group vice president and author of the “Tao of Alibaba,” published in November 2022.

Management shake-up centered on cloud

Are they too big? That was the charge from the government before, but now the question is are they nimble enough, are they able to compete enough in the marketplace?

Duncan Clark
BDA, chairman

“Are they too big? That was the charge from the government before, but now the question is are they nimble enough, are they able to compete enough in the marketplace?” he said. Clark also wrote “Alibaba: The House That Jack Ma Built,” published in 2016.

Cloud competition from Huawei

Alibaba has been an industry leader in the cloud business.
The company remained the largest player in China’s cloud market in the third quarter, followed by Huawei and Tencent, according to Canalys.
But the research firm predicted that Huawei’s market share will gradually increase, said analyst Yi Zhang.
She pointed out the telecommunications company started in 2022 to focus on improving its engagement with business partners — via a strategy of developing an ecosystem of experts and developers. In contrast, she said Alibaba’s and Tencent’s cloud units only started pursuing a similar strategy in 2023.
Such an approach can pay off in a slowing cloud services market that Canalys said is “relying heavily on government and state-owned enterprises to drive growth.”
Chinese business news site 36kr reported in January last year, citing sources, that government customers closed cloud deals with Huawei, after almost buying from Alibaba.
Alibaba and Huawei did not respond to a request for comment on this story. Alibaba in November blamed U.S. restrictions on chip sales to China for the decision to pull the cloud IPO.

Read more about China from CNBC Pro

Alibaba said its cloud business revenue grew by just 2% year-on-year in the quarter ended Sept. 30. Since the quarter ended June, the company has included cloud revenue from business with other parts of Alibaba Group.
BDA’s Clark said his firm’s research found that Alibaba tried to grow its cloud business by taking away big clients from third-party resellers. Those resellers were other companies that had acted as distributors or agents for Alibaba cloud and received commissions.
“It may be like a botched go-to-market strategy, or reseller strategy, because a lot of those resellers … became very upset and some of them are now going to work with other players,” Clark said. “They were supposed to be able to focus on smaller companies rather than the big ones that were taken away but that didn’t materialize. It’s a very tough market.“

Global IPO market slump

Alibaba still plans to list its Cainiao logistics business, and its Freshippo grocery store chain. But it’s been a tough IPO market, especially for Chinese companies wanting to list overseas.
The Information reported in November, citing sources, that an international investment firm was only willing to value Alibaba’s cloud unit at less than $25 billion, far below the $40 billion the company had wanted.
Alibaba “has a massive base to work from in terms of customers and data, and that is a treasure trove of any AI operation. They still have some amazing minds in the organization,” former executive Wong said.
“I think all the raw materials are there, it’s question of how do they [execute] this in a time of a critical moment,” he said, noting that to him, Alibaba is “getting its house in order to prepare for the next big thing.” More

Monday – Friday, 5:00 – 6:00 PM ET

Fast Money Podcast
Full Episodes

It’s a level not seen since George W. Bush was president.
Wall Street forecaster Jim Bianco is predicting the benchmark 10-year Treasury note yield will hit 5.5% this year — its highest level since May 2001.

A major part of his thesis is built on the economy’s strength and resiliency.
“I don’t think the economy is hurt by 5% interest rates. I don’t think the economy is really hurt by 7%, maybe high 7%, mortgages,” the Bianco Research president said on CNBC’s “Fast Money” on Wednesday. “I don’t think something is broken because of these rates.”
Bianco sees inflation bottoming around 3% and demand holding stable as catalysts for rebounding yields.
“You add the two together, you get 5.5%,” he said. “That’s where I come up with 5.5% for the yield. That’s nominal GDP. The 10-year yield should approximate where nominal GDP is.”
Bianco thinks the rate on the 10-year Treasury will reach 5.5% as early as summer. He correctly predicted last fall’s yield spike above 5%.

His latest forecast includes the impact of the Federal Reserve potentially cutting interest rates three times this year.
“The Fed may be a little stickier in cutting rates. It doesn’t mean they won’t cut rates. It just might not be as aggressive as everybody says,” said Bianco, who warned in late 2020 on CNBC that there would be “higher inflation for the first time in a generation.”
As of Wednesday’s market close, the 10-year yield was yielding 3.9%.
Disclaimer More

Federal Reserve officials in December concluded that interest rate cuts are likely in 2024, though they appeared to provide little in the way of when that might occur, according to minutes from the meeting released Wednesday.At the meeting, the rate-setting Federal Open Market Committee agreed to hold its benchmark rate steady in a range between 5.25% and 5.5%. Members indicated they expect three quarter-percentage point cuts by the end of 2024.However, the meeting summary noted a high level of uncertainty over how, or if, that will happen.”In discussing the policy outlook, participants viewed the policy rate as likely at or near its peak for this tightening cycle, though they noted that the actual policy path will depend on how the economy evolves,” the minutes said.Officials noted the progress that has been made in the battle to bring down inflation. They said supply chain factors that contributed substantially to a surge that peaked in mid-2022 appear to have eased. In addition, they cited progress in bringing the labor market better into balance, though that also is a work in progress.The “dot plot” of individual members’ expectations released following the meeting showed that participants expect cuts over the coming three years to bring the overnight borrowing rate back down near the long-run range of 2%.”In their submitted projections, almost all participants indicated that, reflecting the improvements in their inflation outlooks, their baseline projections implied that a lower target range for the federal funds rate would be appropriate by the end of 2024,” the document said.However, the minutes noted an “unusually elevated degree of uncertainty” about the policy path. Several members said it might be necessary to keep the funds rate at an elevated level if inflation doesn’t cooperate, and others noted the potential for additional hikes depending on how conditions evolve.”Participants generally stressed the importance of maintaining a careful and data-dependent approach to making monetary policy decisions and reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the Committee’s objective,” the minutes stated.Despite the cautionary tone from Fed officials, markets expect the central bank to cut aggressively in 2024.Fed funds futures trading points to six quarter-point cuts this year, which would take the fed funds rate, which primarily sets what banks charge each other for overnight loans but also influences multiple consumer debt products, down to a range between 3.75%-4%.Earlier Wednesday, Richmond Fed President Thomas Barkin also expressed caution about policy, noting the number of risks inherent in trying to guide the economy to a soft landing.The minutes indicated that “clear progress” had been made against inflation, with a six-month measure of personal consumption expenditures even indicating that the inflation rate has edged below the Fed’s 2% target.However, the document also noted that progress has been “uneven” across sectors, with energy and core goods moving lower but core services still moving higher.Officials also addressed the Fed’s effort to reduce the bond holdings on its balance sheet. The central bank has shaved about $1.2 trillion by allowing maturing proceeds to roll off rather than reinvesting them as usual.Several FOMC members said it likely would be appropriate to wind down the process when bank reserves “are somewhat above the level judged consistent with ample.” Those officials said discussions would begin well in advance of stopping the process so the public had plenty of notice.
Don’t miss these stories from CNBC PRO: More

At some point American economic growth will disappoint expectations. For now, though, it appears to have ended 2023 much as it passed the previous few years, with yet another expansion that defied forecasts. Recent data suggest that the economy grew at an annualised pace of 2.5% or so in the final three months of the year, more than twice the median expectation of analysts at the start of the quarter.Although such momentum is welcome, it complicates the outlook as the Federal Reserve contemplates when to start cutting interest rates. America’s strength is broad-based. Investment in manufacturing facilities has soared to record highs, propelled by the Biden administration’s subsidies for electric-vehicle and semiconductor production. Elevated mortgage rates have led to big falls in sales of existing houses, but property developers have responded to the dearth of single-family homes on the market by ramping up building. The government has remained a backstop to growth—albeit a worrying one from the standpoint of long-term fiscal sustainability—with its deficit running at about 7% of GDP, which is virtually unprecedented during peacetime without a recession.Most important of all, American consumers have remained indomitable, defying expectations of a retrenchment in personal spending. Two factors help explain their resilience. The stash of savings accumulated by households during the covid-19 pandemic, thanks to the government’s fiscal largesse, has continued to offer them a buffer. Economists at the Fed’s branch in San Francisco reckon that households had about $290bn of excess savings, relative to the expected baseline, as of November. Moreover, the tight labour market has led to robust wage growth, especially for lower-income workers, who, in turn, have a higher propensity to spend. As inflation has come under control their real wage gains look even more substantial.These various sources of strength contributed to America’s barnstorming third quarter in 2023, when it posted annualised growth of 4.9%. Some slowing was only natural after such a rapid expansion. As recently as early October analysts had pencilled in growth of just 0.7% in the final quarter of 2023. But the latest reading from a real-time model by the Atlanta Fed—which has proved to be a reliable guide for recent GDP figures—points instead to annualised growth of 2.5%. Although the reading will fluctuate as more data trickle in, the margin for error shrinks as the date of a gdp release nears; the next one is on January 25th. For 2023 as a whole growth is likely to be about 2.5%, impressive considering that most economists expected America to be flirting with recession.What makes the growth all the more striking is that it has come at the same time as inflation has receded. The Fed’s preferred measure of inflation—the personal consumption expenditure (PCE) price index—hit 2.6% in November compared with a year earlier, down from 7% in mid-2022. Even more encouragingly, core PCE prices, which strip out volatile food and energy costs, have risen by just 2.2% on an annualised basis over the past three months, in line with the Fed’s target of 2%. The disinflation has been propelled by declines in goods prices as supply chains have recovered from pandemic disruptions.This has given rise to a best-of-both-worlds scenario: resilient growth and fading inflation. Such a propitious combination might allow the Fed to cut rates in the coming months not because growth is weakening, but because it wants to avoid excessive monetary restraint. Jerome Powell, the Fed’s chairman, seemed to give voice to these hopes after the central bank’s meeting in mid-December, when he said that rate cuts “could just be a sign that the economy is normalising and doesn’t need the tight policy”. His words fuelled a rally in both stocks and bonds.Yet the strong growth points to a less pleasant scenario: that the fall in inflation is a false signal. Whereas goods prices have declined, those for many services continue to rise at a faster clip than their pre-pandemic trend. Housing prices actually rebounded in 2023, despite mortgage rates climbing to 8%, their highest in two decades. With mortgage rates falling back below 7% in December, the prospect of a bigger re-acceleration in the property market looms large. An easing in financial conditions as a result of rate cuts would support economic growth but would also feed into renewed price pressures.If inflation rebounds the Fed would have little choice but to keep interest rates elevated, perhaps reviving the fears of a recession that have all but vanished. These risks help explain why John Williams, president of the New York Fed, poured cold water on the most feverish speculation about imminent rate cuts in the wake of Mr Powell’s comments last month. He said it was “just premature to be even thinking about that”. It is probably also premature to celebrate America’s escape from the past few years of brutal inflation with barely a bruise to its economy. ■ More