Connect with us


Labour Party leader says UK finance sector will be ‘servant of industry’ under Labour government



Britain’s financial sector will be “the servant of industry not the masters of us all” if the opposition Labour Party gets into power, its leader Jeremy Corbyn will say on Tuesday, accusing bankers of taking the economy hostage.

Corbyn, a socialist who has won over many voters with his promises to re-nationalize services and increase public spending, has long targeted London’s lucrative financial sector, saying politicians have been in thrall of money makers for too long.

In a speech to a manufacturers’ conference, Corbyn will renew his pledge to re-balance Britain’s economy if he wins power in an election not due until 2022, and will also criticize Prime Minister Theresa May for offering little clarity over Brexit.

“For a generation, instead of finance serving industry, politicians have served finance. We’ve seen where that ends: the productive economy, our public services and people’s lives being held hostage by a small number of too big to fail banks and casino financial institutions,” he will say.

“No more. The next Labour government will be the first in 40 years to stand up for the real economy. We will take decisive action to make finance the servant of industry not the masters
of us all.”

Big corporates have been cautious towards Labour, with financial services company Morgan Stanley warning investors that Corbyn winning power was a bigger political risk than Brexit.

But they have also started engaging with the party. Corbyn’s deputy, Labour’s finance policy adviser John McDonnell, took his message that capitalism was living on borrowed time, to the global elite at the World Economic Forum in Davos this year.

Any deep mutual understanding looks far off for now, with Corbyn promising to end the spread of finance’s “extractive logic” that “has spread into all areas of life with short-term performance and narrow shareholder value prioritized over long-run growth and broader economic benefit”.

The 68-year-old leader will say that if he takes power, his party would protect companies from hostile bids, citing the takeover bid of British engineering group GKN by investment company Melrose Industries.

“We rightly praise the growth of companies like GKN and their location in the UK. And yet when we are facing the possible destruction of that company, we are powerless to act,” he will say.

“That’s why the next Labour government will broaden the scope of the ‘public interest test’, allowing government to intervene to prevent hostile takeovers which destroy our industrial base.”

Source link


Biden to hold infrastructure plan meeting this week



U.S. President Joe Biden acknowledges reporters and visitors as he departs on travel to Wilmington, Delaware from the South Lawn of the White House in Washington, June 18, 2021.

Carlos Barria | Reuters

President Joe Biden expects to meet with lawmakers this week as a group of Democrats and Republicans try to forge an infrastructure plan that could get through Congress with bipartisan support, White House press secretary Jen Psaki said Monday.

At least 21 senators from both parties have backed a framework that seeks to spend roughly $1 trillion on transportation, broadband and water systems. Biden and Democratic congressional leaders have raised questions about how lawmakers plan to pay for the plan, while liberals have called it inadequate to fight climate change.

The president’s talks this week could mark a final push to find a compromise before Democrats try to pass a sprawling infrastructure plan on their own. While the discussions between Democrats and Republicans go forward, Biden’s party has started the process of drafting a budget resolution that would allow them to pass a bill without GOP votes.

A bipartisan deal could now depend on whether the White House and Republicans can strike a funding compromise, and on what Democratic leaders promise skeptical progressives they can pass as part of a separate bill. Biden will not support a potential increase in gas taxes or vehicle mileage fees — revenue raisers floated as part of the bipartisan talks — because they would break his promise not to hike taxes on people making less than $400,000 per year, Psaki told reporters Monday.

“That is a nonstarter for him,” she said.

Psaki added that Biden supports boosting IRS enforcement to ensure wealthy people do not avoid existing taxes. Doing so would meet a Republican demand not to revise the 2017 GOP tax cuts, she said.

Biden initially called to hike the corporate tax rate to 28% to pay for his $2.3 trillion infrastructure plan.

Disagreements over how broad the proposal should be and how to pay for it threaten to trip up the bipartisan plan in the Senate. Sen. Bernie Sanders, a Vermont independent who caucuses with Democrats, said Sunday he would not support a higher gas tax or an electric vehicle mileage fee as part of an infrastructure bill.

“One of the concerns that I do have about the bipartisan bill is how they are going to pay for their proposals, and they’re not clear yet,” he told “Meet the Press.” “I don’t know that they even know yet, but some of the speculation is raising a gas tax, which I don’t support, a fee on electric vehicles, privatization of infrastructure. Those are proposals that I would not support.”

The bipartisan group could consider excluding a gas tax increase from the plan, Sen. Rob Portman, an Ohio Republican and one of the negotiators, told “Meet the Press” on Sunday. He said the Biden administration “will need to come forward with other ideas without raising taxes.”

Meanwhile, Democrats including Sen. Ed Markey of Massachusetts have said they will not back a bill that does not include more funding to combat climate change. On Monday, he told MSNBC that he “cannot support a deal that does not have climate at its center.”

Some Democrats have signaled the party could try to pass a broader bill that address climate change without Republicans after Congress approves a bipartisan infrastructure plan. Markey said he would need “an absolute guarantee that climate is dealt with” in a second bill in order to back the bipartisan framework.

Eleven Republicans have said they support the plan. In the evenly split Senate, only one Democrat could oppose it for it to win the 60 votes needed to overcome a filibuster.

The plan put forward by the Democratic and Republican senators focuses on what the GOP has called physical infrastructure. Biden and his party have pushed to pass policies including care for dependent family members and upgrades to housing and schools as part of their infrastructure plans, contending they are necessary to boost the economy.

If Democrats cannot strike a deal with the GOP, they could push ahead with a multitrillion dollar proposal that would not only upgrade transportation, utilities and broadband, but also accelerate the adoption of clean energy, expand child care and boost job training programs. To be successful, all 50 Senate Democrats would have to vote for that bill.

At least one Democrat, Sen. Joe Manchin of West Virginia, has insisted on passing an infrastructure bill with Republican votes. It is unclear if he would back a separate reconciliation bill if Congress passes an initial infrastructure plan with bipartisan support.

Subscribe to CNBC on YouTube.

Source link

Continue Reading


Here’s why the market may be wrong about the Federal Reserve and interest rates



Traders on the floor of the New York Stock Exchange.

Source: NYSE

Monday’s aggressive stock market rally came despite the fears of one Wall Street firm that investors still aren’t appreciating how quickly the Federal Reserve could start raising rates.

After getting hammered in the final three trading days last week, Wall Street came roaring back with a move that sent the Dow Jones Industrial Average up more than 1.5%.

“The market is getting back to its comfortable mode,” Mohamed El-Erian, the chief economic advisor at Allianz, told CNBC’s “Squawk Box.” “Growth is strong. They still believe inflation is transitory. They believe the Fed is going to be relatively slow in tapering [monthly asset purchases], and that’s why you’re seeing” stocks higher.

That sanguine view of Fed policy is a mistake, according to Bank of America credit strategist Hans Mikkelsen.

Last week’s Federal Open Market Committee concluded with officials indicating they now see two rate increases coming as soon as 2023, more quickly than the market had been anticipating.

But Mikkelsen’s view is that tighter monetary policy may come even sooner.

“Expect the Fed to soon begin tapering its [quantitative easing] purchases, and to start hiking interest rates earlier than expected – and most importantly much faster than currently priced in markets,” he said in a note to clients.

The bank’s analysis noted the committee was only “two dots,” or the projections of two members of the 18-person committee, away from pulling the first rate increase into 2022. The panel split evenly on whether rates should move next year, while eight members saw as many as three hikes for 2023.

Taken collectively, the members’ sentiment about where policy should go offered a significant deviation from what has been a historically easy Fed.

Mikkelsen said the credit market, which sent rates sharply lower despite the hawkish Fed, is misjudging which way the central bank is heading. From the market’s perspective, it is seeing just a 41% chance that the Fed hikes rates by July 2022, according to the CME’s FedWatch tracker.

“The key mispricing in the rates market, as our rates strategists continue to point out, is not the taper, not the timing of the first rate hike, but the pace of hikes from that point on, which is way too shallow compared with normal hiking cycles in the past,” he wrote.

Mikkelsen pointed out that the Fed in effect has already begun tapering with its moves to unwind the small portfolio of corporate bonds it purchased during the Covid-19 pandemic. That move, “which was 100% unexpected as the Fed has a poor track record selling assets – was a signal the Fed increasingly feels emboldened to exit their super-easy monetary policy stance, even if that means defying market expectations.”

Changes in the Fed

For their part, Fed officials are indicating the landscape indeed is shifting, as reflected in the dot-plot projections released Wednesday.

New York Fed President John Williams, in a speech Monday, reflected the consensus view when he said he views inflation as transitory and Fed policy as appropriate given the current and expected conditions.

“It’s clear that the economy is improving at a rapid rate, and the medium-term outlook is very good. But the data and conditions have not progressed enough for the FOMC to shift its monetary policy stance of strong support for the economic recovery,” Williams said in prepared remarks.

But within the Fed, opinions are diverging.

St. Louis Fed President James Bullard jolted the market Friday when he told CNBC he was one of the FOMC members who thinks a rate hike in 2022 would be appropriate. Bullard is not a voter this year but will be one next year.

But Dallas Fed President Robert Kaplan said Monday he is more focused on reducing the pace of bond purchases – tapering – for now, and sees the rates question as one to be answered another day.

“I would rather see us act sooner rather than later on asset purchases, then we’ll make a decision down the road in 2022 and beyond about the additional steps that are necessary,” said Kaplan, who appeared jointly with Bullard for a discussion presented by the Official Monetary and Financial Institutions Forum. “But I think the issue on the table today and in the near term is the timing and adjustment of these purchases.”

Both officials noted the progress the economy has made and see reason that the inflation that has arisen in recent months may be a little stickier than the Fed had anticipated.

“The supply-demand imbalances, some of them we think will resolve themselves in the next six to 12 months,” Kaplan said. “But again some of them we think are likely to be more persistent, driven by a number of structural changes in the economy.”

For example, he cited changes in the energy industry – a key component of Kaplan’s district – toward sustainable power as contributing to longer-lasting inflationary pressures.

Bullard spoke of the evolving labor market as an important consideration for future Fed policy.

“We have to be ready for the idea that there’s upside risks to inflation,” he said. “Certainly, the anecdotal evidence is overwhelming that this is a very tight labor market.”

If those inflationary pressures are hotter than Fed officials think, it would force them into tightening policy faster than they would like. That would hit the stock market and broader economy, both of which are dependent on lower rates.

A tight Fed would drive up borrowing costs for a government that has been on a spending binge over the past year and wants to do even more with infrastructure.

“Right now, inflation is transitory. But if you overlay that with significant further stimulus, then you run the risk of making something transitory permanent,” Natixis chief economist for the Americas Joe LaVorgna said. “So, you’re in a really tricky spot. I think the Fed’s best approach is to say less.”

Become a smarter investor with CNBC Pro.
Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.
Sign up to start a free trial today.

Source link

Continue Reading


Man City make transfer bid for Tottenham striker



Harry Kane of England scores a penalty in a shootout at the end of extra time during the 2018 FIFA World Cup Russia Round of 16 match between Colombia and England at Spartak Stadium on July 3, 2018 in Moscow, Russia. 

Robbie Jay Barratt – AMA/Getty Images

Manchester City have made a £100m bid for Tottenham striker Harry Kane.

City are open to including players in addition to the cash offer, but Tottenham are expected to reject the bid.

Sky Sports News exclusively reported last month that Kane had told Spurs he wanted to leave this summer with Man City, Manchester United and Chelsea interested.

Kane is valued at upwards of £120m and Tottenham keen to keep him despite the 27-year-old believing he has a gentleman’s agreement with Daniel Levy.

The England captain is said to be fully focused on the Euros, with a decision on his club future not expected before the conclusion of the tournament.

Man City chairman Khaldoon Al Mubarak said after last month’s Champions League final that the club will be “competitive and aggressive” this summer, and are aiming to strengthen by bringing “quality to the squad in a couple of key positions”.

The Premier League champions’ priority is to replace Sergio Aguero, with Kane being considered along with Erling Haaland, Romelu Lukaku and Lautaro Martinez.

Man City begin their Premier League title defense by travelling to Tottenham on August 15, live on Sky Sports.

Kane insists that neither a lack of fitness nor speculation over his future at Tottenham have been the reasons for his disappointing start to Euro 2020.

Kane was substituted in England’s opening win over Croatia and their underwhelming 0-0 draw with Scotland following below-par performances in both games.

His displays have come as a surprise given he enjoyed an impressive season with Spurs, topping the Premier League charts for goals and assists, despite his club’s struggles.

And while he did sustain a couple of ankle injuries during the campaign, he returned from the most recent of those nearly two months ago, and was a regular for Spurs until the end of the season.

Kane won the Golden Boot at the 2018 World Cup – a factor that has only added to expectations on him at Euro 2020 – and although he admits he became fatigued in Russia three years ago, he says that is not the problem this time around.

“Gareth [Southgate] is within his rights to make the changes he thinks are best for the team,” Kane told The Guardian when asked for his reaction to being replaced in both of England’s games so far.

“What we’ve learned over past tournaments is about trying to peak at the right time. The best time to be peaking is in the knockout stages and hopefully kick on from there.

“Maybe in Russia there were times, towards the quarter and semi-final, when I wasn’t as sharp as I wanted to be. In the end we didn’t get to where we wanted to go, maybe partly for that reason.

“It’s about managing the squad, making sure everyone is feeling as fit and sharp as possible. In my case, it was a tough couple of games and it’s about making sure I’m right for the rest of them.

“I didn’t have any issues. I didn’t feel physically I wasn’t up to it. I felt going into those games as good as I’ve felt all season, if I’m honest.”

Although Kane was one of the standout players in the Premier League during the 2020/21 season, Spurs endured a difficult campaign, finishing seventh in the table, without a trophy or a manager, having sacked Jose Mourinho in April.

The club was also rocked by the news that Kane had told them he wanted to leave this summer due to their failure to regularly compete for – and win – trophies.

Manchester City, Manchester United and Chelsea are all understood to be keen on signing the striker but, despite his future promising to be one of the main plotlines of this summer’s transfer window, Kane says it is not affecting his international performances.

“Absolutely not,” he insisted. “All my focus is on how I can help this team and how we can be successful in this tournament.

“I understand from a media point of view there is speculation, but I am fully focused on the job here.”

Source link

Continue Reading