S&P Still Has Plenty of Room to Fall If Recession Is Inevitable
The fasetst US stock market selloff since the depths of the Covid pandemic has left valuations looking cheap. But if a recession is inevitable due to the global trade war sparked by President Donald Trump's tariffs, the definition of inexpensive becomes relative.
'What are you doing to me, Trump? We're all navigating in the dark with recession risks rising,' said Adam Phillips, managing director of portfolio strategy at EP Wealth Advisors, whose firm is neutral US equities.
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San Francisco Chronicle
10 minutes ago
- San Francisco Chronicle
UK leader Starmer waters down planned welfare cuts after revolt in his Labour Party
LONDON (AP) — British Prime Minister Keir Starmer gave way to political pressure on Friday, watering down planned welfare reforms to avoid defeat by his own party's lawmakers. It's the latest forced U-turn for a center-left government caught between conflicting goals of cutting spending and improving public services. The government planned to bring a bill to Parliament next week that would tighten eligibility for a key disability benefit, removing the Personal Independence Payment from hundreds of thousands of people with long-term physical or mental health conditions. Another health-related benefit received by people on low incomes would also be reduced under the plans. The government said the proposed changes would help people find jobs while preserving a safety net for those who can never work. It would also save an estimated 5 billion pounds ($7 billion) a year from a welfare bill that has ballooned since the COVID-19 pandemic. But many Labour lawmakers balked at the changes, which the Institute for Fiscal Studies think tank estimated would cut the income of 3.2 million people by 2030. More than 120 of the 403 Labour legislators signed a motion that would effectively kill the bill if it were to be passed. Defeat at the hands of his own party in the vote planned for Tuesday would have seriously damaged Starmer's authority. To avoid that, the government said it would ensure no one who currently receives the PIP benefit will lose it. Starmer was elected a year ago in a landslide victory, winning a commanding majority of seats in the House of Commons. Since then his popularity has plunged as a sluggish economy and stubbornly high inflation resist efforts to raise living standards and ease a cost-of-living squeeze. Even as Starmer enjoyed success on the world stage – charming U.S. President Donald Trump and securing a trade deal to exempt Britain from some U.S. tariffs – Labour lawmakers have grown restive at the party's sagging poll ratings and the rise of the hard-right Reform U.K. party led by Nigel Farage. Starmer has been forced into several U-turns. In May the government dropped a plan to end winter home heating subsidies for millions of retirees. Last week Starmer announced a national inquiry into organized child sexual abuse, something he was pressured to do by opposition politicians — and Elon Musk. The government insists that major changes to welfare are needed to deal with a 'broken' system inherited from the previous Conservative government. It says the spending cuts it is making will be balanced by new money and support to help people who are able to work find jobs. The government wants to reduce the number of working-age people who are economically inactive through long-term sickness, which it says stand at 2.8 million, the highest rate of any G7 nation. At a NATO summit on Wednesday, Starmer dismissed griping about the welfare plans as 'noises off.' But the next day, he insisted he was listening to party rebels. 'We want to see reform implemented with Labour values of fairness,' he told lawmakers. 'That conversation will continue in the coming days, so we can begin making change together on Tuesday.'
CNN
12 minutes ago
- CNN
Trump may name a ‘shadow' Fed chair, an unprecedented development in American history
President Donald Trump said last week that he will announce his pick to succeed Federal Reserve Chair Jerome Powell 'very soon.' The problem is that Powell still has 11 months left until the end of his term. Trump remains frustrated as ever with the Fed because it has not yet lowered interest rates. He has relentlessly attacked Powell for months. But announcing a Fed chair nominee this far in advance — if he makes good on that plan — would be an unprecedented development in the central bank's 111-year history. This person would effectively be acting as America's 'shadow' Fed chair — a proposal Scott Bessent first floated last year before he became Trump's Treasury secretary. Such an extraordinary move could undermine the current Fed chief and intensify the uncertainty that has bedeviled the US economy since Trump took office, former Fed officials and academics tell CNN. 'It's an absolutely horrible idea,' Alan Blinder, who served as the No. 2 official at the Fed during the mid-1990s, told CNN in a phone interview. Blinder said a shadow Fed chair would mean markets would have to make sense of two influential voices speaking about monetary policy at the same time, but offering potentially very different visions. 'If they're not singing from the same playbook, which seems likely, this is just going to cause confusion in markets,' said Blinder, a former Clinton economic adviser who is now a professor at Princeton University. Greg Valliere, chief US policy strategist at AGF Investments, expressed a similar sentiment in a note to investors on Thursday: 'This is a terrible idea, sure to annoy and confuse financial markets if there are two Fed Chairs.' 'It all depends on just how loyal this person is expected to be to Trump,' said Kathryn Judge, a professor at Columbia Law School who researches financial markets and central banking. 'But we don't we know what the ramifications would be or what they'd be willing to do, because this is unprecedented.' US presidents have historically waited until the final months of the incumbent Fed chair's term before naming a successor. RSM chief economist Joe Brusuelas cautioned that naming an early Fed chair could backfire, causing a jump in the very interest rates Trump is seeking to drive lower. 'Undermining Powell is in no one's best interest as it will almost certainly translate to a weaker dollar and rising rates,' Brusuelas said. On Wednesday, the Wall Street Journal reported that Trump, frustrated by Powell's reluctance to slash interest rates, could announce his nominee as early as this summer. The US dollar index, which measures the dollar's strength against six major foreign currencies, subsequently illustrated investors' discomfort with the idea of a shadow Fed chair. After the Journal's report, the US dollar was down 0.3% Thursday morning and hovered around its lowest level since February 2022. The stock market, in contrast, appeared largely unfazed by the idea of Trump naming a shadow Fed chair. US stocks moved solidly higher on Thursday, flirting with record highs. Valliere worries the plan for naming an early Fed chair 'would politicize the Fed for a few months before stability is restored next May.' 'The damage to the Fed's independence would be considerable if Trump becomes a monetary back-seat driver, second-guessing Fed policies this fall,' Valliere said. There are at least three contenders for the top job at the Fed, CNN has previously reported: Bessent; Kevin Warsh, a former Fed governor; and Christopher Waller, a current Fed governor. The Journal reported that Kevin Hassett, the director of the White House's National Economic Council, is also being considered; as well as David Malpass, who Trump in his first term nominated to helm the World Bank. Narayana Kocherlakota, a former president of the Federal Reserve Bank of Minneapolis who is now a professor at the University of Rochester, told CNN that a shadow Fed chair is 'not great policy' because the person could step on Powell's current messaging. 'However, it might be better than having the president tweet about monetary policy,' Kocherlakota said, alluding to Trump's intensifying attacks on Powell via social media. Austan Goolsbee, president of the Federal Reserve Bank of Chicago, told CNBC on Thursday that the naming of a new Fed chair this far in advance would have 'no effect' on Fed policymakers. One former Fed official who sat on the rate-setting committee alongside Powell also stressed that naming a shadow Fed chair would not sway policymakers. 'I can tell you with absolute certainty it will have no impact on Jay Powell and the existing FOMC,' this former official told CNN on the condition of anonymity, referencing the Fed's 12-member voting committee. The former Fed official said some candidates Trump is considering may have second thoughts about getting announced this early in the process. 'I wouldn't want to be named at this juncture because you'd be saying I am Trump's lackey. That would hurt my credibility on the Street and in Corporate America,' the former official said. As Goolsbee alluded to, a shadow Fed chair won't have any real power before assuming the role. Trump's pick would also need to be confirmed by the Senate, though that likely won't be much of an obstacle with Republicans controlling both chambers of Congress through 2026. Even then, it won't be easy for this person to bend the Fed to their will. All monetary policy decisions are voted on by the FOMC, also known as the Federal Open Market Committee. The chair cannot unilaterally veto what the members vote for and, in theory, could even be outvoted. Blinder, the former Fed vice chair, said the risk is that a shadow Fed chair provokes their future colleagues by speaking out before taking power. 'If he or she contradicts what Powell is saying, that will aggravate the FOMC, almost all of whose members will still be there when the new chair takes over,' Blinder said. 'It opens the door to an open or silent revolt against the chair, which is a rare thing in Fed history.' CNN's John Towfighi contributed to this report.
Hamilton Spectator
14 minutes ago
- Hamilton Spectator
UK leader Starmer waters down planned welfare cuts after revolt in his Labour Party
LONDON (AP) — British Prime Minister Keir Starmer gave way to political pressure on Friday, watering down planned welfare reforms to avoid defeat by his own party's lawmakers. It's the latest forced U-turn for a center-left government caught between conflicting goals of cutting spending and improving public services. The government planned to bring a bill to Parliament next week that would tighten eligibility for a key disability benefit, removing the Personal Independence Payment from hundreds of thousands of people with long-term physical or mental health conditions. Another health-related benefit received by people on low incomes would also be reduced under the plans. The government said the proposed changes would help people find jobs while preserving a safety net for those who can never work. It would also save an estimated 5 billion pounds ($7 billion) a year from a welfare bill that has ballooned since the COVID-19 pandemic. But many Labour lawmakers balked at the changes, which the Institute for Fiscal Studies think tank estimated would cut the income of 3.2 million people by 2030. More than 120 of the 403 Labour legislators signed a motion that would effectively kill the bill if it were to be passed. Defeat at the hands of his own party in the vote planned for Tuesday would have seriously damaged Starmer's authority. To avoid that, the government said it would ensure no one who currently receives the PIP benefit will lose it. Starmer was elected a year ago in a landslide victory, winning a commanding majority of seats in the House of Commons. Since then his popularity has plunged as a sluggish economy and stubbornly high inflation resist efforts to raise living standards and ease a cost-of-living squeeze. Even as Starmer enjoyed success on the world stage – charming U.S. President Donald Trump and securing a trade deal to exempt Britain from some U.S. tariffs – Labour lawmakers have grown restive at the party's sagging poll ratings and the rise of the hard-right Reform U.K. party led by Nigel Farage . Starmer has been forced into several U-turns. In May the government dropped a plan to end winter home heating subsidies for millions of retirees. Last week Starmer announced a national inquiry into organized child sexual abuse, something he was pressured to do by opposition politicians — and Elon Musk . The government insists that major changes to welfare are needed to deal with a 'broken' system inherited from the previous Conservative government. It says the spending cuts it is making will be balanced by new money and support to help people who are able to work find jobs. The government wants to reduce the number of working-age people who are economically inactive through long-term sickness, which it says stand at 2.8 million, the highest rate of any G7 nation. At a NATO summit on Wednesday, Starmer dismissed griping about the welfare plans as 'noises off.' But the next day, he insisted he was listening to party rebels. 'All colleagues want to get this right, and so do I,' Starmer said. 'We want to see reform implemented with Labour values of fairness,' he told lawmakers. 'That conversation will continue in the coming days, so we can begin making change together on Tuesday.' Error! Sorry, there was an error processing your request. There was a problem with the recaptcha. Please try again. You may unsubscribe at any time. By signing up, you agree to our terms of use and privacy policy . This site is protected by reCAPTCHA and the Google privacy policy and terms of service apply. Want more of the latest from us? Sign up for more at our newsletter page .
