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Rishi Sunak struggles to defuse Britain’s ‘winter of discontent’




After one of the worst weeks of industrial unrest in modern British history – with nurses, railway workers and postal staff among those in icy picket lines – Rishi Sunak’s government has been hawkish, warning that big wage increases are “unsustainable” and will lead to inflation.

But as Jack Straw, an adviser to Labor governments during the strife-torn 1970s and then a Cabinet minister, said: “These differences will be ironed out. Or not?

The prime minister told his cabinet on Tuesday that the government had been “fair and reasonable” in its handling of the wage disputes. “There is a feeling that we have to get over this,” said one minister.

But there is also a recognition in the Sunak government that dealing with the wage demands of British nurses – one of the most respected professions in the country – is a particularly complex problem.

Tory unity has already begun to fray on the fringes, with Sir Jake Perry, the former party chairman, and Dan Boulter, a Conservative MP and NHS hospital doctor, saying Sunak will have to increase supply for nurses.

“You’ll never win an argument with the nursing profession,” said Straw. “It’s impossible.” The problem for ministers is that complying with demands for a pay increase for more than a million NHS workers in England would cost billions of pounds.

In understanding Sunak’s approach to the wave of strikes sweeping through Britain, his allies said it was important to understand that ministers treat every dispute as different. But the overarching goal is to maintain wages amid a huge budget deficit and inflation running at more than 10 percent.

Strikes in the NHS are a particular problem for the government, but Sunak is more sanguine about other labor disputes, particularly over railways, where ministers intervened this month to stop employers offering a 10 per cent pay deal over two years.

“The rail unions are starting to act,” said one senior Conservative, noting that only 63 percent of RMT rail union members voted to reject an offer of a 9 percent payout over two years from Network Rail, the infrastructure operator. Another union, TSSA, accepted Network Rail’s offer.

The sight this week of RMT leader Mick Lynch berating a BBC journalist for “repeating far-right things” when she asked him about waning union support for strikes delighted Sunak’s allies. Someone said, “Lynch is upset.”

Ministers believe that public support for strikes “tends to wane the longer they last” and that the government could win the argument at a time when many workers accept offers of lower wages – certainly less than the 19 per cent cut demanded by the Royal College of Nursing, the union behind The industrial strike of nurses.

For example, senior governors believe that teachers who are It has been voted on By unions for strikes in 2023, it is unlikely to garner massive public support, given that children’s education has been disrupted by the Covid pandemic.

Sunak has promised new anti-strike legislation in the new year, limiting damage to key public services caused by the strike, and will be encouraged by many Conservative MPs and right-wing newspapers.

The Prime Minister also believes that Sir Keir Starmer, the leader of the Labor Party, could be introduced as a servant of the union – and someone who would make unaffordable salary offers, should he win the next election.

“What is weak is that it is not strong enough to stand up to unions,” Sunak said on Wednesday. We are actually protecting the public. They are protecting their payers.” Starmer described the nurses’ strike as a “badge of shame” for the government.

A strike by nurses and ambulance drivers is a serious problem for a government that has accepted an independent wage review body’s proposal for a £1,400 salary increase for more than a million NHS staff in England, backdated to April. This represents an increase of just under 4 percent in the average base wage for nurses.

So far, the Cabinet and most Tory MPs have stuck firm, arguing that the government could not afford a higher wage increase, that it would be inflationary, and that if NHS staff were paid more it would open the door to similar demands from other public sectors. Workers.

But Steve Breen, the Tory chair of the House of Commons health committee, called for flexibility, saying the “elegant” way out would be to ask the wage review body to reconsider its recommendation. This idea has so far been rejected by Number 10.

There is tension in the government, with figures including Sir John Geoff, the former deputy governor of the Bank of England, wondering whether larger pay increases for public sector workers will cause inflation to rise significantly.

Lord Nick MacPherson, former permanent secretary at the Treasury, said: “I think the government should be careful about its rhetoric here. Public sector workers don’t create inflation.”

Speaking on BBC Radio week in WestminsterHe added, “It is the private sector that is really driving the labor market. We also have to realize that public sector salaries have been contracting for a very long time.”

Some government officials fear that other Tory MPs will join Perry and Poulter and urge the government to give more money to NHS staff, especially if their constituents start complaining about the scrapped operations. “You know what Tory MPs are like,” said one.

Steve Barclay, the health secretary, has so far refused to discuss this year’s NHS wage award with the RCN, saying its demand for a 19 per cent increase was “unsustainable”.

But he, like the unions, is looking for a way to end the strikes. Barkley’s allies said he had tried to “start a conversation” about the next NHS wages deal which comes into effect in April.

But, in the meantime, Sunak will have to calculate the extent of the potential political damage if strikes continue deep into 2023. Watch.

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We need to pay more attention to skewed economic signals





The writer is chair of Queen’s College, Cambridge and advisor to Allianz and Gramercy

Inflation was the dominant economic and financial issue of 2022 for most countries around the world, especially for advanced economies that have a consequential impact on the global economy and markets.

The effects have been seen in declining living standards, increasing inequality, increasing borrowing costs, stock and bond market losses, and occasional financial mishaps (fortunately small and so far contained).

In this new year, recession, both actual and feared, has joined inflation in the driving seat of the global economy and is likely to replace it. It’s a development that makes the global economy and investment portfolios subject to a wide range of possible outcomes — something that a growing number of bond investors seem to be aware of more than their equity counterparts.

International Monetary Fund iYou will likely review soon Her economic growth forecasts again, predicting that “a third of the world will be hit by recession this year”. What is particularly notable to me about these worsening global prospects is not only that the world’s three major economic regions – China, the European Union and the United States – are slowing down together, but also that this is happening for different reasons.

In China, a chaotic exit from the wrong Covid-19 policy is undermining demand and causing more supply disruptions. Such headwinds to domestic and global economic well-being will continue as long as China fails to improve the coverage and effectiveness of its vaccination efforts. The strength and sustainability of the subsequent recovery will also require that the country more vigorously renew a growth model that can no longer rely on greater globalization.

The European Union continues to deal with energy supply disruptions as the Russian invasion of Ukraine continues. Strengthening inventory management and reorientation of energy supplies is well advanced in many countries. However, it is not yet sufficient to lift immediate constraints on growth, let alone resolve long-term structural headwinds.

The United States has the least problematic view. The headwinds to growth are due to the Fed’s struggle to contain inflation after mischaracterizing rate increases as fleeting and then initially being too timid to adjust monetary policy.

The Fed’s shift to an aggressive front-load of interest rate hikes came too late to prevent the spread of inflation in the services sector and wages. As such, inflation is likely to remain stubborn at around 4 percent, be less sensitive to interest rate policies and expose the economy to greater risk for accidents from additional policy errors that undermine growth.

The uncertainties facing each of these three economic areas suggest that analysts should be more careful in reassuring us that recessionary pressures will be “short and shallow”. They need to be open, if only to avoid repeating the mistake of prematurely dismissing inflation as transient.

This is especially important because these diverse drivers of recessionary risk make financial fragility more threatening and policy shifts more difficult, including potentially Japan. Get out of interest rate control Policy. The range of possible outcomes is extraordinarily large.

On the one hand, a better policy response, including improving the supply response and protecting the most vulnerable populations, can counteract the global economic slowdown and, in the case of the United States, avert a recession.

On the other hand, additional policy errors and market turmoil can lead to self-reinforcing vicious cycles with rising inflation and rising interest rates, weakening credit and compressed earnings, and stressing market performance.

Judging by market prices, more bond investors are better understanding this, including by refusing to follow the Fed’s interest rate guidance this year. Instead of a sustainable path to higher rates for 2023, they believe recessionary pressures will lead to cuts later this year. If true, government bonds would provide the yield and potential for badly missed portfolio risk mitigation in 2022.

However, parts of the stock market is still weakly bearish pricing. Reconciling these different scenarios is more important than investors. Without better alignment within markets and with policy signals, the positive economic and financial outcomes we all desire will be no less likely. They will also be challenged by the risk of more unpleasant outcomes at a time of less economic and human resilience.

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Macro hedge funds end 2022 higher, investors say, while many others take big losses By Reuters





© Reuters. FILE PHOTO: Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York City, US, January 5, 2023. REUTERS/Andrew Kelly

By Svea Herbst Baylis

NEW YORK (Reuters) – Some hedge funds betting on macroeconomic trends have boasted of double and even triple-digit gains for 2022, while other high-profile companies that have long been on technology stocks have suffered heavy losses in volatile markets, investors said.

Rokos Capital, run by Chris Rokos and one of a handful of so-called global macro companies, gained 51% last year. Fund investors this week, who asked not to be identified, said Brevan Howard Asset Management, the company where Rokos once worked, posted a gain of 20.14% and Caxton Associates returned 16.73%.

Haider Capital Management’s Haider Jupiter Fund rose 193%, an investor said.

Data from hedge fund research showed that many macro managers have avoided crumbling stock markets that have been rocked by rapid interest rate increases and geopolitical turmoil, including the war in Ukraine, to rank among the best performers in the hedge fund industry. The company’s macro index rose 14.2% while the general index of hedge funds fell 4.25%, its first loss since 2018.

Equity hedge funds, where the bulk of the industry’s roughly $3.7 trillion in assets are invested, fared worse with a loss of 10.4%, according to HFR data. And while that beat the broader stock market’s loss of 19.4%, some high-profile funds posted even bigger losses.

Tiger Global Management lost 56% while Whale Rock Capital Management ended the year with a 43% loss and Maverick Capital lost 23%. Coatue Management ended 2022 with a loss of 19%.

But not all companies that bet on technology stocks suffered. John Thaler JAT Capital finished the year with a 3.7% gain after fees after a 33% increase in 2021 and a 46% gain in 2020.

Sculptor Capital Management (NYSE::), where founder Dan Och is fighting the company’s current CEO in court over his salary increase, posted a 13% drop.

David Einhorn’s Greenlight Capital, which bet that Elon Musk would be forced to buy Twitter, ended the year up 37% while Rick Sandler’s Eminence Capital rose 7%.

A number of so-called multi-manager companies where teams of portfolio managers bet on a variety of sectors also boast positive returns and have been able to deliver on their promise that hedge funds can deliver better returns in distressed markets.

Balyasny’s Atlas Fund (NYSE: Enhanced) gained 9.7%, while Point72 Asset Management gained 10%. Millennium Management gained 12% while Carlson Capital ended the year with a 7% gain.

Representatives for the companies either did not respond to requests for comment or declined to comment.

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German automakers point to easing supply chain problems





Sales at BMW and Mercedes-Benz jumped in the final months of 2022 as the German premium auto brands indicated supply chain problems plaguing the industry were abating.

Automakers around the world have experienced parts shortages since the pandemic, especially semiconductors, leaving many of them with large fleets of incomplete vehicles that can’t be delivered to customers.

BMW and Mercedes each said their full-year vehicle deliveries fell last year by 4.8 percent and 1 percent, respectively, due to Suppliers Bottlenecks as well as lockdowns in China and the war in Ukraine.

But supply pressures eased in the last quarter of the year, as BMW recorded a 10.6 percent jump in sales, with 651,798 vehicles delivered, and Mercedes fulfilling 540,800 orders, up 17 percent from the same period in 2022.

BMW He said the main effects of supply chain bottlenecks and continued lockdowns were felt in the first six months of the year, adding that “sales were steadily picking up in the second half.”

Mercedes boss Ula Kallenius told the Financial Times last week that the list of problems in the auto supply chain was declining, but added that long waits for cars would continue into 2023.

“One chip is enough to be vital [ . . .] Missing, and then you can’t finish the car, even if you have everything else.

Both brands recorded strong sales growth electric car. Mercedes, which last week announced a plan to build 10,000 charging docks, said EV shipments grew 124 percent to 117,800 last year compared with its predecessor.

Similarly, BMW reported strong growth in electric vehicle sales, with deliveries of fully electric vehicles doubling last year to 215,755.

Analysts at Bank of America said that sales of electric vehicles, including hybrid cars, reached a historic peak last November, with 1.1 million units sold. They attributed this largely to the upcoming phase-out of customer subsidies in Germany.

Participate in Mercedes BMW and BMW prices held steady Tuesday morning as investors priced in an image of an improving showing.

Rolls-Royce, a subsidiary of BMW, announced Monday that sales have hit a 119-year record, driven by strong demand in the United States, its largest market.

The luxury brand has been largely unaffected by the semiconductor pressure, mainly because it makes relatively few compounds and therefore needs fewer chips.

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