Category: Finance News

Posted on

FCA hires law firms and headhunters as staff vacancies mount

FCA hires law firms and headhunters as staff vacancies mount

The Financial Conduct Authority is recruiting private law firms to help process applications and has spent almost £1m on headhunters this year as it battles to deal with almost twice its typical number of vacancies after a wave of departures, Travel & Tips.

The news comes after Nikhil Rathi, the head of the UK’s financial services watchdog, defended his transformation project to the Treasury select committee last Wednesday, telling them that while there would be “noise” about the changes for some time to come, the FCA was headed in the right direction.

Rathi’s team has provoked a fierce backlash from staff over attempts to change the FCA’s work practices and pay structures, efforts that management say will deliver a more efficient regulator better placed to prevent future scandals like the 2019 implosion of London Capital & Finance, which cost 12,000 savers £236m.

The grievances of FCA staffers have been publicly aired by trade union Unite, which is pushing to represent them. A person familiar with the FCA’s operations said vacancy levels were now running at about 500, versus typical levels of 300. The FCA’s staff is about 4,000.

Against that backdrop, the financial watchdog has been advertising contracts for consultants to pick up the slack, including a recent tender for lawyers to help with the “change of control” applications that financial services groups file when their ownership changes.

The FCA stressed that the “final decision on an application will be taken by an FCA staff member”. The regulator attributed the need for external resources to an “increase in the number of change in control applications”.

“In order to ensure that we can process these as quickly as possible, while maintaining our high standards, we have employed some short-term resources to support us,” the FCA added. Change of control applications are deemed approved if they are not processed within 60 days, so the regulator cannot afford a pile-up.

Regulated firms and their lawyers have been complaining of delays in other areas of the FCA’s work. A lawyer who spoke to the Financial Times said the time taken for some applications was the longest he could remember in a decade.

“There is a very real sense that the FCA is dangerously understaffed in certain key areas, mainly areas that actually provide a service to authorised persons [regulated firms],” the lawyer said.

Last July, Rathi said he was adding 100 staff to its authorisations division. On Wednesday, he told the Treasury select committee that the FCA was deliberately giving companies a more vigorous assessment.

The third-party law firm for change of control applications, which has not yet been appointed, will be used for a maximum of six months and will involve a maximum of 17 people.

The government tendering website also details almost £1m of spending on headhunters to bolster the FCA’s ranks after a string of resignations. The FCA said last week that Megan Butler, head of the transformation project, was leaving.

The £1m was spread across 12 different tenders for executive searches to fill roles including directors, heads of departments, general counsel and the chair of the FCA’s consumer panel. The largest was a £155,000 contract to find a new finance director and finance head of division.

In 2020, the FCA advertised for headhunters just three times, with a total bill of almost £400,000, according to notices posted on the government’s procurement website.

At the Treasury select committee hearing, Rathi said the FCA’s attrition levels for 2021 were not unusually high and that it was facing the same pressures as commercial companies in an intense jobs market. Several FCA insiders and those who recently left the regulator told the FT that staff had been leaving because of the fallout from the transformation plan.

Business Tips
Health News
Future Technology

Posted on

Why we have exactly the fuel we need for a year-end rally

Market participants are trying to make sense of the recent stock market volatility. They want to know why it happened, why was there a significant drop in so many growth stocks, and was this recent sharp pullback just a shakeout before a year-end rally or the start of a bigger correction? Of course, no one knows the answer to the last question, but I’m leaning towards a year-end rally for the following reasons.

Technicals – During the recent drop, the S&P 500 and Nasdaq Composite found support around their 50-day moving averages. Since this is traditionally an area of institutional support, it is important to note that the large institutions were buying near these levels. 

Chart is provided by MarketSmith.

Chart is provided by MarketSmith.

Strong Seasonality — November, December, and January are historically three of the stronger months of the year. Specifically, the second half of December tends to be strong, as seen in the chart below (courtesy of @RyanDetrick) 

Stock Leadership — It’s hard to get bearish when many Mega Cap growth leaders such as Microsoft (MSFT), Alphabet (GOOG, GOOGL) and Tesla (TSLA) continue to hold logical support levels. In addition, Apple (AAPL) is the most widely held stock and it surged to an all-time high this week. Finally, I consider Semiconductors as a true indicator of the economy, and many stocks in this sector are approaching or already at new highs.

Sentiment — Many sentiment measures reached extreme bearish levels last week. A casual observer might not understand why this happened with the major indexes near all-time highs, but beneath the surface, it has been a bloodbath. Most people don’t just own the index. They own growth stocks, and especially get married to the ones that have greatly appreciated in price over the past year or two. When these stocks become “too crowded,” the market conveniently destroys these names, and that kills the morale of many traders.

This leads me to the first two questions I posed at the beginning of this article. The selloff was partially related to uncertainty fears around the new Omicron variant, and it was also a normal pullback to shake out some of the excess created in the prior six weeks. However, the main reason had to do with Fed Chair Powell changing his tune from dovish to more hawkish.

Since early April 2020, I’ve been writing articles to stay bullish because of the insane amount of liquidity the Fed was pumping into the system. In the spring of 2020, the Fed made more Treasury purchases in the six weeks following the pandemic than they did in the nine years combined between 2009-2018. They continued with $120 billion in monthly bond purchases, but now need to reduce or “taper” these purchases. In last week’s testimony to Congress, Fed Chair Powell discussed speeding up the taper and the market interpreted his language as hawkish and started to price in two to three rate hikes in 2022. There’s a reason why Wall Street legend Martin Zweig created the phrase “Don’t fight the Fed.”

Many people are concerned that we might see a all of 2018 scenario. In October 2018, Fed Chair Powell said he planned on raising rates 3 to 4 times in the upcoming year. The market clearly could not handle this and then proceeded to drop 20{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in the following few months. In January 2019, Powell took back his words and that ended the market correction. I don’t see this scenario happening now because even if the Fed tapers more quickly than people expect, they are still providing a low-interest rate and equity-friendly environment. In fact, Powell never really has to raise rates. He can just say that he will, watch the market drop, and then retract his words.

Bottom line, the strong technicals combined with the favorable seasonality and extremely negative sentiment could be the fuel needed for a year-end rally. As far as 2022 goes, we’ll worry about that next year.

I can be reached at: jfahmy@zorcapital.com

Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained on this site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned on this site. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

Posted on

These 2 things are going to bring down inflation in the coming months: Biden aide

This week saw two key pieces of economic data: the lowest number of jobless claims since September 1969 and the highest inflation since June 1982.

Jared Bernstein, longtime economic aide to President Biden, was keen to drop some trivia on the more flattering number, noting “‘Honky Tonk Woman’ by the Rolling Stones was topping the charts” the last time jobless claims were this low.

What was left unmentioned was that “Ebony and Ivory” was the most popular song the last time inflation was this high. On those price challenges, Bernstein said the wheels are in motion to curb price pressures in the coming months. In fact, he said, gas prices are already down and “we fully expect [these lower prices] to show up in the December report.”

He added that “part of what is happening here is the president asking the Federal Trade Commission to make sure [oil companies] aren’t engaging in any anti-competitive behavior” as well as “the largest ever release from our strategic petroleum reserve.”

President Joe Biden speaks during his meeting with members of the White House Covid-19 Response Team on the latest developments related to the Omicron variant in the State Dining Room of the White House in Washington, DC, December 9, 2021. (Photo by Nicholas Kamm / AFP) (Photo by NICHOLAS KAMM/AFP via Getty Images)

President Joe Biden speaks Thursday during a meeting with members of the White House Covid-19 Response Team. (Nicholas Kamm / AFP via Getty Images)

AAA noted this week that gas prices have fallen in recent days to levels not seen since August. It attributed the downward pressure more to COVID-19 and fears of an economic slowdown linked to the omicron variant.

In a statement Friday, Biden also focused on energy prices, saying recent moves “should translate into lower prices for Americans in the months ahead.”

The Labor Department reported that the Consumer Price Index increased 0.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November adding up to a 6.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} increase over last year. Another measure, the so-called core CPI which excludes food and energy prices, jumped by 4.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} over last year, also marking the fastest increase in decades.

Republicans were quick to jump on the numbers with the Republican House Ways and Means leader, Rep. Kevin Brady (R., Texas), calling it ”another grim report for American workers and families whose paychecks are shrinking month after month due to President Biden’s inflation-friendly policies.”

A second factor: Supply chains

Easing supply chain logjams will help drive down prices in the coming months, and Biden is “detailing his team to do everything we can to help unsnarl supply chains,” Bernstein told Yahoo Finance. 

Bernstein is currently a member of the White House Council of Economic Advisers and has had a long relationship with Biden on economic issues. From 2009 to 2011, he served as the chief economic adviser to then-Vice President Biden during the Obama administration.

The White House’s Port Action Plan, is working and “virtually every forecast I’ve seen has some of these supply chain snarls easing as demand for goods rebalances [and] demand for services come up and that takes pressure off the supply chain and that takes some pressure off of inflation,” he said.

Kroll Institute Global Chief Economist Megan Greene told Yahoo Finance that much of the inflation was indeed caused by pent-up demand for goods, but Friday’s report “says nothing about whether we’re going to continue to buy goods once this pandemic is contained rather than services.”

‘The heart of Bidenomics’

LONG BEACH, CALIFORNIA - DECEMBER 02: A person paddle boards near shipping containers stacked on a container ship at the Port of Long Beach on December 2, 2021 in Long Beach, California. The Ports of Los Angeles and Long Beach have delayed a plan for a fourth time to charge shippers fees for container storage as a backlog of aging cargo at the ports has decreased 37 percent since last month. (Photo by Mario Tama/Getty Images)

A container ship at the Port of Long Beach waits to be unloaded last week in California. A backlog of aging cargo at the Ports of Los Angeles and Long Beach has decreased 37 percent since last month. (Mario Tama/Getty Images)

Bernstein returned repeatedly to the most recent jobless claims numbers to celebrate how, in his view, the tight job market is helping “lower-income people have a fair shot at claiming some of the economic growth.”

Wage growth, he said, is “beating inflation by a fair bit.”

“If you look at the lowest-wage workers – the bottom 25{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} – their pace is beating inflation as well,” Bernstein said.

While inflation has eaten deeply into wage gains, economists have found earnings rising the fastest recently for the lowest-paid workers, with the lowest-wage workers beating inflation.

“We have just very, very strong labor demand in this economy and particularly strong for low-wage workers,” said Bernstein. “That is at the heart of Bidenomics.”

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

US inflation jumps 6.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November — fastest rate in 39 years

Biden’s $2.2T spending bill ‘likely to boost inflation’ in the short term, economist says

It’s ‘not a quick hit’: Democrats highlight the gradual nature of their spending bills amid inflation worries

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, YouTube, and reddit.

Posted on

Stock futures edge up as investors await inflation data

Stock futures opened higher Thursday evening as investors awaited a key inflation report ahead of the Federal Reserve’s final policy-setting meeting of the year next week. 

Contracts on the S&P 500 gained. Earlier, the blue-chip index closed out the regular session in the red after three consecutive days of gains, with concerns over Omicron beginning to ease as new developments suggested the variant may not cause as severe of infections as previously feared. The Nasdaq dropped 1.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} during the regular trading day, but was still on track for a weekly return of nearly 2.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} after posting solid gains earlier this week. 

Investors on Friday are set to receive the Labor Department’s latest Consumer Price Index (CPI), which is expected to show another multi-decade high rate of inflation for November. Consensus economists are looking for the CPI to climb by 6.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in November over last year, or the fastest annual rate since the 1980s. And even excluding more volatile food and energy prices, the core CPI likely rose by 4.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} over last year, or the fastest rate in about three decades.  

“We think that inflation is still going to be pretty broad when we see tomorrow’s report,” Luke Tilley, Wilmington Trust chief economist, told Yahoo Finance Live on Thursday. “But what we’re looking for is a deceleration as we go forward over the course of 2022.”

“That doesn’t mean prices are going to go down, it’s just a question of, are they going to go up as much in 2022 as in 2021 without the kind of fiscal stimulus we’ve had this year? And we don’t think that that’s going to happen, because it won’t be as much of a push on the demand side,” he added. “And then on the supply side, we’re looking for the labor market to improve, more people returning to work, and of course the delivery and the ports to improve.”  

Other recent data have further underscored the present tightness on the supply side of the economy. Weekly U.S. jobless claims plunged more than expected to reach the lowest level since 1969 last week, coming in even below pre-pandemic levels. And U.S. job openings came in at more than 11 million for only the second time on record in October.  

“Wage increases are probably on the agenda for next year. That’s part of the broadening of inflationary pressures that we’ve already started to see come through in some of that CPI data,” Seema Shah, Principal Global Investors chief strategist, told Yahoo Finance Live on Thursday. “But I have to say that we’re not so worried because we’re starting to see other parts of the inflation picture actually starting to fade. So at the end of next year, 12 months from now, we’re not expecting the kind of 6-7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} CPI numbers that we may see tomorrow. We’re thinking more the 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} level for 12 months time.” 

Given the backdrop of elevated inflation, Federal Reserve officials have adopted more hawkish rhetoric about the monetary policy path forward. Some pundits suggested more rotation could occur in U.S. equity markets beneath the surface as investors price in expectations for tighter Fed policy to rein in inflation. The Federal Open Market Committee is slated to hold its final two-day monetary policy-setting meeting of the year next week. 

“If we go back to the bulk of the second half of 2020 and for much of this year, the pendulum of risk-on, risk-off in the market was really simply occurring just below the surface of the index, of the S&P 500 —meaning that when there was a risk-on rally, it was value and it was cyclicals,” Craig Fehr, principal and leader of investment strategy for Edward Jones, told Yahoo Finance Live on Thursday. “And when it was risk-off and the risk appetite was declining, it was tech that was the safe haven.”

“What we’re seeing is a transition now, particularly as the Fed is signaling a withdrawal of some of this excess liquidity and stimulus that’s been in place for quite some time,” he added. “The market isn’t going to run directly into high-valuation, perhaps tech names broadly like it has over the past year-and-a-half. I think we’re going to see more discernment.” 

—

6:25 p.m. ET Thursday: Stock futures open higher 

Here were the main moves in markets in late trading on Thursday:

  • S&P 500 futures (ES=F): +6.5 points (+0.14{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 4,673.50

  • Dow futures (YM=F): +34 points (+0.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 35,787.00

  • Nasdaq futures (NQ=F): +25.25 points (+0.16{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 16,174.00

NEW YORK, NEW YORK - DECEMBER 08: Traders work on the floor of the New York Stock Exchange (NYSE) on December 08, 2021 in New York City. Following news from the pharmaceutical company Pfizer on the effectiveness of its vaccine against the Omicron COVID-19 variant, the Dow Jones Industrial Average rallied nearly 100 points in morning trading on Wednesday. (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – DECEMBER 08: Traders work on the floor of the New York Stock Exchange (NYSE) on December 08, 2021 in New York City. Following news from the pharmaceutical company Pfizer on the effectiveness of its vaccine against the Omicron COVID-19 variant, the Dow Jones Industrial Average rallied nearly 100 points in morning trading on Wednesday. (Photo by Spencer Platt/Getty Images)

—

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

Posted on

Futures open flat as Omicron concerns subside

Stock futures opened relatively flat on Wednesday evening, though sustaining gains posted by a three-day recovery rally that was led by cooled investor concerns around the Omicron variant.

Dow futures inched up 0.02{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, while contracts on the tech-focused Nasdaq Composite ticked up 0.10{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. All major indexes closed up, with the S&P 500 gaining 14.46 points to close the session at 4,701.21, just 0.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} shy of the trading session on Nov. 24, a day before the latest COVID-19 variant was announced by the World Health Organization. 

The moves were supported by eased virus fears after Pfizer Inc. and BioNTech reported that early lab studies show a third dose of their coronavirus vaccine mitigates the Omicron variant. The vaccine makers had indicated the initial two doses may not be enough to protect against infection from Omicron. Shares of Pfizer (PFE) traded 0.62{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} lower on Wednesday, closing at $51.40.

“We do think that there is fundamental support there for markets to continue to move higher here,” Emily Roland, co-chief investment strategist at John Hancock investment management, told Yahoo Finance Live on Tuesday. “Obviously we had a couple of things spook us over the last week or so, the emergence of the Omicron variant as well as this pivot from the Fed, potentially seeing them accelerating their tapering of asset purchases here. But the bottom line is that the economy is strong.”

With virus concerns diminishing, investors are pivoting their attention back to economic data, awaiting Consumer Price Index (CPI) figures on Friday to assess the extent inflationary pressures will persist.

“If the Omicron variant was to lead to a resurgence in goods spending at the expense of services or to further complicate supply disruptions, there could be a clear inflationary impact, too,” HSBC economist James Pomeroy wrote earlier this week in a research note to clients. “The inflation news in the past few weeks has been decidedly mixed — with upside surprises in both the U.S. and eurozone being offset by the possibility of some of the supply chain issues starting to alleviate, while energy prices have fallen sharply in recent days.

Separately, Apple shares rose 2.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} closing at $175.08 Wednesday — hitting a third-consecutive record high. The iPhone maker is on the cusp of becoming a $3 trillion company. The milestone would be reached at a time when the company is expected to foray into augmented and virtual reality with the launch of headsets in 2022. 

6:57 p.m. ET Wednesday: Stock futures flat

Here were the main moves in markets in late trading on Wednesday:

  • S&P 500 futures (ES=F): -1.75 points (-0.04{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 4,697.25

  • Dow futures (YM=F): + -8 points (-0.02{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 35,728

  • Nasdaq futures (NQ=F): -16.50 points (-0.10{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 16,375.75

—

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

Posted on

Stock futures advance further after tech-led rally

Stock futures opened higher Tuesday evening after a technology-led rally during the regular trading day, as investors looked through concerns over the Omicron variant and a potential policy pivot by the Federal Reserve. 

Contracts on the Nasdaq Composite opened in the green. Earlier, the index closed higher by more than 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, posting its best day since March. The S&P 500 and Dow also advanced solidly, rising more than 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and 1.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} during the session, respectively. Treasury yields climbed, and the 10-year Treasury note gained nearly 5 basis points to trade just below 1.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. 

Pfizer (PFE) shares traded little changed to slightly lower Tuesday evening after data from a study in South Africa suggested the vaccine’s two-dose inoculation saw only partial effectiveness against the Omicron variant. However, other developments around the virus have been more upbeat, with Dr. Anthony Fauci telling the AFP on Tuesday that Omicron infections are “almost certainly” not more severe than those caused by the previous Delta variant. Public health officials and vaccine-makers are still collecting data to further assess the extent of the transmissibility and severity of illness caused by the Omicron variant. 

Investors have snapped up shares of technology and growth stocks that had lagged the broader market in recent sessions on Tuesday. Heavily weighted tech giant Apple (AAPL) extended gains into late trading after reaching a fresh all-time high. 

“Economic growth is going to be strong. Certainly the Omicron variant could possibly push some of that out, but it won’t eliminate it given the underlying fundamentals,” Brent Schutte, chief investment strategist for Northwestern Mutual, told Yahoo Finance Live. “And the Federal Reserve certainly will focus a bit more on tapering — that kind of spooked the market — but ask yourself: What impact is that going to have on growth? The answer to us is not much. You are still going to have a strong U.S. economy next year on the back of reopening, on the back of all the cash that is still available on the consumer balance sheet.” 

Other strategists echoed these sentiments. 

“We do think that there is fundamental support there for markets to continue to move higher here,” Emily Roland, co-chief investment strategist at John Hancock investment management, told Yahoo Finance Live on Tuesday. “Obviously we had a couple of things spook us over the last week or so, the emergence of the Omicron variant as well as this pivot from the Fed, potentially seeing them accelerating their tapering of asset purchases here. But the bottom line is that the economy is strong.” 

“So until it looks like we’re inching closer to a recession here, which we’re nowhere near at this point, it’s hard for us to get too defensive,” she added. “We continue to embrace equities, we like the U.S. the most, that’s where we’re seeing the best relative economic growth, that’s where we’re seeing the best relative earnings growth. And again, the other element here is that there is a ton of cash on the sidelines that’s looking to get put to work.” 

—

6:06 p.m. ET Tuesday: Stock futures open higher after rally 

Here were the main moves in markets in late trading on Tuesday:

  • S&P 500 futures (ES=F): +3 points (+0.06{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 4,688.00

  • Dow futures (YM=F): +9 points (+0.03{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 35,722.00

  • Nasdaq futures (NQ=F): +21.5 points (+0.13{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 16,339.5

NEW YORK, NEW YORK - DECEMBER 02: Traders work on the floor of the New York Stock Exchange (NYSE) on December 02, 2021 in New York City. The Dow rose over 500 points today after falling yesterday due to fears of the omicron strain of the Covid-19 virus. (Photo by Spencer Platt/Getty Images)

NEW YORK, NEW YORK – DECEMBER 02: Traders work on the floor of the New York Stock Exchange (NYSE) on December 02, 2021 in New York City. The Dow rose over 500 points today after falling yesterday due to fears of the omicron strain of the Covid-19 virus. (Photo by Spencer Platt/Getty Images)

—

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter