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US Adds 261,000 Jobs in Continued Sign of Robust Labour Market

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US jobs growth rose at an unexpectedly rapid clip in October, defying expectations for a larger slowdown as the historically tight labour market again showed resilience in the face of the Federal Reserve’s aggressive efforts to curb demand.

The economy added 261,000 positions last month, according to data released by the Bureau of Labor Statistics on Friday, more than consensus forecasts of 200,000. The figure was down from an upwardly revised 315,000 in September and 292,000 in August.

On average this year, the economy has added 407,000 jobs each month, compared with a monthly increase of 562,000 in 2021.

Despite these gains, the unemployment rate ticked up to 3.7 per cent, just above its pre-pandemic low.

The red-hot labour market has long been a source of discomfort for the Fed as the US central bank seeks to restrain economic growth in order to bring decades-high inflation under control. Acute worker shortages have helped to drive up wages as employers seek to fill positions, helping to stoke inflation.

Fed chair Jay Powell described the labour market as “overheated” at a press conference on Wednesday following the central bank’s decision to lift the federal funds rate by 0.75 percentage points for the fourth time in a row. Citing recently released data that showed labour costs steadying and job vacancies unexpectedly climbing, he warned he did not “see the case for real softening yet”.

In response to the latest jobs report, which came just days before US midterm elections that will determine control of Congress, president Joe Biden celebrated the gains.

“We’re going to do what it takes to bring inflation down. But as long as I’m president, I’m not going to accept an argument that the problem is that too many Americans are finding good jobs,” he said.

Fuelling October’s jobs gain was a rise in employment across the healthcare industry, professional and technical services and manufacturing. The number of leisure and hospitality jobs also swelled by 35,000. Construction and retail were among the sectors to report no monthly increase in positions.

The share of Americans either employed or seeking a job — known as the labour force participation rate — again failed to improve in October, steadying at 62.2 per cent. Average hourly earnings rose 0.4 per cent, more than expected and an acceleration from September’s increase. The annual pace steadied at 4.7 per cent.

Powell on Wednesday cautioned that wages were “flattening out” at a level that is “well above” what would be consistent with inflation returning to the Fed’s 2 per cent target. Despite evidence that the economy is not cooling as rapidly as expected, the chair this week signalled the Fed would consider reducing the pace at which it is raising interest rates. That potential change could come either as soon as the December meeting or the one after that, given not only how far rates have risen this year but also the lagged effect of policy changes on the real economy.

Susan Collins, president of the Boston Fed, on Friday signalled her support for a slower pace of rate rises. “Smaller increments will often be appropriate as we work to determine how much tightening is needed to reach a level of the funds rate that is sufficiently restrictive,” she said.

Also on Friday, Thomas Barkin, president of the Richmond Fed, backed a slower pace of rises.

The potential course adjustment from the US central bank comes after it pushed the fed funds rate to a range of between 3.75 per cent and 4 per cent, a level that will more forcefully curb activity.

Powell made clear that a slower pace would not mean an easing up of the fight against inflation, however, he did warn the policy rate would reach higher levels than expected. Following the latest jobs report, markets have now priced in the fed funds rate peaking above 5 per cent next year.

A higher so-called terminal rate further reduces the odds the Fed can avoid tipping the economy into a recession, economists warn, with the unemployment rate likely to rise above 5 per cent.

Bob Michele, head of fixed income, currencies and commodities at JPMorgan Asset Management, said the Fed’s “sole priority” for now was to bring inflation down, and that Powell on Wednesday had tried to “tell the market that they weren’t going to pivot or pause [because] they are still concerned about inflation”.

US government debt initially came under another bout of selling pressure on Friday, but reversed much of that move. The yield on the 10-year Treasury — a benchmark used to set borrowing costs for consumers, businesses and other governments across the globe — was flat at about 4.13 per cent. Yields rise when a bond’s price falls.

The S&P 500 was up 1.6 per cent in mid-morning trading.

Thomas Simons, an economist with Jefferies, said payroll growth and wages were not slowing quickly enough. “This keeps another 75 basis point hike on the table for the December [Fed] meeting, though obviously we have lots more data between now and then,” he said.

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Original Source: ft.com

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Iceland Introduces ‘turkey Promise’ to Ensure Shoppers Get ‘low Price’ Meat

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Iceland has frozen the price of its festive fowl.

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Bankman-Fried Empire Includes Billions of Dollars of Illiquid Investments

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Sam Bankman-Fried’s business empire includes billions of dollars of illiquid venture capital investments, according to internal records seen by the Financial Times, underscoring the uncertain recovery facing customers of his collapsed FTX exchange.

The 30-year-old entrepreneur, once a star of the crypto industry, on Friday placed FTX international, its independent US arm, and his proprietary trading firm Alameda Research into a joint bankruptcy process in Delaware federal court.

Initial filings listed both assets and liabilities of the group at between $10bn and $50bn. FTX’s new chief executive John Ray, who was brought in to chair Enron during its liquidation, said the companies had “valuable assets” and that the bankruptcy would maximise recoveries.

The sprawling venture capital portfolio will add to the complexity of the insolvency proceedings, which itself includes more than 130 companies controlled by Bankman-Fried. FTX’s collapse is among the most dramatic failures in the crypto industry not just this year, but since the creation of bitcoin more than a decade ago.

FTX and its affiliates have not yet disclosed the exact size of their liabilities and assets, and the shortfall that likely exists. FTX’s recently departed head of institutional sales, Zane Tackett, said on Twitter on Friday that the shortfall ran into billions of dollars. FTX did not immediately respond to a request for comment.

Any gap between assets and liabilities will be influenced by the value that can be recovered from almost $5.4bn that FTX and Alameda invested in almost 500 crypto companies and venture capital funds, according to the records seen by the FT.

The largest of those investments is $1.15bn that Alameda ploughed into crypto mining group Genesis Digital Assets between August 2021 and April 2022, the records show.

Publicly traded mining companies have sold off sharply over the past year as the crypto market has declined. The HashRate crypto mining index, which tracks such stocks, is down 75 per cent since August 2021. Genesis did not immediately respond to a request for comment.

The records also list more than $1bn invested across about 40 funds run by venture capital firms, including some that were investors in FTX such as Sequoia Capital. Those holdings include a $300mn investment by Alameda in K5 Global, the firm run by Michael Kives. The investment amounts to 30 per cent of K5’s general partnership, and $225mn of the total sits in Elon Musk’s SpaceX and Boring Company, and other unidentified businesses, according to the records.

Earlier this year, texts released during Musk’s litigation with Twitter showed Kives suggesting Bankman-Fried as a co-investor in the social media company. Musk was dismissive of the FTX founder and ultimately took money from the head of rival exchange Binance, Changpeng Zhao.

Other big bets detailed in the records include a $500mn investment in Anthropic, an artificial intelligence “safety and research company”, made by Bankman-Fried through Alameda earlier this year. Anthropic did not immediately respond to a request for comment.

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Sam Bankman-Fried’s $32bn FTX Crypto Empire Files for Bankruptcy

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FTX, the once high-flying crypto currency group, has filed for bankruptcy protection in the US, marking a stunning collapse of the $32bn empire built by the colourful 30-year-old entrepreneur Sam Bankman-Fried.

The filing in Delaware federal court on Friday included the main FTX international exchange, a US crypto marketplace, Bankman-Fried’s proprietary trading group Alameda Research and about 130 affiliated companies.

FTX’s failure came after Bankman-Fried desperately sought billions of dollars to save the exchange this week after it was unable to meet a torrent of customer withdrawals in a run prompted by concerns over its financial health and links to Alameda.

The collapse of such a prominent group, which advertised during the US Superbowl and whose shorts-wearing, charismatic founder was a leading donor to the Democratic party, has rocked the notoriously volatile crypto industry.

Bitcoin dropped 5 per cent to a fresh two-year low of $16,492 after the FTX bankruptcy was announced. Changpeng Zhao, chief executive of Binance, earlier on Friday said the fall of FTX left crypto facing a financial crisis akin to 2008 and that more businesses could fail in its wake.

Bankman-Fried, who one week ago was among the most respected figures in the sector with a $24bn personal fortune and close links with Wall Street and celebrities, resigned as FTX’s chief executive on Friday. John R Ray, a restructuring specialist who oversaw the Enron and Nortel Networks bankruptcy cases, will take the reins.

“The FTX Group has valuable assets that can only be effectively administered in an organised, joint process,” Ray said.

In just over three years, FTX had secured a $32bn valuation and had wooed a roster of blue-chip investors, including Paradigm, SoftBank, Sequoia Capital and Singapore’s Temasek. Venture capital firms Sequoia and Paradigm have in recent days marked their investment down to zero.

The sprawling business empire run by a tight-knit group of longtime associates around Bankman-Fried, many of whom lived together in a Nassau penthouse in the Bahamas, has around 100,000 creditors and $10-50bn of assets and liabilities, according to the filing.

The US Securities and Exchange Commission is investigating FTX, which includes examining the platform’s cryptocurrency lending products and the management of customer funds, according to a person familiar with the matter.

The bankruptcy filing follows a frantic week in digital asset markets. Rumours about the financial health of FTX and its trading affiliate Alameda Research culminated on Monday in a run on the exchange with insufficient readily accessible assets to meet $5bn in customer withdrawals.

After appeals to its investors and rival exchanges, FTX halted the demands on Tuesday and agreed a rescue by the world’s largest crypto bourse, Binance, led by Zhao, a one-time partner turned arch-rival of Bankman-Fried.

That deal fell through a day later after Binance said due diligence revealed insurmountable financial problems at FTX. Last-ditch efforts to find another investor to supply up to $8bn failed in recent days.

FTX Digital Markets Ltd, the group’s subsidiary in the Bahamas, where it is headquartered, is not included in the bankruptcy proceedings. The Securities Commission of The Bahamas froze the subsidiary’s assets on Thursday and appointed a provisional liquidator.

LedgerX, a regulated US futures exchange, and a subsidiary in Australia are among other units not included in the filing. The group’s Australian business has already been placed into administration while Japanese watchdogs suspended operations of FTX’s affiliate in the country.

Bankman-Fried has blamed mistaken accounting of the exchange’s liquidity and leverage for the collapse.

“I’m really sorry, again, that we ended up here,” he said following Friday’s filing. “I’m piecing together all of the details, but I was shocked to see things unravel the way they did earlier this week.”

Additional reporting by Stefania Palma in Washington

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