BOE Governor: OBR independence is important
After resisting two invitations to comment on the Office for Budget Responsibility, Bank of England Governor Andrew Bailey can’t resist a swing at number three (is he watching England bat in Australia?).
Q: You’ve commented before on political attacks on the Federal Reserve, so are political attacks on the office dangerous for budget responsibility?
Bailey Reminds today’s press conference that there are good reasons why the Office was made responsible for the budget by George Osborne in 2010, telling reporters:
The reason for the creation of the OBR was to ensure that there was a source of independent forecasting and an independent review of fiscal policy.
It is important, in many countries it is important. Britain is not unique… there is nothing unusual about this very basic principle.
So where the attack on the OBR is concerned, Bailey says we should “please remember why it happened and its underlying principles”.
However, it is not for the bank to engage in the “affairs of its day”.
Key events
After a weak start to December yesterday, the US stock market is rising at the start of trading.
Growing confidence that US interest rates will be cut soon Dow Jones Industrial Averageand S&P 500 Index, to gain 0.27% at the start of trading.
Warner Bros shares rise as new takeover bid comes in
Shares of Warner Bros. Discovery jumped in early trading as it received a second round of takeover bids.
New offers on the table for Warner Burrows discovery Add most cash offers from NetflixBloomberg reported last night, adding that for bankers Paramount Sky Dance And Comcast Also worked on new bids over Thanksgiving weekend.
This latest round of auctions follows Warner Rejected an all-cash offer from Paramount of about $24 a share, and began a strategic review that could result in a sale.
In early Wall Street trading, shares in Warner Bros. Discovery rose 1.35 percent to $24.21.
Michael Berry: The stock market can go through several bad years.
Influential investor Michael Berry has warned that he sees tough times ahead in the stock market.
buriedone of the main characters in the big short, has told Against the rules podcast that he sees several “bad years ahead.”
Explaining why he recently closed his hedge fund, buried He said he didn’t want to relive the 2008 crisis, when he was repeatedly criticized by investors for betting against the U.S. housing market, before the financial crisis hit.
buried says:
I think we are in a bad situation in the stock market. I think the stock market could be in for a number of bad years.
I think this could be a long bear market, around 2,000 [when the dot-com bubble burst].
buried Arguably, the structure of the market today means that much of the money is invested “passively” through index funds, with perhaps less than 10 percent being actively managed.
This increases the chances of wider sales, buried Argus, saying:
Now I think the whole thing is going to come down.
buried Then explained that after closing his fund, he had restructured his positions in his account, including a bet against data firm Palantir.
Explaining why, he says:
Here are five billionaires who came out of Palantir, because they owned Palantir stock. Revenue was $4 billion. The ratio of billionaires to revenues was more than one, and I had never seen one before.
Looking back to the 2008 crisis, he told the podcast host Michael Lewis (who wrote the larger brief) that it was “a very unique set of circumstances” and a “once-in-a-century trade”.
The key to his explanation was that he was allowed to buy insurance on housing bonds that were uninsured, and then take advantage of the insurance without actually owning the insured item.
British shoppers spent more during the Black Friday/Cyber Monday period than last year.
Data from Adobe Analytics It shows that £3.8bn was spent online in four days, up 4.6% on a year ago.
Adobe Analytics says the top performing product categories over the four days were jewelry, video games, toys, electronics, personal care products, sporting goods and apparel.
The average discount across all retail categories was 16.7 percent, with deep discounts on computers, televisions and apparel.
The OBR has refused to back up Tory claims that voters were misled about the state of the public finances with a pre-budget speech.
The OBR has refused to criticize Rachel Reeves for a speech at the start of November which suggested she would need to raise income tax.
Professor David Miles The Chancellor was not misleading when, on November 4, he appeared to lay out the basis for a rise in income tax rates, the Treasury Committee was told today.
Mail Told the committee:
My interpretation, and others may interpret differently, was that the Chancellor was saying that this was a very difficult budget and very difficult choices needed to be made.
And I don’t think it contradicted the final assessment of the pre-measures itself that we would make, although it showed a very small positive amount of so-called headroom, it was wafer thin.
Andrew Sparrow’s Politics Live blog has more details from the OBR meeting in Parliament.
The OBR has also denied being “at war” with the Treasury following the resignation of its boss Richard Hughes.
Budget Responsibility Committee member Professor David Miles described relations with the Treasury as “very close” but hoped for a “smooth” process next year.
He told the Commons Treasury Committee:
“I wouldn’t say we were at war with the Treasury.
“I mean, we have a very close relationship with the Treasury. In fact, we rely not only on the Treasury but on other departments in government for the analysis of a lot of initiatives.”
UK bond yields rise slightly
The shake-up in charge of the Office for the Budget, whose chair resigned last night following the initial release of its budget documents last week, has not alarmed markets.
UK bond prices slipped slightly today, wiping out the immediate post-Budget rally, which pushed yields (or interest rates) on debt slightly higher.
The yield on 10-year gilts is up 2.5 basis points, up just over 4.5 per cent, slightly higher than at the start of Budget Day last week.
The 30-year gilt yield rose 3bps to 5.28%, lower than before the budget.
Bill Blaineof the CEO Windshift Capital Advisors, Suspects may change Office for Budget Responsibilitywrite:
When the organization that excludes stability in the market that causes instability…. Then it’s time to move on. The resignation of Richard Hughes was inevitable about this… The question for the markets will be his subsequent independence…
Heather Stewart
The Office for Budget Responsibility complained to senior Treasury officials during the Budget about a spate of leaks that it said spread “misconceptions” about its forecasts, it has emerged.
Professor David Mail The OBR’s Budget Responsibility Committee told MPs in the Treasury Select Committee on Tuesday that the watchdog had raised the issue of leaks with the department ahead of the chancellor’s statement last week.
“I think it was clear that there was a lot of information appearing in the press that probably wouldn’t normally be there and that wasn’t particularly helpful from our perspective,” he said.
He added:
“We made it clear that they were not helpful and we were not in a position to vindicate them.”
Mail Appearing before the committee after OBR chair Richard Hughes resigned on Monday, accepting responsibility for the inadvertent release of his budget documents, before Rachel Reeves stood up to announce her tax and spending plans.
OECD: UK to be third fastest growing G7 member in 2026
Away from the Bank of England, the OECD predicts that the UK will be the third fastest growing member of the G7 next year.
In a new report, Paris-based think tank Rachel Reus warns that tighter government spending and higher taxes will curb consumer spending.
The OECD predicts Great Britain The economy will grow by 1.2 percent in 2026 Francefor , for , for , . Germanyfor , for , for , . Italy And Japanbut slower than that We (1.7%) and Canada (+1.3%)
More here:
Q: Is there a risk that more retail investors are attracted to the stock market, and then the AI bubble bursts?
Andrew Bailey says Britain needs more investment in the real economy, which is why pension reform is important.
Andrew Bailey declined to comment on whether last week’s Budget would boost growth in the UK.
Artificial intelligence is likely to be the next technology to spur productivity growth, he says.
But it is vital that there is a policy environment in the UK where we can support growth, he says:
If we do not increase the potential growth rate, and thus the actual growth rate of the economy, the entire policy context is more difficult. As we see, it is more difficult to choose.
So we all have, absolutely to focus on increasing the growth rate.
