U.K. chancellor throws out almost all major tax cuts from the mini-budget and pares back energy support

Anviksha Patel - MARKETWATCH - YESTERDAY


The U.K.’s new Chancellor of the Exchequer Jeremy Hunt has scrapped the majority of the £45 billion previously announced unfunded tax cuts in an emergency statement on the mini-budget.


Related video: Chancellor Hunt slashes energy price guarantee, scraps mini budget tax rate cut   Duration 6:03  View on Watch

Hunt pulled back the government’s energy price guarantee, which was due to support households and businesses for two years. It will now remain universal until April next year, so that it will cost taxpayers “significantly less than planned.”

He said that a Treasury-led review will be created to look into how people can be supported from April onwards.

“There will be more difficult decisions I’m afraid on both tax and spending, as we deliver our commitment to get debt falling as a share of the economy over the medium term,” Hunt said.

Together, the moves save some £30 billion, ahead of the official budget plan due at the end of October.

Bond yields on the 30-year gilt — which the Bank of England was buying last week — as well as the 10-year fell sharply on Monday, by nearly 50 basis points, while the British pound rose. Sterling was up 1% to $1.1361 during Monday trading.

The government had already backtracked on a plan to cut the personal tax rate of those making more than £150,000, as well as corporate taxes.

Now the chancellor also threw out plans to cut the basic rate of income tax to 19% from 20%, as well as dividend tax cuts and a freeze on alcohol taxes.

See also: Who is Jeremy Hunt? Meet the new U.K. chancellor

The tax proposals that will remain are the cuts to stamp duty on property purchases and cuts to national insurance contributions, the latter which had already been enacted into law.

As soon as he came into the post over the weekend after Kwasi Kwarteng was fired on Friday, Hunt said he would not wait until Oct. 31 to make its medium-term fiscal statement in an effort to cool down the markets.

“No government can control markets by every government can give certainty about the sustainability of public finances. And that is one of the many factors that influence how markets behave,” Hunt stated.

The Bank of England on Monday said its temporary bond purchase program ended and “as intended, these operations have enabled a significant increase in the resilience of the sector.”

Read: Why Kwasi Kwarteng could not survive the battle with the Bank of England

Market reaction

Market commentators have welcomed the early announcement and the bank intervention.

Ganesh Viswanath-Natraj, assistant professor of finance at Warwick Business School, said the policies can help “maintain the pound’s value as it makes sterling assets more attractive.”

“This signals to financial markets that government debt is on a sustainable path, leading to a more stable demand for gilts by investors,” he said.

Pantheon Macroeconomics chief U.K. economist Samuel Tombs said the announcement amounts to £31 billion of savings found, with “a further £40 billion or so to go.”

“For context, Mr. Hunt will have to reduce the average annual growth rate of total managed expenditure, excluding debt interest payments, over the years to 2025/26 to 1.8%, from the 2.7% rate in the mini-budget, if all of the remaining £40B savings are to be found from spending,” Tombs added.

Nick Macpherson, a former Treasury official, said on Twitter that the early statement was a good move to help the markets.

“There is no doubt this means market turmoil should lessen,” added Neil Birrell, chief investment officer at Premier Miton Investors, adding that domestic equities should benefit from the U-turn as well.

“However, political uncertainty has not gone away, but has probably increased. Furthermore, for investors outside the UK looking to commit money here, this see-sawing can’t help our case,” he added.

The U.K. FTSE 100 rose 1.36% on Monday.U-turn on Trussonomics

The flipflopping from Liz Truss’s administration has angered political opposition, but more importantly, Truss’s own Conservative party members, triggering a wave of bets on who could replace Truss.

Reports from The Times note that Tory MPs in the 1922 committee -– which oversees how Conservative party leaders are chosen –- held talks on Friday night to discuss Truss’s future as prime minister.

The opposition Labour could win in a landslide in the next election, according to polling by Opinium.

BOE to Delay Bond Sales Again After Gilt Strain, FT Says

Ruth Carson and David Goodman
Tue, October 18, 2022 

(Bloomberg) -- The Bank of England is likely to delay its planned sale of government bonds after the government’s botched fiscal plan roiled financial markets, the Financial Times reported, without saying where it got the information.

The central bank had scheduled to start the sales on Oct. 31 under a so-called quantitative tightening program, weeks later than it originally planned. Policymakers led by Governor Andrew Bailey always said they would be willing to change tack in times of market stress.

A BOE spokesman declined to comment on the report.

Officials regard the gilts market as having been “very distressed” in recent weeks, a view backed by the BOE’s Financial Policy Committee, the FT said. The pound jumped as much as 0.5% to $1.1410 after the report, before erasing gains.

A delay in quantitative tightening, along with the UK government’s reversal on its fiscal policies, may offer a reprieve for pension funds that had been trying to manage their exposure to a gilt selloff. Short sellers have said they’re reducing their positions.

“The BOE backtracking on QT is a welcome relief, but the issues are deeper,” said Patrick Bennett, strategist at Canadian Imperial Bank of Commerce. “Despite any changes taking place on the ground, there is a loss of external confidence in gilts and GBP that will not be easily recovered.”

Pushing Back

The Bank of England has almost £840 billion ($956 billion) of gilt holdings, which grew during the quantitative easing it deployed for more than a decade to stimulate the economy through the global financial crisis and pandemic.

The central bank had said it intended to complete around 80 billion pounds of active sales in the next year. While that’s not vast in issuance terms, analysts had been worried about the signal it would give to markets already struggling with a lack of investor confidence and a deterioration in liquidity.

Another postponement would be the latest sign the central bank is concerned by the state of bond market in the wake of a run on UK gilts following Prime Minister Liz Truss’s ill-fated fiscal plan.

Truss’s new Chancellor of the Exchequer Jeremy Hunt on Monday reversed more of the measures his predecessor set out in September, and Oct. 31 is the date he’s due to set out his complete package.

Truss Sees UK Vision Dismantled as Rivals Fight for Her Job

The BOE on Friday finished its emergency bond-buying plan on schedule. That program was aimed at injecting liquidity into markets to help prevent a fire sale of the gilts used in some pension funds. The bonds soared Monday after a statement from Hunt.

The BOE has already conducted so-called “passive” quantitative tightening, whereby maturing bonds are allowed to roll off the balance sheet, but the process is a slow and uneven one given the distribution of maturities compared to other central banks such as the Federal Reserve.

UK gilts, pound and stocks rally on expected U-turn on fiscal plans

Reuters
Publishing date: Oct 17, 2022 • 

LONDON — Long-dated British government bonds, the pound and shares all rallied on Monday ahead of a statement from new finance minister Jeremy Hunt who is expected to reverse swathes of Prime Minister Liz Truss’s economic growth plan which triggered a market rout.

Yields on 20- and 30-year gilts slid by around 34 basis points in early trade, reversing most of their sharp rises seen on Friday when a statement by Truss failed to reassure investors about the government’s fiscal plans.

The pound, which had also fallen on Friday, rose 0.7% against the dollar to $1.1258 and gained on the euro , while Britain’s domestically-focused FTSE250 outperformed European peers and gained 0.63%.

Hunt will announce tax and spending measures on Monday, two weeks earlier than scheduled, to stem a collapse in investor confidence that began when Truss’s government unveiled a push for economic growth based on unfunded tax cuts last month.

“The message is that they’re clearly trying to repair some fiscal stability,” said Kenneth Broux, senior currency strategist at Societe Generale.

“From a market perspective that makes complete sense, hence why we’re seeing yields collapse and why sterling is bid.”

“Obviously, they have to reverse everything that happened in the last three weeks, and the question is how long that takes, and whether that requires the removal of the Prime Minister.”

MARKET VOLATILITY

While in historic terms a 34 basis-point fall in yields would represent a huge rally for gilts, on Monday it only put them back to a levels seen last week – a reflection of the enormous market volatility recently.

Gilt yields remain well above the levels seen before former finance minister Kwasi Kwarteng announced Truss’s growth agenda on Sept. 23 – a measure of the deficit in investor confidence that Hunt must now address.

The 20-year gilt yield was about 71 basis points higher on Monday than its closing level on Sept. 22, the day before the announcement of the “Growth Plan,” leaving it closer to its recent peak than its pre-plan level.

“It would take an almighty fiscal tightening package to convince the market that a) the fiscal path is now sustainable and b) that Bank of England hiking risk is reduced,” said Antoine Bouvet, rates strategist at ING.

Rate futures priced in a roughly 80% chance that the BoE will raise interest rates by 100 bps to 3.25% on Nov. 3, having priced in a smaller increase to 3.0% at the end of last week.

BoE Governor Andrew Bailey said on Saturday: “As things stand today, my best guess is that inflationary pressures will require a stronger response than we perhaps thought in August.”

While the pound was roughly back to where it was before Kwarteng’s mini budget, it remains highly volatile with moves in sterling and British yields driving moves in other currencies and government bond markets around the world.

Speculators increased their exposure to the pound by a fifth in the latest week – the most in two months, according to data from the Commodity Futures Trading Commission.

Investors such as hedge funds added to their bullish bets on sterling for the first time since late September. 

(Reporting by Andy Bruce and Alun John, Editing by William Schomberg and Ed Osmond)

Hedge Fund Titan Warns UK Pension Crisis Is Just the Start

Nishant Kumar
Mon, October 17, 2022 


(Bloomberg) -- For one of the world’s largest hedge funds, the UK pension fund crisis is just starting as central banks around the world raise interest rates and turn off quantitative easing.

Paul Marshall, co-founder of $62 billion investment firm Marshall Wace, said central banks had created the perfect environment for “mal-investment’ by artificially holding interest rates low for years.

“The UK LDI industry is the first casualty of the end of the ‘money for nothing’ era -- the first dead fish to float to the surface as rising central bank interest rates act like dynamite fishing in global asset markets,” Marshall said in a letter sent to clients this month.

So-called liability-driven investments are a form of financial engineering that involve derivatives and allow defined benefit pension schemes to jack up leverage and juice returns. The Bank of England was forced to step in to stabilize markets after rising gilt yields triggered margin calls at the funds that came too quickly for them to manage.

JPMorgan Chase & Co. estimates the losses from so-called liability-driven investments deployed by pension schemes has grown to as much as £150 billion ($171 billion) since early August.

The pensions were acting like hedge fund managers with much less knowledge or nimbleness, Marshall said in the letter.

Crispin Odey, the British hedge fund manager who has profited this year from short wagers on gilts, warned the LDI crisis is only just beginning.

“LDI investors are forced to sell to pay for their losses and it does not look like it will stop,” Odey wrote in a letter sent to investors this month.

Representatives for Marshall and Odey declined to comment.

“Everyone wanted to blame the new Chancellor, Kwasi Kwarteng, for the melt down,” Odey said, referring to the former UK chancellor who stepped down from the role last week. “But I believe it was really 20 years in the creation and brought about by the unstoppable rise in prices,” Odey said.

Marshall said people won’t all agree on who should take the blame for the crisis.

“We can argue how much of the collapse in the UK gilt market was due to the timidity of the Bank of England on interest rates, how much due to Kwasi Kwarteng’s budget and how much due to the distress in the LDI industry,” he wrote.

Central banks reversing years of quantitative easing to contain spiraling inflation have induced volatility and roiled stock, bonds and currency markets. The UK government under a new chancellor has now reversed tax cuts it announced last month that sparked a sell-off in gilts and exposed the weakness in the LDI structures.

Next in line could be the European sovereign bond markets, Marshall said. The billionaire also flagged the risk of central banks pausing their tightening process given the fragility of the financial system.

“The painful path will bring casualties and it will be interesting to see how central banks react when these casualties float to the surface,” Marshall wrote. “Time will tell. But for the moment, we believe the best opportunities remain in the short side,” he said referring to a strategy that makes money from falling prices.

Marshall Wace’s flagship Eureka hedge fund is up 4.2% this year. Odey Asset Management’s Odey European Inc. hedge fund has returned a record 193% through September this year.

A lack of financing could hinder India’s shift towards a low-carbon economy


Kundan Pandey
Mon, October 17, 2022 

October, a month that is typically associated with celebration and festive fervour in India, came with some unexpected news for those who track global finance. In the first week, reports said that one of the top American national banks, JPMorgan Chase & Co, has held off on including India in its global bond index, a semi-annual review of its emerging-market debt index which is a useful indicator for investors. This was a dampener in the usually upbeat season—India’s ability to attract foreign investment would have benefited from the inclusion in the internationally regarded global bond index. The inclusion would have further benefitted the resource-constrained green sector, which includes environmentally oriented business sectors such as the renewable energy sector.

It was anticipated that if India had been included in the global bond index, tens of billions of dollars would have poured into the Indian market. But there was uncertainty over the domestic market’s ability to handle a large amount of capital inflow. A managing director at the Los Angeles-based firm TCW, David Loevinger, said to the media that if India is added to global bond indexes, there would be more investment for India’s journey towards a low carbon economy.


The Pavagada Solar Park in Karnataka. India’s inclusion in the global bond index could’ve benefitted the country’s renewable energy sector.

Talking about the significance of inclusion in a global bond index, especially from the green finance perspective, Neha Kumar, head of the India programme, Climate Bond Initiative which works to mobilise global capital for climate action says, “Inclusion in the global bond index is a broader issue, and an important one. The inclusion of government bonds would have been beneficial for emerging market investors. It could have increased their participation in Indian government securities (G-Secs) and infused the much-needed liquidity. Green finance would have automatically benefitted, especially owing to the fact that currently, the demand for green products emanates mainly from the offshore investor base and is a big opportunity to meet the massive local green financing needs.”

A funding gap of nearly $170 billion a year through 2030, in meeting India’s climate targets, cannot be bridged with domestic capital alone, she adds. But, to hinge the growth of the Indian green finance market, squarely on international index inclusion, would be a narrow lens.

Kumar lists other options for India to grow its green finance market by saying that it not only needs credible green bonds but also credible sustainability-linked bonds, loans, and transition bonds (used to fund a firm’s transition towards reduced environmental impact). The country needs its sovereign green issuance to set the highest credibility standard and kickstart a programme of sovereign and sub-sovereign issuances, to infuse liquidity and scale, that benefits private sector investment for the green transition.

Moving on a similar track, on Sep. 29, India announced that it was borrowing 16,000 crore rupees ($1.94 billion) through the issuance of Sovereign Green Bonds. Union Minister of Finance Nirmala Sitharaman had earlier made an announcement (pdf) in this regard while presenting the annual national budget in Parliament on Feb. 1.

Coal mining in India’s Odisha district. India requires $170 billion a year through 2030, to meet its climate goals. Domestic funding alone cannot sustain the requirement.

In the present global climate finance structure, mobilizing green finance is not an easy task for an emerging economy. Given this, the government is trying out different options to generate the necessary impetus to draw investors for green finance. In the first week of October, just a day before the news about JP Morgan not including India in its global bond index came, the International Financial Services Centres Authority (IFSCA) released a report in which it recommended a slew of measures to mobilize finance for the green sector. IFSCA is a statutory authority established by the Government of India. The central government operationalized India’s first International Financial Service Centre at Gujarat International Finance Tec-City (GIFT) in 2015. Now, IFSCA, its expert committee has come up with the report aiming to identify existing and emerging opportunities in Sustainable Finance for GIFT-IFSC to act as a gateway to meet India’s requirements.

The committee, in its report, has recommended several short, medium, and long-term roadmaps to mobilise sustainable finance. It includes creation of a voluntary carbon market and global climate alliance. The committee has also talked about devising a framework for promoting a regulatory sandbox for green fintech and transition bonds along with setting up a platform for sustainable lending for small and medium enterprises. “A regulatory sandbox serves as a framework that allows live, timebound testing of innovations under IFSCA’s oversight,” the report explains.

Reacting to the IFSCA report, Kumar says that IFSCA, as a financial services SEZ, and with an aim to become a sustainable finance hub, is considering putting in place many innovative regulation regimes and incentives including tax incentives (such as 0% GST and reducing withholding tax to 4% from 5%) to attract green finance from international investors. Some of them could be replicated outside of the IFSCA as well. For example, leveraging pooled investment vehicles such as Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) will allow companies to monetise operational cash-generating assets.
The wide gap

All these initiatives are meant to reduce the climate funding gap that’s one of the barriers in achieving ambitious climate goals stated in the Nationally Determined Contributions (NDCs). For this, India needs around $2.5 trillion between 2015 to 2030. It translates into $170 billion every year till 2030. This estimate, however, is based on India’s earlier NDCs and not the latest ones that India submitted in August this year. The revised goals are more ambitious and include a net zero goal as well, which the Prime Minister of India announced during COP26. According to the report of the IFSCA Expert Committee on Sustainable Finance, India would require cumulative investments of $10 trillion to achieve the net zero target by 2070.

India requires a cumulative investment of $10 trillion to achieve net zero target by 2070.

India managed to raise only $44 billion in the financial year 2019-20, approximately 25% of the total target of the required budget every year for a green transition, notes a report published by Climate Policy Initiative (CPI), an independent, non-profit research group, headquartered in San Francisco, US. The report appeared in August and tracks green investment for the financial years 2019 and 2020.

In this amount that India raised, the contribution of international finance has been 13% in 2019 and 17% in 2020. One of the writers of the report, Neha Khanna, says that a major part of finance was raised domestically. Most international private capital flows, according to experts, lean towards well-established industries such as renewable energy and take the least risky route. Financial transfers from the Global North to the Global South continue to be a structural impediment. This calls for novel approaches to modify risk premiums for emerging market economies (EMEs).

When asked why India’s green sector is not able to lure foreign investment, Namita Vikas, founder and managing director of auctusESG LLP, an expert advisory and enabling firm working with the aim of accelerating global sustainable finance, lists a few reasons such as hedging costs which can be a pain point for foreign investors. Hedging is a financial strategy used to safeguard investments from adverse circumstances that could result in a loss of value. For example, offshore investments, mostly foreign currency denominated, are susceptible to currency fluctuations. To protect their investment from any uncertainty, investors can choose from a variety of hedging strategies with associated expenses. It is reported in the media that the hedging cost is close to 5% in the region.

Vikas, who was also a part of the IFSCA committee, says that an enabling environment, where risks are balanced, underpins the flow of investments. The renewable energy sector has gone on to become the fourth most attractive sector in India, owing to the policies and regulations that have spurred both domestic and foreign investor interest.

Regarding hedging costs, she adds, “Lowering the cost of capital would reduce the currency hedging cost and mobilise foreign capital. If the expected cost of the foreign exchange hedging facility is borne by the government, the cost of debt, renewable energy, and the cost of government support may be reduced. The Indian government has shown interest in providing a government-sponsored exchange rate hedging facility. However, the design of the facility would need to be carefully considered, given that currency movements can be uncertain and volatile. There is also a need to look for innovative financial structuring to enable foreign capital flow such as green securitisation, India’s Viability Gap Funding (VGF) model, supplier-based finance, and sovereign green bonds to attract foreign capital into the Indian markets.”

Sectoral preferences

The CPI report gives sectoral trends as well noting that the total fund flow towards climate mitigation was almost equally split between clean energy (42%) and energy efficiency (38%) while clean transport received just 17%.

Within clean energy, solar projects received the greatest share of financial investments accounting for 41% of the total finance flows to the clean energy sector. Interestingly, when clean transportation received the maximum funding (96%) from public sources, investment in the energy efficiency sector was primarily from the private sector (91%).

The report also gave details of funding for adaptation saying that the total amount of green finance was $5 billion per annum. It was mostly funded by central and state government budgets.

Underlining the bigger trend of green finance in India, Khanna says, “Debt accounts for about 50% of total finance flows, equity for 26%, and government and budgetary expenditures at about 19%. Flows to all sectors increased from the previous years. However, these flows were limited to certain sub-sectors such as solar in the clean energy segment and Mass Rapid Transport System (MRTS) in the clean transport segment.”

According to the Climate Policy Initiative report, the clean transport sector received only 17% of the total funds ($44 billion) for climate mitigation.

Talking about the low contribution of the private sector, Namita Vikas says that it could be because the nature of risks in the green sector is largely unknown or unaccounted for. Unlike the traditional business models which are tried and tested, businesses in the green sectors are yet to have a well-established risk management structure. As a result, only large issuers have been prominent in the green finance space–owing to their capital prowess and risk-bearing capacity–whereas the mid to small companies have remained off the radar. Further, the private sector’s nascent understanding of green sector finance is another challenge, which also leads the private sector to perceive bankability issues such as high transaction costs, long gestation periods, and higher risk-return profiles–referred to as risk perception.

“While the government is keen on steering away from carbon-intensive assets, given the scale of investments required, public sector investors will need to act as facilitators rather than the sole investor,” Vikas adds. Private capital needs to be roped in through de-risking mechanisms, such as guarantees and catalytic capital, as deployed in blended finance structures. Policies and regulations need to be made conducive for the private sector to participate, along with appropriate pricing and guidance on innovative financial products for green finance. In essence, the public sector needs to institutionalize mechanisms for the private sector to participate in order to achieve a more balanced ratio for green financing.

Challenges to tracking green finance

In India, it is not easy to track green finance as there is no organised effort to develop a system in this regard. The CPI report also underlines this fact by saying, “While this report presents the most comprehensive information available, methodological issues and data limitations persist. Tracking green finance faces multiple issues related to the availability, quality, and robustness of investment data on both public and private sectors.”

When asked about the challenges faced during the study, Khanna says that there is non-availability and trackability of disbursements. Extracting this information can be challenging due to the lack of an effective Measurement, Reporting, and Verification (MRV) system in India. The Public Financial Management System in its current form does not provide granular information about the flow of finance and its end use. To overcome this challenge, the team has had to resort to the use of legally available mechanisms such as the Right to Information Act, 2005, which was cumbersome and only partially effective, she adds.

About other challenges regarding tracking green finance, Khanna underlines the difficulty in green tagging of the budget entries. “The lack of a harmonised green finance taxonomy in the country, and non-standardised reporting of data, make green tagging of domestic entries arbitrary and vulnerable to the user’s discretion,” she says.

Namita Vikas emphasized the need for a uniform definition and a taxonomy for green finance that is currently not in place in India, which makes it harder to track the green sector in India for investment purposes. Currently, disclosures serve as the primary source of ESG/green information. While think tanks and some organizations have attempted to track green financial flows, it is largely on the back of contextualized and customized definitions.

This post appeared first on Mongabay.com.

Microsoft plans to lay off nearly 1,000 workers over weaker sales

The silicon valley giant has endured the lowest revenue growth in five years in this quarter, which ended on September 30th.

IT tech giant Microsoft is planning to lay off nearly 1,000 workers across multiple divisions as the software maker’s revenue is expected to slow in the coming months. The latest move seems to come after Microsoft reported weaker sales of Windows licenses for PCs.

According to the Microsoft website, they currently house about 2,21,000 employees worldwide. According to the latest move, 0.45% (nearly 1000 workers) of the workforce would be relieved of their jobs. The number of layoffs spans various departments and regions including gaming and operating systems such as Xbox, Windows and Edge. 

Also Read: After Wipro, Infosys terminates employees for moonlighting

"Like all companies, we evaluate our business priorities on a regular basis and make structural adjustments accordingly. We will continue to invest in our business and hire in key growth areas in the year ahead,” a Microsoft spokesperson told CNBC.com.

Microsoft is scheduled to release quarterly earnings on 25 October 2022 and after that, the firm is expected to take a final call. 

The latest layoff reports come almost three months after Microsoft announced they would be sacking 18,000 employees over the next year as part of “structural readjustment”. This included 12,500 workers in the company’s sales, marketing, and engineering divisions. 

Microsoft is the latest to join the long list of tech companies that have decided to lay off employees in 2022. Meta dissolved its “responsible innovation team’. Snapchat parent company Snap laid off 20% of their workforce. Twilio’s CEO announced they would be laying off 11% of their workforce due to restructuring. Along with the attrition, many companies like Apple, Oracle, Google and more have also announced a hiring freeze for the incoming months.  

The ‘layoff winter’ has impacted South Asian countries like India, with companies like Byju’s and EPAM planning to lay off workers in thousands.

Justice Dept’s crypto chief: Crypto thefts are 'serious national security concerns'

David Hollerith

·Senior Reporter

Mon, October 17, 2022

The amount of crypto stolen by hackers has risen by more than a quarter this year, even as the value of cryptocurrencies has plunged.

Blockchain thieves have nabbed as much as $3 billion of investor funds through 141 various crypto exploits since January, according to data from DeFi Yield, a 31% increase over the same period last year. That means 2022 likely will surpass 2021 as the biggest year for crypto hacks on record,

Of the nearly weekly occurrence's of crypto exploits this year, those involving “cross-chain” crypto bridges have accounted for as much as $600 million in October and $2 billion worth of stolen funds year to date, with at least $1 billion in exploits attributed to North Korean-linked hackers, according to Chainalysis estimates.

“These are serious national security concerns that really stretch beyond the fact that there are millions of dollars being stolen in single episodes that we see with the DeFi hacks and exploits,” Eun Young Choi, director of the National Cryptocurrency Enforcement Team (NCET), said at Yahoo Finance's All Markets Summit.

Effectively, Choi’s team - NCET - provides one possible link in the chain for how companies and investors might recover stolen funds.

Formed little more than a year ago, NCET is intended to act as a “one-stop shop” of the federal agency’s investigators specializing in crypto, according to Choi.

Working at times with other government agencies both in the U.S. and abroad, NCET has helped seize over $3.8 billion worth of stolen crypto this year with the bulk of that sum coming from a February indictment involving alleged money launderers of proceeds stolen in 2016.

Those billions won’t be returned to victims any time soon or at least not until the trial for the case reaches some conclusion.

HONG KONG - 2018/11/22: In this photo illustration, the Cryptocurrency electronic cash Bitcoin logo is seen displayed on an Android mobile device with a figure of hacker in the background. (Photo Illustration by Miguel Candela/SOPA Images/LightRocket via Getty Images)

On the flip side, during a record year for crypto exploits, illicit crypto earned by scams (-65%) and darknet markets (-43%) declined notably between January and July, according to a report from blockchain analytics firm, Chainalysis.

In April, an investigation by the Justice Department also led to the shutdown of the world’s largest darknet marketplace, Hydra market.

While also in part attributed the crypto market’s performance, rising exploits and dropping darknet flows illustrates how illicit use of crypto has changed in recent years.

“Early days, it was darknet markets and it was people buying and selling all sorts of contraband,” Choi explained. “These days, we're seeing [crypto] pop up in any every single type of criminal activity the department looks into.”

Although Choi admitted cases involving crypto can be different in nature, NCET prosecutes cases involving digital assets virtually the same way the Justice Department pursues criminal activity dealing in stocks, commodities, and other assets.

“These transactions can oftentimes be relatively frictionless and quick, but it also means that if we identify a particular transaction as being criminal, we can't go to some centralized, you know, financial institution and ask for that money to come back,” Choi said.

Nevertheless, Choi admitted her team has a role to play in reducing the high degree of crypto exploits plaguing the industry.

“We have to work with the private sector and ensure that they understand the ways in which we've identified particular tactics that bad actors might be using in order to exploit these types of platforms,” she said.

“The industry is still, in our view, in a maturation phase and in a lot of respects we're looking at companies and hoping that they will understand that doing things such as basic risk reduction, having robust compliance programs and ensuring that they are decreasing the opportunities for these types of exploits on their own platform is the first, best line of defense.”

—

David Hollerith is a senior reporter at Yahoo Finance covering the cryptocurrency and stock markets. Follow him on Twitter at @DsHollers

Chipotle CEO: We don't need unions 'to get between our restaurant teams and our company' ITS YOUR TEAMS UNIONIZING

Brooke DiPalma

·Reporter, Booking Producer

Mon, October 17, 2022 

Chipotle CEO Brian Niccol told Yahoo Finance that he's "disappointed” that a Michigan location choose to unionize earlier this year.

On August 25, a Lansing store unionized via a 11-3 vote with 2 contested ballots — the first union at the fast food chain. “I was disappointed to see that happen,” Niccol said at Yahoo Finance’s All Market Summit.

“I really don't think we need a third party to get between our restaurant teams and our company. We do a better job of communicating directly with our employees on what it takes to be successful at our company, what it takes to have a great work environment, and what it takes to provide a great customer experience," Niccol said.

Despite his disappointment, Niccol said he will sit down to bargain in good faith with the new members of the Teamsters Local 243. “Obviously, we'll go through the process that we need to," he added.

Credit: International Brotherhood of Teamsters, Local 243

That being said, he hopes going to maintain a direct relationship with all employees.

“Hopefully going forward, you know, we'll continue to be able to communicate directly with our employees and grow our employees with that direct communication," Niccol said.

In early May 2021, Chipotle announced plans to increase its wage to an average of $15 per an hour by June 2021. This resulted in its employees wages ranging from $11-$18 per hour.

The company hopes to attract new talent as it ramps up expansion plans with other benefits like health care, a mental health assistance program, and debt-free college degrees.

“I’m 100% confident we will get these restaurants staffed,” adding “what we stand for will attract the right employees.”

As of June 30th, 2022, the end of Chipotle’s second quarter, there were more than 3,000 total locations and over 100,000 employees. By the end of this year, the fast casual chain forecasted 235 to 250 new restaurant openings.

As the company looks to build the staff for the new spots, he added that career growth for its crew members is top of mind too.

“Ninety percent of our promotions come from within,” Niccol said, adding that a “key piece for us is developing them (employees), training them, so that then they become future leaders as we grow this company.”

Terrified fish by the thousands throw themselves onto Outer Banks beach, videos show


Facebook screengrab Mark Price
Mon, October 17, 2022 

Mystified Outer Banks tourists witnessed a bizarre act of nature Friday, Oct. 14, as fish began flinging themselves onto the beach at Ocracoke Island.

Multiple videos shared on social media show the ocean appeared to boil with fish as they tumbled over each other in the surf.

The so-called “bluefish blitz” concluded with thousands of dying fish piled on the sand, flopping up and down as tourists watched from a distance.

“Bluefish have been blitzing the Ocracoke beach off and on the past couple of weeks,” according to the Tradewinds Tackle fishing store on the Outer Banks.

“Amazingly beautiful and tragic at the same time. Smaller fish (mostly spot in these photos) are literally throwing themselves onshore to escape the teeth in the water. ... Bluefish have lots of teeth and will kill anything they catch.”

Some videos also showed the much-larger bluefish, racing through the water to catch and eat the smaller fish.

Marybeth Druzbick of Sylva, North Carolina, saw it happening Friday as she visited South Point on Ocracoke Island. Her videos show spot fish coming ashore in waves.

“This is one of the strangest things I’ve seen at the beach!” she wrote.

“Bluefish blitzes” coincide with the seasonal southern migration of bluefish, which are cannibalistic and will snap at people, according to Fishingstatus.com.

“Bluefish are extremely aggressive, and will often chase bait through the surf zone, and literally onto dry beach,” the site reports.

“Thousands of big bluefish will attack schools of hapless baitfish in mere inches of water, churning the water like a washing machine. ... Bait fish, such as bunker, will willingly run themselves high and dry on the sand, where they will suffocate, rather than be shredded by the marauding bluefish schools.”

News of the blitz has gotten hundreds of reactions and comments on social media, including reports of people who walked the beach filling up baskets with fish.

“Fish on shore and gulls in the air as far as the eye could see. Awesome!” posted Joel Gossett, who was among the witnesses.

“Just pick them up. No hook needed. Crazy!” Duane Shreeves wrote.

“Enough spot (fish) to feed 1,000’s of folks,” John Koster Jr. said.

K-ULTURE GOES TO WAR

The future of K-pop superstars BTS takes center stage in South Korea’s conscription debate

  

Julia Malleck

On Saturday (Oct. 15), the K-pop septet and global sensation BTS will perform their “Yet to Come” concert at Asiad Main Stadium in Busan, South Korea, and are expected to draw as many as 100,000 fans to the stands. The event, in support of Busan’s bid to host the World City Expo in 2030, will be free and live streamed but has also reignited questions about whether this could mark the group’s final on-stage bow, and what their future holds.

Earlier this year, BTS announced that they would be going on hiatus to focus on individual projects. Since then, lead rapper J-Hope has performed at the Lollapalooza music festival and dropped a solo album, while other members reportedly have their own music ventures in the works.

But some members may soon have to enlist in South Korea’s mandatory military service. It’s a commitment that has already been pushed back for the group, thanks to a law the National Assembly passed in 2020 allowing exceptional K-pop performers to defer conscription to age 30. As the oldest member of the group, Kim Seok-jin a.k.a “Jin,” is poised to turn 30 in December, many are wondering if the K-pop idols, like some of the country’s top athletes and musicians, could also be exempted from the draft.

Brief history of South Korea’s draft exemptions

South Korea has a decades-long precedent for exempting certain athletes, actors, dancers, and musical performers from conscription upon demonstrating exceptional skill in their field.

The basis for the current exemption law was introduced in 1988, allowing athletes who medal in competitions like the Olympics or Asian Games, as well as award-winning classical musicians, to avoid military conscription. Since then, over 170 athletes and 280 performers have qualified for exemption.

Famously, two Major League Baseball players, Texas Rangers right fielder Choo Shin-soo and LA Dodgers pitcher Ryu Hyun-jin, have both received exemptions. More recently, South Korean national soccer players were exempted after their team beat Japan for gold in the 2018 Asian Games.

Quotable

“The current controversy reminds me that it is time to fix the exemption rules for military service. We’re planning a comprehensive re-examination of the system in the areas of sports and the arts.” –Ki Chan-soo, commissioner of South Korea’s Military Manpower Administration, in an interview from 2018 on the topic of BTS’s conscription

By the digits: The BTS economy

$3.6 billion: What BTS are worth to the South Korean economy each year, according to the Hyundai Research Institute.

800,000: Tourists who visited South Korea in 2018 because of BTS, or over 7% of foreign visitors that year.

$1.1 billion: Estimated value of South Korean consumer goods exports related to BTS, including clothes and cosmetics, in 2018.

$29.1 trillion: BTS’s expected contribution to the South Korean economy over a decade, beginning in 2018.

What next for BTS?

A bill introduced earlier this year would allow outstanding idols to carry out an alternative service. As recipients of an Order of Cultural Merit in 2018, “Hallyu” standard-bearers BTS would qualify under the bill, but some have raised questions about the fairness of expanding military exemptions.

The government was also weighing the possibility of holding a public survey to decide BTS’s fate, though that idea has since been dropped. However, one opinion poll held earlier this year found that about 60% of respondents favor giving the colorfully coiffed crooners a military service exemption, compared to a 2020 poll that found the pro-and-against sides more evenly split.

Whatever the outcome, the deadline for a decision is drawing near. Until then, the estimated 40 million members of ARMY, BTS’s fanbase, are eagerly anticipating what promises to be a dynamite performance in Busan.

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Climate Changed: Communities on edge of catastrophe face choice of fight or flight


VANCOUVER — The idea of relocating his community isn't one that Arnie Lampreau of the Shackan Indian Band in British Columbia's Nicola Valley thought he'd be considering when he was elected chief early last year.



After wildfires torched the forests surrounding the band's reserves and flooding swept away homes and the only highway access just months later, however, he said he now wants to see members living in a safer place.

Lampreau was among the evacuees of both extreme weather events and said he knows it won't be easy.

"Even myself, I look at starting over, you know. I took a better part of my lifetime to build where I'm at, and now, I'm basically going to be uprooted and leaving my home," he said in an interview.

The Shackan First Nation isn't alone in being confronted with a fight-or-flight decision in the face of climate change and increasingly extreme weather. Communities across Canada are weighing whether to invest in costly infrastructure upgrades to protect against the threats or spend on property buyouts and land acquisition.

A 2020 report on so-called planned retreat commissioned by Natural Resources Canada found the strategy is typically a reaction to a natural disaster like flooding where the cost of rebuilding homes is more than double the cost of relocation, health and emergency services.

However, it's not a standardized practice, with neighbouring communities opting for different approaches, the report found. In the Ottawa-Gatineau region, homeowners in Quebec received buyouts following two record flood years in 2017 and 2019, while those in Ottawa did not.

"Inequity based on socioeconomic status and systemic marginalization is a persisting problem," the report adds, pointing to the United States, where it says affluent, mostly white communities were able to garner more support for upgraded protections.

Recently, Indigenous Services Canada worked with First Nations to examine flood insurance and the unique context of reserves. The steering committee's report, released last month, found 66 per cent of survey respondents felt that relocation should be considered in areas of repeat flooding.

"Yet, several participants expressed frustration at the need to have this relocation discussion, noting that the location of their reserves and the associated flood risks had been imposed on the community," the report says.

One comment noted residents had previously been displaced and lost culturally sacred sites to developments like dams, while another said the government that created the reserves should be responsible for protecting them.

Planned retreat was never seriously considered as an option in Abbotsford, B.C., after devastating flooding last year.

Record rainfall pushed the Nooksack River in Washington over its banks in November, spilling across the border into Abbotsford's Sumas Prairie. The flooded area is a former lake that was drained about a century ago to create some of Canada's most productive farmland.

Mayor Henry Braun said buying out the whole area and allowing the land to return to its natural form isn't an option.

"That has never been on the table," he said. "It's 22,000 acres of the best, prime farmland that there is in the country, if not the world."

Reflooding the lake would also mean putting underwater a freeway, gas lines, electrical systems and other major infrastructure, he added.

Related video: Communities need to adapt to evolving climate, expert says
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The proposed $2.8-billion flood mitigation plan, which will depend on funding from other levels of government, would instead focus on the construction of a new pump station, improvements to an older one and replacements of temporary fixes to a dike with permanent ones.

While there would be some property buyouts, it's too early to say how many or exactly where, he said.

"A key focus for the city is to ensure that agricultural land is preserved and to minimize impacts on properties by restricting water flow in the event of a flood," a public bulletin for the plan says.

In other communities, a flight strategy ended with hybrid results. In the 1950s, the federal government recommended the relocation of Aklavik in the Northwest Territories due to flooding and land erosion and chose the present site of Inuvik for the new community.

Hundreds moved but others refused. The hamlet of Aklavik has survived and maintains the town motto of "Never Say Die."

The City of Grand Forks, B.C., has pursued a joint strategy — buying out about 90 properties in a high-risk neighbourhood, while also investing in new flood protection for the downtown core.

Two days of torrential rainfall in 2018 ravaged the city, with the worst impacts felt in North Ruckle, a low-lying area with modest rents and affordable housing.

The future of the neighbourhood is green space — possibly a small pond or dog park — and other "non-people stuff," Mayor Brian Taylor said.

As for residents forced to abandon their homes, outcomes have varied. There was initial turmoil after it looked like buyouts would be made at post-flood values, but Taylor said those figures eventually reached close to market rates.

Some former residents left the city, some stayed. Some were able to use the buyout cash to land on their feet, while others lost footing as property prices across the province climbed in the ensuing years. Others ended up in government-subsidized housing, Taylor said.

"Some of them had been (in North Ruckle) for 20, 30, 40 years," Taylor said. "It was a mixture of success and failure for the people coping with what was happening there."

Taylor estimated the city is about 70 per cent through the $53-million recovery project, including buyouts and flood protection for downtown.

Taylor wasn't on council at the time of the plan's approval, but said he believes it's the right direction. After the disasters, the downtown's future was threatened because businesses couldn't get insurance. With most of the flood protection in place, insurance companies are extending coverage again and there has been an influx of companies, he said.

"I think in the long run, we're going to see this as a cornerstone of the city coming back, making a transition back to being the kind of vibrant community that we're used to," he said.

Explaining how the calculations are made in determining what is protected and what is turned into green space is more complicated than money, he said. Had the city built dikes around North Ruckle, rising river water would have been redirected to the downtown core, he said. And had the city not prioritized the cleanup and protection of downtown, businesses likely would have folded and the downtown itself would have moved.

"That's a really sticky point, when you're trying to explain to people that there was an analysis," Taylor said.

Back on Shackan territory, Lampreau said the community is only in the early stages of exploring possible new land but is working with federal and provincial governments to identify potential parcels.

He said he hopes the land will not only be safer but more appropriate for agriculture and other production to sustain the community. Like many First Nations, he said the reserves were drawn on some of the least usable land, even without considering the effects of extreme weather.

"Our people were placed on these little postage stamp-sized reserves, that was the land that was given to us by the government in the Doctrine of Discovery," he said.

While moving may be disruptive, it also wouldn't be unprecedented, he said.

"Traditionally, you know, we didn't stay in one spot. We're nomadic, we moved around."

This report by The Canadian Press was first published Oct. 9, 2022.

Amy Smart, The Canadian Press

Prostitution laws, not sex work, source of 'structural inequality,' says lawyer


OTTAWA — The laws governing prostitution in Canada — not sex work itself — are creating inequality, a lawyer told the Ontario Superior Court  as part of a constitutional challenge.



"Sex work itself is not a source of structural inequality. However, the impugned laws are," said Pam Hrick, the executive director and general counsel for the Women's Legal Education and Action Fund, which is an intervener in the court case.

"The effects include the constant over-surveillance by police in marginalized communities, as well as barriers, including accessing and maintaining housing," she added.

"The laws have the impact of restricting the agency of sex workers."

The Supreme Court of Canada struck down the country's anti-prostitution laws in 2013 after lawyers argued provisions were disproportionate, too broad and put sex workers at risk of harm.

In December 2014, the Conservative government passed a new bill to replace them.

The Canadian Alliance for Sex Work Law Reform, which includes 25 sex-worker organizations across the country, started arguing in a Toronto courtroom on Monday that the 2014 legislation fosters stigma, invites targeted violence and removes safe consent.

They also argue it violates the Canadian Charter of Rights and Freedoms.

Under the previous laws, prostitution was legal, even though nearly all related activities, such as running a brothel, pimping and communicating in a public place for the purposes of prostitution, were against the law.

The prostitution-related offences brought in under former prime minister Stephen Harper moved closer to criminalizing prostitution itself by making it against the law to pay for sexual services and for businesses to profit from it. It also made communicating to buy sexual services a criminal offence, even if those transactions take place over the internet.

The federal government maintains those new statutes do not prevent people selling sex from taking safety measures, and that they are meant to to reduce both the purchase and the sale of sexual services.

Lawyers representing transgender, Indigenous and Black sex workers argued in court Tuesday the new laws are too restrictive and disproportionately harm marginalized groups.

Studies show Indigenous, transgender, nonbinary and racialized migrant individuals are overrepresented in the sex work industry. They also show sex workers belonging to marginalized groups are excluded from other employment sectors for a variety of reasons, including discrimination, colonialism and immigration status.

The alliance says there shouldn't be any criminal laws specific to sex work, and it has dozens of recommendations to create a more regulated industry.

Michael Rosenberg, the lawyer representing the alliance, said in court Tuesday that decriminalizing sex work "is the only rational choice."

But he also said the court can't be asked to tell Parliament what to do, it can only decide if the legislation is unconstitutional and strike it down.

Lawyers representing the federal government argued in court Tuesday that the laws in question have exemptions to prevent sex workers from being criminalized. They asked Ontario Superior Court Justice Robert Goldstein to consider the intention of Parliament when the laws were passed in 2014.

Michael Morris, arguing behalf of Attorney General David Lametti, said there is no consensus on the best policy approach for commercialized sex. But he said the primary objective of the Canadian laws are to “target and end the demand for sexual services."

He said the laws also target those who capitalize on the demand for sexual services while ensuring the sex workers themselves aren't criminally liable for providing the services.

In a written statement Tuesday, Lametti's office said the minister "will always work to ensure that our criminal laws effectively meet their objectives, keep all Canadians safe, and are consistent with the Charter of Rights and Freedoms."

The 2014 law required that it be reviewed five years after it passed though that didn't happen until this year.

The House of Commons justice committee met eight times since February to review the law and made 17 recommendations, including a call to remove specific sections of the law because of the harmful effects on sex workers.

The committee's report said the 2014 law makes sex work more dangerous, and asks the government to strengthen the Criminal Code by making additional resources available to victims and law enforcement combating exploitation. They also want the government to make coercive and controlling behaviour in intimate partner relationships a criminal offence.

A dissenting report was filed by the Conservative Party of Canada, which largely continues to support existing legislation.

Lametti has 120 days to respond to those recommendations and is expected to do so before Oct. 20.

The court hearing will continue Thursday.

This report by The Canadian Press was first published Oct. 4, 2022.

David Fraser, The Canadian Press