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Investors proceeded cautiously through the week’s opening days, but the tone shifted on Friday (August 23) afternoon in response to an optimistic announcement from US Federal Reserve Chair Jerome Powell

In a Jackson Hole speech, he signaled that the Fed is ready to begin cutting interest rates.

Crypto markets also saw a surge, breaking free from a weeks-long pricing gridlock. In company news, Waymo introduced a new version of its self-driving technology, marking another milestone in a series of wins in recent months.

1. Markets celebrate with rate cuts in sight

The week started shaky for the stock markets, with the S&P 500 S&P 500 (INDEXSP:.INX) and Nasdaq Composite (INDEXNASDAQ:.IXIC) opening below last week’s close on Monday (August 19) before notching their eighth consecutive day of wins, along with the S&P/TSX Composite Index (INDEXTSI:OSPTX).

The Russell 2000 Index (INDEXRUSSELL:RUT) saw gains of 1.1 percent on the day.

Cautious trading left the major indexes little changed on Tuesday (August 20) morning as investors awaited a fresh round of inflation data. Wednesday (August 21) saw the release of US non-farm payroll benchmark revisions and minutes from July’s Fed meeting. The data from the Bureau of Labor Statistics showed that, while the labor market is expanding, job growth between March 2023 and March 2024 was lower than previously estimated.

Meanwhile, the Fed meeting minutes revealed that policymakers considered a quarter percentage point rate cut in July due to reduced inflation and increased unemployment, increasing confidence in a rate cut in September. The news sent indexes higher, with the Russell 2000 taking the lead, gaining over 1 percentage point to close at 2,170.32.

The upward trend continued on Thursday (August 22) morning, with all but the S&P/TSX Composite index opening above the previous day’s close. Economic data showed that the US manufacturing PMI fell to 48 in August from 49.6 in July, coming in softer than expected. Conversely, initial jobless claims rose slightly in the week ended on August 17 compared to the prior week, up by 4,000 to 232,000.

NVIDIA performance, August 19 to August 23, 2024.

Chart via Google Finance.

Stocks retreated midday Thursday, led by the tech sector. NVIDIA (NASDAQ:NVDA) saw its share price fall by 4.77 percent by the end of the day. Optimism returned on Friday morning as Powell addressed bankers and financial professionals at the Kansas City Fed’s annual economic conference in Jackson Hole, Wyoming.

During the highly anticipated speech, Powell endorsed an imminent rate cut, but refrained from specifying the exact number of basis points by which the rates might be reduced.

‘The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks,’ he said.

The news ignited a surge in all three major stock indexes as investors reacted positively. The Russell 2000 outperformed by far, climbing more than 3 percent midday. This continued a recent trend of increased investor interest in mid-cap stocks, which has been observed in response to optimistic Fed data over the past couple of months.

The week ended strong with all four major indexes up more than 1 percent on the week, including the Russell 2000, which was up by over 3 percent.

2. Bitcoin price breaks US$60,000

Bitcoin experienced a dip below US$58,000 in pre-market trading on Monday morning, spending most of the trading day at that level before recovering to move above US$61,000 in the hours between Monday and Tuesday.

Tuesday saw another sharp pullback, coinciding with a dip in US stock indexes. At the same time, K33 analysts reported that Tuesday’s seven day average annualized funding rate was the lowest one since March 2023, indicating increased short bets and potential for a squeeze. More price movement was observed on Wednesday, with Bitcoin trading in the US$59,000 range for most of the day before breaking above US$60,000 and then US$61,000 in the final hours of the trading day. The popular cryptocurrency held above US$60,000 for the remainder of the week.

Recent data shows a slight decrease in demand for Bitcoin, although long-term holders have continued accumulating tokens. Concurrently, the number of institutional investors holding Bitcoin ETFs witnessed a notable growth of 14 percent in Q2 compared to Q1, suggesting continued interest from larger market participants.

Analysts at Fairlead Strategies suggested on Wednesday that Bitcoin could be heading into a period of downturn in the near future based on a reading of the 14 month stochastic indicator, which compares a security’s closing price to its price range over a specific period. The indicator is used to assess the momentum and potential trend reversals in financial markets. While it was previously above the 80 level, indicating an overbought condition, it recently crossed below 80, indicating that Bitcoin may be entering an overbought downturn and could start falling in price.

However, the crypto market surged in response to positive economic developments on Friday. The likelihood of an impending September rate cut being further solidified following Powell’s address in Jackson Hole Wyoming on Friday morning sent the price of Bitcoin above US$64,000 by 5:20 p.m. EDT on Friday.

Ether, which had a volatile week, also saw a significant boost, trading above US$2,770 as of that time.

3. Democrats leave crypto off 2024 platform, but Harris could support the sector

Ahead of the Democratic National Convention, the party unveiled its 2024 Platform on Sunday (August 18). The 92 page document covers the party’s stance on various issues, including economic policy and social justice.

However, an important issue was noticeably absent: Vice President Kamala Harris’s stance on cryptocurrency and web3 infrastructure. While voices in the crypto community have expressed optimism that Harris could be more open to supporting the industry compared to the current administration, Harris herself has been tight-lipped about where she stands on issues related to the regulation and taxation of decentralized finance.

However, the platform released on Sunday refers to “Biden’s second term.’ Given the tight deadline — the plan was finalized less than one week before President Joe Biden withdrew from the race — Harris may be more outspoken about her views on cryptocurrency and web3 infrastructure as the campaign progresses.

During a Bloomberg News roundtable at the Democratic National Convention, which kicked off in Chicago this past Monday, Brian Nelson, the campaign’s senior adviser for policy, said that Harris would back measures that “ensure that emerging technologies and that sort of industry can continue to grow.”

Before Harris took over the Democratic campaign, Republican candidate Donald Trump’s embrace of Bitcoin and other digital assets seemed to give his party an advantage with crypto-focused voters.

The two candidates have been in competition on crypto-betting platform Polymarket, which enables users to use cryptocurrencies to place bets on real-world events. While the odds of a Democratic win surged by 12 percent on Polymarket just two weeks ago, propelling Harris into the lead, Trump overtook her this week.

Crypto media outlet Decrypt has suggested that the lack of a clear stance on cryptocurrency and Bitcoin in the Democratic Party’s platform may have contributed to Trump overtaking Harris.

4. Waymo introduces 6th generation self-driving technology

Waymo, a subsidiary of Alphabet (NASDAQ:GOOGL), introduced the newest version of its self-driving technology, the 6th Generation Waymo Driver, on Monday. According to the company’s press release, the 6th generation system is more cost-effective than the current version while providing more capabilities and compute power.

The Waymo Driver will be able to see further, up to 500 meters away, and can better withstand harsh weather conditions. The new hardware also consists of an enhanced camera-radar surround view and advanced sensor technology that will reportedly improve its navigation capabilities.

Waymo CEO Tekedra Mawakana shared via LinkedIn this week that the company’s robotaxi service, Waymo One, surpassed 100,000 rides per week, double the 50,000 weekly rides the company reported in May. The company’s fleet is made up of Geely Zeekr electric vehicles (EVs) using the Waymo Driver technology.

Waymo began as a self-driving project in 2009. It has since expanded to offer commercial services in Texas, Arizona and California and partnered with Uber (NYSE:UBER) in May 2023. During Alphabet’s Q2 earnings call on July 23, Jim Friedland, director of investor relations, shared that Alphabet was committing to a US$5 billion investment in Waymo.

The new systems are currently still in testing with updates expected to be provided as development progresses.

5. AMD makes AI move with ZT Systems purchase

Semiconductor manufacturer Advanced Micro Devices (AMD) (NASDAQ:AMD) announced plans to acquire ZT Systems, a company that specializes in the development of servers and network equipment. The move, announced on Monday, is part of AMD’s efforts to expand its data center artificial intelligence (AI) capabilities.

“Our acquisition of ZT Systems is the next major step in our long-term AI strategy to deliver leadership training and inferencing solutions that can be rapidly deployed at scale across cloud and enterprise customers,” AMD Chair and CEO Dr. Lisa Su said in a press release. The deal is valued at US$4.9 billion, and consists of a blend of cash and stock, including up to US$400 million based on post-closing milestones.

AMD shares were up 4.66 percent on Monday, and reached US$161.57 during trading on Tuesday, the company’s highest valuation this week. AMD’s share price was sitting US$154.97 on Friday afternoon, up 4.46 percent for the week.

Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.

This post appeared first on investingnews.com

The Department of Justice and eight states on Friday accused software company RealPage of unlawfully scheming to undermine competition among landlords and create a monopoly that harms millions of renters.

RealPage “allows landlords to manipulate, distort, and subvert market forces,” the Justice Department said in a civil complaint in U.S. District Court in North Carolina.

“At bottom, RealPage is an algorithmic intermediary that collects, combines, and exploits landlords’ competitively sensitive information,” the antitrust lawsuit said.

“And in so doing, it enriches itself and compliant landlords at the expense of renters who pay inflated prices and honest businesses that would otherwise compete,” the DOJ alleged.

Attorney General Merrick Garland in a press conference Friday morning put it more bluntly: “Everybody knows the rent is too damn high, and we allege this is one of the reasons why.”

The lawsuit marks the first time that the government has accused a company of working to systematically subvert the rules of free-market competition using mathematical algorithms.

“Antitrust law does not become obsolete simply because competitors find new ways to unlawfully act in concert,” Garland said.

“And Americans should not have to pay more in rent simply because a company has found a new way to scheme with landlords to break the law.”

The DOJ is joined in its lawsuit by the attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington.

RealPage, which is owned by the private-equity firm Thoma Bravo, did not immediately respond to CNBC’s request for comment.

The lawsuit, which Garland said followed a nearly two-year investigation, arrives in the middle of a U.S. presidential election cycle where high housing and rental prices have emerged as a key issue.

Democratic nominee Kamala Harris last week unveiled an economic plan that aims to lower rental costs in part by cracking down on the companies behind price-setting tools that let landlords collude.

The White House declined to comment on the DOJ’s antitrust suit against RealPage.

But it provided a statement from national economic advisor Lael Brainard, who said President Joe Biden and Vice President Kamala Harris “know that too many Americans feel squeezed by high rents.”

“The Biden-Harris Administration has made clear that no one should pay higher prices because of corporate lawbreaking and continues to support fair and vigorous enforcement of the antitrust laws to prevent illegal collusion,” Brainard said.

— CNBC’s Eamon Javers contributed to this report.

This post appeared first on NBC NEWS

DETROIT — Ford Motor’s profit engine for decades has been large trucks and SUVs in the U.S. So it might surprise investors that the automaker believes its new path to profitability for electric vehicles will first be led by smaller, more affordable vehicles.

The new plan is an “insurance policy” for the automaker to be able to expand its growingly popular hybrid models and create more affordable EVs that it believes will deliver a more capital-efficient, profitable electric vehicle business for the company and investors, according to Marin Gjaja, Ford’s chief operating officer for its Model e EV unit.

“We’re quite convinced that the highest adoption rates for electric vehicles will be in the affordable segment on the lower size-end of the range,” he told CNBC on Thursday. “We have to play there in order to compete with the entrants that are coming.”

Those expected newcomers are largely Chinese automakers, such as Warren Buffett-backed BYD, that have been rapidly growing from their home market to Europe and other countries.

Gjaja’s comments came a day after the automaker announced updates to its EV strategy that will cost up to $1.9 billion. That includes about $400 million for the write-down of manufacturing assets, as well as additional expenses and cash expenditures of up to $1.5 billion.

Ford’s new plans for North America include canceling a large, electric three-row SUV that was already far in development, delaying production of its next-generation “T3” electric full-size pickup truck by about 18 months until late 2027, and refocusing battery production and sourcing to the U.S.

Instead of the three-row SUV or large pickup, the company’s first new EV is expected to be a commercial van in 2026, followed the next year by a midsized pickup and then the T3 full-size pickup.

Gjaja said the decision wasn’t taken lightly, especially the cancellation of the upcoming three-row vehicle, which Ford CEO Jim Farley and other executives had been touting as a game changer for several years.

The commercial van comes as Ford’s “Pro” commercial vehicle and fleet business, which includes vans and large Super Duty trucks, has been a standout for the company and offset billions of dollars in EV losses.

And the midsize pickup is scheduled to be the first vehicle from a specialized “skunkworks” team in California, The company had tasked the team two years ago with developing a new small EV platform.

“We believe smaller, more affordable vehicles are the way to go for EV in volume. Why? Because the math is completely different than [internal combustion engine (ICE) vehicles],” Farley told investors last month. “In ICE, a business we’ve been in for 120 years, the bigger the vehicle, the higher the margin. But it’s exactly the opposite for EVs.”

Farley has said the weight and cost of battery packs needed for large vehicles such as a three-row SUV, which many families buy for road trips, towing and hauling, are a limitation for EVs due to current ranges and charging networks.

Ford’s current EVs — the Mustang Mach-E crossover, F-150 Lightning and a commercial van in the U.S. — are not profitable overall. The Model e operations have lost nearly $2.5 billion during the first half of this year and lost $4.7 billion in 2023.

The losses, as well as changing market conditions and business plans, caused Ford earlier this year to withdraw an ambitious 8% profit margin for its EV unit by 2026.

Investors and Wall Street analysts have largely supported the EV changes, most recently sending the company’s shares up about 2.3% since the announcement earlier this week, despite the expected costs.

“Overall, these changes will position Ford to benefit from growing demand for EVs, while also focusing on areas in which it has a Core competitive advantage,” BofA’s John Murphy wrote Wednesday in an investor note. “Given the size of the charge, this is clearly a tough decision in the short-term, but we think makes sense in the medium to long-term given what will likely be subpar economics in the three-row CUV/SUV segment.”

The updates are the latest for Ford’s electrification plans, which now include a heavy focus on hybrid and plug-in hybrid electric vehicles, or PHEVs, to assist in meeting tightening fuel economy regulations in addition to all-electric vehicles.

Ford CFO John Lawler said Wednesday that the company’s future capital expenditure plans will shift from spending about 40% on all-electric vehicles to spending 30%. He did not give a timeline for the change, but it’s a massive swing from when the company announced plans in 2021 to spend more than $30 billion on EVs through 2025.

The hybrid plans include offering such options across its entire North American lineup by 2030, including three-row SUVs, to assist in meeting tightening emissions and fuel economy requirements. Lawler said that to improve profitability, Ford is also accelerating the mix of battery production in the U.S. that will qualify for tax incentives and credits.

The shift in Ford’s plans is consistent with the overall auto industry, which is facing growing, but slower-than-expected adoption of EVs, as well as automakers not being able to achieve expected profitability on the vehicles.

“What we saw in ’21 and ’22 was a temporary market spike where the demand for EVs really took off,” Gjaja told CNBC during an interview earlier this year. “It’s still growing but not nearly at the rate we thought it might have in ’21, ’22.”

There’s also an industrywide fear that Chinese automakers could be able to flood markets with cheaper, more profitable EVs. Chinese automakers such as BYD are quickly growing exports of vehicles to Europe and other countries.

Lawler pushed back Wednesday on the idea that the Chinese have outgunned American automakers. He said the Ford, in part, developed the skunkworks team to prove that Ford can compete against the Chinese automakers.

“As we’ve watched in the last 18 to 24 months, the emergence of incredible products and formidable competitors in China has really been, I think, the story for us,” Gjaja said. “And so now, when we look at the competitive landscape, we have to chin ourselves against the most competitive companies in China.”

Ford’s new plans are polar opposite of its closest rival, General Motors.

America’s largest automaker has pulled back spending and delayed many of its EVs, but it has several large all-electric vehicles on sale coming soon.

GM was among the first to go “all in” on EVs, including by creating a vertically integrated, dedicated electric vehicle platform and supporting technologies such as batteries and motors.

Aside from Tesla, GM was the first automaker to begin U.S. battery cell manufacturing through a joint venture at scale, which the company has continued to tout as a cost advantage

GM’s current lineup includes three all-electric large pickup trucks, a Hummer SUV, two recently launched Chevrolet crossovers, a luxury Cadillac crossover and $300,000 Celestiq car. Several more crossover models and an all-electric Escalade SUV are expected to join the lineup this year as well.

As recently as last month, GM reconfirmed expectations for its EVs to be profitable on a production, or contribution-margin basis, once it reaches output of 200,000 units by the fourth quarter.

A GM spokesman Thursday said the automaker continues “to work to reach variable profit positive during the fourth quarter.”

Gjaja declined to comment on GM’s target or operations but said Ford is doing what’s best for the company.

“We’re focusing on what we think are the right technologies to serve our customers that can also be affordable for them and profitable for us,” he said.

This post appeared first on NBC NEWS

Federal Reserve chair Jerome Powell on Friday gave the clearest indication yet that the central bank is likely to start cutting interest rates, which are currently at their highest level in two decades.

If a rate cut comes in September, as experts expect, it would be the first time officials have trimmed rates in over four years, when they slashed them to near zero at the beginning of the Covid-19 pandemic. 

Investors may be wondering what to do at the precipice of this policy shift.

Those who are already well diversified likely don’t need to do much right now, according to financial advisors on CNBC’s Advisor Council.

“For most people, this is welcome news, but it doesn’t mean we make big changes,” said Winnie Sun, co-founder and managing director of Sun Group Wealth Partners, based in Irvine, California.

“It’s kind of like getting a haircut: We’re doing small trims here and there,” she said.

Many long-term investors may not need to do anything at all — like those holding most or all of their assets in a target-date fund via their 401(k) plan, for example, advisors said.

Such funds are overseen by professional asset managers equipped to make the necessary tweaks for you.

“They’re doing it behind the scenes on your behalf,” said Lee Baker, a certified financial planner and founder of Claris Financial Advisors, based in Atlanta.

That said, there are some adjustments that more-hands-on investors can consider.

Largely, those tweaks would apply to cash and fixed income holdings, and perhaps to the types of stocks in one’s portfolio, advisors said.

In his keynote address on Friday at the Fed’s annual retreat in Jackson Hole, Wyoming, Powell said that “the time has come” for interest-rate policy to adjust.

That proclamation comes as inflation has fallen significantly from its pandemic-era peak in mid-2022. And the labor market, though still relatively healthy, has hinted at signs of weakness. Lowering rates would take some pressure off the U.S. economy.

The Fed will likely be choosing between a 0.25 and 0.50 percentage-point cut at its next policy meeting in September, Stephen Brown, deputy chief North America economist at Capital Economics wrote in a note Friday.

Lower interest rates are “generally positive for stocks,” said Marguerita Cheng, a CFP and chief executive of Blue Ocean Global Wealth, based in Gaithersburg, Maryland. Businesses may feel more comfortable expanding if borrowing costs are lower, for example, she said.

But uncertainty around the number of future rate cuts, as well as their size and pace, mean investors shouldn’t make wholesale changes to their portfolios as a knee-jerk reaction to Powell’s proclamation, advisors said.

“Things can change,” Sun said.

Importantly, Powell didn’t commit to lowering rates, saying the trajectory depends on “incoming data, the evolving outlook, and the balance of risks.”

Falling interest rates generally means investors can expect lower returns on their “safer” money, advisors said.

This would include holdings with relatively low risk, like cash held in savings accounts, money market funds or certificates of deposit, and money in shorter-term bonds.

High interest rates have meant investors enjoyed fairly lofty returns on these lower-risk holdings.

It’s kind of like getting a haircut: We’re doing small trims here and there.

However, such returns are expected to fall alongside declining interest rates, advisors said. They generally recommend locking in high guaranteed rates on cash now while they’re still available.

“It’s probably a good time for people who are thinking about buying CDs at the bank to lock in the higher rates for the next 12 months,” said Ted Jenkin, a CFP and the CEO and founder of oXYGen Financial, based in Atlanta.

“A year from now you probably won’t be able to renew at those same rates,” he said.

Others may wish to park excess cash — sums that investors don’t need for short-term spending — in higher-paying fixed-income investments like longer-duration bonds, said Carolyn McClanahan, a CFP and founder of Life Planning Partners in Jacksonville, Florida.

“We’re really being aggressive about making sure clients understand the interest-rate risk they’re taking by staying in cash,” she said. “Too many people aren’t thinking about it.”

“They’ll be crying in six months when interest rates are a lot lower,” she said.

Bond duration is a measure of a bond’s sensitivity to interest rate changes. Duration is expressed in years, and factors in the coupon, time to maturity and yield paid through the term.

Short-duration bonds — with a term of perhaps a few years or less — generally pay lower returns but carry less risk.

Investors may need to raise their duration (and risk) to keep yield in the same ballpark as it has been for the past two or so years, advisors said. Duration of five to 10 years is probably OK for many investors right now, Sun said.

Advisors generally don’t recommend tweaking stock-bond allocations, however.

But investors may wish to allocate more future contributions to different types of stocks, Sun said.

For example, stocks of utility and home-improvement companies tend to perform better when interest rates fall, she said.

Asset categories like real estate investment trusts, preferred stock and small-cap stocks also tend to do well in such an environment, Jenkin said.

This post appeared first on NBC NEWS

Federal Reserve Chair Jay Powell said Friday he expects the central bank will cut its key interest rate in the near future in response to slower economic growth and cooling inflation.

At a speech during the Fed’s annual August summit in Jackson Hole, Wyoming, Powell said ‘the time has come for policy to adjust.’ His remarks come as price growth has slowed and the jobs market, as well as demand for borrowing money, has begun to soften to a weaker level than before the onset of the pandemic.

“Inflation has declined significantly,’ Powell said. ‘The labor market is no longer overheated, and conditions are now less tight than those that prevailed before the pandemic. Supply constraints have normalized. And the balance of the risks to our two mandates has changed.”

Markets responded favorably to the news. The Dow Jones Industrial Average closed up 462 points, or 1.14%. The Nasdaq Composite advanced 1.47%, and the the S&P 500 gained 1.15%. All three indexes remain near their all-time highs.

Federal Reserve Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting at the Federal Reserve in Washington, DC, on July 31, 2024.Roberto Schmidt / AFP – Getty Images file

The speech was highly anticipated as the U.S. economy appears to be entering a new, more subdued phase following several years of surging growth following pandemic reopenings.

However, Powell was vague about the exact timing and extent of a cut, leaving market participants guessing about how exactly the Fed views the current state of economic growth.

He said the Fed’s next move would ‘depend on incoming data, the evolving outlook, and the balance of risks.” The central bank’s Federal Open Market Committee, which decides interest rates, next meets Sept. 17.

The interest rates set by the Fed are benchmarks that dictate borrowing costs for much of the economy and are its main tool for fulfilling its mandate of keeping both inflation and unemployment low.

Starting in the spring of 2022, the Fed raised interest rates to a level not seen in nearly two decades as it worked to combat soaring inflation. By making it more expensive to borrow money, the central bank sought to curb demand for goods and services and thus easing upward pressure on price growth.

The strategy has mostly worked: After hitting a peak of more than 9% in June 2022, the 12-month inflation rate has slowed to 2.9%, with some categories, including groceries and many durable goods, seeing price growth below 2% or even lower.

Now, the Fed is expressing more concern that the slower inflation is coming at the cost of jobs. In July, the unemployment rate unexpectedly inched up to 4.3%, its highest level, excluding the surge during the pandemic, since September 2017. While that is still low by historical standards, it comes as the rate of hiring has also fallen to below the pre-pandemic average.

“Our objective has been to restore price stability while maintaining a strong labor market, avoiding the sharp increases in unemployment that characterized earlier disinflationary episodes when inflation expectations were less well anchored,” Powell said Friday. “While the task is not complete, we have made a good deal of progress toward that outcome.”

In a note to clients following Powell’s remarks, Seema Shah, chief global strategist at Principal Asset Management financial group, said it was clear that ‘labor market risks now have [the central bank’s] full attention’ but that it was still waiting on August’s jobs report — scheduled to be released the first Friday of September — to determine next steps.

‘Make no mistake, if the labor market shows signs of further cooling, the Fed will cut with conviction,’ Shah wrote.

Lower interest rates will provide some relief to consumer borrowers, but it will not be immediate, according to Greg McBride, chief financial analyst at Bankrate.com.

‘The trip down is likely to be much slower than the series of interest rate hikes which quickly pushed the federal funds rate higher by 5.25 percentage points in 2022 and 2023,’ McBride wrote in a note, adding that while mortgage rates have dropped from nearly 8% last fall to about 6.6% today, they remain higher than what borrowers have seen the past two decades.

Meanwhile, he said ‘we’ve yet to see a meaningful drop in credit card or auto loan rates’ — the former still at approximately 21.5% and the latter as much as 9.5%.

This post appeared first on NBC NEWS

Russia’s President Vladimir Putin likes to project himself as a strongman. But his track record of handling recent crises in Russia reveals a different side of his presidential persona: one of paralysis and indecision.

A day and a half after Ukrainian troops stormed a Russian border crossing and continued, almost unimpeded, across the wide green fields of the southern Kursk region, Putin finally made his first public remarks on the matter. He called the incursion a “massive provocation”, accused Ukraine of indiscriminately firing on civilians, and then moved on quickly to other government business, including how to mark Russia’s “Construction Worker’s Day.”

It would take another five days, and the loss of nearly 30 settlements, before he promised a military response.  There was no visit to the region to meet the tens of thousands of evacuees, no declaration of martial law.

In March, after the terror attack at the Crocus City concert hall in Moscow, Russia’s deadliest in decades, it took Putin more than 24 hours to address the nation. Despite a claim of responsibility from ISIS-K, he continued to insist that Ukraine, and the West had played a role. The US had in fact warned Russia an attack could be imminent. Putin never visited the site of the attack, or survivors in hospital.

When Evgeny Prigozhin, then the leader of the Wagner mercenary group, launched his aborted mutiny last June, the Russian leader’s response was marked by inconsistency. After initially slamming the incident as “treachery,” Putin left it two days before speaking publicly again, at which point he thanked the Wagner troops involved for standing down, and offered them military contracts. Then he invited Prigozhin to tea at the Kremlin. Two months later Prigozhin was killed in a mysterious plane crash in Russia.

More distant parallels are also easy to find, and Putin chose this week to highlight one himself.  For the first time in 16 years he visited School No.1 in Beslan, more than a week before the 20th anniversary of the terror attack on the school that killed more than 300 people, many of them children.  In 2017 the European Court of Human Rights found that not only had the Russian authorities failed to act on prior knowledge of an imminent attack, but that the security operation was “disorganized and suffered from a lack of leadership.”

Shock offensive left Kremlin reeling

Experts say Russia’s military response in Kursk has somewhat mirrored the fumbling reactions of its president.

Battlefield accounts have backed up the sense that a motley selection of Russian troops were rushed in, as Moscow grappled with the dilemma of how to balance defending its own soil with keeping up the slow momentum on the eastern front. Ukrainian officials said some troops were redeployed from Kharkiv region and the southern front. Chechen leader Ramzan Kadyrov claimed early on that his special forces unit, the Akhmat brigade, had been deployed. Naval infantry officers from the Black Sea fleet in Crimea are also involved.

The diverse groupings complicated Russian efforts to coordinate its resistance, with one pro-Russian military blogger even noting on August 14 that Ukraine was deliberately creating disruptions and then retreating, “taking advantage of the fact that our diverse forces, who don’t always have good communications with each other, were activated to repel this invasion.”

Russia’s bureaucratic response to the incursion has been equally unwieldy.  Defense Minister Andrei Belousov set up a coordinating council to handle security in the border regions and this week announced he was dividing up responsibilities between no fewer than five different officials.

This, according to the Institute for the Study of War, “will likely create additional confusion within the Russian MoD and friction among the Russian MoD, FSB, and Rosgvardia [Russia’s national guard], all of which are attempting to operate in Kursk Oblast,” and could jeopardize Russia’s ability to mount an effective counterattack.

Ryan, the Australian retired general, agrees Russia is moving beyond the initial knee-jerk response phase, and it should start to look more organized in the days and weeks ahead. But, he believes the past two weeks have also laid bare Putin’s priorities and his own people are not currently top of the list.

“The decision will be Putin’s: What is the most dangerous to him?  Ukrainians in Kursk or not succeeding in the Donbas.  I think at the moment he’s decided that it’s more dangerous to not make this progress in the Donbas than to throw everything at Kursk.”

Experts agree the Kursk incursion has not fundamentally changed Putin’s overarching strategy of attrition – to exhaust Ukraine, and try to outlast its allies. And yet, Ukraine’s surprise move has emboldened those who had previously questioned the West’s policy of limiting certain types of military aid, and their use inside Russia.

And that may well have been part of Ukraine’s strategy.  On August 19, Ukrainian President Volodymyr Zelensky allowed his closely held veil of gratitude towards his Western allies to lift momentarily.

“The entire naïve, illusory concept of so-called red lines regarding Russia, which dominated the assessment of the war by some of our partners, has crumbled these days somewhere near Sudzha,” he told a gathering of Ukrainian diplomats, referring to a Russian town that Ukrainian troops had occupied.

His point is that Western fears that Russia may interpret the use of American or British long-range missiles on its soil as a conventional threat worthy of a nuclear response – Russian nuclear doctrine does allow for this – are now more remote than ever, given its lack of a coherent military response to its first foreign occupation since World War II.

“The current NATO strategy for helping Ukraine is a strategy for defeat. It is just a strategy for perpetuating war and allowing Russia to wait us all out,” said Ryan. “We need a fundamental reassessment.”

Former Russian diplomat Bondarev argues Putin’s own reaction serves as further proof that the West needs to formulate a more robust response to Putin’s aggression.

“And that’s why he should not be feared so much.”

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An Indonesian court ordered two local companies to pay up to 60 million rupiah ($3,850) to each family whose children died of an acute kidney injury or were seriously injured after consuming toxic cough syrup.

More than 200 children in Indonesia died of the injury and about 120 more survived, some of whom lived with disabilities which led to financial hardships for their parents.

Indonesian courts have cited lax oversight by pharmaceutical companies, including local drugmakers and some suppliers, as well as the country’s food and drugs agency (BPOM), in hearings into the poisonings.

In late 2022, more than 20 families launched a civil suit against the agency, the health ministry, and several companies.

Judges at the Central Jakarta court found a drugmaker and a supplier, Afi Farma and CV Samudera Chemical, at fault in the poisonings, according to a ruling released late on Thursday.

The health ministry and the BPOM were cleared of wrongdoing.

The court ordered the companies to pay the parents who brought the suit compensation of 50 million rupiah for children who died and 60 million rupiah for children who were injured.

Parents had asked for 3.4 billion rupiah for each child that died, and 2.2 billion rupiah for survivors. Indonesia’s 2023 gross domestic product per capita was nearly $5,000, data from the country’s Statistics Bureau shows.

Siti Habiba, the lawyer for the parents, said the families were disappointed by the ruling, as the money was given “as though we were beggars.”

“This breaks a lot of the victims’ hearts,” she said, adding the court ignored the parents’ government oversight concerns by not finding the health ministry and the BPOM at fault.

The court document, posted on its website, did not include reasons for the decision.

Afi Farma’s lawyer Reza Wendra Prayogo told Reuters on Friday the firm was “disappointed” with the civil case ruling and the company was still considering its next legal step.

Last year, a criminal court found East Java-based drugmaker Afi Farma guilty of negligence and jailed officials for not testing the ingredients sent by its supplier.

The syrups contained ethylene glycol (EG), a commonly used chemical in products such as brake fluid and antifreeze. A court document from that criminal case said the EG concentration in the syrups reached as high as 99%, where international standards say only 0.1% of EG is safe for consumption.

The company has repeatedly denied negligence.

Reuters could not immediately contact CV Samudera Chemical, an Indonesian soapmaker, whose toxic ingredient made its way to Afi Farma, according to the court document of the Afi Farma criminal case in 2023.

The World Health Organization said the contaminated medicines had also killed children in Gambia and Uzbekistan in 2022.

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Four officers at a maximum security prison in Russia were killed after inmates who identified themselves as affiliated to ISIS took several staff hostage, Russian state media reported.

Russian special forces said the alleged hostage takers were all “eliminated” in an operation that saw some hostages freed, at the penal colony in the town of Surovikino.

The National Guard of Russia, also known as the Rosgvardia, wrote on Telegram: “Snipers from the special forces of the Russian National Guard in the Volgograd Region neutralized four prisoners who had taken prisoner employees hostage with four precise shots; the hostages were freed.”

Graphic footage circulating on social media showed three uniformed prison staff members lying motionless in pools of blood, one with his throat slashed. A fourth staff member is seen on his knees in a doorway.

In another video the apparent hostage takers can be seen waving ISIS flags.

Inmates captured the correctional facility staff at a disciplinary commission meeting, Russia’s Federal Penitentiary Service of Russia earlier told state media outlet TASS.

“At a meeting of the disciplinary commission (where cases of malicious violators are considered, among other things) of the colony, several prisoners seized employees,” the penitentiary service said, according to TASS.

Eight prison officers and four inmates were taken hostage, according to RIA Novosti.

Russian President Vladimir Putin said Friday that the head of the Federal Penitentiary Service reported to him about the situation in the Volgograd colony.

The incident follows another hostage situation in Russia in June, when two employees of a pre-trial detention center in the southern Russian city of Rostov-on-Don were rescued after being held hostage for several hours by six detainees.

The detainees had links to ISIS and were killed in the operation.

This story has been updated with additional information.

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The attacker is on the run and police are treating the incident as a terror attack, said a German police spokesperson.

Police services are utilizing all available resources, including personnel and vehicles, and a large-scale manhunt is underway, the spokesperson added.

The attack occurred at a “Festival of Diversity” being held in the city, which is a three-day event marking the 650th anniversary of the city’s founding.

Images and footage from the scene showed several ambulances and police officers at the scene, as well as a helicopter flying overhead.

“This evening, all of us in Solingen are experiencing shock, horror, and great sadness,” The city’s mayor, Tim Kurzbach, wrote on Solingen’s Facebook page.

“We all wanted to celebrate our city’s anniversary together and now we have to mourn the dead and injured.”

The mayor sent his prayers to the victims fighting for their lives and thanked the rescue and security personnel for their help. “I ask you, if you believe, pray with me and, if not, then hope with me,” he said.

According to the festival’s website, Friday was the start of the three-day “Festival of Diversity,” which would include music, food, performances, and family-friendly entertainment.

Bergisch Symphony Orchestra, the shared orchestra for the cities of Solingen and Remscheid, was scheduled to play on the main stage on Friday.

This is a developing story and will be updated.

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Khin Mar Cho worries for her 4-year-old son as she struggles to scrape together enough food to feed him in a makeshift displacement camp at a crowded monastery in western Myanmar.

Soldiers had stormed their village of Byine Phyu, Rakhine state, and forced her and other family members out of their homes. They detained all the men and shot her brother and other neighbors, she said.

Survivors like Khin Mar Cho fled to the monastery just outside the regional capital Sittwe. There, a lone monk is struggling to feed about 300 people who have sought refuge inside the camp as a three-year civil war intensifies around them, waged by Myanmar’s military junta against an armed resistance.

“There are days that we have no food, even though we are hungry,” Khin Mar Cho said. “I cannot feed my kid anything more than meals donated by people because I don’t have a job or income, and all the male family members have been taken away.”

Disturbing accounts from multiple aid workers suggest hunger is being used as a weapon of war in Rakhine state.

Rakhine has become a focal point of the conflict, where a powerful ethnic minority armed rebel group, the Arakan Army (AA) — which is accused of human rights abuses — has seized control of at least 10 of the state’s townships since a year-long ceasefire with the military collapsed in November.

The aid officials said the junta is trying to “starve” civilians in AA-held territory, using tactics that have repeatedly been described as war crimes and crimes against humanity by UN officials and rights groups.

“The Myanmar government is committed to the equality of all citizens,” the statement said. “Every citizen has the right to travel freely without any restrictions.”

Risk of starvation

Aid workers say they don’t know the full extent of the suffering due to telecoms and internet blocks coupled with restrictions on access to affected areas.

But they say the crisis is acute.

The situation unfolding across the country is desperate, but in Rakhine — which is almost entirely dependent on food aid — the UN says that fewer than a quarter of the 873,000 people who need food assistance have received it.

“There is a very real possibility that the most vulnerable… may die if they do not receive support,” a UN report warned in June. It is now August, and the situation has deteriorated.

Prices for basic staples, like rice, fuel and cooking oil, have skyrocketed partly due to shortages created by the junta’s control of supply routes north from Myanmar’s largest city, Yangon, aid officials said. Requests to transport goods, including food, into the region are being refused, they added.

Meanwhile, food production in the state has plummeted, with farmers predicting a 50% drop in this year’s rice harvest, independent Myanmar news outlet The Irrawaddy reported.

Mohammed, a 43-year-old father of three, has lived in a displacement camp with his family in Sittwe since 2012, when anti-Muslim violence forced tens of thousands of people from their homes.

The latest fighting has not yet reached Sittwe, which the junta still controls. But since the collapse of the ceasefire deal between the AA and the military in November opened a major new front in Myanmar’s civil war, the camp has been all but cut off and conditions have drastically deteriorated, he said.

Mohammed’s children attend a small, makeshift school within the camp, but he says it’s difficult to nurture their dreams when he can only feed them half a bowl of rice.

“My children would cry and ask, ‘Are we not eating tonight?’ In those moments, feeling desperate, I would go to a neighbor and ask for some food to feed our children,” Mohammed told Partners Relief and Development, an aid NGO.

Yet his neighbors are hungry too, and they have little to spare.

Access denied

“As the conflict has spread around Rakhine, we’ve also seen the destruction of roadways and bridges,” she said. “The result is, basically, no one has access to these places.”

Aid groups, including UN agencies, must get “travel authorizations” from the state government, which reports to the ruling military council, before they can access territory that the junta considers “travel-restricted areas,” according to aid officials.

In February, the junta stopped issuing nearly all travel authorizations to contested or rebel-controlled territory in the state, most of which are in northern Rakhine, according to seven aid officials with direct knowledge of the matter, all of whom requested anonymity.

Without the travel authorizations, it’s impossible to pass through the junta’s road and waterway blockades, they said.

One senior aid official said, “it is difficult to negotiate because the SAC does not want assistance to go to non-SAC controlled areas,” referring to the State Administration Council, the official name of the junta government.

In May, some aid agencies received travel authorizations for Sittwe when the junta allowed them to begin transporting supplies from Yangon. Two cargo vessels carrying rice and basic medicine arrived in Sittwe two months later, but some items such as solar lights, hygiene and newborn kits remained held up, OCHA reported in August.

Teams still can’t access the surrounding townships or areas further afield.

The UN aid officials made clear in their meetings, which have not been previously reported, that the status quo is unacceptable, the sources said. Separately, the two officials said the agency has raised the issue with the UN Security Council, the European Union and China, among others.

But “that’s a lame excuse,” said a senior aid official. “We don’t need the junta to cover for our security.”

Aid workers and officials say the junta’s blockade is part of a wider war strategy long used by the military, designed to chip away at the rebel group’s popular support by cutting off food, water and medical care to the civilian population.

Bauchner, the Human Rights Watch researcher, said the blockades are “deliberate, and they are intended to harm the population in what is an apparent war crime.”

Myint Kyaw of the junta’s information ministry, said humanitarian groups are “being allowed to go to safe areas” after completing a verification process and alleged — without evidence — that rebel groups are blocking aid deliveries.

In the statement, the junta linked instability in the region to armed groups allegedly engaging in online gambling, planting and selling illegal drugs, human trafficking, online scams and illegal weapons deliveries to “terrorist groups” in rebel-controlled areas.

Ejaz — a local aid official who works in northern Rakhine — said the junta is “punishing civilians collectively” by blocking most food and medicine imports. Even the limited food that is available in the state is prohibitively expensive to most, largely thanks to blockade-induced inflation, he said.

“People are surviving on the bare minimum … like rice and salt,” said Ejaz, who asked to be identified by a pseudonym for his safety.

“I’ve seen it with my own eyes.”

War and hunger

Many of the displaced in Rakhine are members of the stateless Rohingya minority, who have been persecuted for decades in a country that denies them citizenship.

Jamila, 26, a former resident of the predominantly Rohingya town of Buthidaung, close to the Bangladesh border, said the community recently suffered food shortages for at least six months due to the fighting.

Many shops were looted by fighters and soldiers, she said, and those still open could only get supplies by smuggling them at high prices across the border from Bangladesh.

Food supplies were also strained as droves of displaced people from surrounding villages fled to Buthidaung to escape fighting and landmines.

“Everyone was helping everyone,” she said. “I lived life with risk and hunger.”

With little food and no medicine, Jamila said her children suffered from diarrhea and vomiting. “I am suffering from allergies. My whole body is full of itching. But there is no medicine, no treatment,” she said.

In late May, the Arakan Army said it seized Buthidaung. Activists and relatives of residents accused AA soldiers of extrajudicial killings, torching and looting Rohingya neighborhoods, and forcing thousands of people to flee.

Jamila said fighters stormed her village, drenching her home in petrol and setting it on fire while she and her family were still inside.

As the flames consumed their home, they scrambled to grab what belongings they could salvage — but only those on the ground floor had time to flee. Her parents-in-law, asleep in their beds upstairs, did not make it out.

They had no time to mourn. As they ran to escape their village, the howl of gunfire rang out, and a bullet pierced her younger brother. He did not survive.

“We didn’t try to save him,” Jamila said. “We were hearing the screams of people, the cries of children.”

She walked for six days to reach Bangladesh, saying “we lived by eating banana leaves and drinking pond water.”

In a statement, the AA denied it torched Buthidaung, saying it “adheres to its principle of fighting under the military code of conduct and never targets non-military objects.”

Earlier this month, the AA was accused of killing Rohingya people in drone strikes and artillery fire as villagers fled the nearby town of Maungdaw. It denied involvement and blamed the deaths on the Myanmar military and allied Rohingya armed groups.

“Emergency responses are extremely slow. The ULA government, including HDCO, is making every effort to provide food, shelter, water, and healthcare with the limited resources available,” it said.

“The primary challenge remains the acute shortage of essential supplies, including food, non-food items, medicines, medical equipment, women’s dignity kits, agricultural products, seeds, and fuel.”

The HDCO, which said its primary focus is on data collection, emergency response, monitoring aid requirements and tracking aid distribution, said junta blockades and risk of aerial bombardments means “there are instances where we are unable to reach those in need.”

‘We are invisible’

When the junta blocks official aid deliveries, regional and local humanitarian groups use covert tactics to operate without approval from the military, risking their lives to deliver aid to those in need, according to officials at four local aid groups, all of whom declined to publicize their tactics because it could jeopardize their operations.

But it’s far from enough.

At least 18.6 million people — about one third of Myanmar’s population — need humanitarian assistance this year, but aid workers have only been able to reach 2.1 million, according to an OCHA report published last week. Even in territories that the junta does not blockade, intensifying war, record-low funding and international apathy are also limiting aid workers’ access.

Aid workers have also become targets in the junta’s war.

A World Food Programme (WFP) warehouse in Maungdaw was looted and burned in June, depriving that community of urgently needed food aid. But WFP’s local partners were already struggling to reach their warehouses in Rakhine because “artillery shells are falling everywhere,” according to a source with direct knowledge of the matter.

Meanwhile, the UN’s humanitarian response program in Myanmar is among the most underfunded in the world. UN agencies and their local partners estimate that about $1 billion is needed to fund aid efforts in the country through 2024, but they have only raised about 20% of that amount.

Without an immediate injection of cash and a lifting of the blockade, aid officials say they will be forced to choose who does — and does not — receive humanitarian aid, leaving millions of desperate civilians without urgently needed assistance.

“Underfunding will result in livelihoods falling beyond the point of repair,” the OCHA report warned.

A senior UN aid official in Myanmar blamed the funding shortfall in part on international apathy. There are relatively few global advocacy groups and international news outlets consistently reporting on the country, and unlike Gaza and Ukraine, human rights abuses in Myanmar have gained little international attention, he said.

“We have become invisible,” the official said. “Donors will find it difficult to fund missions that are invisible.”

The monastery in Sittwe, where Khin Mar Cho and her family now reside, relies on food donated from the local community.

“The soldiers took all the money we had,” she said. “All we need at the moment is aid and support to survive this.”

Though his small monastery is overwhelmed with displaced people, the monk said he tries to collect more donations from the community, hoping to feed those in the compound more than small helpings of rice.

But they receive meager food donations. Adding to the dire situation, his makeshift camp is overfilled, many families are forced to sleep outside without a covering in the height of the rainy season, so sickness and diarrhea is rife, the monk said.

“There are no NGOs or medics helping them,” he said.

“The only help we get is from the fire service for their funerals.”

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