Mixed Market Trump Reactions

Mixed Market Reactions

There were mixed reactions to the unexpected extent of Trump’s victory in the stock and bond markets. The S&P 500 rose 2.5 per cent with the small companies’ index rising 5.8 per cent. Clearly sentiment was driving this segment of the markets. Bond markets told a different tale with 10-year Treasury yields rising 0.15 per cent. Inflationary fears due to increased tariffs and the impact of mass deportations were key factors. That said, a quarter point cut in interest rates from the Fed is expected today. This is clearly a time for calm reflection.

UK to Pass AI Legislation

Peter Kyle, the UK’s Technology minister, has told the FT’s AI Summit that the UK government will pass new legislation seeking to put a voluntary AI accord on a former footing. At present large developers of large language models have agreed to submit their creations to review by “partner governments”. This code will be made legally bind. The AI Safety Institute, which manages this arrangement, will also be fully legally recognized. The balance between innovation and safety will clearly be a critical factor in the ability to grow our economies in a sustainable fashion.

Post Office Fighter Threatens Legal Action

Sir Alan Bates, the man at the heart of the fight to obtain compensation for those wronged in the Post Office scandal, has threatened further legal action. Nine hundred post office sub-masters were wrongfully convicted of fraud due to mal functioning of Fujitsu software. The UK government has set aside £1.8 billion for compensation. Sir Alan told the Business and Trade Committee that the Prime Minister has not replied to his letter requesting expedition of the compensation process.

Worries About “Extend and Pretend”

The New York Fed has published a paper expressing concerns that banks are modifying commercial property loan contracts to avoid defaults. The practice is referred to as “extend and pretend” and is seen as a way of kicking the can down the road. Some borrowers have had their contracts modified twice since Covid. Unless interest come down major losses could be just around the corner. Will the new US President give himself the power to set interest rates and avoid this disaster?