InternationalFollowing a week of chaos sparked by the UK government's mini budget, the pound got some relief yesterday, climbing off of recent lows against the dollar.
Good morning, readers. I'm Hallam Bullock, Insider's newsletter editor, reporting from London this week while Phil Rosen is out.
Spare a thought for us dizzy Brits, whose pound and politics have been lurching all over the place in recent days. Sterling has shown it can take a beating and get back up, while our prime minister said she would stand by proposed tax cuts one day — before the plan was pulled entirely the next.
Are you ready to ride the rollercoaster? Let's get started.
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1. The pound gets a relief rally on the government's U-turn. The currency hit a record low against the dollar last week, but it didn't hang around down there. That's thanks to the UK government rowing back on a planned tax cut, which gave the pound a new lease on life Monday.
On Sunday, Prime Minister Liz Truss insisted the controversial plan to cut the 45% tax rate would go ahead — that's a tax only paid by people earning more than £150,000 a year. No more than 24-hours later, the government had changed its tune. The UK's Chancellor of the Exchequer, Kwasi Kwarteng, confirmed the plan was being scrapped, just 10 days after it was first announced.
"We get it, and we have listened." Kwarteng said on Twitter. It comes after days of market chaos which saw the pound plummet. Kwarteng, speaking at a Tory Party conference Monday, admitted that the proposals may have caused "a little turbulence."
That tax cut would have impacted the UK's highest earners, giving them on average an extra £10,000 per year — that's around a third of the average wage in the UK, according to the ONS — at a time when the country is in the midst of a cost of living crisis.
The move last week throttled UK bonds as well as the pound, with long-dated gilts surging in response to fears over the unfunded tax cuts. Economists around the world sounded off on the government's plan, with many comparing the situation to what's commonly faced by developing economies, while the IMF gave a stinging rebuke of the proposal.
The relief sparked by the turnaround was felt immediately yesterday. By Monday afternoon, the pound had broken $1.13, close to where it was trading before the mini budget and above the all-time low of $1.03.
In another reversal, Kwarteng has backed down on when he will reveal what's in his medium-term fiscal plan. He previously insisted he wouldn't publish it and related economic forecasts until November 23 , but it will now come later this month. Early Tuesday, the pound traded as high as $1.14 after the news.
Here's the full story.
What's your outlook for the UK economy? Let me know at hbullock@insider.com or tweet @hallam_bullock
In other news
2. Global stocks and US futures rise for a second day early Tuesday. Meanwhile, Australia's central bank surprised markets by lifting interest rates by a smaller-than-expected 25 basis points. Here are the latest market moves.
3. Earnings on deck: Acuity Brands Inc., Fuji Co Ltd, and more, all reporting.
4. The top strategist at BMO Capital Markets is still bullish on stocks. This year hasn't gone as Brian Belski expected, but he hasn't lost hope. Here are nine reasons he thinks US stocks are primed to bounce back in the fourth quarter.
5. The Federal Reserve will raise rates just one more time in November, before it stops because the soaring dollar risks breaking markets. That's according to market veteran Ed Yardeni, who says a strong dollar has been "associated in the past with creating financial crises on a global basis."
6. Before Celsius froze withdrawals, the crypto lender's founder withdrew $10 million. Per the Financial Times, Celsius Network founder Alex Mashinsky made the withdrawals in May, when the crypto market was crashing and the company was spiraling toward bankruptcy.
7. OPEC's power is at an all-time high, according to Goldman Sachs' commodities chief. "And one of the reasons really is the fact that we have not been investing in alternative energy sources" Jeff Currie said, "so they're really the only game in town."
8. A 24-year-old who made $8 million in two years explained how he remained profitable in bear-market rallies. This year hasn't been easy for traders, but Jack Kellogg adjusted his trading strategy and made over $280,000 in August alone. Here are his six tips for navigating bear-market rallies.
9. UBS analysts shared nine stocks to buy now to protect your portfolio from recession risk. Their picks are also set for a rebound when interest rates peak — here are the companies in their playbook.
10. Tesla shares sank more than 8% Monday as third quarter deliveries fell short of expectations. The EV maker set a new record for the quarter, delivering 343,830 vehicles — but that still didn't meet analysts' projections.
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Curated by Hallam Bullock in London. (Feedback or tips? Email hbullock@insider.com or tweet @hallam_bullock).
Edited by Max Adams (@maxradams) in New York.