The owner of the politically right-leaning New York Sun has emerged as the favourite to acquire the Daily and Sunday Telegraph ahead of Friday’s deadline for bids.

Though a late entrant to the auction British-born Dovid Efune’s BID is considered by several parties as the potential new frontrunner.

He is thought able to offer a competitive bid of around £550m while not attracting the political and regulatory objections that saw a bid backed by the United Arab Emirates ruling family blocked by the government.

Mr Efune is one of only two bidders to have attended senior management presentations at the Telegraph.

They have broadly welcomed the prospect of his ownership while conceding that “none of the bidders are perfect”.

If the bid is successful it could provide a link between the Telegraph and its former owner Conrad Black.

Lord Black, who is a regular contributor to the New York Sun, was convicted of fraud and obstructing justice in 2007 and jailed for more than three years, but was pardoned in 2019 by Donald Trump when he was US President.

There are several other bidders who remain in the hunt for one of Britain’s most influential and profitable daily newspapers and its Sunday sister publication.

Hedge fund tycoon Sir Paul Marshall recently acquired the Spectator for £100m and appointed former Conservative minister Michael Gove as the new editor.

Backed by funds from fellow hedge fund boss Ken Griffin, some have speculated that Sir Paul wants to add to a growing right-leaning media empire that includes GB News.

However, sources close to the deal suggest that the bid may be losing momentum.

National World, which owns regional titles including the Scotsman and the Yorkshire Post, is also in the running and its owner, David Montgomery, was the other bidder to attend a presentation by the current Telegraph management.

Attendees were reportedly underwhelmed by his plans for the group – perhaps unsurprising given his track record of cutting jobs at other titles.

One attendee described his ideas for the Telegraph’s future as “dated” and “a bit like dad dancing – he doesn’t understand modern media”.

Lord Rothermere, the controlling shareholder of the Daily Mail, is thought to have refreshed interest in the auction having previously walked away citing inevitable competition objections from regulators and a new Labour government.

Former chancellor Nadhim Zahawi, who is close to the Telegraph’s former owners, the Barclay family, is also thought to be trying to raise money in the Middle East to finance a bid.

Rupert Murdoch’s News UK had shown early interest but is no longer considered a bidder, having been more interested in the Spectator.

Sources close to the deal say there are other potential bidders who may emerge as Friday’s midnight deadline approaches.

The Telegraph is back up for sale after an audacious attempt backed by Redbird IMI – a vehicle largely funded by Manchester City owner Sheikh Mansour – to take ownership of both the Telegraph and the Spectator by paying off the previous owner’s debts collapsed.

The bid was vetoed by the previous Conservative government, who balked at the idea of a foreign state having majority ownership of politically influential UK newspapers and periodicals.

Titles like the Telegraph and the Spectator don’t come up for sale very often and are considered “trophy assets”.

Assets like this have prestige and influence, which means they command a higher price than their financial performance alone can justify.

Redbird IMI effectively paid £600m for both titles with many thinking they had overpaid.

However, Sir Paul Marshall paid £100m for the Spectator alone despite the fact it only makes around £2m in profit a year.

That valuation has fuelled optimism at Redbird IMI that the Telegraph, which makes a profit of over £40m, will fetch “north of £500m”.

If so, the Gulf bidders will be able to walk away from their attempted swoop without damage to their wallets or dignity.

It is expected to take several weeks or even months for the ownership to be settled as various legal and regulatory hurdles are cleared.

ANOTHER major high street bank is offering a big £150 cash incentive – here’s how you can cash in.

The bank is launching a new switch-and-stay offer, as the switch wars between banks trying to poach customers from rivals continues.

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The Co-operative Bank has announced eligible customers could receive up to £150.

The first £75 is given when a customer completes a switch to the bank.

Then, the bank is offering three monthly instalments of £25 – another £75 – to make up the £150.

Both new and existing customers can apply to switch to a current account to make themselves eligible for the payment.

Like any good offer, there are a few boxes to tick off before the big payment comes in.

Customers must apply for a Standard Current Account or Everyday Extra account.

To be eligible, customers must not have benefited from a switch incentive at The Co-operative Bank since 1 November 2022.

And to receive the first £75, customers need to follow a series of rules.

They are:

• Deposit a minimum of £1,000 into their new account (this includes balances transferred as part of the switch).
• Have 2 active Direct Debits.
• Make a minimum of 10 debit card or digital wallet transactions (pending payments will not count toward fulfilment of this criteria).
• Register for our online and/or mobile banking service.
• Set up the debit card in a digital wallet (Apple Pay, Samsung Wallet or Google Pay).

That leaves the three £25 instalments – and there are some rules to claim them too.

Bankers need to deposit at least £1,000 into their account, have two direct debits and make a minimum of 10 debit card transactions.

Co-operative Bank director of products John Ward: “We’re really pleased to launch this offer today and hope it will encourage more people to consider switching to The Co-operative Bank – the only UK high street bank with a customer-led Ethical Policy, which guides how we do business.

“This offer allows eligible new and existing customers to benefit from up to £150 for switching and staying with The Co-operative Bank as their main current account provider.”

Nationwide, Lloyds, Santander and others have all been offering incentives over summer, with the switch wars looking set to continue into autumn.

It’s always advisable to check whether an offer is right for your personal circumstances.

When discussing the economy after the interest rate cuts last week, chair of the US Federal Reserve Jay Powell made an interesting comment about jobs numbers and immigration. “If you are having millions of people come into the labour force, and you are creating 100,000 jobs, you’re going to see unemployment go up,” he said. Well, mostly. Today on the show, the entire staff of the Unhedged newsletter – Rob Armstrong and Aiden Reiter – get together to discuss how immigration might be affecting unemployment. Also, they go long and short China’s new stimulus programmes.

For a free 30-day trial to the Unhedged newsletter go to: https://www.ft.com/unhedgedoffer

You can email Robert Armstrong at robert.armstrong@ft.com and Katie Martin at katie.martin@ft.com.

Read a transcript of this episode on FT.com

View our accessibility guide.

SOUTHERN WATER is in talks to import water from fjords in Norway — in the event of a severe drought.

The shock plan to bring in supplies from more than 1,000 miles away comes just a month after the firm’s boss Lawrence Gosden complained there was “too much rain”.

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The company, which serves 4.7 million households in Sussex, Kent, and the Isle of Wight, is in conversations with a Norwegian firm to ship in 45million litres of water a day into Hampshire.

It stressed it was a “last resort option” amid concerns there would be shortfall while construction on a new reservoir takes place.

The cost would end up being added to customer bills.

It is likely to outrage households further as the average Southern Water bill is already expected to rise from £420 by 43 per cent to £603 by 2030, according to recent Ofwat documents.

The firm is majority owned by MacQuarie. The Australian investor previously came underfire for saddling Thames Water, which it owned between 2006 and 2017, with billions of pounds of debt so it could afford bumper dividends.

Southern Water imposed a hosepipe ban in August 2022, the first such for a decade, after a heatwave caused the driest July since 1935.

It was also ranked as one of the worst for sewage spills, pumping 317,285 hours of sewage from overflows in 2023, the Environment Agency found.

The Norwegian firm that it would use is Extreme Drought Resilience Service.

Its website says it offers to ­supply “those required to insure against critical shortages to their own water resources due to major outages or extreme drought”.

Tim McMahon, Southern’s managing director for water, said importation would be a “last ­minute contingency measure”.

He said it would only be used in the event of a drought in the early 2030s and “something considerably worse than the drought of 1976”.

Mike Keil, of the Consumer Council for Water, said that while customers want the security of having a reliable service, that should still come at a good value.

He said: “Water resources in the south of England are under intense pressure and water ­companies need to have a robust long-term plan, but that must not come at an unreasonable cost to customers or the environment.”

Meanwhile, the owner of South West Water yesterday said it had taken a £16million hit from ­parasite-contaminated water in parts of Devon.

Around 17,000 households in the town of Brixham had to boil their water for eight weeks because of the diarrhoea-causing bug that was in the supplies.

Pennon had to flush the network and provide bottles of water to affected customers.

It has also said it is paying £3.5million in compensation.

BUST AND WIN FOR BRA BOSS

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AN ENTREPRENEUR who set up her own lingerie company from her living room has cashed in to the tune of £45.7million.

Sarah Tremellen, 58, launched Bravissimo in 1995 after finding a dearth of big-busted bra options when she was a size 34G during a pregnancy.

She previously said: “You don’t have to have big boobs to work here, but it helps.”

Almost three decades after setting up the firm she and her husband, Mike, have struck a deal to sell to Wacoal Europe, which also owns the bra brands Freya and Fantasie.

The Warwickshire-based firm, which started out with mail order, sells lingerie and swimwear up to L cups online and from 25 stores across the UK.

Mrs Tremellen said. “I have loved creating and growing Bravissimo. It has been an ­absolute privilege to be able to bring a range of bigger cup size lingerie and swimwear to so many wonderful women.”

AI ADDS A BIT MORR

ARTIFICIAL intelligence cameras have helped keep shelves at Morrisons stocked and boost sales, the store’s chief said yesterday.

The grocer reported a 2.9 per cent rise in sales in the third quarter, which boss Rami Baitiéh said was helped by cameras monitoring stock and reordering when needed.

The supermarket confirmed it had struck a £331million ground rent deal on 76 shops to cut its debtpile from its £7billion takeover.

PASSENGERS were hit with travel chaos after roads surrounding a major UK airport were “totally inaccessible”.

Floodwater left motorists “jammed for miles” on their way to Luton Airport this morning after heavy rainfall overnight.

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Holidaymakers travelling to Luton Airport this morning were “jammed for miles” after roads became completely waterlogged over night.

Footage outside the airport showed the “total chaos” as backlogged traffic tried to navigate the flooded areas.

The road was inaccessible for less than 30 minutes, according to a London Luton Airport spokesperson.

The main roundabout appeared to be the worse affected area.

Emergency workers could be seen with equipment to drain the water.

One person shared on social media: “Luton Airport totally inaccessible due to flooding at main roundabout, all roads jammed for miles, will be hours until sorted out, total chaos.”

Luton Airport have confirmed that the airport has been open and fully operational since this morning,

The access road to the terminal is also clear of any flooding, said a Luton Airport spokesperson.

A spokesperson said earlier today: “Due to adverse weather, localised flooding is possible.

“Please allow extra time for your journey to and from the airport.

“Public transport could also be affected. For the latest status of your flight, please contact your airline.”

Gatwick Express also urged rail users to check their journeys.

A spokesperson said: “Due to the consistent overnight rainfall throughout the GTR network, a number of services are expected to be impacted this morning.

“The first services through the areas listen on the next message will report back on current track conditions.

“They will travel their route at reduced speeds, and so will likely run with delays and could be altered at short notice.”

Meanwhile, Footie fans were also disappointed to learn AFC Wimbledon and Newcastle’s Carabao Cup third-round meeting tomorrow has been called off due to “extensive overnight flooding” at the Cherry Red Records Stadium.

The Dons’ stadium in London is closed as a result, with a rescheduled date yet to be confirmed.

A statement on Wimbledon’s official website read: “We regret to inform supporters that due to extensive overnight flooding of the River Wandle and surrounding areas, including at our Cherry Red Records Stadium, Tuesday night’s Carabao Cup third-round fixture against Newcastle United has been postponed.

“More information will follow in due course regarding fixture rearrangement.

“The stadium is closed until further notice.”

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The Overground and some Tube lines in London have also been partly suspended due to flooding.

The District Line is not running between Turnham Green and Richmond, while the Piccadilly and Metropolitan lines are suspended between Rayners Lane and Uxbridge.

And, there is no Overground service between South Acton and Richmond, while severe delays on the Bakerloo Line, and Metropolitan line between Rayners Lane and Harrow-on-the-Hill is affecting users.

It comes as The Environment Agency issued a flood warning for parts of England today.

As of 7.40am, 13 flood warnings – meaning flooding is expected – were issued for England by the Environment Agency.

Areas affected by the flood warnings include Atherstone in Warwickshire, Leighton Buzzard and Luton in Bedfordshire and parts of London including Wimbledon and South Ruislip.

The Met Office also placed parts of Wales, much of the south of England, the Midlands and into north-west England and Yorkshire under a yellow rain warning.

An amber warning came into force at 5am this morning and will last until 9pm, sweeping over Worcester, Birmingham, Nottingham and Hull.

And, some affected areas could see a whopping 100 to 120mm of rain today.

Environment Agency flood duty manager Sarah Cook said “persistent heavy rain and thunderstorms” could lead to some property flooding and travel disruption.

She said: “Persistent heavy rain and thunderstorms could lead to significant surface water flooding on Monday across parts of England.

“The impacts could include localised flooding in urban areas and fast-responding catchments, including some property flooding as well as travel disruption. The risk from river flooding remains low.

“Environment Agency teams are out on the ground and ready to support local authorities in responding to surface water flooding.

“We urge people to plan their journeys carefully, follow the advice of local emergency services on the roads and not to drive through flood water – it is often deeper than it looks and just 30cm of flowing water is enough to float your car.

“People should check their flood risk, sign up for free flood warnings and keep up to date with the latest situation as well as following @EnvAgency on X, formerly Twitter, for the latest flood updates.”

Met Office meteorologist Jonathan Vautrey previously told the PA news agency that Herefordshire, Gloucestershire and up towards the Wash and the Humber could see over a month’s worth of rain falling on Monday.

Police have confirmed a number of road closures across Bedfordshire and Hertfordshire following “substantial flooding” overnight.

Heavy rainfall on Sunday into Monday has seen areas such as Dunstable and Hitchin partially submerged.

Bedfordshire Police said it had closed off part of Dunstable High Street due to “substantial flooding”, with footage shared on social media showing cars battling high water around the Saracen’s Head pub.

Central Bedfordshire Council said flooding had also hit Flitwick, Cranfield and Marston Moretaine.

North Hertfordshire Police have also advised motorists to avoid some parts of Hitchin, including Walsworth Road near the town centre.

Meanwhile, storms over the weekend saw lightning trigger a terrifying explosion in Stoke-on-Trent.

Firefighters and police were called to Bambury Street in Longton, Stoke-on-Trent, before a cordon went up and homes were evacuated.

And, shocking footage in a Hampshire town showed the moment a tornado swept in and wreaked havoc.

Two blocks of flats were among homes damaged by winds that also felled several trees in Aldershot on Friday.

Another twister was also captured on video in Bedfordshire, Luton yesterday afternoon.

Meanwhile, a man from Northamptonshire described the moment he saw a “wave of water” heading towards him during flooding on Sunday night.

Tim Maher and his partner Carol Findon, from Grendon, saw their two-storey home partially submerged overnight with more than a foot of water.

Mr Maher told the PA news agency: “We’ve had an awful lot of rain in recent days and some forecasters were warning we could see a month’s worth of rain in 24 hours.

“I have an app on my phone which tracks river levels and at around 8.45pm it rocketed up.

“I decided to drive down to the bridge and saw the water breaking the banks and coming down the road towards me.

“I quickly turned around, drove home and put up a flood barrier we’ve got up against the door. It kept out a lot of the water but we’ve had about an inch overnight.

“We’ve had some damage to the carpets, settees and other furniture. The most difficult bit will be drying out the structure.

“We haven’t had much sleep and at least eight houses on our road have been impacted. It would be nice to get a permanent solution to this problem.”

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This is an audio transcript of the Unhedged podcast episode: ‘Immigration and unemployment’

Robert Armstrong
Last week at his big press conference, Jay Powell, chair of the Federal Reserve, was asked about the number of jobs being created in the United States. It’s around 100,000 a month. In theory, that is below replacement rate, meaning that it suggests that unemployment will be rising.

[MUSIC PLAYING]

He said this: It depends on the inflows. If you’re having millions of people come into the labour force and you are creating 100,000 jobs, you’re going to see unemployment go up.

Today on the show: immigration, the labour market, the Fed and the economy. This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. I am Rob Armstrong. I’m coming to you from Unhedged world headquarters in beautiful New York City, where I’m joined by Aiden Reiter.

Aiden Reiter
Good morning.

Robert Armstrong
My colleague on writing the Unhedged newsletter. Aiden, is Powell right that part of the reason or a lot of the reason that the unemployment rate is going up is that we have a lot of people coming into the country from the outside?

Aiden Reiter
So he’s directionally right, but it might be a bit of an overstatement.

Robert Armstrong
Yes. That, on Wall Street, directionally right is how we say wrong, I think. So you agree basically.

Aiden Reiter
Basically, yes.

Robert Armstrong
OK.

Aiden Reiter
But we talked to some really smart people . . . 

Robert Armstrong
OK. But it seems like . . . Wait, let’s not get to the smart people. Let’s just have the two stupid people in this room talk for a second. The unemployment rate is a fraction. It’s the number of people who are unemployed, divided by the number of people in the workforce.

Aiden Reiter
So the equation for unemployment is people in the economy who are searching for a job and cannot find a job. And that has its own weird quirks ‘cause say you don’t have a job because you gave up looking, you might not be included. But yeah. So it’s people looking for a job who don’t have a job divided by the entire working age population, which is around 170mn.

Robert Armstrong
Powell’s point seems quite straightforward. People come in the country, workforce gets bigger. Denominator gets larger, unemployment rate goes up. What’s so hard?

Aiden Reiter
Yes, that’s technically right. But they’re not just in the denominator. So a lot of migrants come into this country, get jobs and they work. So if they are increasing the unemployment rate, it’s probably only by a little bit.

Robert Armstrong
OK. I’m with you that far. And is it possible they also increase demand, which makes other people get hired? Is that part of the equation? Like they come in and they buy tons of stuff and . . . 

Aiden Reiter
They’re coming in, they’re buying food, they’re going to the grocery stores.

Robert Armstrong
Those people need to be served.

Aiden Reiter
Exactly. So yes, they also increase aggregate demand and aggregate goods in the economy.

Robert Armstrong
I think this is why in general, economists tend to be positive on immigration, at least in the case of the United States. Cheap labour in a tightish labour market is a good thing. And more demand is a good thing. And so it’s kind of positive. But I wanna get in the weeds a bit on this because we now have to measure three things that are kind of complicated to measure. At least three. Let’s start with how many people are coming into the country. We need to measure that. Then we need to measure how many of them are employed and how many of them are unemployed. And then we need to measure everybody else so that we know what the context is. Can we measure these things very accurately?

Aiden Reiter
Well, it’s a pretty tough task. Undocumented immigrants are undocumented by their very nature, right, so it’s hard to get a big picture and a good picture of how many people are coming across the border and how they’re working and what they’re doing in the economy. But we have some pretty good estimates that we can use for some of those questions you ask.

Robert Armstrong
OK. Give me one of them.

Aiden Reiter
You know, again, this is backwards-looking data, but the Congressional Budget Office had projected there to be 1mn new migrants in 2023 back when they did their demographic outlook in 2019. They upgraded that number to 3.3mn last year. They said we got an extra 2.3mn people than we otherwise would have in 2023. That’s a huge surge.

Robert Armstrong
Yeah. And how big is the workforce? Remind me just so we can . . . 

Aiden Reiter
It’s just under 170mn. And we should note that’s not everybody who’s of working age. That’s people who are working age and want to work.

Robert Armstrong
So you have an addition of three over 170. So that’s increasing the labour potential, potentially increasing the labour force by a couple of per cent. I mean, it’s not trivial.

Aiden Reiter
It’s not. Yeah, it’s absolutely part of the picture. But keep in mind that those people are also working so they get put into a numerator, some of them. It’s kind of hard to tell anecdotally and from some research studies that people have done, it seems like the foreign-born population that has come in in the past two years has a slightly lower employment rate than people who are already here. So, yes, they are directionally increasing the unemployment rate. But again, it’s not by that much. And think about how large that denominator is of the population.

Robert Armstrong
You wrote on this a few days ago. And I remember one thing that really struck me is that the main tools that we use to measure this sort of thing are these surveys. We have what they call the household survey and the establishment survey. So you ask households and you ask employers. How many people do you employ? Are you employing more? Do you have a job? Do you not have a job? Neither of these surveys asks you, Are you an immigrant? Are you in this country legally, illegally? Do you have a work permit? Do your workers have work permits? So it’s like there is not a primary source of information within the data the Fed is looking at to answer this question.

Aiden Reiter
Yeah, there are other surveys like census surveys that capture that, but again, it’s not direct and that’s not what the Fed uses. There are some of those surveys that ask whether employees or somebody is foreign-born versus US-born, but people often lie on those. There’s no, you know, an employer will lie because he’s afraid that oh, I’ve hired too many foreign migrants who might be illegal, even though technically, you know, Immigration and Customs Enforcement is not supposed to penalise employers through those surveys, people will still not accurately report.

Robert Armstrong
I mean, talk to somebody who runs a restaurant. This is a constant anxiety for them. What do I tell? Who do I tell who’s working for me? You know, it’s an issue for employers.

Aiden Reiter
Yeah. So we don’t have a great picture of what is the actual population that’s immigration-driven. But there are a couple of things we can say with the numbers we do have. So right, we know there’s been this huge upsurge. And part of what that upsurge we think is in large part due to is people coming over undocumented over the border. There’s been a record amount of encounters at the border. So between border enforcement and people trying to flee and come to this country. So that anecdotally tells us there’s a lot more people coming in.

Robert Armstrong
I wanna stop on that point for one second. One thing several of the economists we’ve spoken to recently, the sort of topic du jour is how beautifully inflation has come down from its peaks of a few years ago. And more than one has mentioned, of those economists have mentioned to us that they think part of the reason for this happy outcome is that the labour market cooled because there’s more workers because people are streaming across the border.

Aiden Reiter
Yeah, absolutely. So say you have a hot economy like the US has been. Aggregate demand is high after a couple of years of people sitting on those savings. They’ve demanded a lot of goods and services. You need people to do that. Now, if you’re trying to battle inflation, the last thing you want is there to be wage competition because that just makes everything go up (inaudible).

Robert Armstrong
Everybody demands. It’s the classic wage-price spiral. There is not enough workers. It’s a bidding war for workers. They demand more wages. The wages go up so prices have to go up and it keeps going. That didn’t happen.

Aiden Reiter
That didn’t happen. And a lot of economists believe it’s because this workforce came in that had not been here before, that weren’t looking for jobs at the time. And they came in and they said, hey, we’re gonna power this economy, essentially.

Robert Armstrong
Now, I wanna mention now, but I don’t necessarily wanna talk about it because we try to avoid politics on this show, that this is the kind of political point of pain. How do you wanna characterise the fact that the labour market cooled in part because immigrants came in? Do you wanna say somebody is stealing somebody else’s job? Do you wanna say, do you know what I mean? Like wouldn’t, don’t we want higher wages for workers? Does immigration mean that’s not happening? I’m just, we’re just boring finance people who try to avoid politics, but we should at least flag we’ve reached the point of political tension.

Aiden Reiter
Yeah, and it’s complicated, right? I completely understand people who say, you know, if you have a workforce that, you know, doesn’t have great negotiating rights because they’re undocumented, they can be, you know, put in bad conditions and they can be given bad wages. And then that makes it harder for a US-born person. That’s definitely a part of this equation. But at the end of the day, if it had not been for those workers, it’s very possible that inflation would have resurged and we also would have potentially faced a recession of some kind.

Robert Armstrong
Yeah, because the Fed would have been forced to raise rates. And then we have a recession because rates are held too high for too long and then more people get fired. We’re not shooting at a stationary target here, right? We’re like in disequilibrium and we’re kind of stumbling our way to some kind of new labour market equilibrium.

Aiden Reiter
Yeah, And on the labour market equilibrium, one of the interesting things that came out in our conversations is that, you know, previously the CBO estimates and a lot of people have been working with the assumption that the break-even level of employment, right, the amount of new jobs you need to create because of new people entering the workforce at a natural pace in order to keep unemployment rate right steady. They had thought between 120,000 and 150,000 jobs a month. It’s probably closer to 230,000 based on some really great work by Wendy Edelberg at Brookings. It’s closer to 230,000. So remember a couple of months ago when we were like, oh wow, 250,000 jobs, new jobs a month. This is such a hot economy. Not really.

Robert Armstrong
Not really. 250,000 jobs a month was a great number of jobs for the smaller economy that existed before the surge in immigration. It’s not such a great number now that the economy is bigger, has more people coming in and more workers in it.

Aiden Reiter
Yeah. And it makes you know, the most recent reading, 89,000, look that much bigger.

Robert Armstrong
Yeah. So if the break-even rate of job additions, which again, this is the number of jobs that’s consistent with the economy just going along sideways, you know, not shrinking, if that’s over 200,000 and the last monthly reading is 89,000 jobs added, this is a pretty cold job market now. One month is just one month, as we love to say in Unhedged. We might be surprised by a high number, the number is volatile, etc, etc. But this strikes me as a very important point and might go a little way to explaining why we got that 50-basis-point cut to rates.

Aiden Reiter
It seems the Fed got hip to this.

Robert Armstrong
Yeah, they are looking at these job additions and saying, you know, we have 3mn more workers in this country. This is something we have to worry about.

Aiden Reiter
Yeah. You know, what’s hard about this whole thing is that it’s hard to measure immigration. It’s hard to measure employment among the foreign-born population. But what we can say is that this new information makes the most recent job additions number look that much weaker.

Robert Armstrong
It’s very interesting to speculate about this, and I wanna emphasise that I’m very much speculating at this point. I don’t know anything about this. But I wonder if because immigration is such a hot political issue — indeed, maybe the hottest of all political issues right now — that while the Fed has to think very carefully about the kind of complexities you’ve just been talking about, they’re careful not to talk too much about it. Powell did mention it in one sentence in his press conference.

Aiden Reiter
In a question answer, not even in his speech.

Robert Armstrong
Not even in his speech. And I wonder if they’re like, we’re supposed to be independent. We’re not supposed to meddle in politics. There’s this really important thing going in the jobs number. Let’s talk about it behind closed doors, but let’s just try to cool it on the public discussion because we’re gonna get drawn into a political fight where we really don’t belong.

Aiden Reiter
Yeah. And there’s also a lot of legal complexity here that I’m sure the Fed doesn’t want to touch with a 10-foot pole, right? So we’ve said, oh, there’s, you know, this huge surge in undocumented migrants coming over the border. Well, there’s also been an uptick in legal migrants. There’s this complexity here where if you are at the border and you request asylum and you’re given, you know, refugee status, etc, you actually are legally permitted to work. You just have a short-term work visa while you await for a court date. So he doesn’t wanna touch that. That’s politically contentious right now, both in the Biden-Harris administration and on the Trump campaign. So there’s a lot of things here that the Fed, I think, is correctly pointing out that they don’t want to get into because it’s not their jurisdiction.

Robert Armstrong
Yes. I wanna turn our discussion to the future a little bit here. So you wrote that the most recent data from Customs and Border Protection suggests this great surge of immigration is slowing.

Aiden Reiter
Yeah.

Robert Armstrong
So just thinking naively about that, we’ve had this kind of relief valve for inflation, meaning this kind of flow of people entering the workforce who keep wage pressure down. Do we need to worry about an inflation resurgence if that flow of people slows? What do we need to think about going forward about this as we try to anticipate what the unemployment rate and inflation is going to do?

Aiden Reiter
It’s a good question and just speculating here, but first, it’s worth noting that while those numbers are coming down and that’s a success, they’re still high by historical average. So there’s still people coming into this workforce. There’s also young people who turn 16 and enter the, you know, the working-age population. So the workforce is always growing and that’s just the nature of feeding this economy.

Robert Armstrong
Yeah. Or you better hope it is or else we’re Japan and you’ve got a whole different set of problems.

Aiden Reiter
Precisely. And so it’s a good problem to have especially in the past when we’ve had labour shortages. In terms of inflation, it’s really, really hard to say. If the economy were to stay hot and you don’t have enough labour coming in then yes, you could have an inflationary spiral. But our economy is cooling off to some degree. We’re in the soft landing stage. So if anything, we’ve actually set the ground to have more population in the future, right? If you’re a migrant population here then has kids or brings in their family, that brings in more people and eventually you have a larger base upon which to grow. So at least in the long term, this is probably good for the US long-term inflationary outlook. But in the short term, it’s very hard to say. It just depends on which direction the economy goes in a couple of months.

Robert Armstrong
If it wasn’t for the short term everything would be so easy.

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We’ll be right back with Long and Short.

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Listeners, we’re back. This is Long and Short, that portion of the show where we go long things we like and short things we don’t like. Aiden, do you have a long or short for us?

Aiden Reiter
I do. I am short Chinese market stimulus. So on Tuesday, it was announced that the People’s Bank of China has made this special fund facility for asset managers, investors, fund managers to buy stocks to try to buoy the long moribund Chinese stock market. 

Robert Armstrong
Yeah, long moribund hardly even covers it. And that stock market has been a disaster.

Aiden Reiter
It’s been bad.

Robert Armstrong
For a couple of years.

Aiden Reiter
They made a pool of about Rmb800bnn, that’s about $100bn, to give to asset managers and then also to give to companies to do stock buybacks to try to revive equities.

Robert Armstrong
So they’re like, here’s money. Buy stocks.

Aiden Reiter
Yeah. And then on top of that, they did a couple other, you know, monetary stimulus moves that would theoretically support more Chinese investors, retailers or, you know, other people putting their money in the stock market. I don’t think it’s gonna work.

Robert Armstrong
OK. That’s a strange thought, because generally if you give people money that they can only use to buy a thing, that thing gets bought.

Aiden Reiter
So while this might give a little bump to market, it’s not gonna help the economy for a couple reasons. A, the economy is still not doing great. You know, the housing market is terrible and that’s where most Chinese households put their assets. If that’s still terrible, they’re not gonna fix it. They’re not gonna put their money into the equity market.

Robert Armstrong
Yeah, they’re not confident.

Aiden Reiter
Yeah. There’s been some in this bond-buying surge where people have piled those bonds. They lowered rates the other day. That theoretically helps more people buy bonds, especially if you’re trying to make more liquidity. If there’s nobody borrowing because the economy’s not great, they’re not gonna go put that money in the market if they don’t wanna borrow.

Robert Armstrong
Yes. So the banks, you’re saying, will buy bonds because what else are they gonna do?

Aiden Reiter
What else are they gonna do? Even though the Chinese government isn’t very clear. They don’t want people to buy bonds. Same with households and same with, you know, any other business, right? So equities have gotten a little bit of a bump. But I think the monetary policy things they did on Tuesday are not enough to see a sustained surge.

Robert Armstrong
All right. I’ll take the other side and I will go long Chinese fiscal stimulus. I agree with you 100 per cent, Aiden, it is crazy to try to make the tail wag the dog by trying to stimulate the stock market in the hopes of giving the economy a boost. However, we have an announcement this morning, this very morning, reported in our own Financial Times that President Xi has pledged to issue and use government bonds to better implement, quote, the driving role of government investment. And this is something that people in general and Aiden Reiter in particular have been saying the Chinese government has the capacity to do and they need to do. The way out of this problem is to reject Mao, embrace Keynes and stimulate. So if President Xi is serious about this, this could be the start of something good for the Chinese economy.

Aiden Reiter
Yeah. And, you know, theoretically, the momentum of the stock market stimulus will ride off that. But we still have a lot to see, including they haven’t put numbers to that fiscal stimulus.

Robert Armstrong
I know. We’ve just got words, no numbers yet.

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On that happy note, join us next Tuesday when the next episode of Unhedged will be available in whatever strange place you get your podcasts.

Aiden Reiter
Usually ears, right?

Robert Armstrong
Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. We had additional help from Topher Forhecz. Cheryl Brumley is the FT’s global head of audio. Special thanks to Laura Clarke, Alastair Mackie, Gretta Cohn and Natalie Sadler.

FT premium subscribers can get the Unhedged newsletter for free, a 30-day free trial is available to everyone else. Just go to ft.com/unhedgedoffer.

I’m Rob Armstrong. Thanks for listening.

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