2024-12-20 21:36

Markets expect shutdown resolution, minimal impact on stocks Investors concerned about Trump's agenda implementation amid shutdown risk Republican hardliners resist Trump's debt ceiling push NEW YORK, Dec 20 (Reuters) - The messy process of trying to avert a U.S. government shutdown offers investors a glimpse into challenges the incoming Trump administration will face in implementing its agenda, adding a market concern for the coming year. While the showdown has so far not rattled markets, investors said it helped feed into the volatility unleashed by the Federal Reserve's projection on Wednesday for fewer U.S. interest rate cuts next year. "Granted, Trump isn't president yet, but he will interject ideas at the last minute and there's no guarantee every member of the Republican Party in Congress is going to go along with his ideas," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin. "That is a formula for gridlock, uncertainty, and volatility." The U.S. Congress was scrambling to avert a government shutdown on Friday, hours after more than three dozen Republicans joined Democrats to reject a demand by President-elect Donald Trump to use the spending bill to lift the nation's debt ceiling. Republican hardliners who normally are ardent Trump supporters are resisting his push to raise the U.S. debt ceiling, sticking to their belief that government spending needs to be pruned and defying his warnings of revenge. A bipartisan deal negotiated with Democrats who now control the Senate and the White House collapsed on Wednesday after an online fusillade of criticism by Trump and Elon Musk. The failure to pass the bill offered investors a peek at how policy might take shape next year. "This behavior ... provides some insight into how Trump may approach governance. He is likely to lead with bold threats and leverage them to push negotiations in his favor," said Joe Hoffman, CEO of Mesirow Currency Management. Prolonged government battles can upset equity investors, who have reaped the S&P 500's roughly 25% gains for the year, its second straight year of 20% or more gains. The fighting may even hurt the so-called 'Trump Trade' which has lifted assets likely to benefit from Trump's policies on tariffs and deregulation. Still, U.S. government shutdowns are fairly recurrent events that on average last nine days. The market generally takes them in stride, with stocks slipping more in the days ahead than during shutdowns, according to CFRA Research data. The S&P 500 has on average fallen 0.3% in the week before government shutdowns, compared with an average rise of 0.1%, for the duration the government remained shut, CFRA data showed. Indeed, on Friday, the S&P 500 was up 1.7%, as a cooler-than-expected inflation report eased some market concerns triggered by the Fed forecasting only two rate cuts for 2025. "Uncertainty surrounding whether a shutdown will occur is greater than when it actually occurs," Sam Stovall, chief investment strategist at CFRA, said. That may be why markets may be largely shrugging off the Friday midnight deadline for Congress to get a deal done. "(Investors) think it's more likely than not that it'll be resolved today, but that a shutdown, if it were to come, would be short and relatively non-impactful," said Helen Given, associate director of trading at Monex USA, in Washington DC. Still, the difficulty of getting a deal to avert government shutdown bodes ill for Trump's agenda. "It's possible to interpret the current impasse as a sign that Donald Trump will struggle to get a big fiscal stimulus through Congress in 2025, given the resistance of fiscal hawks in his own party who would like to see plans for more spending cuts in exchange for raising the debt limit or extending its suspension," said John Higgins, Capital Economics' chief markets economist, in a note. Sign up here. https://www.reuters.com/markets/us/us-government-shutdown-showdown-creates-another-investor-worry-2024-12-20/

2024-12-20 21:25

Panel says Mexico GM corn restrictions violate USMCA trade deal Mexico says disagrees with panel's decision but will respect it Former Mexican president had banned GM corn use in tortillas Mexico is top buyer of U.S. corn, $4.8 bln imported so far in 2024 WASHINGTON, Dec 20 (Reuters) - A trade-dispute panel ruled on Friday that Mexico's restrictions on U.S. genetically modified corn exports violate the U.S.-Mexico-Canada Agreement, handing the Biden administration a major trade victory in its final weeks. The U.S. Trade Representative's office said the USMCA dispute settlement panel ruled in favor of all seven U.S. legal claims in the long-running case. It said the panel found Mexico's restrictions are not based on science and violate the USMCA's chapters on sanitary and phytosanitary measures and on market access and national treatment. The three-member panel's final report , opens new tab recommended that Mexico bring its corn-trade policies into compliance with the trade agreement. It has 45 days to do so under the 2020 trade deal's rules and failure to comply could result in punitive duties on some exports to the U.S. Mexico's economy and agriculture ministries said in a joint statement they disagreed with the ruling but would respect it, providing no details on what steps they would take. "The Government of Mexico does not agree with the Panel's decision, as it considers that the measures in question are aligned with the principles of public health protection and the rights of Indigenous peoples," the agencies said. Nonetheless, they said that dispute resolution was a key component of the USMCA trade deal, noting that Mexico and Canada prevailed over the U.S. in an automotive rules of origin dispute case last year. The corn dispute began six months after USMCA came into force in July 2020 when then-President Andres Manuel Lopez Obrador decreed that GM corn be banned by the end of 2024 -- a move largely targeting U.S. corn exports. His successor, President Claudia Sheinbaum, has supported the policy. After years of little movement in consultations, USTR requested arbitration to settle the dispute, challenging Mexico's 2023 decree that immediately banned use of GM corn in tortillas and dough, and instructed government agencies to gradually eliminate its use in other foods and in animal feed. The U.S. argued the Mexican government's claims that GM corn is harmful to human health were not based on science. "The panel's ruling reaffirms the United States' longstanding concerns about Mexico’s biotechnology policies and their detrimental impact on U.S. agricultural exports, U.S. Trade Representative Katherine Tai said in a statement. U.S. Agriculture Secretary Tom Vilsack said the decision ensured that U.S. farmers and exporters "will continue to have full and fair access to the Mexican market." "It is also a victory for the countries around the world growing and using products of agricultural biotechnology to feed their growing populations and adapt to a changing planet,” Vilsack added. In February, Mexico's government softened its initial ban on GM corn, explicitly allowing its use for livestock feed and industrialized products for human consumption, but maintained the ban for use in tortillas. Mexican officials have defended restrictions on GM corn in tortillas and argued it is up to Washington to demonstrate its exports do not harm human health. U.S. President-elect Donald Trump has threatened to impose a 25% blanket tariff on all imports from Canada and Mexico when he takes office on Jan. 20 unless they stem the flow of illegal migrants and fentanyl to the U.S. If implemented, those duties would appear to violate the USMCA's rules, possibly spawning another dispute case. TOP BUYER Mexico, birthplace of modern corn, prohibits planting of GM corn due to fears it would contaminate native strains of the grain. Yet the country is the top foreign buyer of U.S.-grown yellow corn, nearly all of which is genetically modified. Mexico's government expects local buyers will import a record 22.3 million metric tons during the 2023/24 agricultural season. In 2024 through October, the U.S. exported $4.8 billion worth of corn to Mexico, according to U.S. Census Bureau data. Mexico boasts over 60 native varieties of corn, known as landraces, many coming in a kaleidoscope of colors and featuring distinct flavor profiles. This month, Deputy Economy Minister Luis Rosendo Gutierrez stressed that the government was doing everything it could to protect the free trade pact amid Trump's tariff threats. He added Mexico would comply with the panel's ruling. U.S. and international agriculture and biotechnology groups applauded the ruling. "This is the clearest of signals that upholding free-trade agreements delivers the stability needed for innovation to flourish and to anchor our food security," said Emily Rees, president of CropLife International, which represents the plant science industry. Sign up here. https://www.reuters.com/markets/commodities/trade-panel-rules-us-favor-mexico-gmo-corn-dispute-case-2024-12-20/

2024-12-20 21:01

Nov. PCE at 2.4% on yearly basis, below estimated 2.5% Real estate leads S&P sectors higher U.S. House to vote Friday to avoid govt shutdown Indexes up: Dow 1.18%, S&P 500 1.09%, Nasdaq 1.03% NEW YORK, Dec 20 (Reuters) - U.S. stocks rallied to close out the trading week on Friday after two lackluster sessions as a cooler-than-expected inflation report and comments from Federal Reserve officials eased worries about the path of interest rates. The latest inflation report in the form of the Personal Consumption Expenditure (PCE) index showed a 2.4% rise in November on an annual basis, just below the 2.5% estimate of economists polled by Reuters. Consumer spending increased in November in another sign of economic resilience. After the data, traders raised their slightly increased expectations for Fed rate cuts in 2025, now expecting the first one in March and another by October. Before the data, traders saw a roughly 50% chance of a second rate cut by December 2025. On Wednesday, the Fed announced its third interest-rate cut of the year but forecast in its summary of economic projections (SEP) just two 25-basis point cuts for 2025, down from its September view of four cuts, in a nod to the economy's continued health and sticky inflation. The announcement sparked a sharp sell-off late on Wednesday, which equities were unable to bounce back from on Thursday. Even with Friday's rally, each of the three major U.S. indexes declined for the week. Also providing support were comments from Fed officials, with some acknowledging they were starting to factor in fiscal policy uncertainty, such as tariffs, in their outlooks. "It's kind of obvious what's going on - it's just this PCE plus dovish Fed commentary offset the market overreaction to the hawkish cut that everybody was expecting," said Jay Hatfield, CEO at Infrastructure Capital Advisors in New York. "We've seen this like 10 times during this Fed cycle. The market just always overreacts on one side or the other." The Dow Jones Industrial Average (.DJI) , opens new tab rose 498.82 points, or 1.18%, to 42,841.06, the S&P 500 (.SPX) , opens new tab gained 63.82 points, or 1.09%, to 5,930.90 and the Nasdaq Composite (.IXIC) , opens new tab gained 199.83 points, or 1.03%, to 19,572.60. The Dow and S&P recorded their biggest daily percentage gains since Nov. 6. For the week, the S&P 500 fell 1.99%, the Nasdaq declined 1.78%, and the Dow dropped 2.25%. The Nasdaq snapped a four-week streak of gains, with the S&P 500 (.SPX) , opens new tab suffering its biggest weekly percentage decline in six weeks. The Dow (.DJI) , opens new tab saw its third consecutive weekly fall. Each of the 11 major S&P sectors advanced in the broad-based rally, led by a gain of 1.8% in real estate (.SPLRCR) , opens new tab and buoyed by a drop in Treasury yields. Small-cap stocks as measured by the Russell 2000 (.RUT) , opens new tab, which are also seen as likely to benefit from lower interest rates, rallied 0.9%. Markets were also monitoring the U.S. Congress as it scrambled to avert a partial government shutdown before a midnight deadline. Republican leaders in the U.S. House of Representatives said they would vote on Friday to keep the federal government operating. Advancing issues outnumbered decliners by a 2.84-to-1 ratio on the NYSE and by a 2.12-to-1 ratio on the Nasdaq. The S&P 500 posted three new 52-week highs and 23 new lows, while the Nasdaq Composite recorded 51 new highs and 233 new lows. Friday's session also marks the simultaneous expiry of quarterly derivatives contracts tied to stocks, index options and futures, also known as "triple witching," which boosted trading activity. Volume on U.S. exchanges was 21.58 billion shares, compared with the 14.87 billion average for the full session over the last 20 trading days. Sign up here. https://www.reuters.com/markets/us/futures-hit-by-government-shutdown-fears-ahead-inflation-data-2024-12-20/

2024-12-20 20:50

WASHINGTON, Dec 20 (Reuters) - The head of the Environmental Protection Agency plans to step down on Dec. 31 after overseeing widespread efforts by the administration of President Joe Biden to reduce greenhouse gas emissions and other pollutants. EPA Administrator Michael Regan told employees of his plans in an email on Friday, saying the agency had "confronted climate change with the urgency science demands. We set the strongest standards in history and put billions of dollars to work to spur clean energy development, create good-paying American jobs and lower costs for families." This week, Regan approved a waiver to allow California to implement landmark clean car rules that seek to ban the sale of gasoline-only vehicles by 2035. Rules finalized by the EPA in March will cut vehicle emissions by 49% by 2032 and speed the deployment of EVs. They will reduce greenhouse gas emissions by 7.2 billion tons through 2055. Regan said Jane Nishida will serve as acting administrator through Jan. 20 and Dan Utech will serve as acting deputy administrator until then. Last month, the EPA finalized a methane fee for big oil and gas producers meant to slash emissions of the powerful greenhouse gas, but which is likely to be scrapped by the incoming presidency of Donald Trump. Trump said in November he was nominating Republican former Congressman Lee Zeldin, who often voted against legislation on green issues, to head the EPA. Trump plans to seek reversal of many Biden EPA rules on the burning of fossil fuels, including one curbing carbon emissions from power plants and another slashing such emissions from vehicles. Trump has said he plans to begin rescinding EPA and the Department of Transportation vehicle pollution rules on his first day in office and is considering paring back or eliminating EV tax breaks and other incentives. Trump also plans to rescind California's ability to set its own vehicle emissions rules, as he did in 2019. Sign up here. https://www.reuters.com/world/us/top-biden-environmental-official-step-down-dec-31-2024-12-20/

2024-12-20 20:43

WASHINGTON, Dec 20 (Reuters) - Nippon Steel (5401.T) , opens new tab alleges the White House had "impermissible undue influence" over a national security review of its $14.9 billion bid for U.S. Steel (X.N) , opens new tab and threatened legal action if the deal is blocked. The accusation was made in a Dec. 17 letter, signed by counsel for Nippon Steel and U.S. Steel and seen by Reuters, to the Committee on Foreign Investment in the United States (CFIUS). CFIUS, which reviews foreign acquisitions for national security risks, has a Monday deadline to approve the deal, extend the review, or recommend that President Joe Biden scuttle it. However, an expected government shutdown would pause the clock, CFIUS lawyers said. Last weekend, CFIUS set the stage for Biden, who has long opposed the tie-up, to block it in a 29-page letter by raising allegedly unresolved national security risks, Reuters exclusively reported. In its response, Nippon Steel and U.S. Steel rebut CFIUS's national security arguments and allege that Biden improperly influenced the review's outcome before CFIUS could reach its conclusions. Specifically, their Dec. 17 letter claims Biden may have weighed in on the deal to please United Steelworkers (USW) President David McCall, who opposes the tie-up, and endorsed Biden for President soon after he announced his opposition to the merger. Biden has opposed the deal because he believes , opens new tab that U.S. Steel should be American-owned and operated. "We are gravely concerned that the December 14 Letter reflects impermissible influence in the CFIUS process from the White House, at the behest of third parties who oppose the transaction and seek to weaken the Parties, namely, Cleveland-Cliffs..., led by CEO Lourenco Goncalves, and Mr. McCall," Nippon and U.S. Steel's latest response to CFIUS reads. Cleveland-Cliffs was a suitor for U.S. Steel and also opposes the deal with Nippon. White House spokesperson Saloni Sharma said the allegation "is not true." She did not specifically address if Biden would block the deal, adding, "The President has been clear that he will continue to see what the CFIUS process yields." "We look forward to finalizing the transaction and remain committed to working with all relevant parties to do so," U.S. Steel said in a statement. Nippon Steel and Cleveland Cliffs CEO Lourenco Goncalves declined to comment. HIGH-LEVEL OPPOSITION The proposed tie-up has faced high-level opposition within the United States since it was announced a year ago, with both Biden and his incoming successor Donald Trump taking aim at it as they sought to woo union voters in the swing state of Pennsylvania, where U.S. Steel is headquartered. Trump has also asserted the iconic American company should remain American-owned. The merger appeared fast-tracked to be blocked after the companies received an Aug. 31 letter from CFIUS, seen by Reuters, arguing the deal could hurt the supply of steel needed for critical transportation, construction and agriculture projects. But Nippon Steel countered that its investments, made by a company from an allied nation, would in fact shore up U.S. Steel's output and won a 90-day review extension. That extension gave CFIUS until after the November election to make a decision, fueling hope among supporters that a calmer political climate could help the deal's approval. "PERSONAL ASSURANCES" In making the case that President Biden was doing a favor to McCall, the letter cited a February USW news release , opens new tab in which the union leader stated, "Today we received personal assurances that President Joe Biden has our backs," McCall said. "He’s always been a friend to the American worker and our union, and we’re grateful he’s taking an interest in this matter." The White House denied the allegation Biden's opposition is at the behest of McCall and referred Reuters to his March statement against the deal , opens new tab. McCall said in a statement that “Nippon’s efforts to circulate unfounded rumors and threats of legal action are regrettable, but ultimately, they’re no more than a distraction from the dangers the company’s acquisition of U.S. Steel poses.” If Biden blocks the deal, "the Parties would immediately file a petition in the U.S. Court of Appeals for the DC Circuit challenging the decision as a violation of due process and the authority of the President," under CFIUS authorities, Nippon Steel writes. Sign up here. https://www.reuters.com/markets/commodities/nippon-steel-alleges-undue-white-house-influence-doomed-deal-review-letter-2024-12-20/

2024-12-20 20:18

Dec 20 (Reuters) - Venture Global, one of the largest producers of liquefied natural gas in the United States, on Friday filed for what could be one of the largest initial public offerings globally next year. The LNG producer plans to list its Class A common shares under the symbol "VG" on NYSE, the company's filing showed. In November, Reuters reported that the Arlington, Virginia-based company was planning to raise about $3 billion from its IPO in New York. Cold storage giant Lineage's (LINE.O) , opens new tab $4.44 billion New York IPO in July and Hyundai Motor India's (HYUN.NS) , opens new tab $3.33 billion Mumbai IPO last month were two of the largest listings this year, LSEG data showed. The company plans to use part of the proceeds for general business purposes, including funding its operations. After the IPO, Venture's founders and co-chairmans, Robert Pender and Michael Sabel, will continue to hold more than 50% of voting power through their entity Venture Global Partners II, LLC, the company said in its filing. Sabel is also the company's CEO. It said Goldman Sachs & Co., J.P. Morgan, BofA Securities, ING, RBC Capital Markets, Scotiabank and Mizuho are among the underwriters for the IPO, according to the filing. Founded 11 years ago, Venture Global has already rocketed into the top ranks of U.S. natural gas exporters, competing against larger rivals Cheniere Energy (LNG.N) , opens new tab, Freeport LNG and Sempra (SRE.N) , opens new tab. Venture Global has two operating plants in Louisiana, with its second facility at Plaquemines achieving its first LNG production just last week , opens new tab. The company reported revenues of $3.45 billion for the nine months ended Sep 30, compared with $6.27 billion, a year earlier. Sign up here. https://www.reuters.com/business/energy/venture-global-applies-list-nyse-2024-12-20/