2024-12-20 17:24

Policymakers tie further rate cuts to progress on inflation Their comments echo Fed chief Powell's call for caution Williams, Daly say policy is in a good place Goolsbee sees rates falling next year by 'judicious' amount Dec 20 (Reuters) - Federal Reserve policymakers, fresh from an interest rate cut this week, fleshed out on Friday the case for reducing borrowing costs more slowly next year as they assess progress in lowering inflation and the impact of tariffs and other policies promised by President-elect Donald Trump. San Francisco Fed President Mary Daly, who supported the U.S. central bank's decision on Wednesday to cut its benchmark overnight rate by a quarter of a percentage point to the 4.25%-4.50% range, and Cleveland Fed President Beth Hammack, who dissented against it, both said the meeting's outcome was a "close call." Daly and two other Fed policymakers who spoke on Friday said they felt the central bank would likely resume its rate-cutting next year, but signaled they would take their time doing so now that, as Daly put it, the "recalibration phase" is over. "We're in the next phase, and that next phase is really looking at the incoming information," Daly said in an interview with Bloomberg Television. The U.S. central bank cut rates by a total of 100 basis points in 2024, bringing monetary policy to a somewhat less restrictive stance as inflation fell from much higher levels earlier in the year and the labor market cooled. Fed policymakers' projections released on Wednesday showed most of them now see two quarter-percentage-point rate cuts in 2025, fewer than the 100 basis points they had forecast in September. Daly said she was comfortable with that rate-cut projection, citing the need to push down on still-elevated inflation and noting that the labor market has held up better than thought. Still, she said, the Fed could end up doing more or less, depending on the data. While Daly said it's too early to guess how the new Trump administration's policies will affect the outlook, Chicago Fed President Austan Goolsbee told CNBC that it was that very uncertainty that caused him to pencil in a shallower rate-cutting path next year than the 100 basis points he had previously thought would be needed. Goolsbee, however, noted that he continues to believe inflation is headed down to the Fed's 2% target, and that means more rate cuts. "Over the next 12 to 18 months, rates can still go down a fair amount," he said. "And whether that happens three months earlier or three months later, I don't think is the most material thing." 'IN A GREAT PLACE' The U.S. Commerce Department reported earlier on Friday that inflation, based on the Fed's preferred measure, was 2.4% last month, less than what economists polled by Reuters had expected. The Personal Consumption Expenditures Price Index excluding volatile food and energy items, which the Fed uses to gauge underlying momentum in prices, rose 2.8%, in line with what Fed Chair Jerome Powell said he was anticipating when he embraced a "cautious" approach on further rate adjustments in his post-meeting press conference on Wednesday. The data prompted financial markets to firm up bets on a Fed rate cut in March, with one more reduction seen as probable by September. Before the release of the report, traders had given only about even odds on a second Fed rate cut by the end of 2025. "I think we're in a great place, well-positioned" for what lies ahead," New York Fed President John Williams said in a separate interview with CNBC, adding that his baseline expectation continues to be that further rate cuts are coming. Like Goolsbee, Williams said he had factored in some thinking on the likely impact of Trump's agenda into his own forecasts, but said there was still a lot of uncertainty. "We need to be data-dependent, and we have time to really assess the data, assess what's happening, and come to the best judgments." In a statement explaining her dissent this week, Hammack said she felt the economy's strength argued against another rate cut at this time, and she wanted to hold the policy rate steady until there is more evidence that inflation is resuming its path toward the 2% target. Sign up here. https://www.reuters.com/markets/us/feds-daly-says-this-weeks-rate-cut-was-close-call-2024-12-20/

2024-12-20 16:58

Dec 20 (Reuters) - Cruise operator Carnival Corp (CCL.N) , opens new tab forecast strong bookings for 2025 ahead of the busy summer travel season, riding the wave of strong spending on experiences even as prices increase, sending its shares up about 5% on Friday. The resilient demand for cruise vacations also helped Carnival post better-than-expected profit and sales for the fourth quarter, but the company forecast annual profit below estimates due to rising input costs and advertising spending. Adjusted cruise costs, excluding fuel, for the quarter increased 7.4% from 2023 but were better than the firm's projections of about 8%, announced in September. "2025 is shaping up to be another banner year, with yield growth expected to far outpace historical growth rates and again exceed unit cost growth," CEO Josh Weinstein said in a statement. On a constant currency basis, Carnival's cumulative advanced booked position for next year is at an all-time high for occupancy and price, with both surpassing 2024 in all four quarters of 2025. The Miami, Florida-based company reported quarterly revenue of $5.94 billion, compared with analysts' estimates of $5.93 billion, per data compiled by LSEG. Its adjusted profit for the quarter was 14 cents per share, above estimates of 8 cents. Still, the company projected annual profit to be $1.70 per share, below estimates of $1.74. Carnival, like peers Royal Caribbean (RCL.N) , opens new tab and Norwegian Cruise Line Holdings (NCLH.N) , opens new tab, has been investing in private-island destinations, seeking to attract young voyagers and boost returns. Operating costs associated with these investments, maintenance costs due to increased dry dock days and expenses from the deal-heavy wave season weighed on the profit forecast. "Cruise lines have historically started the year on the conservative side with their guides given the various global uncertainties," said Patrick Scholes, analyst with Truist Securities. He expects to see opportunity for quarterly earnings beats and raises. Sign up here. https://www.reuters.com/business/carnival-forecasts-annual-profit-below-estimates-2024-12-20/

2024-12-20 16:41

Dec 20 (Reuters) - New Nike (NKE.N) , opens new tab CEO Elliott Hill's plan to refocus on sports that are core to its brand like basketball and running allayed some investor worries on Friday, but Wall Street initially was taking a wait-and-see approach to the promised comeback. The longtime Nike executive returned to the company in October to steer a turnaround that investors hope will help reverse several quarters of weak sales and revive the Nike brand, which has taken a hit as rivals step in with more innovative footwear. In his first public address as CEO on a post-earnings call on Thursday, Hill said Nike had "lost its obsession with sport" and vowed to put it back on track after a period where its focus on direct-to-consumer sales left it with high inventories, necessitating steep discounting. Shares of Nike, which have lost about half of its value in the last three years, were down 1.5% on Friday morning. The company is valued at a discount to its peers and it has struggled to match upstart rivals. "The recovery is going to be a multi-year process, but he(Hill) seems to be going back to the roots, back to Nike being Nike," said John Nagle, chief investment officer at Kavar Capital Partners, which owns Nike shares. "(Hill plans to shift focus) away from some of the streetwear and fashion that had taken over the brand, the heavy discounting and the neglect of retailers. Just taking it back to what worked," Nagle said. Still, at least 10 brokerages cut price targets on the stock, with some analysts pointing to the lack of a clear timeline for Nike's return to growth. "Nike will turn but the turn will take time," wrote Barclays analyst Adrienne Yih, as "the reset actions will take a material toll on profit margins and sales growth". Nike's forward price-to-earnings ratio for the next 12 months, a benchmark for valuing stocks, was 27.53, compared with 33.47 for Deckers (DECK.N) , opens new tab and 32.32 for Adidas (ADSGn.DE) , opens new tab. Morgan Stanley's Alex Straton said Nike's trajectory is likely to get worse before it can get better as the inflection point for growth remains uncertain. Hill said a lack of newness led Nike to rely on promotions and plans to sell more products at full price on its website and app. Nike in the past year has lost out to rival brands, including Roger Federer-backed On and Deckers' Hoka (DECK.N) , opens new tab, who lured consumers with fresher and more innovative styles. Hill is also looking to reverse certain strategy missteps under the former CEO that soured its relations with retailers such as Foot Locker (FL.N) , opens new tab. Earlier this month, Foot Locker CEO Mary Dillon said Hill was "taking the right actions for the brand" and the retailer was "working closely" with Nike to emphasize newer sportswear styles, including Vomero and Air DT Max. "A rudderless ship now has a rudder, and a sailor who knows how to drive it," said Eric Clark, portfolio manager at the Rational Dynamic Brands fund that owns Nike shares. Sign up here. https://www.reuters.com/business/retail-consumer/nikes-new-ceo-plans-go-back-basics-brand-overhaul-effort-2024-12-20/

2024-12-20 16:39

COPENHAGEN, Dec 20 (Reuters) - The Danish crown weakened on Friday, after disappointing results from a late-stage trial of a new weight-loss drug drove a big fall in the shares of Denmark's largest company, Novo Nordisk. The success of existing weight-loss treatment Wegovy in recent years has benefited the Danish economy as well as its manufacturer Novo Nordisk (NOVOb.CO) , opens new tab. The company's exports have contributed to the Danish balance of payments surplus, creating an increased demand for exchanging profits made in foreign currencies into Danish crowns and exerting upward pressure on the currency. However, on Friday, foreign investors selling Novo Nordisk's shares and converting the proceeds into other currencies reduced demand for the Danish currency. "The Danish crown has come under pressure due to the large price drop in Novo Nordisk," Soren Kristensen, chief economist at Sydbank, said in a research note. The Danish central bank seeks to maintain currency stability within a narrow band against the euro, achieved through currency interventions and interest rate adjustments. Before Novo's announcement, the crown traded below the midpoint of its peg at around 7.46 crowns per euro, at 7.4588. It later strengthened to trade at 7.4618 per euro, above the midpoint. If the weakness continues, the central bank might be forced to intervene by purchasing crowns or raising interest rates. "We don't think it will come to that, but this is further evidence that Novo Nordisk is extremely important to the Danish economy," Kristensen said. Sign up here. https://www.reuters.com/markets/currencies/novo-nordisks-drug-trial-results-weaken-danish-currency-2024-12-20/

2024-12-20 16:38

Dec 20 (Reuters) - U.S. President-elect Donald Trump has moved the stake he owns in Trump Media & Technology to a revocable trust. Trump transferred 114.75 million shares, or 53% of Trump Media & Technology's (DJT.O) , opens new tab outstanding stock, to the revocable trust of which he is the sole beneficiary, according to securities filings. His stake in the company was valued at more than $4 billion based on the stock's last closing price of $35.41. Trump said in November that he had no intention of selling his shares in the company, which owns the Truth Social media platform. Trump's eldest son, Donald Trump Jr., is the sole trustee of the trust and has sole voting and investment power over securities held by it, according to the securities filings. Trump Media has a market capitalization of around $7.7 billion as retail traders bet on the stock as a proxy of Trump winning the 2024 U.S. presidential election. The company's shares were down 4% at $33.86 on Friday. Sign up here. https://www.reuters.com/business/media-telecom/trump-media-shares-fall-after-trump-transfers-his-stake-company-revocable-trust-2024-12-20/

2024-12-20 15:15

Fed's Williams still expects more rate cuts Williams says Fed policy still restraining economy Williams says starting to factor in Trump agenda in outlook Williams spoke on CNBC television NEW YORK, Dec 20 (Reuters) - Federal Reserve Bank of New York President John Williams said Friday he expects the central bank to deliver more interest rate cuts but noted that what happens will be driven by incoming data, amid a policy that is still providing restraint on the economy's momentum. Even with this week's rate cut Williams thinks "we're pretty restrictive" with monetary policy, meaning short-term rates are continuing to restrain the economy, which should help further an easing in inflation pressures, he told CNBC in an interview. As for where the Fed goes next with monetary policy, "the baseline trajectory is moving down towards neutral rates," Williams said, suggesting some sort of rate cut combinations were still in his outlook. "We need to be data dependent and we have time to really assess the data, assess what's happening, and come to the best judgments based on the data, the outlook and the risks to achieve our goals," he said. "I think we're in a great place, well positioned" for what lies ahead, he said. He spoke on CNBC Friday following this week’s Federal Open Market Committee meeting, at which the officials met market projections and cut their overnight target rate by a quarter percentage point, to between 4.25% and 4.5%. The Fed also dialed back expectations of how much it will cut rates next year. UNCERTAIN OUTLOOK Williams noted in his appearance that the outlook for inflation and many other things was attended by considerable uncertainty at this point. Many economists have warned that the tariff and deportation regime favored by President-elect Donald Trump is likely to put further pressure on inflation, although Fed leader Jerome Powell said after the FOMC meeting that new central bank forecasts projecting a slower move back to 2% inflation are driven by the data and not expectations of future government policy. Williams acknowledged that the impact of Trump's agenda was starting to influence his outlook and that some of what Trump wants on immigration front may already be happening. "In my own personal forecast, I have incorporated some thinking about where fiscal policy may be, immigration and other policies, because those are important drivers to thinking about the economic outlook. But I would just emphasize [there's] just a lot of uncertainty about what those effects will be," the official said. Williams spoke after the release of November inflation data that showed ongoing persistence in price pressures. The November personal consumption expenditures price index was up by 2.4% from a year ago, from October's 2.3% rise, while the PCE price index stripped of food and energy was unchanged at a 2.8% rise. Addressing what could be turbulent money market conditions at year end, a situation many traders and investors are bracing for, he said he thinks "there's ample liquidity to see the financial system through" the end of the year. He added: "I think we will see a little bit more pressures in the repo markets." "I feel like we're well positioned in terms of the liquidity and the tools that we have" and there's evidence market participants are already positioning for any issues around the turn of the year, he said. Sign up here. https://www.reuters.com/markets/us/feds-williams-fed-remains-track-cuts-amid-uncertain-outlook-2024-12-20/