2024-12-18 20:13

SAO PAULO, Dec 18 (Reuters) - Brazil's Congress reached an agreement to reject stricter rules for the so-called BPC, a social benefit for the elderly and disabled, newspaper Valor Economico reported on Wednesday. The adjustments in BPC were part of the fiscal package that is being voted this week by the Congress. Sign up here. https://www.reuters.com/world/americas/brazilian-lawmakers-stand-against-stricter-rules-social-benefit-bpc-says-local-2024-12-18/

2024-12-18 20:05

NEW YORK, Dec 18 (Reuters) - Federal Reserve Chairman Jerome Powell said Wednesday it's too soon to say what President-elect Donald Trump's proposed economic policies will do to the economy and how that might bear on the central bank's policy choices. At this point, "it’s very premature to make any kind of conclusions. We don’t know what will be tariffed, from what countries, for how long, in what size," Powell said in a press conference following the latest Federal Open Market Committee meeting. "We need to take our time, not rush” and see what the new president delivers, Powell said, amid economists' expectations that tariffs and deportations favored by Trump are likely to push inflation higher. Sign up here. https://www.reuters.com/markets/us/feds-powell-not-ready-say-what-trump-policies-will-do-economy-2024-12-18/

2024-12-18 19:49

Plaintiffs invested in company that bought Brooge Brooge agreed settlement over US SEC fraud charges in 2023 Ernst & Young audited Brooge Dec 18 (Reuters) - Some shareholders in Brooge Energy have filed a fraud complaint in the United States against Ernst & Young, alleging the auditor failed to identify fabricated revenues in two years of the oil storage firm's annual reports. The plaintiffs are Stephen Cannon, Bryant Edwards and Neil Richardson, who were investors in a so-called special purpose acquisition company (SPAC) that bought Brooge in 2019, according to the filing with the United States District Court in the Southern District of New York. The plaintiffs allege Brooge fabricated revenues amounting to tens of millions of dollars and that Ernst & Young's audit of the company was fraudulent. Ernst & Young said it is unable to comment on legal proceedings. Brooge also did not respond to an email seeking comment. Brooge agreed to a settlement with the U.S. Securities and Exchange Commission in 2023 over fraud charges, which involved paying a $5 million penalty. "The fundamental financial picture presented by Brooge to plaintiffs was a fraud: in fact, Brooge fabricated between 30% and 80% of its 2018, 2019 and 2020 revenues," the filing said. "Brooge could not have effectuated this scheme without critical support from Ernst & Young." Brooge, an oil-storage leasing company based in the United Arab Emirates' Fujairah, was set up in 2013 and counts Mohammed bin Khalifa, the eldest son of the previous president of the UAE, among its shareholders. Brooge's shares closed at $1.585 on Tuesday, down from a peak of $12.99 in March 2020. The board of Dubai-listed shipping firm Gulf Navigation (GNAV.DU) , opens new tab in September approved an acquisition of companies and assets owned by Brooge, including a capital increase, according to UAE state news agency WAM. One of Brooge's lines of business was with Coral Energy Pte. Ltd., according to the filing. Coral was later rebranded as 2Rivers and was sanctioned by Britain on Tuesday for allegedly playing a key role in the Russian oil trade. Sign up here. https://www.reuters.com/legal/brooge-energy-investors-file-fraud-complaint-against-ernst-young-2024-12-18/

2024-12-18 19:27

Brazil's real posts largest daily decline since November 2022 Brazilian markets hit by strong US dollar after Fed cuts rates but signals caution NEW YORK/LONDON, Dec 18 (Reuters) - Brazil's real tumbled by the most in over two years to a fresh record low on Wednesday and stocks were also under pressure as financial markets put the Brazilian government's spending plans and wide budget deficit to the test. The local currency hit its weakest-ever mark of 6.3139 to the dollar before closing down 2.9% at 6.2896. It was its largest daily decline since November 2022. The currency earlier closed for trading locally at 6.26, down 2.7%. Further weighing on the real late in the session, the U.S. Federal Reserve cut interest rates on Wednesday and signalled it will slow the pace at which borrowing costs fall, strengthening the dollar across the board. The benchmark Bovespa stock index (.BVSP) , opens new tab closed at a six-month low, down 3.15% in its largest daily percentage drop since November 2022. The cost of insuring exposure to the country's bond debt was at a 14-month high, with investors anxious as Latin America's largest economy faces a deepening financial market crisis. Investors have been doubtful whether lawmakers will be able to pass the main part of a fiscal bill aimed at putting government finances on a more sustainable footing. "Markets are mainly worried about the overall fragile fiscal trajectory and the fact that it is affecting inflation expectations via the pressure on the real," said Thomas Haugaard, portfolio manager at Janus Henderson in Copenhagen. "Often we have to see the market revolting before painful adjustments come, but for now it does not look like there will be a fiscal response to the recent turmoil." Congress late on Tuesday approved the main text of a bill but has yet to vote on some amendments proposed by lawmakers, while Finance Minister Fernando Haddad said Wednesday the Senate is ready to vote on the bill as soon as Congress sends it. "We are doing our part: sending (Congress) the measures, working to make sure they are not watered down, and convincing people these measures are needed to strengthen the fiscal framework," Haddad said. Brazil's central bank held spot U.S. dollar auctions for the third consecutive session on Tuesday and reaffirmed its tough monetary policy stance. "The central bank hiked more than expected and have been intervening in the currency so they are doing their part," said Shamaila Khan, head of fixed income for emerging markets and Asia Pacific at UBS Asset Management. The local sovereign bond benchmark yield closed at 14.77% on Wednesday, having on Tuesday hit 14.847%, the highest since March 2016. The yield started the year around 10.5%. "At this point the bar is very, very low for a positive fiscal surprise," said Arif Joshi, co-head of the emerging markets debt platform at Lazard Asset Management. He said fiscal consolidation must move beyond bets that stronger growth will make the fiscal side look healthier and into actual spending cuts. "It always starts with baby steps and it builds from there," Joshi said. "We're not looking for the full bazooka, we're looking for baby steps in the right direction." Five-year credit default swaps, the cost to insure against a sovereign default, stood at 194 basis points according to S&P Global Market Intelligence -the most expensive since October 2023. The dollar-denominated MSCI Brazil index has fallen more than 30% since the start of the year. (.MIBR00000PUS) , opens new tab Brazil's nominal budget deficit, including interest payments on public debt, has climbed to 9.5% of GDP from 4.6% when President Luiz Inacio Lula da Silva took office in January 2023. Sign up here. https://www.reuters.com/markets/currencies/brazils-real-hits-record-low-markets-eye-govt-spending-2024-12-18/

2024-12-18 18:43

BUENOS AIRES, Dec 18 (Reuters) - Economic activity in Argentina likely fell in October versus the same month a year earlier, a Reuters poll of market analysts showed on Wednesday, although they also forecast the possibility of month-on-month growth. The median forecast from 12 analysts sees economic activity shrinking 2.5% year-on-year in October, the fifth consecutive month of year-on-year contraction. Estimates ranged from a forecast for a 4.4% contraction to 0.7% growth. Despite the anticipated year-on-year drop, economic activity may have grown in October compared to September, according to the analysts. A year ago, Argentina's economy was "overstimulated" due to higher public spending in the run-up to the country's elections, affecting the year-on-year comparison, said economist Alejandro Giacoia from Econviews consulting firm. Month-on-month data meanwhile shows economic activity growth bottoming out around April, said Giacoia. "It is quite clear there is a certain rebound, although it is not yet so palpable in the streets," the economist said. Consulting firm ABECEB also forecast economic activity to grow in October compared to September. "Tax collection, imports, electricity demand, consumption indicators and also car production and car registrations had positive data in the tenth month of the year," ABECEB said. Looking ahead to coming months, analysts expect economic activity to begin to show signs of greater recovery. "The recovery of wages in a context of a strong deceleration of inflation will help recompose domestic demand, hand in hand with the growth of consumer credit," said the consulting firm Orlando Ferreres & Asociados. Argentina's INDEC statistics agency is scheduled to publish economic activity data for October on Friday afternoon (19:00 GMT). Sign up here. https://www.reuters.com/world/americas/argentina-economic-activity-seen-sliding-october-year-on-year-2024-12-18/

2024-12-18 14:28

Spread widening noticeable but limited - Lane Governments should not expect money falling from sky - Wunsch FRANKFURT, Dec 18 (Reuters) - A surge in market pressure on France due to concern over its budget deficit has been "limited" and part of the normal functioning of euro zone bond markets, the European Central Bank's chief economist Philip Lane said on Wednesday. A series of political crises this year has rattled investors in French government bonds and brought the country's budget problems to the fore, with the premium that buyers demand to own French bonds rising to the highest level since a debt crisis 12 years ago. While the ECB has tools at its disposal to put out any fire in the debt market, Lane seemed to downplay any chance of imminent action to cap the spread between French bond yields and their German counterpart. "What you talk about there, in the end, has been fairly limited," Lane told an event hosted by Market News International. "(It has been) noticeable, trackable, but it's basically part of the design of the euro area that spreads are supposed to respond to evolving beliefs about future fiscal fundamentals." The ECB can deploy its Transmission Protection Instrument to buy any amount of a country's bonds if it finds that there is a unwarranted and disorderly widening in spreads. New French Prime Minister Francois Bayrou said upon his appointment last week that he faced a "Himalaya" of a challenge to tackle France's deficit, which he said was a moral and not just financial question. Many of the euro zone's 20 governments - as well as the United States -- have been running oversized deficits since the pandemic and spending is expected to continue in the coming years, albeit at a lower pace, to support rearmament and the transition to a greener and more digital economy. Speaking about a growing clamour for central banks to support this spending, ECB policymaker Pierre Wunsch said on Wednesday governments should not expect "money falling from the sky". "We're not going to make up for what's difficult on the political front," Wunsch, the Belgian central bank governor, told the Reuters Global Market Forum. "We need to give democracy a chance and not try to find a solution with money falling from the sky. It ends badly." Sign up here. https://www.reuters.com/markets/europe/ecbs-lane-says-market-pressure-france-still-limited-2024-12-18/