2024-11-25 11:07

MADRID, Nov 25 (Reuters) - Basque steelmaker Sidenor has made an offer to buy a 29.9% stake in Spanish train maker Talgo (TLGO.MC) , opens new tab held by global investment fund Trilantic, a source close to the negotiations said on Monday, confirming an earlier report by Expansion newspaper. Neither the source nor the Expansion would disclose the price, but Expansion said it would be above the current market price of 3.375 euros ($3.54) per share, if below the 5 euros Hungarian consortium Ganz-Mavag had offered in a takeover bid earlier. Ganz-Mavag withdrew its offer in August following the Spanish government's opposition to the deal. Trilantic did not immediately respond to a request for comment. Trilantic and other partners own 40.33% in the train maker through holding company Pegaso. ($1 = 0.9528 euros) Sign up here. https://www.reuters.com/markets/deals/spains-sidenor-is-said-make-offer-trilantic-stake-talgo-2024-11-25/

2024-11-25 11:05

Fulcrum LNG lacks experience and financial backing, experts say Guyana officials say selection for gas project now tentative Exxon says it alone will decide whether to tap gas resources HOUSTON/GEORGETOWN, Nov 25 (Reuters) - Doubts are growing over Guyana's pick of a little-known U.S. startup to craft and develop projects to monetize its vast untapped natural gas resources that could cost up to $30 billion. Year-old Fulcrum LNG faces financing hurdles that could derail its selection. Ultimately, the South American nation may end up relying on a consortium led by Exxon Mobil (XOM.N) , opens new tab, which controls all the production in the new energy hotspot. So far the top U.S. oil producer has focused on oil. Guyana has been pressing Exxon to come up with a plan to convert its about 16 trillion cubic feet of gas reserves into valuable exports such as liquefied natural gas (LNG), or relinquish areas where gas has been discovered so they can be developed by others. When Fulcrum was chosen in June, its founder and former Exxon executive Jesus Bronchalo said on LinkedIn he was "delighted and honored" to be selected "to design, finance, construct and operate the required gas infrastructure." Since then, Fulcrum has not identified any financial backers, casting doubt over its ability to pull off the work, and leading government officials to now describe its selection as tentative. "No project has been awarded to anyone. We're in an exploratory phase," Guyana's Vice President Bharrat Jagdeo told Reuters last month. That is a change from the ministry of finance's description of the awarding of the contract as among its economic achievements this year. Guyana's president, who announced the award, said an agreement, that may or may not include Exxon, was expected next year. Meanwhile, the opposition People's National Congress party is skeptical about the award. Fulcrum LNG "lacks requisite experience and a demonstrated ability to raise the type of multi-billion dollar finances required," said Elson Low, an economist and advisor to the PNC. FULCRUM'S LEVERAGE Guyana picked Nevada-registered Fulcrum LNG, which it said offered "the most comprehensive and technically sound proposal," among the 17 bidders, including China's third-largest oil firm CNOOC (600938.SS) , opens new tab, U.S. gas pipeline giant Energy Transfer (ET.N) , opens new tab, and the No. 4 U.S. LNG exporter Venture Global LNG. Ira Joseph, an LNG market expert and senior researcher at Columbia University's Center on Global Energy Policy, said it would be "very difficult" for a startup to raise the financing for a multi-billion-dollar infrastructure project. "Why isn't Exxon building the LNG plant itself? It is very hard to raise that kind of money to make a project work, (Guyana) would have to bring in one of the big players like TotalEnergies (TTEF.PA) , opens new tab or Shell (SHEL.L) , opens new tab," Joseph said. Besides pairing with U.S. oil service Baker Hughes (BKR.O) , opens new tab and construction contractor McDermott (MCDIF.PK) , opens new tab , Fulcrum's proposal would include financing from the U.S. Export-Import Bank and the participation of private equity firms and an environmental partner, the government said. The U.S. Export-Import Bank and McDermott did not reply to requests for comment, and Baker Hughes referred questions to Fulcrum. Bronchalo - who is Fulcrum's CEO, secretary, treasurer, director and president - and the only other person associated with the company, the technical director, did not respond to requests for information. Fulcrum's website does not identify any prior projects, but claims "extensive experience in origination of new opportunities to access and capture global LNG markets." Guyanese officials now say they chose Fulcrum without first determining whether it could raise the money to tap the enormous gas reserves. The technical committee that selected Fulcrum was confident it could raise money for the projects, Jagdeo told Reuters. "They represented they had the capacity to raise the money." Minister of Natural Resources Vickram Bharrat said Bronchalo's expertise, having worked at Exxon in Guyana and Asia for two decades helping to negotiate contracts, swung the selection in his favor. "We don't have the expertise and capability in government, especially when it comes to gas ... we expect Fulcrum will have the capability and experience," he said in an interview in October. COLLABORATION OR CONFLICT Exxon's consortium with Hess (HES.N) , opens new tab and CNOOC has discovered more than 11 billion barrels of oil off Guyana's Caribbean coast since 2015, and produced 500 million barrels of crude from its Stabroek block since 2019, turning the tiny country overnight into a significant global oil producer. So far, Exxon's only planned use for the gas is a small gas-to-power project. The project to develop gas independently was conceived as a way for Guyana to create a new revenue stream apart from the oil, which is entirely exported. Gas would develop the country’s manufacturing and food sectors and help make it a regional energy powerhouse. Last year, the country's take from royalties and fees was $1.6 billion, compared with $6.33 billion in profit that went to the consortium. Exxon's Guyana country manager Alistair Routledge told Reuters the company would make a decision on tapping newer discoveries containing mostly gas by mid-2025. Fulcrum "may have better data and more knowledge than the government to push Exxon in that direction," said Guyana's vice president. Jagdeo said Guyana wants Fulcrum to work with Exxon, but would push forward with or without it. If, however, Exxon does not act on the discoveries or auction the acreage to others willing to develop the gas, Guyana could claw back some offshore land, he said. The oil major, on the other hand, believes it alone can decide how to use that gas, a person familiar with the company's position said, citing the agreement it has with Guyana. "Exxon did indicate that they are interested in the development of gas, but as the talks continue, we will see how much commitment is there in regards to gas," Minister Bharrat said. Sign up here. https://www.reuters.com/markets/commodities/guyanas-pick-new-us-startup-faces-hurdles-tap-vast-gas-reserves-2024-11-25/

2024-11-25 11:02

Farm industry warns Trump's deportation plans could upend food supply Nearly half of US farm workers lack legal status Farmers seek expanded legal pathways for agricultural laborers WASHINGTON, Nov 25 (Reuters) - U.S. farm industry groups want President-elect Donald Trump to spare their sector from his promise of mass deportations, which could upend a food supply chain heavily dependent on immigrants in the United States illegally. So far Trump officials have not committed to any exemptions, according to interviews with farm and worker groups and Trump's incoming "border czar" Tom Homan. Nearly half of the nation's approximately 2 million farm workers lack legal status, according to the departments of Labor and Agriculture, as well as many dairy and meatpacking workers. Trump, a Republican, vowed to deport millions of immigrants in the U.S. illegally as part of his campaign to win back the White House, a logistically challenging undertaking that critics say could split apart families and disrupt U.S. businesses. Homan has said immigration enforcement will focus on criminals and people with final deportation orders but that no immigrant in the U.S. illegally will be exempt. He told Fox News on Nov. 11 that enforcement against businesses would "have to happen" but has not said whether the agricultural sector would be targeted. "We've got a lot on our plate," Homan said in a phone interview this month. Mass removal of farm workers would shock the food supply chain and drive consumer grocery prices higher, said David Ortega, a professor of food economics and policy at Michigan State University. "They're filling critical roles that many U.S.-born workers are either unable or unwilling to perform," Ortega said. Farm groups and Republican allies are encouraged by the incoming administration's stated focus on criminals. Dave Puglia, president and CEO of Western Growers, which represents produce farmers, said the group supports that approach and is concerned about impacts to the farm sector if a deportation plan was targeted at farmworkers. Trump transition spokesperson Karoline Leavitt did not directly address the farmer concerns in a statement to Reuters. "The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail, like deporting migrant criminals and restoring our economic greatness," Leavitt said. "He will deliver." Trump announced on Saturday that he would nominate Brooke Rollins, who chaired the White House Domestic Policy Council during his first term, to become agriculture secretary. Agriculture and related industries contributed $1.5 trillion to the U.S. gross domestic product, or 5.6%, in 2023, according to the U.S. Department of Agriculture. In his first administration, Trump promised the farm sector that his deportation effort would not target food sector workers, though the administration did conduct raids at some agricultural worksites, including poultry processing plants in Mississippi and produce processing facilities in Nebraska. U.S. Representative John Duarte, a Republican and fourth-generation farmer in California's Central Valley, said farms in the area depend on immigrants in the U.S. illegally and that small towns would collapse if those workers were deported. Duarte's congressional seat is one of a handful of close races where a winner has yet to be declared. Duarte said the Trump administration should pledge that immigrant workers in the country for five years or longer with no criminal record will not be targeted and look at avenues to permanent legal status. "I would like to hear more clearly expressed that these families will not be targeted," he said. 'WE NEED THE CERTAINTY' Farmers have a legal option for hiring labor with the H-2A visa program, which allows employers to bring in an unlimited number of seasonal workers if they can show there are not enough U.S. workers willing, qualified and available to do the job. The program has grown over time, with 378,000 H-2A positions certified by the Labor Department in 2023, three times more than in 2014, according to agency data. But that figure is only about 20% of the nation's farm workers, according to the USDA. Many farmers say they cannot afford the visa's wage and housing requirements. Others have year-round labor needs that rule out the seasonal visas. Farmers and workers would benefit from expanded legal pathways for agricultural laborers, said John Walt Boatright, director of government affairs at the American Farm Bureau Federation, a farmer lobby group. "We need the certainty, reliability and affordability of a workforce program and programs that are going to allow us to continue to deliver food from the farm to the table,” said John Hollay, director of government relations at the International Fresh Produce Association, which represents produce farmers. For decades, farm and worker groups have attempted to pass immigration reform that would enable more agricultural workers to stay in the U.S., but the legislation has failed so far. The risk of enforcement against farms is likely low because of the necessity of the workers, said Leon Fresco, an immigration attorney at Holland & Knight. "There are some very significant business interests that obviously want agricultural labor and need it," he said. But for farmworkers, the fear of enforcement can create chronic stress, said Mary Jo Dudley, director of the Cornell Farmworker Program, which is training workers to know their rights if confronted by immigration officials. If there are again raids on meatpacking plants, immigration enforcement should take precautions to avoid detaining workers in the country legally, said Marc Perrone, international president of the United Food and Commercial Workers union, which represents some meatpacking workers. Edgar Franks, a former farmworker and political director at Familias Unidas por la Justicia, a worker union in Washington state, said the group is seeing new energy from workers to organize. "The anxiety and fear is real. But if we're together, there’s a better chance for us to fight back," he said. Sign up here. https://www.reuters.com/world/us/us-farm-groups-want-trump-spare-their-workers-deportation-2024-11-25/

2024-11-25 11:01

Nov 25 (Reuters) - Donald Trump on Friday said he would nominate Scott Bessent to be the 79th U.S. Treasury secretary and frontman for the president-elect's aggressive economic policies, a slate that financial markets already anticipate will add to economic growth in the near term but also rekindle inflation. Here are five charts sensitive to that agenda that the incoming cabinet official may want to keep on his radar: BALLOONING US DEBT The U.S. is already more than $35 trillion in debt, with roughly $28 trillion of that floated in the global bond market in the form of U.S. Treasury securities. Total debt grew by more than $7.8 trillion in Trump's first term, with Treasury debt rising by $7.2 trillion. Under President Joe Biden, total debt is up by a further $8.2 trillion, including nearly $7 trillion of new Treasury market debt. Those totals, according to the latest baseline forecast from the Congressional Budget Office - which does not take into account Trump's ambitions for additional tax cuts and tariffs - are expected to rise to about $42 trillion and $35 trillion, respectively, by the end of 2028 just before the Republican president-elect's second term in the White House expires. Often touted as the safest asset pool on Earth, the Treasury market nonetheless has grown increasingly sensitive to the rapid growth of the federal debt, with concerns over just how much longer global investors will be willing to fund the country's liabilities at advantageous interest rates. DEFICIT OUTPACING GROWTH In light of Trump's desire to lower taxes, which is likely to reduce tax revenues, Bessent will have to hope the cuts stimulate economic growth that outpaces growth in the federal budget deficit. Bessent has said he would like to reduce the deficit as a share of gross domestic product to 3%. For fiscal 2024, which ended on Sept. 30, it was 7.8% of real - or inflation-adjusted - GDP. It has not been 3% or below since 2015 during the Obama administration. In Trump's first term, it ranged from 3.4% in fiscal 2017 to 15.2% in fiscal 2020, a year when COVID-19 pandemic relief spending blew out the deficit. The CBO's projection underestimated the actual deficit-to-GDP ratio in 2024, but its baseline forecast estimates it at 6.1% next year and 5.6% just before Trump leaves office. It then starts to expand again beginning in 2030. INTEREST ON THE DEBT Federal debt service costs topped $1 trillion in fiscal 2024 for the first time on a combination of more debt and higher interest rates resulting from two years of Federal Reserve rate increases to rein in inflation. Interest on the debt in the last fiscal year was exceeded only by the Social Security retirement program as a spending line item. And, even as the Fed has started cutting interest rates, Treasury yields have risen notably in the last two months in anticipation of much of Trump's agenda taking effect - and the country's borrowing costs have continued rising with them. So far, recent auctions of new U.S. bonds have been well bid, but that is not guaranteed should the market size continue its rapid growth. RED-HOT GREENBACK The U.S. dollar has been on a tear, climbing more than 7% since late September against a basket of major trading partners' currencies, and is at its strongest level in about two years. A strong dollar will help mute some of the inflationary impetus of the Trump economic agenda, with currency effects making imported goods cheaper. But it will make U.S. exports less attractive, complicating any effort to put a dent in the trade deficit even with the expanded slate of tariffs Trump has in mind to slow the flow of imports. THAT PESKY FED Bessent will be the chief liaison between the Fed and the administration. Fed Chair Jerome Powell meets most weeks with the Treasury secretary - now Janet Yellen and Steven Mnuchin before her - giving the new secretary ample opportunity to offer views on what is going on with Fed policy, particularly interest rates. Trump famously soured on Powell soon after elevating him from Fed governor to the U.S. central bank's chief because Powell continued with a rate-increasing regime begun by his predecessor, who happened to be Yellen. As Trump takes office this time, the Fed is in the process of lowering rates - but perhaps not as much as central bank officials themselves had anticipated just two months ago and perhaps also not as much as Trump would like to see. That's because inflation is again proving to be a bit slower in returning to the Fed's 2% target, and the job market - the other focus of the dual mandate assigned it by Congress - remains pretty healthy. Powell's term as chair expires in May 2026, and if history is a guide, Bessent could be an influential voice advising Trump on who next to pick to lead the central bank. Earlier this year Bessent floated the idea of nominating Powell's successor as early as possible to undercut Powell's authority - a so-called "shadow chair" appointment - but he has since backed away from the idea. Sign up here. https://www.reuters.com/markets/us/five-key-charts-new-treasury-secretary-watch-2024-11-25/

2024-11-25 10:54

LONDON, Nov 25 (Reuters) - Britain's roads and railways were hit by closures on Monday after Storm Bert battered the country over the weekend, causing widespread flooding and killing four people. There were more 200 flood warnings and flood alerts in place across England and Wales, while trains from London to the southwest were cancelled and rail services in central England were severely disrupted. "Do not attempt to travel on any route today," Great Western Railway, whose trains connect London to Bristol and Cornwall, said on X. Among those killed during the storm were a dog walker in North Wales and a man who died when a tree hit his car in southern England. Major roads in Northamptonshire and Bristol were closed, while fallen trees on rail lines cut off services between London and Stansted Airport, Britain's fourth busiest hub. The disruption comes after Storm Bert hit Britain late on Friday, bringing snow, rain and strong winds. The Met Office kept a warning for strong winds in place for northern Scotland on Monday and said the storm would clear from that part of the country early on Tuesday. Sign up here. https://www.reuters.com/world/uk/uk-travel-disrupted-storm-bert-fallout-continues-2024-11-25/

2024-11-25 10:41

BoE's Lombardelli makes first speech as MPC member She sees broadly balanced risks to inflation Upside risk scenario is more cause for worry, Lombardelli says Too soon to read much into bad PMI readings But BoE could have to respond if deterioration continues LONDON, Nov 25 (Reuters) - Bank of England Deputy Governor Clare Lombardelli said on Monday she was more worried about the risk that inflation comes in higher - not lower - than the central bank has forecast as she made the case for only gradual reductions in interest rates. Lombardelli, making her first speech since joining the BoE in July, said recent downbeat business surveys suggested that inflation could cool while strong wage growth posed a threat in the opposite direction. She said she thought those risks were balanced. "But at this point I am more worried about the possible consequences if the upside materialised, as this could require a more costly monetary policy response," Lombardelli told a conference organised by King's Business School. Sterling rose by around a tenth of a cent as Lombardelli spoke. The BoE has lowered rates twice since August, taking it to 4.75% from a 16-year high of 5.25%, less than cuts by the European Central Bank and the U.S. Federal Reserve due mostly to concerns about inflation pressure in the UK jobs market. Most of the Monetary Policy Committee's members also support gradual cuts to interest rates and Lombardelli's concerns about the risk of higher-than-expected inflation suggest she might be close in her views to BoE Chief Economist Huw Pill who this month warned that pay growth remained stuck at a high level. By contrast, another deputy governor, Dave Ramsden, said last week that inflation could undershoot the BoE's latest forecasts, potentially requiring faster cuts. Financial markets expect around three BoE interest rate reductions between now and the end of next year, compared with around six for the ECB and four for the Fed. Lombardelli said a scenario where wage growth eases to around 3.5%-4% and inflation stabilises at around 3% rather than the BoE's 2% target would be more costly to address, if that became the "new normal" expectation for firms and consumers. Some economists think Britain's inflation rate could rise to 3% in early 2025 after coming in stronger than expected in October. Preliminary purchasing manager index reports published last week suggested a slowing of Britain's economy but Lombardelli said she did not take a strong signal from a single release of data. The BoE would have to watch for the risk of a further deterioration, she said, adding later that weakness in the euro zone was likely to affect Britain's economy. "Given the lags in policy it would be important not to act late if the economy moved in this direction," she said. Swati Dhingra, who has stressed the downside risks to Britain's economy more than any other MPC member, was due to speak at around 1030 GMT. Lombardelli, who is in charge of reforming the BoE's forecasting and analysis processes after a report from former Fed chair Ben Bernanke, said an overhaul was needed and there would be "nose to tail" changes. The BoE was already making progress in modernising its technology and data processing, and had introduced scenarios into its forecasting. But she acknowledged that there was a long way to go, she said. "This programme is going to take time to work through – years not months," Lombardelli said. Sign up here. https://www.reuters.com/world/uk/bank-englands-lombardelli-says-inflation-could-go-above-forecast-2024-11-25/