2024-10-21 15:16

BRASILIA, Oct 21 (Reuters) - Brazil's central bank chief Roberto Campos Neto on Monday highlighted a "huge" de-anchoring of inflation expectations in the country, adding that it is "very important" to bring inflation back to the 3% target, and policymakers are committed to doing so. Speaking at an event hosted by the 20-20 Investment Association, Campos Neto said tight labor market data indicates the need to closely monitor services inflation. He also reiterated that policymakers chose not to provide monetary guidance to allow time to assess the evolving scenario. Campos Neto said consumer prices in Latin America's largest economy had been converging with the central bank's target, but that the trend had recently stalled. He also noted that both market and company surveys show expectations drifting away from the official inflation target, a move also reflected in inflation implied by market prices. "Because we're seeing this huge de-anchoring ... the central bank decided it was time to initiate the cycle," he said, referring to the central bank's decision to hike its key interest rate by 25 basis points to 10.75% last month. "And again, we think it's very important to make inflation converge (with the target). That's our job. That's our mission. That is determined by the government, and we will do that," he added. The central bank's next monetary policy meeting takes place in November, and bets embedded in the yield curve point to an accelerated tightening, with an upcoming 50-basis-point rate hike. Campos Neto said it "remains a puzzle" why the labor market has continued to be strong despite high borrowing costs, noting that fiscal stimulus explains only part of this phenomenon. He stressed that Brazil's economic growth has consistently surprised on the upside for a long time, with part of this strength coming from structural reforms implemented over the past five to 10 years. "Obviously, there is a growing concern in Brazil that part of this is the fiscal (impact), and I think it is, but I think there is also a structural element that's there," he said. Sign up here. https://www.reuters.com/markets/brazil-central-bank-chief-highlights-huge-deanchoring-inflation-expectations-2024-10-21/

2024-10-21 15:09

NEW YORK, Oct 21 (Reuters) - Global hedge funds have shown "a strong preference" for stocks that could perform well if Republican presidential candidate Donald Trump wins the election, JPMorgan (JPM.N) , opens new tab said in a note late last week analyzing how positioning is changing ahead of the nomination. "In general, net flows year-to-date have been quite correlated to Trump's odds," said the bank, adding "there is room for a bit of disappointment and reversal in coming weeks if odds start to shift the other way." Democratic candidate Kamala Harris led Trump by a marginal 45% to 42% in a Reuters/Ipsos poll released on Tuesday, with the gap between both candidates remaining steady. Some other national polls have showed the gap between candidates narrowing. Trump has taken the lead in online prediction markets, with a 60% chance of winning the race on Polymarket. Over the past few weeks, portfolio managers bought assets in some themes that could benefit from a Republican government, according to JPMorgan's positioning intelligence unit, which tracks hedge funds' portfolios. Meanwhile, hedge funds sold assets that could perform well under a Democratic government. As an example, JPMorgan mentioned renewable energy, which "sold very quickly in past couple weeks as Trump’s odds jumped." The Republican candidate has laid out an energy policy platform that opposes president Joe Biden's clean energy agenda. Hedge funds have been buying crypto stocks strongly, but positioning is neutral. Trump has positioned himself as pro-cryptocurrency and has unveiled a new crypto business, World Liberty Financial. JPMorgan did not entirely detail the components of its Republican and Democratic baskets. The bank did not immediately respond to a Reuters request for more information. Some hedge funds have been more vocal about their trades leaning on a Trump win. Billionaire investor Daniel Loeb has adjusted Third Point's portfolio to capture a potential boom in corporate activity if the Republican candidate wins the election, according to a letter seen by Reuters. Sign up here. https://www.reuters.com/markets/hedge-flow-hedge-funds-side-with-trump-trades-equities-says-jpm-2024-10-21/

2024-10-21 14:35

LONDON, Oct 21 (Reuters) - Bank of England interest rate-setter Megan Greene said she still believed the central bank should take a cautious approach to cutting borrowing costs. Greene, writing in a column published in the Financial Times on Monday, said it was possible that consumption could be stronger or weaker than expected. "Given these risks, I believe a cautious, gradual approach to monetary easing is appropriate," she wrote. Greene said in September the BoE should take a cautious approach to cutting borrowing costs due to the risk of longer-term inflation pressures. BoE Governor Andrew Bailey said earlier this month that the BoE could move more aggressively to cut interest rates if inflation pressures continued to weaken. Data last week showed British inflation fell below the BoE's 2% target and underlying inflation pressures, which are closely watched by the central bank, also dropped. Investors are pricing a quarter-point cut in Bank Rate as a near certainty at the BoE's November meeting and they are also betting heavily on another 25 basis-point reduction in December. Sign up here. https://www.reuters.com/world/uk/boes-greene-sticks-view-that-rate-cuts-should-be-gradual-2024-10-21/

2024-10-21 14:24

Oct 20 (Reuters) - Jeff Bezos-backed Perplexity AI has begun fundraising talks in which it is looking to more than double its valuation to $8 billion or more, the Wall Street Journal reported on Sunday. Perplexity has told investors it is looking to raise around $500 million in the new funding round, the Journal reported citing people familiar with the matter. The Nvidia-backed artificial intelligence (AI) company's estimated annualized revenue based on recent sales is currently about $50 million, the report added. Perplexity AI declined to comment. In October the startup said it had received a "cease and desist" notice from the New York Times demanding it to stop using the newspaper's content for generative AI purposes. Perplexity has previously faced accusations from media organizations such as Forbes and Wired for plagiarizing their content, but has since launched a revenue-sharing program to address some concerns put forward by publishers. Perplexity's search tools enable users to get instant answers to questions with sources and citations. It is powered by a variety of large language models (LLMs) that can sum up and generate information, from OpenAI to Meta's open-source model Llama. Sign up here. https://www.reuters.com/technology/artificial-intelligence/perplexity-ai-funding-talks-more-than-double-valuation-8-bln-wsj-reports-2024-10-20/

2024-10-21 13:53

Oct 21 (Reuters) - (This Oct. 21 story has been refiled to say that the firm's total strategies is $35 billion, not 'over $30 billion,' in paragraph 3) Brevan Howard does a significant amount of its crypto trading from the United Arab Emirates because of the country's "sensible regulations," an executive from the hedge fund told the AIM conference in Dubai on Monday. "The regulators in the UAE are hard, but they want the industry to fly and so they write sensible regulations and they are prepared to talk to the industry in order to evolve those regulations," Ryan Taylor, group head of compliance at hedge fund Brevan Howard, said during a panel on hedge fund trends and strategies. Taylor said that Brevan Howard's crypto trading operations represented about $2 billion of the firm's total strategies which he said was $35 billion. Beyond saying the UAE share of trading was significant, he did not give any precise indication. "We're also seeing new opportunities, such as those that are happening here in the UAE, whether it's from the equity market or other opportunities, and we're really all excited about that," Brandon Robinson, deputy head of private markets at JPMorgan Asset Management, said during the same debate. Robinson, who oversees a department at JPMorgan that invests in some hedge funds, said the bank was talking to a number of managers in the area. "The growth has been unprecedented. We thought the growth was up last year. It's been just the same again," said Jonathan Beardall, head of wealth and asset management at the Dubai International Financial Centre Authority (DIFC). Dubai has 65 hedge funds registered in the city centre and that number would increase to 70 in the next few weeks, Beardall said. Hedge funds trading on macro economics were up 3.6% for the year to the end of September, compared with the same period last year, hedge fund research firm Pivotal Path found. Sign up here. https://www.reuters.com/technology/brevan-howard-says-significant-amount-its-crypto-trading-done-uae-2024-10-21/

2024-10-21 12:48

LONDON, Oct 21 (Reuters) - The European Union, rushing to develop a 9 million euro joint purchasing mechanism for critical minerals and energy, is choosing between eight bidders vying to develop a platform, documents showed and sources with direct knowledge told Reuters. The bloc's rationale for pooling together buying orders is that it would hand participants more leverage to achieve more favourable deals and prices for critical minerals essential for the green transition that trade in thin and opaque markets often dominated by China. The EU aims to sign a contract by the end of the year and start developing sections of the platform for individual products early next year, an EU source who declined to be named told Reuters. The winner of the tender would be paid about 9 million euros to set up and hand over a platform to the EU, documents seen by Reuters showed. The eight bidders include major consulting groups Deloitte and PricewaterhouseCoopers (PwC), both of which declined to comment. Germany's Metalshub , opens new tab and Enmacc , opens new tab submitted a joint bid, telling Reuters they propose to use their existing trading platforms for metals and energy for the EU project. EU Commission spokesperson Johanna Bernsel said an online consultation with 66 responses showed industry backing for the initiative. "Overall, the survey revealed wide support for setting up a demand aggregation and matchmaking platform for strategic raw materials." EU officials are hurrying to develop the initiative, a key element in the EU's Critical Raw Materials Act (CRMA), on a mandate of Commission President Ursula von der Leyen, another source said. "The imperative comes from the very top. Von der Leyen ... wants people to move quickly," said the source, who also declined to be named as they were not authorised to speak publicly. The CRMA, which came into force in May, aims to boost domestic production and processing of critical minerals, whilst weaning off dependence on China. SUPPLY CHAINS IN PLACE Some possible users, however, say they already have supply chains in place for key inputs such as lithium and cobalt for electric vehicle batteries. "Larger companies that have already established their supply chains for critical raw materials, such as battery raw materials, are unlikely to use this platform," said Karol Bednarek, raw materials consultant with the German auto industry association VDA. The platform may be useful, however, for sourcing materials certified as sustainable or niche materials such as germanium and gallium, he added. The EU initiative is positive, but also has potential pitfalls, said the Spanish Association of Automotive Suppliers. "Automotive suppliers typically source processed raw materials of very specific grades that require certification, which makes bundling demand more challenging," Carolina López, head of sustainability for the group, told Reuters. CEO Vincent Yang of Taiwanese battery maker ProLogium Technology Co said its cathode material suppliers have already signed procurement agreements with mineral producers. ProLogium, in which Mercedes-Benz (MBGn.DE) , opens new tab is an investor, plans to launch a 5.2 billion euro gigafactory in France in 2027 to produce its next-generation EV batteries. Any platform must protect data regarding the specifics of what each buyer is requesting, which could expose trade secrets, Yang and other industry sources said. MINERALS AND ENERGY? The EU has targeted critical minerals - vital for the energy transition for EVs and wind turbines - as a key sector to strengthen as the bloc seeks to achieve net zero carbon emissions by 2050. But combining 17 critical minerals plus natural gas and hydrogen in the same platform would not work because the markets are very different, several industry sources said. The new system is being patterned after an existing platform for joint buying of gas, AggregateEU, which was launched during the energy crisis in 2022. The EU says it has been a success, but a report , opens new tab by the European Court of Auditors questioned the effectiveness of the platform. Sign up here. https://www.reuters.com/markets/commodities/eu-set-choose-firm-critical-minerals-joint-buying-platform-2024-10-21/