2025-09-22 21:21
ORLANDO, Florida, Sept 22 (Reuters) - Wall Street rose to new highs on Monday, lifting global stocks to fresh peaks in the process as investors cheered the latest multi-billion-dollar agreement - one of the biggest - in the booming U.S. tech and artificial intelligence space. More on that below. In my column today I look at how, by some measures, U.S. pension funds and households hold record amounts of equities. This is good news right now as stocks continue to outperform bonds. But can it last? Sign up here. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Today's Talking Points: * U.S. immigration The Trump administration's immigration crackdown is not just on the lower-skilled, lower-income end of the foreign worker spectrum at the country's southern border - the new $100,000 fee for H-1B visas targets highly-skilled workers in specialty fields, mainly from India and China. Tech could be hit hardest. Setting aside the politics, the macroeconomic impact of tighter immigration controls is negative. If GDP growth is the increase in labor supply plus the productivity growth of those extra workers, then less immigration equals less growth. And it looks like workers at both ends of the skills spectrum are in the administration's sights. * AI spend frenzy The recent flurry of agreements and tie-ups between U.S. tech firms exploded on Monday with chipmaker Nvidia committing to invest up to $100 billion in OpenAI. It's the latest example of companies pouring billions of dollars into securing and expanding capacity for powerful cloud computing required to develop and power complex AI technology. Nvidia shares, the semiconductor and tech sectors, and Nasdaq and S&P 500 indices leaped to new highs. These are huge investments that raise the bar on future returns, potentially a headwind for markets in the months or years ahead. But not today. * Politics and Palestine It may not be a global market-mover, but it's a moment in global political history. As global leaders converge on New York this week for the U.N. General Assembly, Britain, France and many other countries have recognized or are expected to formally recognize a Palestinian state. Israel and the U.S. have rejected the notion out of hand, and U.S. President Donald Trump will address the U.N. on Tuesday. For investors, the most significant aspect of this may be how it affects U.S. relations with other major countries over the longer term. U.S. savers go all in on 'cult of equity' U.S. pension funds and households have never held more equities as a share of their overall assets, by some measures, raising questions about whether the long-term shift towards stocks has run its course or whether investors have truly undergone a paradigm shift. There are compelling arguments on both sides of that debate, but what's not in dispute are the numbers. The share of stocks in U.S. private sector defined contribution (DC) pension plans is now approaching 70%, while equities as a share of U.S. households' financial assets is a record 45.4%. John Higgins, chief markets economist at Capital Economics, notes that DC pension plans' equity exposure is the highest in at least 75 years. This largely reflects the decades-long shift away from defined benefit (DB) schemes, where the risk of retirement savings lies with the employer, and toward DC plans, where employees assume more of the burden. Broadly speaking, DB plans tend to invest more in bonds, especially long-dated ones, to match the funds' longer-dated liabilities, while DC plans are equity-heavy, as individuals don't have liabilities to match and so will be more likely to lean towards stocks offering higher returns – and higher risk. In the 1950s, more than 90% of all U.S. pensions were DB plans, and less than 20 years ago the split was roughly 50-50. But now, almost 80% are DC plans. In that sense, investors are in a brave new world – and it could be an increasingly risky one, given that DC plans are so highly exposed to Wall Street at a time when U.S. stock market valuations are looking stretched. FLAGGING RISKS From a returns perspective, overloading on stocks makes sense for long-term investors because equities usually outperform bonds, especially over the long run. By some measures, that performance gap is widening, according to figures from Truist Advisory Services' chief markets strategist Keith Lerner and his team. As of August, the S&P 500's trailing one-year annualized return was nearly 16%, compared with the Bloomberg aggregate bond index's returns of just over 3%. The 12.7 percentage point gap is in the 68th percentile going back seven decades. Moreover, the S&P 500's returns advantage when measured on a rolling three- and five-year basis is in the 93rd and 95th percentiles, respectively. How long can equities sustain that level of outperformance over bonds? NOT SO 'RISK-FREE' The answer may be "a while". The near 40-year bull market in bonds appears to be over. Worries about inflation remain, the U.S. federal deficit and public debt are rising, and pension funds' appetite for long-dated bonds may no longer be as voracious as it once was. In short, bonds don't appear quite so 'risk-free' any more. If stocks do continue to outperform over the long term, that's obviously great news for future retirees with portfolios heavily weighted in that direction. The danger, of course, is the stock market can fall sharply and very quickly, wiping out large swathes of savings for people just about to retire. It's also true that many people reduce their exposure to equities in favor of bonds as they near retirement, although that may become less prevalent in the context of a wider paradigm shift in how bonds are viewed. There's no indication that any dramatic equity market correction is on the horizon, though investors are conscious of how expensive stocks are getting. Still, they keep buying. Although valuations are "unambiguously high by historical standards", Deutsche Bank analysts just raised their year-end S&P 500 target to 7,000 from 6,550 and next year's earnings per share forecast. "High allocations to equities don't necessarily mean another major correction in the stock market is imminent. Indeed, our forecast is that the S&P 500 will make further gains this year and next, as enthusiasm for AI continues to grow," says Capital Economics' Higgins. "But high allocations to equities may be flagging trouble ahead." That's true. But as long as equities keep providing the returns and outperforming bonds, prospective retirees will keep ploughing their pension savings into them. What could move markets tomorrow? Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles , opens new tab, is committed to integrity, independence, and freedom from bias. https://www.reuters.com/business/global-markets-trading-day-graphic-2025-09-22/
2025-09-22 21:13
SAO PAULO, Sept 22 (Reuters) - Brazil's government will need to tighten spending curbs in order to comply with its fiscal framework this year, it said in a bimonthly revenue and expenditure report published on Monday. The report, released by the Planning and Finance ministries, showed the spending block will now amount to 12.1 billion reais ($2.27 billion), up from 10.7 billion reais in the previous report published in July. Sign up here. Latin America's largest economy targets a zero primary deficit this year, but with a tolerance band of 0.25% of gross domestic product in either direction, meaning that a 31 billion real deficit would still allow it to meet the target. The government estimated Brazil's primary deficit to reach 30.2 billion reais this year, wider than a previously estimated 25.6 billion reais but still within target. Brazil's 2025 primary spending forecast remained virtually unchanged at 2.42 trillion reais, while its net revenue projection was revised slightly down to 2.34 trillion reais, from 2.35 trillion reais. ($1 = 5.3360 reais) https://www.reuters.com/world/americas/brazil-tightens-spending-curbs-meet-fiscal-targets-2025-09-22/
2025-09-22 21:10
Sept 22 (Reuters) - Hurricane Gabrielle has intensified into a Category 4 hurricane, the U.S. National Hurricane Center said on Monday. Hurricane Gabrielle is located about 180 miles (290 km)east-southeast of Bermuda, with maximum sustained winds of 140 mph (220 kmph), the Miami-based forecaster added. Sign up here. NHC said little significant change in strength is forecast tonight, and Gabrielle is expected to gradually weaken on Tuesday and Wednesday. In its latest advisory, the forecaster noted that swells generated by Gabrielle will continue to affect Bermuda and the east coast of the United States from North Carolina northward, as well as Atlantic Canada, during the next couple of days. https://www.reuters.com/business/environment/gabrielle-strengthens-into-category-4-hurricane-nhc-says-2025-09-22/
2025-09-22 20:41
LONDON, Sept 22 (Reuters) - The governments of Britain and the United States will set up a body to reduce red tape for firms seeking to access capital markets on both sides of the Atlantic and improve cooperation on crypto assets, Britain's finance ministry said on Monday. The Transatlantic Taskforce for Markets of the Future will report back within 180 days on ways to enhance collaboration in the short term and on longer-term options, including in wholesale digital markets, the Treasury said. Sign up here. Creation of the taskforce was approved by British finance minister Rachel Reeves and U.S. Treasury Secretary Scott Bessent last week when President Donald Trump made a state visit to Britain. U.S. and UK finance ministry officials will chair the new body that will also include regulators from both countries. Britain's financial services industry has struggled to maintain its pre-eminence in Europe after the Brexit vote in 2016, and many companies have moved their primary stock market listing to the United States. To try to boost its digital assets industry, Britain has sought to align its approach to crypto to that of the U.S. by using existing regulation to regulate the sector instead of creating new rules, as the European Union has done. https://www.reuters.com/sustainability/boards-policy-regulation/uk-us-smooth-capital-markets-access-crypto-cooperation-2025-09-22/
2025-09-22 20:30
Food security experts say USDA report is most comprehensive data source available Cuts to SNAP include expanded work requirements, state cost-sharing USDA says report was redundant and costly, with better data sets available WASHINGTON, Sept 22 (Reuters) - The U.S. Department of Agriculture's decision to end its annual food insecurity survey , opens new tab will make it harder to measure the impact of the Trump administration's cuts to nutrition programs such as food stamps, anti-hunger advocates said on Monday. The USDA on Saturday announced it was canceling the Household Food Security report because it was redundant, costly and politicized. It said it would instead use "the bevy of more timely and accurate data sets available." Sign up here. But the report, which gathers data through the Census Bureau's Current Population Survey and has been published since 1998, is the only data set with state as well as national statistics, and is crucial to assessing the efficacy of government programs, according to food security experts. "To say it's duplicative is a little misleading because this is the most comprehensive source we have," said Megan Lott, deputy director for the Healthy Eating Research program at Duke University. President Donald Trump's tax cut and spending bill passed in July included significant cuts to the nation's largest food aid program, the Supplemental Nutrition Assistance Program, including expanded work requirements for recipients and state cost-sharing requirements that state governments will likely struggle to afford. Without the hunger report, it will be more difficult to determine whether those cuts cause food insecurity rates to rise, said Eric Mitchell, president of the Alliance to End Hunger. "There's no way to determine what that impact will look like if the government isn't tracking the data," Mitchell said. The lack of data will also make it harder to ensure the efficacy of existing federal programs, including the Special Supplemental Nutrition Program for Women, Infants, and Children, said Georgia Machell, president and CEO of the National WIC Association. The USDA did not respond to a request for comment. About 13.5 percent of U.S. households were food-insecure during some point in 2023, according to the most recent USDA report. Hunger has risen in the U.S. since 2021, driven by rising food costs and the end of temporary programs that expanded food aid during the COVID-19 pandemic. Food banks have struggled to keep up with demand. https://www.reuters.com/business/healthcare-pharmaceuticals/impact-trump-cuts-will-be-harder-track-without-usda-hunger-survey-advocates-say-2025-09-22/
2025-09-22 20:29
Denmark's Copenhagen Airport reopens after halting take-offs, landings for nearly four hours Norway's Oslo Airport shut airspace from midnight local time (2200 GMT) Denmark and Norway will investigate whether incidents linked-Copenhagen police COPENHAGEN, Sept 23 (Reuters) - Copenhagen Airport (KBHL.CO) , opens new tab, the busiest in the Nordic region, said it reopened early on Tuesday after drone sightings halted all take-offs and landings for nearly four hours, while Norway's Oslo Airport said it had shut its airspace over a drone. "The police have launched an intensive investigation to determine what kind of drones these are," Copenhagen Police Deputy Assistant Commissioner Jakob Hansen told reporters. "The drones have disappeared and we have not taken any of them," he added. Sign up here. Hansen said authorities in Denmark and Norway would cooperate to determine whether there was a link between the two incidents. Oslo Airport shut its airspace from midnight local time (2200 GMT) due to a drone observation, a spokesperson for Norwegian airport operator Avinor said in an emailed statement, adding that all flights were diverted to the nearest airport. Danish police said earlier on Monday that two or three large drones had been seen flying near Copenhagen's airport, closing it to all traffic. The airport halted operations at 8:26 p.m. (1826 GMT) on Monday, according to flight tracking service FlightRadar. Around 50 flights were diverted to alternate airports, FlightRadar said on X. After it reopened, Copenhagen Airport said on X that delays and some cancelled departures would persist and urged passengers to check with their airlines. The airport shutdowns came after a string of disruptions at European airports in recent days. A cyberattack last Friday knocked out check-in and boarding systems supplied by Collins Aerospace, a unit of RTX (RTX.N) , opens new tab, affecting operations at London's Heathrow and the Berlin and Brussels airports. Over the weekend and into Monday, the fallout continued to snarl travel across the region. In 2018, drone sightings over the runway at Gatwick near London stranded tens of thousands of passengers and disrupted hundreds of flights at the height of the holiday season. https://www.reuters.com/business/aerospace-defense/copenhagen-airport-halts-traffic-due-drone-sightings-police-says-2025-09-22/
