2024-04-25 13:21
BRASILIA, April 25 (Reuters) - An outspoken couple weeks for Brazil's central bank chief, including criticism of budget policy and comments scrapping monetary policy guidance, have soured relations with a Finance Ministry team who had been his strongest partners in government. Three ministry officials, who requested anonymity to discuss personal views, said they took the recent comments from central bank governor Roberto Campos Neto as a deliberate move to take a harsher tone with the leftist government preparing to replace him at the end of the year. The rising tensions may bring forward the noise around that transition — the first under a new law granting the central bank formal autonomy — and reinforce expectations that he will be replaced by a policymaker more trusted by leftist President Luiz Inacio Lula da Silva and his economic team. When Campos Neto came under fire from Lula early last year for high interest rates, it was Finance Minister Fernando Haddad who stepped in to broker meetings and lower the temperature. However, Campos Neto's shifting policy guidance and broadsides against Brazil's fiscal discipline during a marathon of public events in Washington last week caught the Finance Ministry off-guard, potentially burning bridges there. One ministry source said the posture from Campos Neto, who was appointed by Lula's right-wing predecessor Jair Bolsonaro, had turned "political." Another called it "unusual." The central bank and Finance Ministry did not reply to requests for comments. At an event with investors last Wednesday, opened to the public just hours before it began, Campos Neto signalled for the first time the chance of less monetary easing in Brazil while discussing a backdrop of increased global uncertainty. He cited both stronger-than-expected U.S. inflation and concerns about the government loosening its 2025 fiscal target. One Finance Ministry source grumbled that similar concerns about U.S. interest rates staying high had roiled markets in September and October without such a dramatic reaction from Campos Neto. Another source from the ministry complained that the statements were made in the heat of the moment, without visibility on a permanent change for the exchange rate. Brazil's currency has now partly recovered its losses this month, but Campos Neto has already revised his policy guidance. Distrust had already been growing in the Finance Ministry, the sources said, since Campos Neto began advocating openly earlier this year for lawmakers to approve a constitutional amendment that would grant financial autonomy to the central bank. The proposal would build on a 2021 law staggering the terms of Brazilian presidents and central bank governors. Given the impact of the changes to the Treasury, Finance Ministry officials were dismayed that Campos Neto had not given Lula and his team advance warning. SHIFTING RATE BETS Despite Lula's early criticism of the central bank and his suggestions that Brazil should tolerate higher inflation, public relations have stabilized since mid-2023 with Campos Neto, who even attended a cookout with the presidential cabinet last year. His government chose to keep the inflation target at 3% from 2024 onwards, which helped lower consumer price expectations and opened the door for a rate-cutting cycle that began in August, cutting the benchmark rate 300 basis points so far to 10.75%. With the next monetary policy meeting two weeks away, Campos Neto underscored on Monday that policymakers could no longer provide guidance due to significant uncertainty. Interest rate futures have now priced in more than a 90% chance of a 25-basis-point cut, breaking with a string of 50-basis-point cuts so far. Lula said this week he hoped Campos Neto would take into account that "Brazil is not at risk," adding that he was weighing whether to make an early announcement of his successor. So far, two leading candidates have emerged for the role. Gabriel Galipolo worked as Haddad's deputy at the Finance Ministry before becoming the central bank's director of monetary policy in July. Paulo Picchetti, the bank's director of international affairs, is also a friend to Haddad since they both completed their master's degrees in economics at the University of Sao Paulo in the early 1990s. While unveiling a package of measures to stimulate lending this week, Haddad said that Galipolo continues to collaborate with various elements of the Finance Ministry agenda since moving to his new position, showing that the ministry and central bank "don't have to be on bad terms." Galipolo's ties with Haddad have kept up since he moved to the central bank as they shared flights between Brasilia and Sao Paulo and held many informal meetings at the minister's office there, according to two other sources. Unlike Picchetti, Galipolo has links to Lula independent of his relationship with Haddad, due to his connection to economist Luiz Gonzaga Belluzzo, his longtime academic partner, who acts as a trusted advisor to the president. Sign up here. https://www.reuters.com/world/americas/brazil-central-bank-chief-irks-finance-ministry-team-his-way-out-2024-04-25/
2024-04-25 12:55
HAVANA, April 25 (Reuters) - Argentine jet fuel providers in Buenos Aires refused to service Cuban state airline Cubana this week citing concerns over U.S. trade sanctions on Cuba, the Havana-based carrier said late on Wednesday, prompting multiple unexpected flight cancellations. Cubana de Aviacion S.A., which operates flights within Cuba and to various cities internationally, said it had cancelled flights on April 23 and 24, as well as other flights contracted to partner airlines, forcing the company to rebook passengers or provide refunds. "This decision is due to the refusal of aviation fuel supply companies in the Republic of Argentina to provide service to the airline, invoking the provisions of the United States blockade measures against Cuba," the airline said in a brief statement. Argentina`s foreign ministry and Office of the Presidency did not immediately respond to a Reuters request for comment on the matter. The U.S. trade embargo against Cuba was put in place following Fidel Castro's 1959 revolution. The web of U.S. laws and regulations complicate financial transactions and the acquisition of goods and services by the Cuban government, while also raising risks for foreign companies who trade with Cuba. Cubana`s long-standing flights between Havana and Buenos Aires ran largely unfettered despite the sanctions under the administration of Argentina`s leftist former president Alberto Fernandez, who maintained close ties with Cuba. But Argentina's President Javier Milei, a far-right libertarian who took office on Dec. 10, is unabashedly pro-United States and has taken a cooler stance towards leftist trade partners in the region and overseas, including Brazil and China. Cuba has been largely silent on Milei`s election. Sign up here. https://www.reuters.com/world/americas/cuba-says-state-airline-cancelled-flights-after-argentina-denied-it-fuel-2024-04-25/
2024-04-25 12:53
BRUSSELS, April 25 (Reuters) - The European Parliament approved on Thursday a new law designed to ensure the bloc produces 40% of its renewable energy, fuel cell and other green technology needs within its borders, and to help Europe's industry compete with U.S. and Chinese rivals. EU lawmakers voted by 361 to 121 against, with 45 abstentions, for the Net Zero Industry Act. WHY IT'S IMPORTANT The act is a centrepiece of the EU's push to ensure it is not only a global leader in cutting greenhouse gas emissions, but also in manufacturing the clean tech required. Europe is increasingly relying on China, which is for example forecast to have 80% of global manufacturing capacity in solar power. The EU also has concerns that the $369 billion of green subsidies in the U.S. Inflation Reduction Act (IRA) will entice European producers to relocate. CONTEXT The bloc has set a 2030 target of producing 40% of the products it needs to reduce greenhouse gas emissions. These will cover renewable energy, nuclear power, heat pumps, electrolysers and other decarbonising technologies, including carbon capture. Likely to enter force later this year, the NZIA proposes streamlining the granting of permits for projects that boost EU manufacturing, ensuring most are issued within six to nine months. Public authorities buying clean tech products will have to base their choices not only on price, but with a 30% weighting to an offer's sustainability and resilience - the degree to which the EU relies on supply from a single third country. Hitting the target will be particularly tough in solar, given EU manufacturers supply less than 3% of EU panel deployments and are fighting for survival. The EU wind energy sector is far stronger, although Chinese companies are starting to gain a foothold. Sign up here. https://www.reuters.com/sustainability/climate-energy/eu-lawmakers-back-law-boost-domestic-clean-tech-production-2024-04-25/
2024-04-25 12:47
April 25 (Reuters) - Railroad operator Union Pacific (UNP.N) New Tab, opens new tab said it will restart share repurchases in the second quarter as it beat Wall Street estimates for first-quarter results on Thursday, with strong pricing offsetting lower volumes. Shares of the company were up nearly 6% in pre-market trading The company, seen as a bellwether for the U.S. economy, has continued to face volume headwinds while maintaining excess capacity. The slowdown in demand is particularly pronounced in the bulk segment, where coal volumes have declined as the U.S. is increasingly stockpiling cheap natural gas instead. In response to a challenging freight market, the railroad operator has continued to price its services above the rate of inflation, mirroring a trend seen across sectors such as retail and industrials. The company reported operating revenue of $6.0 billion in the first quarter ended March, flat year-on-year, but above analysts' estimates of $5.98 billion, as per LSEG data. To offset lower volumes, the Omaha, Nebraska-based company has been seeking new business in segments such as biofuels and petrochemicals. It has also sought to improve its service efficiency, which came under shareholder pressure in 2023 after the company's operating ratio rose for several quarters. Union Pacific reported an operating ratio of 60.7% for the first quarter, an improvement from last year's 62.1%. The ratio is a keenly watched metric that indicates operating expenses as a percentage of revenue. Union Pacific's net income of $1.6 billion, or $2.69 per share, was also flat year-on-year but came in above estimates of $2.51 per share. Sign up here. https://www.reuters.com/business/railroad-operator-union-pacific-reports-flat-quarterly-profit-2024-04-25/
2024-04-25 12:43
April 25 (Reuters) - Electric and gas utility DTE Energy (DTE.N) New Tab, opens new tab missed Wall Street estimates for the first-quarter profit on Thursday, hurt by weakness in its natural gas unit. Natural gas futures plunged about 30% during the quarter, hurting DTE Energy, which distributes, transmits, and sells natural gas to roughly 1.3 million customers in Michigan. Reported income of the DTE Gas arm, the second largest segment by net income, declined 9.9% to $154 million for the quarter. The company owns and operates 278 storage wells, representing about 34% of the underground working capacity in Michigan. Its non-utility units' performance also fell sharply from last year. The energy trading division reported income plummeted nearly 100% to $1 million from $138 million a year ago. DTE Energy Trading unit is an active physical and financial gas, power and environmental marketing company. Fluctuations in commodity prices impact energy companies' trading units. The Detroit, Michigan-based company reported operating earnings, which excludes certain items, of $1.67 per share for the quarter ended March 31, missing the average analysts' estimate of $1.71 per share, according to LSEG data. However, it reaffirmed its full-year operating profit outlook of between $6.54 and $6.83 per share. The company invested over $1 billion during the quarter to upgrade its electric and gas grids, with plans for $4 billion investment this year. "We are off to a strong start in 2024 as we continue to make investments to modernize our electric system so it is more resilient to increasingly extreme weather and more reliable for our customers," CEO Jerry Norcia said. Sign up here. https://www.reuters.com/business/energy/dte-energy-misses-quarterly-profit-estimates-natgas-unit-weakness-2024-04-25/
2024-04-25 12:41
WARSAW, April 25 (Reuters) - Russia has warned Kazakhstan its oil transit to Germany could stop in June due to a payment impasse in a stark reminder of the landlocked country's reliance on Russia for its exports, sources said. The warning from state-controlled pipeline operator Transneft is a reminder of Kazakhstan's exports fragility with most of its flow of 1.5 million barrels per day or 1.5% of global supply going via various Russian pipelines. Transneft operates the Druzhba oil pipeline, one of the world's largest, capable of carrying 2 million barrels per day. Flows through the Druzhba have dropped sharply since Russia's invasion of Ukraine as the European Union refused to buy Russian oil. The northern leg of the Druzhba system, linking Germany via Poland and Belarus, is currently used for Kazakhstan’s oil exports for the Schwedt refinery, which supplies most of Berlin's fuel. In recent weeks, Transneft has told Kazakh suppliers that Poland’s state-owned pipeline operator PERN has until June to pay for metering services at its Adamowo base the Polish-Belarussian border, according to three trading sources. The existing service contract expires June 5, according to one source. The sources did not specify the terms of the new contract and how much money Russia wanted to be paid. PERN has not paid so far due to concerns it could breach Western sanctions against Russia, one Polish source familiar with the situation said. The company is working with counterparties on solutions, that could include using an alternative, certified metering system at Adamowo, adding that the security of its infrastructure is paramount, PERN said in an emailed response to Retuers questions. "PERN has the technical capabilities and readiness to provide crude oil transport to the refinery in Schwedt, provided that suppliers and recipients are interested, and the operators of the other systems are ready to cooperate," spokesperson Katarzyna Krasinska said. Kazakhstan plans to ship 1.2 million tonnes of oil via Druzhba to Germany this year, with plans to increase exports to 2 million in the future. Kazakhstan pipeline operator Kaztransoil said the plan remained unchanged and it was working with all relevant parties. It did not elaborate. "Kaztransoil and KazMunayGas are quite nervous," one source familiar with the matter said. Transneft did not immediately respond to a request for comment. Many Western companies such as Chevron, ExxonMobil, Italy's Eni and France's Total hold large stakes in oil and gas projects in Kazakhstan. Schwedt was designed to refine mostly Russian oil coming via Druzhba but it also relies on deliveries by sea via the port of Rostock in Germany or Poland's Gdansk. Germany's economy ministry declined to comment on company matters. A majority stake in the refinery has been under German government trusteeship since September 2022. Sign up here. https://www.reuters.com/markets/commodities/russia-warns-kazakhstan-oil-transit-germany-risk-over-service-payments-sources-2024-04-25/
