2024-02-26 17:32

Feb 26 (Reuters) - Microsoft (MSFT.O) , opens new tab will make French startup Mistral AI's artificial intelligence models available through its Azure cloud computing platform under a new partnership, the companies said on Monday. The multi-year deal signals Microsoft's efforts to offer a variety of AI models beyond its biggest bet in OpenAI as the tech giant seeks to attract more customers for its Azure cloud services. Microsoft will take a minority stake in Mistral as part of the deal, the startup told Reuters without disclosing details. Microsoft confirmed its investment in Mistral, but said it holds no equity in the company. The tech giant is under regulatory scrutiny in Europe and the U.S. for its outsized funding in OpenAI. The Paris-based startup works on open source and proprietary large language models (LLM), similar to the one OpenAI pioneered with ChatGPT, that understands and generates text in a human-like fashion. Its latest proprietary model, Mistral Large, will be first available to Azure customers under the partnership. Mistral's technology will be hosted on Microsoft's cloud computing platform. Mistral has also been working with Amazon (AMZN.O) , opens new tab and Google to distribute its models. It plans to make Mistral Large available on other cloud platforms in the next few months, a spokesperson said. Mistral was founded by Timothée Lacroix and Guillaume Lample, who previously worked on Meta's artificial intelligence teams; and Arthur Mensch, a former researcher at Google's DeepMind (GOOGL.O) , opens new tab. https://www.reuters.com/technology/microsoft-partners-with-openais-french-rival-mistral-2024-02-26/

2024-02-26 16:30

Feb 26 (Reuters) - Warren Buffett-led Berkshire Hathaway's shares closed down by more than 2% on Monday, slowing its march to $1 trillion market value on investor worries after the U.S. government warned of a lawsuit against its power company, PacifiCorp. Berkshire disclosed the risk of a lawsuit against its unit over its alleged failure to cover $356 million in costs associated with the 2020 Slater wildfire in southern Oregon and northern California. The investment conglomerate had warned on Saturday that the parent of PacifiCorp and one of Berkshire's biggest businesses outside insurance, Berkshire Hathaway Energy, was under pressure. "It will be many years until we know the final tally from BHE's forest-fire losses and can intelligently make decisions about the desirability of future investments in vulnerable western states," Buffett wrote in his annual letter to shareholders. He also toned down expectations for Berkshire's share price, saying it did not have many lucrative investment opportunities left, while reassuring investors that the biggest financial firm by market value was "built to last". The 93-year-old investing legend told shareholders that Berkshire would perform slightly better than the "average American corporation", but anything beyond that is "wishful thinking", even though it had a cash pile of $167.6 billion. "There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others... All in all, we have no possibility of eye-popping performance," Buffett wrote. TRILLION-DOLLAR MILESTONE Investors closely watch Berkshire as its results are often seen as a bellwether for the U.S. economy. "While this reads as if Buffett is saying that global equities are fairly valued, the truth is more nuanced than that," Nicholas Colas, co-founder of DataTrek Research, wrote in a note. "Berkshire is a huge business and needs to take substantial positions in large companies in order to 'move the needle'. Markets are generally good at pricing those sorts of stocks, hence the lack of opportunities." Berkshire's annual operating profit climbed 21%, to $37.4 billion on improved underwriting and higher investment income from the insurance segment. Operating profit for the fourth quarter also came in ahead of analysts' expectations. A $1 trillion market value would put Berkshire among a rarefied list of American businesses, which currently includes tech giants like Microsoft (MSFT.O) , opens new tab and Apple (AAPL.O) , opens new tab. Berkshire's Class A shares dropped 2.16%, while its Class B shares, which carry higher voting rights and whose value is 1/1,500th of Class A shares, slipped 1.94%. That left the conglomerate with a stock market value below $900 billion. "We continue to believe shares are an attractive stock in an uncertain macro environment," UBS analyst Brian Meredith said. Buffett in his letter also mourned the passing of his longtime second-in-command Charlie Munger, while assuring investors that vice chairman and designated successor Greg Abel was "ready to be CEO of Berkshire tomorrow". https://www.reuters.com/business/berkshire-shares-gain-built-last-conglomerate-posts-record-profit-2024-02-26/

2024-02-26 15:37

ATHENS, Feb 26 (Reuters) - European Central Bank policymaker Yannis Stournaras said on Monday that the "optimal timing" for the first rate cut might be the end of the first semester if inflation continues to decelerate and wage data is supportive. ECB President Christine Lagarde said last week that fourth quarter wage growth data was encouraging but not yet enough to give the bank confidence that inflation has been defeated. "Inflation decelerates faster than our December projections and it is very likely that we will closely approach our 2%inflation target in the autumn of the current year," Stournaras said in a speech at Liverpool University. He added that the recent slight deceleration in negotiated wages was encouraging and much will depend on the evolution of profit margins, since overall cost developments, including energy costs, indicate a further easing of price pressures in the near term. https://www.reuters.com/markets/europe/best-time-rate-cut-may-be-end-first-semester-ecbs-stournaras-2024-02-26/

2024-02-26 14:25

MUMBAI, Feb 26 (Reuters) - The Indian rupee ended slightly stronger on Monday, aided by likely inflows, but dollar demand from state-run banks, possibly on behalf of importer clients, curbed further gains in the local unit, traders said. The rupee closed at 82.89 against the U.S. dollar, 0.06% higher that its previous closing at 82.9375. The dollar index was slightly lower at 103.8, while most Asian currencies weakened, with the Philippine peso down 0.3% and leading losses. The dollar-rupee pair continues to see dip-buying demand on moves towards 82.85-82.80, a foreign exchange trader at a foreign bank said. State-run banks were seen bidding for dollars on Monday, likely on behalf of importer clients, the trader added. Dollar demand from importers and likely intervention from the Reserve Bank of India have kept the rupee in a tight range over the last few trading sessions. The central bank bought dollars regularly through last week to prevent the currency from appreciating much amid persistent inflows, traders said. For now, the rupee's range between 82.80 and 83.10 "remains intact," Gaurang Somaiya, a foreign exchange research analyst at Motilal Oswal Financial Services said. Meanwhile, the RBI has eased restrictions on banks' arbitrage trades between the outright foreign exchange over-the-counter (OTC) and the non-deliverable forward (NDF) markets, Reuters reported earlier in the day. Over the week, remarks from several Federal Reserve officials will be key, alongside the release of U.S. core personal consumption expenditures inflation data, the central bank's preferred measure of inflation, due on Thursday. India will also report its GDP numbers for the October-December quarter later in the week. https://www.reuters.com/markets/currencies/rupee-ends-slightly-higher-importers-dollar-buys-curb-gains-2024-02-26/

2024-02-26 13:46

Europe tries to square circle of growth and green transition EU productivity lags far behind United States Industry complains of green rules, lobbies for aid GHENT, Belgium, Feb 26 (Reuters) - As the head of a small Belgian company making and recycling batteries for European clients, Rahul Gopalakrishnan is at the vanguard of the continent's dash for green growth. But even on what is one of the 27-member European Union's flagship policy goals, Gopalakrishnan is concerned that reality for businesses like his Avesta Battery & Energy Engineering (ABEE) group does not match the ambition. "Europe always has this ability to shoot itself in the foot," the 37-year-old Indian told Reuters, adding he was not getting enough state support to combat Chinese rivals and also had to grapple with rules like a proposed EU ban on "forever chemicals" - a type of pollutant used in lithium-ion batteries. His concerns illustrate the circle Europe wants to square as it seeks to regain economic ground lost to the United States over the past 20 years, even as it strives to protect the environment and become more self sufficient. The U.S. economy is growing at more than 2% per year while the euro zone is stagnating. Productivity - or the output of each hour worked and euro invested - has also grown more slowly on the east side of the Atlantic for 30 years. Compared to the United States, the EU is a fragmented bloc suffering from chronic under-investment, a more rapidly ageing population and, despite its 31-year-old single market, snags on the free flow of labour, capital and goods. The man charged with producing a blueprint to overcome such hurdles is Mario Draghi, the former European Central Bank chief famed for ending the 2012 debt crisis by declaring the ECB would do "whatever it takes" to save the euro. Draghi, who met EU finance ministers in the Belgian city of Ghent last weekend, recently said the solution involved a low cost of capital, re-working the rules to favour innovation and where necessary coming up with state aid. "We need to invest an enormous amount in a relatively short time horizon to restructure supply chains and decarbonise our economies, with capital being likely destroyed faster than it can be replaced," Draghi said in a speech. HUNDREDS OF BILLIONS EU institutions estimate Europe will need 650 billion euros ($704.08 billion) in mostly private investments every year until 2030 and 800 billion euros annually thereafter until 2040. The aim is to close the technology gap with the United States, home to world-leading tech giants, and to make Europe more self-reliant by nurturing local sectors that produce green energy as well as the chips it imports from the Far East. Far from generating investment however, Europe is bleeding capital -- some 330 billion euros last year -- as Europeans deploy their savings abroad, particularly on the much larger U.S. stock market. Public investment is also lower than in the United States, where government funding has led to inventions such as the Internet itself. The EU finance chiefs in Ghent gave a familiar solution to the problem: knocking down remaining barriers between member countries to turn them into a fully fledged single market. "We need to ensure that businesses, especially smaller businesses, that are looking to grow quicker have access... to the appropriate funding," the president of the Eurogroup of EU finance ministers, Paschal Donohoe, said in Ghent. Yet this so-called capital market union has been stalled for years by countries keen to keep their prerogatives. The latest French proposal for a small group of countries to move ahead was immediately torpedoed by Germany. BUSINESS FRIENDLY? Even if it eventually comes, a tighter union would be no panacea for the EU's lack of competitiveness. Only one EU member, Denmark, ranks above the United States in the World Bank's Ease of Doing Business Index, which tracks practicalities such as opening a company or getting a permit. Italy even lags Morocco, Kenya and Kosovo. Meanwhile, the cost of electricity is three times that of the United States and will stay high until the EU can produce its own sometime in the next decade. Businesses are lobbying for energy subsidies and easier environmental rules. "In the transformation to renewables, we are confronted with an electricity price that makes us unable to compete globally," said Gunnar Groebler, CEO of steelmaker Salzgitter (SZGG.DE) , opens new tab. Oil major Exxon even raised the spectre of "deindustrialisation" unless the EU changed course. Few large companies are leaving Europe for now but some, like French automotive supplier Forvia (FRVIA.PA) , opens new tab, are shedding jobs in the region. Others, such as industrial gases firm Air Liquide (AIRP.PA) , opens new tab are doing more business in the United States. A group of industrial companies last week demanded that the EU subsidises not just investments but also operating expenses, like Washington is doing. But policymakers in Ghent have made clear the bulk of the money that Europe needs should come from the private purse. "We've never done that in Europe," said Simone Tagliapietra, a senior fellow at think tank Bruegel. "There's the real risk that the business disappears when the subsidy is taken away." ($1 = 0.9232 euros) https://www.reuters.com/markets/europe-has-uphill-battle-catch-up-with-us-growth-2024-02-26/

2024-02-26 12:46

LONDON, Feb 26 (Reuters) - Portfolio investors have become extremely bearish about the outlook for U.S. gas prices, even though prices have already fallen to their lowest level in real terms since futures began trading in 1990. Hedge funds and other money managers sold the equivalent of 399 billion cubic feet (bcf) in the two major futures and options contracts linked to prices at Henry Hub in Louisiana over the seven days ending on Feb. 20. Fund managers have been net sellers in each of the most recent five weeks, selling 2,085 bcf since Jan. 16, according to position reports filed with the U.S. Commodity Futures Trading Commission. As a result, the combined position has been reduced to a net short of 1,675 bcf (3rd percentile for all weeks since 2010) down from a net long of 410 bcf (42nd percentile) in the middle of January. The gas market has been chronically oversupplied in recent months, with inventories 436 bcf (+21% or +1.26 standard deviations) above the prior 10-year seasonal average on Feb. 16. The surplus has swelled consistently since the start of the winter heating season on Oct. 1, when it was just 64 bcf (+2% or +0.24 standard deviations). Chartbook: Gas and oil positions , opens new tab Exceptionally strong El Niño conditions over the Pacific ensured temperatures have been mostly above average across the major population centres of the northern United States. Domestic gas production has continued to increase, in spite of the relatively low prices, adding to the burgeoning surplus of gas in storage. The rig count for gas has actually increased marginally since September 2023 as producers have been unresponsive to falling prices until the last few weeks. In addition, more associated gas is being produced as a co-product of drilling for oil, where prices are close to the long-term inflation-adjusted average and drilling rates are steady. From a purely positioning perspective, the balance of risks must lie to the upside, with real prices at multi-decade lows and lots of short positions that must eventually be repurchased. Short positions have only ever been greater in the first quarter of 2020, when stocks were at record levels and the economy was bracing for the arrival of the first wave of the coronavirus epidemic. So there is potential for a huge short-covering rally if and when the news flow becomes more positive and inventories start to erode. But hedge fund managers have tried and failed to identify the turning point three times in the last twelve months and been forced to retreat each time. Bloated gas stocks in Europe and Japan after the price spike of 2021/22 will make it hard for the market to rebalance via increased exports. Many analysts now expect the rebalancing to be postponed until the winter of 2024/25 with prices likely to remain suppressed until nearer then. PETROLEUM Investors continued to add to their position in petroleum-related futures and options over the seven days ending on Feb. 16, but at a slower rate than in previous weeks. Hedge funds and other money managers purchased the equivalent of 17 million barrels in the six most important petroleum-linked futures and options contracts. All the buying was concentrated in NYMEX and ICE WTI (+29 million barrels) with small sales in Brent (-4 million), European gas oil (-4 million), U.S. diesel (-4 million) and U.S. gasoline (-1 million). Even after the recent buying, positions in WTI remain the most bearish of any of the major oil contracts, weighed down by the continued rise in domestic oil production, even as OPEC restricts Middle East supplies. The net position in NYMEX and ICE WTI of 109 million barrels is still in only the 8th percentile for all weeks since 2013. That compares with net positions in Brent, gasoline and the distillates contracts all between the 60th and 70th percentiles. WTI buying seems to have been motivated by unwinding previous bearish short positions (-17 million barrels) and cautious initiation of new longs (+13 million). Crude inventories around the NYMEX WTI delivery point at Cushing in Oklahoma are still 14 million barrels (-32% or -1.14 standard deviations) below the prior 10-year seasonal average. Despite an extended shutdown of BP's refinery at Whiting in Indiana, Cushing stocks have increased only slightly in the last two weeks, underscoring the risk of a squeeze on deliverable supplies. With positioning so bearish, the balance of risks lies to the upside; some fund managers have begun to cut short positions and get long accordingly. Related columns: - Slumping U.S. gas prices cause hedge funds to despair(February 19, 2024) - El Niño pushes real U.S. gas prices to multi-decade low (February 16, 2024) - Investors dump oil after U.S. refinery shutdown (February 12, 2024) - Oil investors try to get bullish as global economy improves (February 5, 2024) John Kemp is a Reuters market analyst. The views expressed are his own. Follow his commentary on X https://twitter.com/JKempEnergy , opens new tab https://www.reuters.com/business/finance/us-gas-glut-gets-hedge-funds-ultra-bearish-kemp-2024-02-26/