2024-02-22 20:13

NEW YORK, Feb 22 (Reuters) - Bankrupt crypto exchange FTX may sell its shares in artificial intelligence startup Anthropic, a U.S. judge ruled Thursday. U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware approved FTX's proposal to sell the shares after FTX reached a compromise in court with a group of FTX customers that had opposed the sale. FTX invested $500 million in Anthropic in 2021, and currently holds a 7.84 percent stake in the company, according to court documents. The company had sought permission to sell the shares as part of its court-supervised effort to liquidate its assets and repay customers who lost access to their accounts when the company collapsed in 2022. "We are selling the Anthropic shares, as we are selling everything, and putting the money in the bank," FTX attorney Andy Dietderich said at a Thursday court hearing. FTX expects to sell the shares at a profit, and it will retain flexibility to sell its shares at the "most optimal and appropriate time," according to court documents. "Given the increased interest in AI and large language models, there has been significant appreciation in the value of the Anthropic Shares since the Debtors' acquisition and investment in Anthropic in 2021," FTX wrote in a Feb. 3 court filing. FTX's 2021 investment initially gave it a 13.56% equity stake in Anthropic. The FTX stake has been diluted by the company's subsequent fundraising, which includes a $4 billion investment from Amazon.com. The customers that opposed the sale had argued that FTX did not actually own the Anthropic shares, because they were purchased with funds embezzled from FTX customers' deposits. But they agreed Thursday to allow the sale to go forward, as long as they are allowed to argue later that FTX customers own any money generated from the future sale. Dietderich said that FTX already intends to repay customers using the sale proceeds, and it has enough cash to repay any specific group of customers that can convince a court that they owned the Anthropic shares. FTX currently has $6.4 billion in cash, Dietderich said. FTX expects to pay all customers in full, although it will calculate their repayment based on cryptocurrency prices from November 2022, when FTX filed for bankruptcy amid a prolonged slump in the crypto market, rather than at the present, higher value of crypto assets. FTX founder Sam Bankman-Fried was found guilty of stealing billions from customers on Nov. 2, in one of the biggest financial frauds on record. Bankman-Fried's sentencing is March 28, and he is expected to appeal his conviction. https://www.reuters.com/technology/crypto-exchange-ftx-sell-shares-ai-startup-anthropic-2024-02-22/

2024-02-22 19:57

Feb 22 (Reuters) - American Airlines (AAL.O) , opens new tab must face a lawsuit claiming it failed to prudently oversee employee retirement funds because it used asset managers that pursued sustainable investment strategies, a federal judge in Fort Worth, Texas ruled. U.S. District Judge Reed O'Connor said pilot Bryan Spence can move forward with his lawsuit claiming the airline breached its duties to plan participants by choosing investment managers focused on "nonfinancial" issues of environmental, social and governance. "These specific actions -- selecting, including, and retaining ESG oriented investment managers -- allow the court to reasonably infer that defendants' process is flawed because it allowed plan assets to be used to support ESG strategies," O'Connor wrote. A spokesperson for American Airlines declined to comment on Thursday. Spence sued the airline last year, saying it had violated the Employee Retirement Income Security Act (ERISA), which governs how retirement funds are administered in the U.S. He claimed that American failed its duties to remain loyal to retirees and prudently oversee their assets by engaging investment advisors who "pursue political agendas" through ESG strategies and voting at shareholder meetings. American Airlines asked O'Connor to dismiss the case, saying Spence had failed to allege that the funds in the plan had financially underperformed. O'Connor, an appointee of Republican former President George W. Bush, is known for frequently ruling in favor of conservative litigants challenging laws and regulations governing guns, LGBTQ rights and health care. The U.S. Department of Labor implemented a rule last year allowing employee retirement plans to consider environmental, social and governance (ESG) issues in investment decisions. Texas is one of 25 Republican-led states appealing a decision rejecting their bid to block the rule. https://www.reuters.com/sustainability/american-airlines-must-face-lawsuit-over-esg-retirement-investing-2024-02-22/

2024-02-22 17:39

Feb 22 (Reuters) - A surge of interest in bitcoin exchange-traded funds is prompting some investors to swap out holdings in gold-backed ETFs, although analysts and fund managers said they are unlikely to challenge bullion longer term. Spot bitcoin ETFs could offer investors looking to hedge against inflation an alternative to gold. ETFs track an index, commodities, bonds or a basket of assets like an index fund. And January's U.S. regulatory green light for ETFs that track the price of the world's largest digital asset has set the ETF market - worth trillions of dollars - up for further gains. The advent of ETFs in gold in the early 2000s added a major pillar of support to the market by creating new demand, causing prices to soar in subsequent years. "We anticipate that bitcoin could substitute for gold in some investor portfolios. It may serve a similar role as a hedge against global disorder and financial system dysfunction," said Jason Benowitz, senior portfolio manager at CI Roosevelt. Since the Jan. 10 U.S. approval, two of the biggest new spot bitcoin ETFs, iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund, had accumulated $5.45 billion and $4.13 billion in assets respectively as of Feb. 14, LSEG Lipper data shows. Meanwhile, the largest gold-backed ETF, New York's SPDR Gold Trust, saw outflows of $768.9 million over the same period, while the iShares Gold Trust had outflows of $284.6 million. NEW HAVEN? The launch of the new products comes against a rally in the prices of crypto tokens. Bitcoin surged more than 150% in 2023, while gold climbed a far more modest 13%. "Overall, the crypto industry is maturing and ... with more regulatory approval and a new legitimized product, it's a growing threat to older havens like gold in some regions," Nicky Shiels, head of metals strategy at MKS PAMP SA said in a note. Even so, some fund managers and analysts urged caution against migrating from gold ETFs, citing bitcoin's volatility. "Gold has been valued for thousands of years, while bitcoin is in its infancy," said Bryan Armour, an ETF analyst at Morningstar. Gold is typically seen as a safe place to park money in times political or economic uncertainty, such as a rapid rise in inflation. "Given that gold doesn't pay dividends like many stocks, its more useful for wealth preservation than wealth generation," said Susannah Streeter, head of money and markets at Hargreaves Lansdown. "Bitcoin speculators have vastly different aims and appear willing to gamble on rapid price rises in a search for hot returns, which are by no means guaranteed," Streeter added. https://www.reuters.com/technology/bitcoin-etfs-test-investor-commitment-gold-backed-paper-2024-02-22/

2024-02-22 17:30

Weekly jobless claims fall 12,000 to 201,000 Continuing claims decline 27,000 to 1.862 million Existing home sales increase 3.1% in January Median house price rises 5.1% to $379,100 from year ago WASHINGTON, Feb 22 (Reuters) - The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting that job growth likely remained solid in February. Labor market resilience, which is underpinning the economy, reduces the urgency for the Federal Reserve to start cutting interest rates. Minutes of the U.S. central bank's Jan. 30-31 meeting published on Wednesday showed the majority of policymakers were concerned about the risks of cutting rates too soon, with broad uncertainty about how long borrowing costs should remain at their current level. "Job layoffs remain minimal so wage pressures from a tight labor market will continue to push off the day when Fed officials can safely lower interest rates without reigniting inflation," said Christopher Rupkey, chief economist at FWDBONDS in New York. "The key economic indicator of whether the economy is slowing down has been and always will be job losses." Initial claims for state unemployment benefits dropped 12,000 to a seasonally adjusted 201,000 for the week ended Feb. 17, the Labor Department said on Thursday. Economists polled by Reuters had forecast 218,000 claims for the latest week. Claims are hovering at historically low levels, despite high-profile layoffs at the start of the year. Unadjusted claims declined 26,053 to 197,932 last week, the lowest level since last October. Claims in California, which were estimated by the state likely because of the holiday-shortened week, plunged 8,584. There were notable decreases in applications in Illinois, Kentucky, Michigan, New York and Texas. Kentucky had seen a jump in filings in the prior week, attributed to layoffs in the automobile manufacturing and wholesale trade industries. Difficulties finding labor during and after the COVID-19 pandemic have generally left employers reluctant to reduce head count. Worker productivity has also risen while the economy continues to expand despite the Fed's aggressive monetary policy stance. Policymakers at last month's meeting continued to view the labor market as "tight," the minutes showed, but several "noted that recent job gains were concentrated in a few sectors, which, in their view, pointed to downside risks to the outlook for employment." Stocks on Wall Street were trading higher. The dollar was steady against a basket of currencies. U.S. Treasury prices were mostly lower. HOUSING GREEN SHOOTS Financial markets have pushed back their expectations for the first rate cut from the Fed to June from May, in the wake of strong job gains in January as well as firmer-than-expected inflation readings at the start of the year. Inflation is, however, likely on a downward trend. A survey from S&P Global on Thursday showed business activity cooled in February, with a measure of prices paid for inputs falling to the lowest level in nearly 3-1/2 years. A slowdown in services industry growth, the focus of the inflation battle, accounted for the fall in the S&P Global's flash U.S. Composite PMI Output Index to 51.4 this month from 52.0 in January. A reading above 50 indicates expansion in the private sector. Since March 2022, the central bank has raised its policy rate by 525 basis points to the current 5.25%-5.50% range. The claims data covered the period during which the government surveyed businesses for the nonfarm payrolls component of February's employment report. Claims rose marginally between the January and February survey periods. The economy added 353,000 jobs in January. The number of people receiving benefits after an initial week of aid, a proxy for hiring, fell 27,000 to 1.862 million during the week ending Feb. 10, the claims report showed. The so-called continuing claims are running a bit higher than their average in 2019, which economists suggested some loosening in labor market conditions. But the insured unemployment rate dipped to 1.2% from 1.3% in the prior week, underscoring the labor market's tightness. "Overall, the labor market remains strong although there is a gradual rebalancing of supply and demand for workers, welcome news for policymakers, said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. There were signs of green shoots in the housing market, the sector that has borne the brunt of higher borrowing costs, though tight inventory remains a barrier for first-time buyers. Existing home sales increased 3.1% in January to a seasonally adjusted annual rate of 4.00 million units, the highest level since last August, the National Association of Realtors said in a third report. Buyers took advantage of a retreat in mortgages rates and modest improvement in supply. The bulk of sales were in the $750,000-$1.0 million and over price bracket, where there is more inventory. Sales of houses below $250,000, considered entry-level homes, remain depressed. The median existing home price rose 5.1% from a year earlier to $379,100 in January, the highest on record for any January, with multiple offers the norm on mid-priced homes. All cash sales accounted for 32% of transactions last month, the largest share since June 2014. "We'll need a combination of lower mortgage rates, price stability if not price drops, and accelerated building to help return the total home sales market back to normal," said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. https://www.reuters.com/markets/us/us-weekly-jobless-claims-unexpectedly-fall-2024-02-22/

2024-02-22 17:05

Feb 22 (Reuters) - The widespread use of powerful new weight-loss drugs in the United States could boost gross domestic product by 1% in the coming years as lower obesity-related complications are likely to boost workplace efficiency, according to Goldman Sachs. Some analysts have predicted the market for weight-loss drugs could reach $100 billion a year by the end of the decade, with Ozempic maker Novo Nordisk (NOVOb.CO) , opens new tab and Mounjaro producer Eli Lilly (LLY.N) , opens new tab leading the race. The class of drugs, called GLP-1 agonists, are being keenly pursued by several companies and more could enter the market depending on clinical trials. The use of GLP-1s could increase by anywhere between 10 to 70 million consumers by 2028, Goldman Sachs said on Thursday. "If GLP-1 usage ultimately increases by this amount and results in lower obesity rates, we see scope for significant spillovers to the broader economy," Goldman economists said in a note. "Academic studies find that obese individuals are both less likely to work and less productive when they do." The brokerage estimated weight-loss drugs could bolster U.S. gross domestic product (GDP) by 0.4% in a scenario with 30 million users, and could rise to 1% with 60 million users. The current wave of healthcare innovation such as AI-powered drug discovery coupled with GLP-1s could raise the level of U.S. GDP by 1.3% in the coming years, equivalent to $360 billion per year in current exchange rates, with potential for an increase ranging from 0.6% to 3.2%. "Effects are likely to be larger in the U.S. than in other countries, as health outcomes in other developed markets are generally better," the brokerage added. https://www.reuters.com/business/healthcare-pharmaceuticals/weight-loss-drugs-could-boost-us-gdp-by-1-coming-years-goldman-says-2024-02-22/

2024-02-22 13:59

LONDON, Feb 22 (Reuters) - Sterling rose against the dollar on Thursday, joining with gains by most other currencies as data from a British business activity survey came in stronger than expected and showed robust growth for services firms. The pound rose as much as 0.57% to $1.271, its highest since Feb 2 when markets were given a jolt by stronger than expected U.S. employment data that sent the dollar soaring. The British currency was last up 0.13% as the dollar recouped some ground in the European afternoon. Versus the euro, the pound was choppy, but last flat on the day at 85.6 pence. The main data release for sterling on Thursday was February's preliminary S&P Global/CIPS Composite Purchasing Managers' Index (PMI), which spans services and manufacturing firms, and which rose to 53.3, the highest in nine months. Economists polled by Reuters had forecast no change from January's reading of 52.9. A reading of 50 separates growth from contraction. S&P's statement also noted that inflationary pressures remained elevated, and that "the rate of input price inflation edged up to its strongest since August 2023, largely due to rising salaries in the service sector". Analysts said that meant the Bank of England could keep interest rates at their current level for longer. "We are more comfortable after today’s data with our view of an August BoE cut – this had been a hawkish call that the BoE would wait so long, but we wonder how long it might be before markets think we’re too dovish (or even price August out altogether and delay cuts for longer)," said Nomura analysts in a note. They expect the first rate cut by the U.S. Federal Reserve and the European Central Bank in June, "so the BoE’s less dovish stance should help GBP remain resilient in G10 space", they added. Dove is a commonly used term for people who favour looser monetary policy to help economic growth, whereas hawks tend to favour higher interest rates to curb inflation. Market pricing currently reflects just under a 50% chance of a BoE rate cut by June, and sees a cut by August as all but certain. Currencies are very sensitive to changes in the interest rate differential between different markets. https://www.reuters.com/markets/currencies/sterling-rises-pmi-data-stronger-than-expected-inflation-pressures-elevated-2024-02-22/