2024-02-20 19:12

BERLIN, Feb 20 (Reuters) - Germany will earmark up to 3.53 billion euros ($3.8 billion) of public funds to procure green hydrogen and its derivatives between 2027 and 2036, the economy ministry said on Tuesday, as Berlin bets on the fuel to help decarbonise Europe's biggest economy. "The aim of the funding measure is to bring together supply and demand, both in terms of quantities and prices," the ministry said in a statement, adding that money will come from the government's Climate and Transformation Fund. Germany is seeking to expand reliance on hydrogen as a future energy source to cut greenhouse gas emissions for highly polluting industrial sectors that cannot be electrified such as steel and chemicals and reduce dependency on imported fossil fuel. Berlin will have to import up to 70% of its hydrogen needs in the future as Europe's largest economy aims to become climate-neutral by 2045, according to the government's updated hydrogen strategy published last summer. The earmarked funds will be used to compensate for the difference between supply and demand prices, the ministry said, adding that it was discussing the details of the use of the new funding with the European Commission. In an effort to speed up the global market ramp-up of green hydrogen and boost investments, the government launched the H2Global project in 2021 by using a "double auction". Under the scheme, hydrogen or hydrogen derivatives are bought cheaply on the world market and sold to the highest bidder. "It's a start. No more, no less," Helge Barlen, a hydrogen expert at AFRY Management Consulting said, adding whether this sum would be sufficient to boost Germany's hydrogen economy would depend on how large the difference between bid and ask prices would evolve. To give an idea of dimensions, Barlen said that with a hypothetical price difference of the 4 euros per kilogramme of hydrogen that was the cap in the first H2Global funding tranche, this funding amount would support close to one million metric tons over 10 years. This could serve to decarbonise about 5% of the German steel industry at its current annual output for example, he added. David Wenger, a hydrogen projects developer, said Tuesday's announcement showed the government's "infinite optimism" regarding the volumes of green hydrogen produced globally in the near future and how quickly output will be scaled up. "The reality is different to what politicians are currently imagining. The industry still has a lot of homework to do to reduce the cost and improve the technology, so I don't think that we will see the announced quantities in 2030," Wenger said. ($1 = 0.9244 euros) https://www.reuters.com/sustainability/sustainable-finance-reporting/germany-earmarks-up-38-bln-future-green-hydrogen-imports-2024-02-20/

2024-02-20 19:12

CAPE TOWN, Feb 20 (Reuters) - A "death ship" carrying thousands of cattle whose foul smell caused a stink in top tourist city Cape Town is expected to continue its voyage to Iraq later on Tuesday, port officials said. The ship, en route from Brazil and carrying an estimated 19,000 cattle, docked in Cape Town on Sunday, bringing with it a nauseating odour that permeated the city centre. Some residents thought a large nearby sewerage works had conked out or their nostrils were being assailed by domestic plumbing problems, a Reuters witness said. A local city councillor, however, confirmed on Monday that the smell was indeed from the "Al Kuwait" vessel, which was immediately boarded by inspectors from the National Council of Societies for the Prevention of Cruelty to Animals (NSPCA) on Sunday evening. "According to the latest update from the vessel agent and the terminal operator, the estimated departure of the vessel remains 20 February 2024," port operator Transnet said in a statement on Tuesday. Transnet said the vessel docked for animal feed, vessel stores, bunkers and medical assessments on the bovines. The NSPCA, which campaigns against the live transport of animals, dubbed the vessel a "Kuwaiti death ship" and attributed the smell to the awful conditions animals endured, having spent two and a half weeks on board, with a build-up of faeces and ammonia. "The faeces that the cattle were standing is already basically up to the top of their hooves in some pens," Grace le Grange, a senior inspector who boarded the vessel, told Reuters. "In general the cattle themselves were not in a physically bad condition in terms of weight-wise, but our concern is what happens when they get back onto the ocean," she said. Le Grange said several animals had to be euthanised due to injuries. https://www.reuters.com/world/kuwaiti-death-ship-carrying-cattle-causes-stench-cape-town-2024-02-20/

2024-02-20 18:59

Feb 20 (Reuters) - Crown Castle's (CCI.N) , opens new tab co-founder Ted Miller said on Tuesday that the U.S. telecommunications infrastructure company could fetch as much as $15 billion by selling its fiber assets if it let him and his partners join its board of directors. Miller told Reuters that he and his team were best positioned to find buyers for the fiber business and help Crown Castle upgrade its tower assets so it can keep up with advances in wireless network technology. "When you create a company from scratch and take it public, you learn a lot more than when you take over from someone else," Miller said. Crown Castle said in a statement that its board had rejected Miller and his partners as director nominees after interviewing them. It added that it appreciated Miller's contributions to the company more than 20 years ago, but that Miller's nominees "do not possess the relevant expertise and experience to successfully oversee Crown Castle's strategy." Miller could now take his and his colleagues' board director nominations directly to Crown Castle shareholders at the company's annual meeting for a vote. The Houston-based company said in December it would explore a sale of its fiber business after reaching a deal with hedge fund Elliott Investment Management over shaking up its board. Crown Castle shares rose 1.5% to $109.84 on Tuesday in New York. Miller has told Crown Castle he can help it fetch between $12 billion and $15 billion for its fiber assets and that he has already carried out preparatory work that will save it six months in finding buyers, so it can complete a deal by the end of 2024. This work, on which Miller said he had spent $5 million, included signing 25 non-disclosure agreements with prospective buyers and identifying more than $1 billion in tax benefits that could be realized if the deal closed this year, Miller said. In a presentation to Crown Castle's board, Miller said he wanted the company to assume the cost of the work. The deal's proceeds could be used to pay down debt and buy back $1.9 billion in stock, he added. Miller, who together with co-investors has a stake in Crown Castle worth more than $100 million, has asked that the company appoint him executive chairman and that three of his partners also join the board of directors. They are former Crown Castle chief financial officer Chuck Green, former Credit Suisse investment banker David Wheeler, and Tripp Rice, Miller's son-in-law and a partner in Miller's firm, 4M Investments. The Wall Street Journal reported this month on Miller's challenge against Crown Castle's board. MILLER SEEKS OVERHAUL Miller said he could help eliminate the discount at which Crown Castle shares trade to peers such as SBA Communications (SBAC.O) , opens new tab and American Tower (AMT.N) , opens new tab not just through the fiber divestiture but by improving operations. He has criticized the company for raising its staff headcount while keep its number of towers steady at around 40,000, and for not fully adopting technological innovations such as drone data and artificial intelligence. "I don't believe Crown Castle has the leadership needed to right the ship, sell the fiber business, invest in its towers, restore relationships with major carriers and fix its broken culture," Miller said. Crown Castle is looking for a chief executive after Jay Brown stepped down last month following more than seven years at the helm. Anthony Melone, a former Verizon Communications (VZ.N) , opens new tab chief technology officer and one of Crown Castle's board directors, is serving as interim chief executive. Miller also criticized Crown Castle's pact with Elliott and asked that Crown Castle let shareholders vote on it. The agreement, which added an Elliott representative and a former Level-3 Communications executive to Crown Castle's board, gave Elliott too much influence without requiring it to stick to ownership thresholds, Miller said. Crown Castle said there was no requirement under corporate law in Delaware, where the company is incorporated, to stage a shareholder vote on the agreement with Elliott, and that doing so would be a departure from norms. It added that Elliott had no influence over Crown Castle's board prior their pact, and that there was no conflict of interest in negotiating it. Elliott sold down its investment in Crown Castle from about $2 billion in December to just $141 million, Miller said, citing Elliott's most recent regulatory filing. Such filings, however, do not always accurately reflect an investor's total stake in a company, because they can exclude derivatives and other instruments that give exposure to a stock. An Elliott spokesperson said it was false for Miller to claim Elliott had sold more than 90% of its Crown Castle stake. "Elliott remains one of the largest investors in the company and is the largest investor after the three index fund shareholders," the spokesperson said. Miller, 72, co-founded Crown Castle in 1994 and served as its chief executive until 2001. He has since founded and served on the board of several other companies. Crown Castle, which rents out towers to wireless carriers such as Verizon and AT&T (T.N) , opens new tab, has a market value of $47 billion. Its shares have dropped 23% in the last 12 months versus an 11% decline in American Tower's shares. https://www.reuters.com/markets/deals/crown-castle-co-founder-says-company-could-fetch-up-15-bln-fiber-assets-2024-02-20/

2024-02-20 18:34

Feb 20 (Reuters) - The Conference Board on Tuesday abandoned a long-running call for the U.S. economy to fall into recession, although its Leading Economic Index still sees economic output flatlining in the months ahead. The business research group's index, meant to be a gauge of future economic activity, fell 0.4% in January to 102.7, the lowest level since April 2020 when the U.S. was in a brief recession after the onset of the COVID-19 pandemic and related shutdowns. It was the 23rd straight monthly decline, just one month short of the record-long slump that began in April 2007 and ran through March 2009 during the global financial crisis. The LEI's six-month annualized rate of decline, however, has slowed sharply and the growth rate is around its least negative since August 2022. "While the declining LEI continues to signal headwinds to economic activity, for the first time in the past two years, six out of its 10 components were positive contributors over the past six-month period," said Justyna Zabinska-La Monica, senior manager, business cycle indicators at the Conference Board. "As a result, the leading index currently does not signal recession ahead." Growth in the second and third quarters, however, should be near zero, she said. The Conference Board first announced in July 2022 that the index signaled a recession was coming. It had repeated that forecast with each month's report until Tuesday's release for January, even as U.S. economic output, job creation and consumer spending all continued at above-trend levels throughout and no recession has materialized. The largest positive contributor to the turn from a recession forecast came from the recent surge in stock prices to record highs. The benchmark S&P 500 index (.SPX) , opens new tab has risen by more than 20% since late October after signals from the Federal Reserve that its aggressive interest rate cycle aimed at containing inflation is over and that rate cuts are expected this year. Persistently low numbers of new filings for unemployment benefits and measures of future credit availability, home building permits and new orders of manufactured goods also contributed to the change in the outlook. Matthew Martin, U.S. economist at Oxford Economics, noted the continued decline in the overall index is now being led by a narrow group of indicators that are poised to turn higher in the months ahead. "The economy remains in growth mode, and the outlook continues to be optimistic due to the strength of the labor market, easing in financial market conditions, and robust consumer spending heading into 2024," Martin wrote in a note after the LEI release. "We estimate (first-quarter) consumption growth is tracking at 2.1% annualized, lower than our baseline forecast of 2.5%, though that would still be consistent with solid Q1 GDP growth of 2%." https://www.reuters.com/world/us/leading-economic-index-no-longer-signals-us-recession-conference-board-2024-02-20/

2024-02-20 17:47

NEW YORK, Feb 20 (Reuters) - Investors in interest rate options are paying for trades that benefit from a sharp slowdown in the U.S. economy, contrary to the upbeat outlook held by many bond market participants. Analysts said they have seen increased demand from hedge funds in the U.S. options market for so-called "receiver swaptions," a type of trade that pays off when interest rates fall. In general, receiver swaptions give buyers the right to enter into an interest rate swap where they receive the fixed rate and pay the floating one. Swaptions, which are options on interest rate swaps, are one segment of the more than $600 trillion over-the-counter interest rate derivatives market. Rate swaps measure the cost of exchanging fixed-rate cash flows for floating-rate ones, or vice versa. Investors use swaps to hedge interest rate risk. Receiver swaptions typically reflect concerns about the U.S. economic outlook, analysts said. This is the opposite of "payer swaptions" where investors buy the right to pay fixed and receive a floating rate, benefiting when rates rise as the Federal Reserve tries to slow a robust economy. "From a macroeconomic standpoint, risks are roughly balanced between a hard landing and no landing," said Bruno Braizinha, interest rates strategist, at BoFA Securities in New York, referring to economic scenarios that reflect contraction and strong growth. "But the options market is pricing those probabilities more skewed towards a hard landing," he added. Receivers were notable on shorter tenors, analysts said, such as the one-year at-the-money options on one-year swap rates , that part of the curve in which Fed policy is being priced. Asset managers, on the other hand, are hedging scenarios where the economy stays resilient and interest rates stay higher for longer, Braizinha said. In this case, fund managers have been buying payer swaptions. Overall, the soft landing scenario is still the majority view, analysts said, but the hard landing case is gaining momentum. A soft landing or no landing has been the predominant view after a slew of data that showed the U.S. economy remained stable despite being subjected to a historically aggressive Fed tightening. Jeff Klingelhofer, co-head of investments at Thornburg Investment Management in Santa Fe, New Mexico noted that a hard landing for the U.S. economy is a reasonable expectation having gone through the Fed's ultra-tight monetary policy. "Just textbook economics: Higher rates mean the bar for future demand is tougher. And because a recession hasn't come to fruition at this point, a lot of investors are quickly pivoting to, well, it's not going to happen. I think that's a mistake," said Klingelhofer. He added that while there have been pockets of strength in some economic data, the majority of these numbers suggested that a slowdown is indeed occurring. VOLATILITY U.S. implied volatility or "vol" on swaptions has stabilized a little bit from high levels seen at the beginning of the year, but it remains elevated compared to numbers in November last year. Implied vol measures how much the options market believes interest rate swaps will move in either direction over a given time frame. Option demand for hedging or speculative purposes tends to lift vol. The higher the vol, the greater the perceived instability over a given period. For instance, volatility on shorter-dated swaptions such as the three-month expiry on one-year swap rates, which reflect near-term uncertainty, was 36.03 basis points (bps) on Tuesday. That's down from 40 bps seen around mid-January, but higher than the level hit in late November of about 33 bps. U.S. vols are also higher than in the euro zone where a slowdown is already underway. Gross domestic product growth for the region was flat in the fourth quarter after a 0.1% contraction in the third. Implied vol on Europe's three-month options on one-year swap rates was 26.6 bps on Tuesday, , down from late January when vols were at 31 bps. Amrut Nashikkar, managing director, fixed income strategy, at Barclays in New York attributed higher U.S. vols relative to Europe to the difficulty in assessing the restrictiveness of Fed policy. "U.S. data has not evolved on the broad front given the big upside surprises," Nashikkar said. "In Europe, the ECB (European Central Bank) raises rates and Europe hits a slowdown. In the U.S. it's much harder to put a firmer bound on it and that's why we have this fear of a big shock." https://www.reuters.com/markets/us/us-hard-landing-bets-rise-rate-options-market-after-fed-hikes-2024-02-20/

2024-02-20 17:00

LA PAZ, Feb 20 (Reuters) - Bolivia's government set out on Tuesday a package of measures to spur investment and exports as it seeks to reverse a worsening dollar scarcity that has left shelves empty and workers unpaid. The government of President Luis Arce said its plan, agreed with businesses, would aim to cut red tape for exports, increase investment in grains production, make diesel imports easier, and allow bigger trucks on the roads. Reserves have plunged from a peak of some $15 billion a decade ago to under $2 billion now, eroded by sliding production and exports of natural gas, the mainstay of the Bolivian economy in the last 20 years. Truckers have been striking in political capital La Paz over delayed pay, while Fitch slashed , opens new tab the country's debt rating deep into 'junk' territory earlier this month, citing the slide in reserves levels that it said threatens economic stability. "With these measures we will try to gradually moderate the shortage of dollars in the private sector," Minister of Economy Marcelo Montenegro said on Tuesday, adding the government aimed to bring in up to $5 billion via the farming and mining sectors. The problem is stark. Net total reserves have halved in the last year, and the cash amount is now under $200 million, according to the latest data. Most of the reserves are in gold. Jaime Ascarrunz, president of Bolivia's national chamber of commerce, said the business sector had been pushing measures to bolster exports and bring in hard currency. "The lack of dollars is something that greatly worries us, especially in the import sectors," he said. In banks and on the streets many people said they could not access dollars, leading some to buy them on the black market, where the price of dollars is near 8 bolivianos, above the official rate of 6.96. Others said they could not get imported materials they need. "Unfortunately we can't bring in more at the moment due to the lack of dollars," said La Paz veterinarian Fabiola Navia, pointing to half-empty shelves where medicines and medical supplies would normally be. "This is all the stock we have." Striking truckers in the city said the reserves slide was affecting the government more widely and holding up payments. "The losses are in the millions," said Ramiro Barrero, leader of the trucking union. "It's been months that we've been without payment." https://www.reuters.com/markets/currencies/bolivia-unveils-measures-tackle-sharpening-dollar-crisis-2024-02-20/