2024-01-10 19:11

WASHINGTON, Jan 10 (Reuters) - The head of the largest U.S. oil and gas lobby group on Wednesday said that if regulators slow down or stop approving liquefied natural gas exports, they will put allies in Europe and Asia at risk. American Petroleum Institute President Mike Sommers issued the warning in response to media reports this week that the administration of President Joe Biden, a Democrat, is considering whether to weigh climate change criteria in approvals for LNG terminals or expansions. "Halting US LNG approvals would put our allies at risk. This should not be controversial," Sommers said at an API event focused on top issues for 2024, adding that US LNG exports help reduce global emissions by displacing coal overseas. Ahead of the Nov. 5 presidential election, the Biden administration is balancing demand for U.S. LNG from European allies reducing dependence on gas from Russia, with outcry from environmentalists demanding a halt domestic fossil fuel projects. The U.S. has become the world's biggest exporter of LNG even as the administration has sought to transition away from fossil fuels, with environmentalists pressuring it to go faster. U.S. Department of Energy (DOE) reviews for LNG export permits have lengthened under Biden to 11 months or more, from seven weeks under former President Donald Trump, a Republican who worked to maximize U.S. energy output. Officials from the DOE and White House have been meeting to determine whether federal regulators should factor in climate change when deciding whether a proposed gas export project meets the national interest, Politico reported on Tuesday, citing sources familiar with the discussions. The DOE had no update on its LNG approval process, a spokesperson said. The Biden administration passed the biggest climate bill in U.S. history, the Inflation Reduction Act, and has imposed numerous climate regulations. Meanwhile, the U.S. has become the world's biggest oil and gas producer. That has prompted protests from environmentalists including author Bill McKibben and groups in the U.S. Gulf coast to stop future approvals for LNG exports including from Venture Global's Calcasieu Pass 2 (CP2) project in Louisiana. CP2 is awaiting approval from the Federal Energy Regulatory Commission, followed by export authorization from the DOE, before construction can begin. Venture Global spokesperson Shaylyn Hynes said "American LNG is the best weapon in our arsenal to quickly displace global coal use and combat climate change." Environmental groups said they will hold a sit-in at the DOE from Feb. 6-8 to seek a halt in licensing new LNG terminals. The groups have also urged the administration to adhere to campaign promises and international climate commitments. In December, the U.S. agreed along with nearly 200 countries at UN climate negotiations in Dubai to transition away from fossil fuel production. https://www.reuters.com/business/energy/oil-gas-lobby-group-warns-against-us-slowing-down-lng-approvals-2024-01-10/

2024-01-10 17:08

NEW YORK, Jan 10 (Reuters) - Credit rating agency Fitch said on Wednesday it expects U.S. fiscal deficits to remain high this year, and that fiscal policy and governance implications of the U.S. presidential elections will be key issues for the country's sovereign rating. Fitch last year downgraded the U.S. government's top credit rating to AA+ from AAA, citing fiscal deterioration and repeated down-the-wire debt ceiling negotiations. A major near-term shift to deficit reduction measures is unlikely because of political polarization, said Shelly Shetty, head of Americas Sovereign Ratings at Fitch Ratings, in a webinar on Wednesday. The U.S. debt rating would be hurt by a "marked increase" in general government debt, and a decline in coherence and credibility of policymaking that undermines the U.S. dollar's reserve currency status, she added. Fitch's downgrade in August, two months after the debt ceiling crisis was resolved, drew an angry response from the White House and surprised investors. It spotlighted the U.S. government's debt sustainability – a theme that fueled a summer bond sell-off as investors grew increasingly concerned over the widening federal debt burden and higher interest payments. The nonpartisan Congressional Budget Office (CBO) has estimated cumulative budget deficits of about $20 trillion in the coming decade. However, Fitch said the U.S. economic outlook has improved. It no longer expects a recession this year but "a more shallow downturn" than previously forecast, Fitch's Chief Economist Brian Coulton said in the webinar. When the agency cut the U.S. debt rating, it expected a mild recession by the end of 2023 and in the current quarter. Fitch expects the Federal Reserve to cut interest rates three times this year, a positive for corporate debt issuers, said Winnie Cisar, global head of strategy at CreditSights, a Fitch company. While the election is unlikely to affect high-yield and leveraged loan issuers' decisions to tap the debt markets, she predicted price volatility in secondary corporate debt markets around the presidential primary elections in March. https://www.reuters.com/markets/us/fitch-sees-high-us-fiscal-deficits-ahead-elections-2024-01-10/

2024-01-10 16:38

LONDON, Jan 10 (Reuters) - Investec, a bank, said on Wednesday it now expected three 25 basis-point interest rate cuts by the Bank of England in 2024 rather than its previous call of two and it said inflation was likely to fall to around 1.5% in the July-to-September period. "It is feasible that the economy remains subdued for longer and that this weakens both the labour market and the inflation profile by more than we are forecasting," Investec Chief Economist Philip Shaw said in a note to clients. "However in the absence of a major negative shock to the economy our core view remains that the five cuts in interest rates which are currently priced into UK markets for 2024 are a touch excessive." https://www.reuters.com/world/uk/investec-says-it-now-expects-three-boe-rate-cuts-2024-2024-01-10/

2024-01-10 16:00

NEW YORK, Jan 10(Reuters) - "Sell" or "split" was the favorite word for activist investors across the world last year when their demands for companies to pursue some form of mergers and acquisition-related activity hit a new record and appeared in roughly half of their 2023 campaigns even as M&A activity dropped off, according to new data from Barclays. Hedge funds Elliott Investment Management, ValueAct Capital, Jana Partners and others urged target companies to merge, split off units or sell themselves, with these demands show up in 49% of all campaigns last year. In the previous four years, mergers and acquisitions requests averaged 42%, the data show. "The activists told corporations that this is the new reality and it is time to move on," said Jim Rossman, global head of shareholder advisory at Barclays. But their requests came during a year takeover activity dropped to its lowest level in a decade, according to Dealogic data, leaving many with little to show for their calls. As total deal volume fell 18% to about $3 trillion, senior dealmakers described the year as one of the toughest in recent memory. Deals weren't getting done because potential partners couldn't agree on price and it was tougher to secure financing as interest rates rose. Still many seasoned activists summoned the self-confidence to make demands to corporate management even if they knew it would take longer than usual to get to the finish line, several fund managers and bankers said. Elliott, one of the industry's busiest activists, called on wireless tower owner Crown Castle to consider selling the business while Jana Partners pushed Frontier Communications to launch a sales process and ValueAct pressed Seven & i Holdings to spin off its 7-Eleven convenience store chain. Irenic Capital Management and Starboard suggested News Corp spin off its digital real estate division. While they might have to wait longer for a proposed outcome, activists described their demands last year when market conditions allowed them to build positions for less money. "Activists saw an opportunity to invest at really attractive points where markets featured depressed valuations," Rossman said, explaining why activism remained very strong last year with 229 new campaigns around the world after 235 campaigns in 2022. Besides M&A, activists also asked for board changes, changes in strategy and operations and improved governance. Changes in management, where activists call for top executives to be replaced, were last on the list of demands last year, showing up in only 10% of all campaigns, the data show. In 2022 there had been a 46% year-on-year increase in activists targeting a company's top brass, research firm Insightia found. https://www.reuters.com/markets/us/global-activist-investors-pressed-companies-sell-or-spin-2023-ma-dropped-off-2024-01-10/

2024-01-10 15:45

Jan 10 (Reuters) - Wells Fargo Investment Institute (WFII) boosted its 2024 year-end target for the S&P 500 (.SPX), citing an improved economic outlook and expectations of interest-rate cuts through the year. The institute expects the index to end the year in the range of 4,800 to 5,000, against the 4,600 to 4,800 range forecast earlier. It expects the U.S. Federal Reserve to start easing interest rates in a "restrained" manner by mid-2024, with three cuts through the year, bringing the Federal funds rate to between 4.50% and 4.75%, WFII said in a note on Tuesday. WFII expects the U.S. economy will grow at a rate of 1.3% this year versus its previous forecast of 0.7%, and sees a flatter "U" path for the economy, with a "somewhat stronger full-year 2024 growth pace on balance". Separately, it upgraded the global energy sector to "favorable" from "neutral", expecting oil prices to finish the year higher after bottoming out. But it downgraded the financials sector to "unfavorable" from "neutral", forecasting that it "will likely feel the brunt of the current economic slowdown". https://www.reuters.com/markets/us/wells-fargo-investment-institute-bets-rate-cuts-lifts-2024-sp-500-target-2024-01-10/

2024-01-10 15:36

WASHINGTON, Jan 10 (Reuters) - U.S. wholesale inventories fell for a second straight month in November, suggesting that a slow pace of inventory accumulation could undercut economic growth in the fourth quarter. The Commerce Department's Census Bureau said on Wednesday that wholesale inventories slipped 0.2% as estimated last month. Stocks at wholesalers dropped 0.3% in October. Economists polled by Reuters had expected that inventories would be unrevised. Inventories are a key part of gross domestic product. They declined 3.0% on a year-on-year basis in November. Economists expect business inventories to subtract from GDP in the fourth quarter. Growth estimates for the October-December quarter are as high as a 2.2% annualized rate. Private inventory investment contributed 1.27 percentage points to the economy's 4.9% growth pace in the third quarter. Businesses are holding back on inventory accumulation in anticipation of slower demand this year following 525 basis points worth of interest rate hikes by the Federal Reserve since March 2022. The government reported on Tuesday that imports of consumer goods dropped to a one-year low in November, contributing to pushing down overall goods imports 2.3%. Wholesale motor vehicle inventories dropped 1.1% in November after falling 0.4% in October. There were also decreases in wholesale stocks of lumber, computer equipment, metals, electrical equipment, groceries, apparel, petroleum, chemicals and hardware. But stocks of machinery and professional equipment rose. Excluding autos, wholesale inventories slipped 0.1% in November. This component goes into the calculation of GDP. Sales at wholesalers were unchanged in November after declining 1.5% in October. At November's sales pace it would take wholesalers 1.34 months to clear shelves. That was down from 1.35 months in October. https://www.reuters.com/markets/us/us-wholesale-inventories-unrevised-november-2024-01-10/