2024-01-04 19:23
Loonie trades in a range of 1.3318 to 1.3365 Services PMI shows sector in contraction Price of U.S. oil falls 0.6% Canadian bond yields rise cross the curve TORONTO, Jan 4 (Reuters) - The Canadian dollar was little changed against the greenback on Thursday, with the currency giving back earlier gains as data showing that Canada's service sector contracted for a seventh straight month added to worries about a possible recession. The loonie was trading nearly unchanged at 1.3355 to the greenback, or 74.88 U.S. cents, after moving in a range of 1.3318 to 1.3365. On Wednesday, the currency touched its weakest intraday level in nearly two weeks, at 1.3371. "Having started the trading session reflecting the positive tone in equities, the Canadian dollar received a dose of reality as data again highlighted the elevated risk that the economy is undergoing a recession," said Simon Harvey, head of FX analysis for Monex Europe and Monex Canada. Activity in Canada's service sector deteriorated in December as elevated borrowing costs weighed on the housing market, S&P Global Canada services PMI data showed. The headline business activity index edged up to 44.6 in December from a near three-and-a-half-year low of 44.5 in November. But it remained well below the 50 threshold that separates expansion from contraction in the sector. The index has been below 50 since June. Canada's employment report for December, due on Friday, could offer further clues on the state of the economy. Analysts expect a jobs gain of 13,500. A decline in the price of oil, one of Canada's major exports, was also a headwind for the currency as massive weekly gasoline and distillate stock builds overshadowed a larger-than-expected crude stock draw. U.S. crude futures were down 0.6% at $72.28 a barrel. Canadian bond yields rose across the curve. The market was tracking moves in U.S. Treasuries as data showed the number of Americans filing new claims for jobless benefits dropping to a two-month low. The 10-year yield was up 7.3 basis points at 3.233%. https://www.reuters.com/markets/currencies/c-gives-back-earlier-gains-data-showcases-recession-risk-2024-01-04/
2024-01-04 19:19
Jan 4 (Reuters) - Apple (AAPL.O) and Disney (DIS.N) cannot avoid shareholder votes about their use of artificial intelligence put forward by a labor group, the top U.S. securities regulator has ruled. In notices dated Jan. 3, the U.S. Securities and Exchange Commission rejected requests by the iPhone maker and by the entertainment giant to exclude from their upcoming annual meetings calls for reports on their use of AI. Corporations have embraced the new technology for its promised efficiencies. But the trend has prompted fears it would replace many creative and professional workers or unfairly draw on their work, issues in recent Hollywood labor disputes and a recent New York Times lawsuit. The similar shareholder proposals were filed by a pension trust of the AFL-CIO, the largest American labor union federation, which also has AI measures pending at four other technology companies. At Apple, the group asked for a report on the company's use of AI "in its business operations and disclose any ethical guidelines that the company has adopted regarding the company’s use of AI technology." In a similar request, it also asked Disney to report on its board's role overseeing AI usage. In its supporting statement at Apple the AFL-CIO wrote that "AI systems should not be trained on copyrighted works, or the voices, likenesses and performances of professional performers, without transparency, consent and compensation to creators and rights holders." Brandon Rees, deputy director of the AFL-CIO's office of investment, said the SEC's decisions could pave the way for agreements with Apple and Disney that would only bring them into line with the AI disclosures of other companies like Microsoft (MSFT.O). Apple and Disney, in contrast, "haven't even begun to grapple with these ethical issues" around AI, Rees said. Apple and Disney did not immediately responded to requests for comment. Both companies had argued the proposals could be left off their ballots because they related to "ordinary business operations," such as the company's choice of technologies. The SEC disagreed. "In our view, the Proposal transcends ordinary business matters and does not seek to micromanage the Company," the agency wrote in separate letters. https://www.reuters.com/technology/us-regulator-denies-apple-disney-bids-skip-votes-ai-2024-01-04/
2024-01-04 19:14
Parts of Europe hit by heavy rain or snow Temperatures fall in northern Scandinavia Flooding affects travel in some areas ARQUES, France, Jan 3 (Reuters) - Parts of northwestern Europe struggled on Wednesday to cope with the impact of the latest in a series of Atlantic storms which dumped rain or snow on already saturated ground, while northern Scandinavia experienced extreme cold. In northern France, rescue crews helped evacuate residents from inundated homes in the town of Arques in the Pas de Calais department, a region that had flooded for the second time in two months after heavy rainfall. Another 20-40 millimetres (0.85-1.7 inches) of rain was expected within hours, and a red alert indicated that the river Aa was close to breaking its banks. "The first time, you think it's had luck, but the second time, it starts to hit your morale and your wallet," said Arques resident Anthony Richevin as he was being evacuated. "You start wondering about the future." There are no large-scale evacuations planned in the region for the time being, Van Cauter added. A ferry travelling from Norway to Denmark with about 900 passengers aboard was unable to dock in Copenhagen because of the storm and was waiting for the wind to drop although that may not happen before Thursday morning, shipping company DFDS said. In Norway, the southern town of Kristiansand said it had closed its schools and cancelled all public buses following heavy snowfall. The same storm, labelled Henk on either side of the North Sea, brought gales and heavy rain to parts of England and Wales on Tuesday, causing power outages, disrupting train travel and forcing the closure of major roads because of flooding. Trees were blown onto roads and rail tracks, killing one motorist in southwestern England. A 59-year-old woman died in Belgium's East Flanders province on Tuesday after being hit by a blown-away fence during a period of heavy rainfall in the country, local governor Carina Van Cauter said in a statement on Wednesday. The Arctic village of Kvikkjokk recorded an overnight temperature of -43.6 Celsius (-46.5 Fahrenheit), Sweden's coldest for the month of January in 25 years, the Swedish Met Office said. In Lapland in northern Finland, a woman went missing in a blizzard while out skiing on Tuesday and was later found dead in an avalanche. A search was continuing on Wednesday for her child, Finnish police said. https://www.reuters.com/world/europe/northwest-europe-struggles-with-floods-snow-after-latest-atlantic-storm-2024-01-03/
2024-01-04 19:12
Jan 4 (Reuters) - South Africa needs a massive power plant construction programme to ensure adequate electricity supply up to 2050, a government planning document released for public comment on Thursday showed. Africa's most industrialised economy has suffered power cuts for more than a decade which have held back growth, reaching record levels last year lasting up to 10 hours a day. The latest iteration of the government's Integrated Resource Plan (IRP) analysed different options to close the power shortfall over the period up to 2030, and the period from 2031 to 2050. Up to 2030, the plan said the deployment of "dispatchable" power generation options like gas-to-power must be accelerated, and where technically and commercially feasible, the planned shutdown of coal-fired plants should be delayed to retain capacity. Dispatchable facilities can be ramped up or down depending on power system needs. Between 2031 and 2050, the IRP said ways to ensure security of supply included different combinations of nuclear power, renewables, clean coal and gas. "In the period between 2031 and 2050 the system will require a massive new build programme with significant capacity required in just over a decade from now," the IRP said. South Africa was once seen as a poster child for the energy transition away from polluting coal-fired power plants that still provide the bulk of its electricity needs. But a worsening of its power crisis has forced the government to rethink and potentially delay its strategy of closing old coal stations in an effort to keep the lights on. https://www.reuters.com/business/energy/south-africa-releases-draft-long-term-power-plan-2024-01-04/
2024-01-04 18:52
LONDON, Jan 4 (Reuters) - Billionaire investor Cliff Asness's AQR Capital Management finished 2023 with double digit returns in several of its funds, buoyed by stock selection, bonds, European natural gas and iron ore, a source familiar with the matter said on Thursday. The $99 billion investment manager, known for its quantitative strategies, returned a net 18.5% for the year in its AQR Absolute Return strategy, its longest running multi-strategy, the source familiar with the firm's performance said. This compared with an almost 44% net return in 2022, the source said. Stock selection and in particular, value investing helped explain last year's success for AQR's fund, the source added. Asness predicted in January 2023 that this kind of investing which means "going long cheap companies and shorting expensive ones" within certain sectors would be "unusually attractive" for the year. A short position is a bet an asset price will fall in value. AQR Apex Strategy, a newer multi-strategy fund, also benefited from positive stock trades as well as success from some economic trends said the source, posting a net 16.2% performance versus 17.1% in 2022. Generally, systematic hedge funds and particularly those trading trends had a choppy year. The effects of global interest rate hikes trickled through economies and markets in 2023, with a banking crisis, and soaring bond yields taking many by surprise. Hedge funds in 2023 averaged a 5.7% return in the year through November, according to hedge fund research firm PivotalPath. Equities and credit-focused strategies were the best performers, while macro and managed futures lagged. But AQR's alternative-trend following Helix Strategy returned a net 14.3% in 2023 versus 49.1% in 2022 and saw tailwinds in bonds and commodity markets such as iron ore, European natural gas and power prices, said the source. The AQR Equity Market Neutral Global Value strategy returned a net 20.6% in 2023 versus a 44.7% return in 2022. Bloomberg first reported the news of the performance earlier on Thursday. https://www.reuters.com/business/finance/investment-manager-aqr-ends-2023-with-returns-over-14-several-funds-source-2024-01-04/
2024-01-04 18:09
NEW YORK, Jan 4 (Reuters) - Alberto Musalem, an economist and former New York Federal Reserve staffer, has been tapped to become the new president of the St. Louis Fed, the regional bank said on Thursday. Musalem, 55, succeeds James Bullard, who led the St. Louis Fed from 2008 until his unexpected resignation last July, when he announced he was leaving to become the dean of Purdue University's business school. Kathleen O'Neill, the St. Louis Fed's first vice president, will continue to serve as its interim leader until Musalem starts his new role on April 2. Musalem will bring extensive market, public policy and central bank experience to the St. Louis Fed. He recently served as co-chief investment officer and co-founder of Evince Asset Management and was also an executive vice president at the New York Fed between 2014 and 2017, focusing on the financial sector and broader policy issues. He also was a partner and managing director at Tudor Investment Corporation and worked as an economist at the International Monetary Fund. Musalem is currently an adjunct professor at Georgetown University. He also serves on the boards of the Federal Home Loan Mortgage Corporation and Man Group, roles the St. Louis Fed said he will give up. He has a PhD in economics from the University of Pennsylvania and holds master's and bachelor's degrees in economics from the London School of Economics and Political Science. Born in Bogota, Colombia, Musalem is a U.S. citizen. "As an experienced economist, former Federal Reserve leader, collaborator and communicator, he comes with the exceptional technical expertise and leadership abilities needed to contribute to effective policymaking and advance a large organization in service to the public," St. Louis Fed Director Carolyn Chism Hardy said in a press release. Hardy, who is president and CEO of Chism Hardy Investments, LLC, helmed the regional bank's presidential search committee. INTO THE FIRE The incoming St. Louis Fed chief has big shoes to fill. Bullard was an active voice on monetary policy and economic issues, and at points his comments were among the most market-moving of all U.S. central bank officials. Musalem will begin his first voting role on the rate-setting Federal Open Market Committee next year. In his final stretch at the St. Louis Fed, Bullard was an early supporter of dialing back on the central bank's pandemic-era stimulus after amid a surge in inflation, a path the central bank eventually embraced in an aggressive fashion. Musalem will arrive as the Fed has almost certainly ended its rate hiking campaign following a sizable moderation in inflation pressures. While financial markets are already betting on Fed rate cuts this year, policymakers are eyeing what they see as an uncertain outlook and are still debating how long they'll need to keep the central bank's benchmark overnight interest rate in the current 5.25%-5.50% range to ensure inflation returns to the 2% target. Fed officials also are contemplating the ongoing drawdown of the central bank's $7.764 trillion balance sheet. The Fed is allowing nearly $100 billion in Treasury bonds and mortgage-backed securities that it holds to expire each month and has shaved more than $1 trillion from its holdings since they peaked at nearly $9 trillion in 2022. With rate hikes likely done and liquidity being drained from the financial system, the Fed is widely expected to stop the drawdown later this year, although policymakers have yet to give much guidance except to acknowledge planning may start soon. LEADERSHIP CHALLENGE The 12 regional Fed banks are quasi-private institutions technically owned by member banks and operating under the oversight of the Fed's Board of Governors in Washington. The regional banks collect local economic information, help oversee regulated financial institutions, and contribute to making monetary policy decisions. The regional Fed banks have long faced criticism for the opacity of their leadership selection processes. Unlike Fed governors or the head of the U.S. central bank, who are named by the president and confirmed by the U.S. Senate, there's generally little public knowledge of who is in the running for regional Fed leadership slots. The central bank's in-house watchdog said in a recent report that it will be looking at the process for selecting regional bank leaders, noting that "consideration of diversity and inclusion" will be included. The Fed in recent years has also faced considerable outside pressure to diversify its top leadership ranks. At the regional level, Atlanta Fed President Raphael Bostic became the first African American to head one of the Fed banks in 2017, with Boston Fed President Susan Collins becoming the second in 2022. https://www.reuters.com/markets/us/st-louis-fed-says-alberto-musalem-succeed-bullard-president-2024-01-04/
