2023-12-23 01:37

WASHINGTON, Dec 22 (Reuters) - The White House on Friday said it was closely monitoring Houthi attacks on ships in the Red Sea, but did not expect the situation to have a significant impact on holiday prices or the availability of products. Lael Brainard, director of the White House National Economic Council, told reporters that the U.S. economy was proving resilient, with inflation having come down faster than even the more optimistic forecasts had indicated, the labor market rebounding, and growth remaining solid. But she said the administration remained keenly alert to risks, including issues such as Russia's ongoing war in Ukraine and its potential to disrupt grain markets, and the evolving situation in the Red Sea. "Geostrategic risks remain elevated. We see that also in the Red Sea, where we're closely monitoring and we're working with partners," she said, adding that there was no evidence thus far to suggest an impact on prices or the availability of products. The Houthi militant group, which controls vast amounts of territory in Yemen after years of war, since last month has fired drones and missiles at international vessels sailing through the Red Sea, attacks that it says respond to Israel's assault on the Gaza Strip. The White House has repeatedly called for those attacks to stop. On Friday, it said Iran was "deeply involved" in planning operations against commercial vessels in the Red Sea, something Iran denies. Brainard said Biden's national security team was "very focused" on the situation in the Red Sea, given its importance to global shipping, and remained in constant communication with ocean shippers and countries in the region to ensure freedom of navigation and to bolster regional security. Asked about the potential inflationary impact of the attacks, Brainard said: "Based on the information we have, diversion of vessels from the Suez Canal to the Cape of Good Hope is not anticipated to have a large effect on the availability of products for holiday shopping, but of course we will continue to monitor that." https://www.reuters.com/world/white-house-says-its-monitoring-red-sea-attacks-not-seeing-big-impact-holiday-2023-12-22/

2023-12-23 01:08

Dec 22 (Reuters) - OpenAI is in early talks to raise a fresh round of funding at a valuation at or above $100 billion, Bloomberg News reported on Friday, citing people with knowledge of the matter. The terms, valuation and timing of the funding round have not yet been finalized and could still change, the report said. OpenAI has also held discussions to raise funding for a new chip venture with Abu Dhabi-based G42, according to the report. It is unclear if the chip venture and wider company funding were related, the report said, adding that OpenAI has discussed raising between $8 billion and $10 billion from G42. OpenAI is set to complete a separate tender offer led by Thrive Capital in early January, which would allow employees to sell shares at a valuation of $86 billion, according to the report. Microsoft (MSFT.O) has committed to invest over $10 billion in OpenAI, which kicked off the generative artificial intelligence craze in November 2022 by releasing ChatGPT. Microsoft said it had nothing to share when contacted by Reuters. OpenAI did not respond to a Reuters request for comment. ChatGPT, a chatbot which can generate human-like responses based on user prompts, has helped AI's popularity and fueled a meteoric rise in the valuation of San Francisco-based OpenAI. The company has previously made a $300 million share sale at a valuation of $30 billion. In late November, OpenAI CEO Sam Altman said Microsoft would take a non-voting, observer position on the company's board. OpenAI had ousted Altman on Nov. 17 without any detailed cause, setting off alarm bells among investors and employees. He was reinstated four days later with the promise of a new board. https://www.reuters.com/technology/openai-talks-raise-new-funding-100-bln-valuation-bloomberg-news-2023-12-22/

2023-12-23 00:42

PCE price index falls 0.1% in November PCE price index increases 2.6% year-on-year Core PCE price index gains 0.1%; up 3.2% year-on-year Durable goods orders jump 5.4%; new home sales slump 12.2% WASHINGTON, Dec 22 (Reuters) - U.S. prices fell in November for the first in more than 3-1/2 years, pushing the annual increase in inflation further below 3%, and boosting financial market expectations of an interest rate cut from the Federal Reserve next March. The report from the Commerce Department on Friday also showed underlying inflation pressures continuing to subside. Cooling inflation left more income at the disposal of households, helping to underpin consumer spending and the overall economy as the year winds down. This was yet another data set showcasing the durability of the economic expansion, thanks to a resilient labor market. The economy has defied dire predictions of recession from economists and some business executives going back to late 2022. "(Fed) Chair (Jerome) Powell couldn't have asked for a better present this year," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. "So far at least, the endgame is turning out better than the Fed or nearly anyone could have imagined at the start of the year. While the Fed won't rush into cutting rates, it's likely now just a matter of time." Inflation, as measured by the personal consumption expenditures (PCE) price index, fell 0.1% last month, the Commerce Department's Bureau of Economic Analysis said. That was the first monthly decline in the PCE price index since April 2020 and followed an unchanged reading in October. Food prices edged down 0.1% and energy prices dropped 2.7%. In the 12 months through November, the PCE price index increased 2.6% after rising 2.9% in October. October marked the first time since March 2021 that the annual PCE price index was below 3%. Economists polled by Reuters had forecast the PCE price index unchanged on the month and rising 2.8% year-on-year. Excluding the volatile food and energy components, the PCE price index rose 0.1% in November, matching October's gain. The so-called core PCE price index advanced 3.2% year-on-year, the smallest rise since April 2021, after increasing 3.4% in October. The Fed tracks the PCE price measures for its 2% inflation target. The government reported on Thursday that core PCE inflation increased at a 2.0% annualized rate in the third quarter. That, combined with November's mild gain, put the six-month core PCE inflation rate at 1.9%. Monthly inflation readings of 0.2% on a sustainable basis are needed to bring inflation back to the Fed's target, economists say. Financial markets saw a roughly 75% chance of a rate cut at the Fed's March 19-20 policy meeting, according to CME Group's FedWatch Tool. Subsiding inflation is brightening the mood for many Americans, with a separate report from the University of Michigan on Friday showing consumer sentiment soaring in December, reversing all declines from the previous four months. President Joe Biden, whose popularity has been hurt by unhappiness over the high cost of living, welcomed the news. "This reflects the hard work we did together to fix our supply chains and the surge of Americans into the workforce. It's remarkable progress," Biden said in a statement. Stocks on Wall Street were trading higher. The dollar fell against basket of currencies. U.S. Treasury prices rose. CONSUMER SPENDING RISES The U.S. central bank held rates steady last week and policymakers signaled in new economic projections that the historic monetary policy tightening engineered over the last two years is at an end and lower borrowing costs are coming in 2024. Since March 2022, the Fed has hiked its policy rate by 525 basis points to the current 5.25%-5.50% range. With the labor market still fairly tight, wages jumped 0.6% last month, more than offsetting the drag on personal income from decreases in government aid, including food stamps, social security and Medicaid. Personal income rose 0.4%. The saving rate ticked up to 4.1% from 4.0% in the prior month, which bodes well for spending. Income at the disposal of households after accounting for inflation and taxes rose 0.4% after gaining 0.3% in October. That allowed Americans to open their wallets at the start of the holiday shopping season. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.2% last month after rising 0.1% in October. When adjusted for inflation, overall consumer spending increased 0.3% after nudging up 0.1% in October. The pick up in the so-called real consumer spending added to data this week, including single-family housing starts and building permits, in suggesting the economy was regaining speed after appearing to falter at the start of the fourth quarter. That was reinforced by a third report from the Commerce Department's Census Bureau showing orders for durable goods jumped 5.4% in November, recouping October's 5.1% drop. Though a fourth report from the Census Bureau showed new home sales plunging 12.2% to a seasonally adjusted annual rate of 590,000 units in November, a one-year low, the drop is likely temporary amid a dearth of previously owned houses on the market. Mortgage rates continue to decline from 23-year highs, which should help new home sales. Gross domestic product growth estimates for the fourth quarter range from as low as a 1.1% annualized rate to as high as a 2.8% pace. The economy grew at a 4.9% rate in the third quarter. "The U.S. economy is doing well heading into 2024," said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. "No recession in 2024." https://www.reuters.com/markets/us/us-annual-inflation-slows-further-below-3-november-2023-12-22/

2023-12-23 00:32

November PCE cooler than expected Durable goods orders surprise to the upside Nike dives after annual sales forecast cut Karuna climbs on Bristol Myers $14 bln buyout Indexes: Dow off 0.05%, S&P up 0.17%, Nasdaq gains 0.19% NEW YORK, Dec 22 (Reuters) - U.S. stocks gyrated to a mixed close on Friday as investors headed into the Christmas holiday weekend, having digested cooler-than-expected inflation data which firmed bets for Federal Reserve interest rate cuts in the new year. All three indexes turned less decisive in light trading as the afternoon progressed, after an initial rally on data showing inflation is easing closer to the U.S. central bank's target. The Nasdaq (.IXIC) joined the S&P 500 (.SPX) in positive territory, while the blue-chip Dow (.DJI) finished nominally lower. "Some traders are willing to back away late on a Friday in order not to be exposed over a long weekend, and we are in a period of heightened geopolitical risks," said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York. "But most traders are investors are in the market because this has been a huge rally." Small caps handily outperformed the broader market, with the Russell 2000 (.RUT) ending up 0.8%. All three indexes notched their eighth consecutive weekly gains, the longest weekly winning streak for the S&P 500 since late 2017. For the Nasdaq and the Dow, it marks the longest streak of consecutive weekly gains since the beginning of 2019. The S&P 500 is now within 1% of its record close reached in January 2022. Should it close above that level, that will confirm the benchmark index has been in a bull market since bottoming in October 2022. "In the context of what we've seen on a year-to-date basis, it's actually pretty extraordinary what we've seen in the fourth quarter," said Michael Green, chief strategist at Simplify Asset Management in New York. "Small caps continue their absolute tear." "The Russell 2000 (.RUT) has gone from being down on the year as of August to now being up 15.6% for the year," Green said. "This truly has become an 'everything' rally." A swath of data was released on the last trading day before the long weekend, notably the Commerce Department's Personal Consumption Expenditures (PCE) report, which showed inflation continues to meander down toward the Fed's average annual 2% target. A separate report showed new orders for core capital goods landed well above analysts' expectations, an upside surprise that bodes well for U.S. corporate spending plans. Together, they reinforce the conviction that not only will the central bank begin cutting interest rates as early as March 2024, but it might pull off reining in inflation without tipping the economy into recession, a "soft landing." "The PCE report was very dovish. The topline number showed deflation for the month. It was very positive and perhaps a step toward lowering rates," said Ghriskey. "Some call for that to happen in March. We think that's overly optimistic." "The economy is strong," Ghriskey added. "It doesn't need lower rates at the moment." Financial markets are pricing in a 74.1% likelihood that the Fed will implement a 25 basis point rate cut in March, according to CME's FedWatch tool. The Dow Jones Industrial Average (.DJI) fell 18.38 points, or 0.05%, to 37,385.97, the S&P 500 (.SPX) gained 7.88 points, or 0.17%, at 4,754.63 and the Nasdaq Composite (.IXIC) added 29.11 points, or 0.19%, at 14,992.97. Of the 11 major sectors in the S&P 500, consumer discretionary (.SPLRCD) was the sole loser, while consumer staples (.SPLRCS) enjoyed the largest percentage gain. Nike (NKE.N) tumbled 11.8% after the sportswear maker trimmed its annual sales forecast due to cautious consumer spending. Its peers Foot locker (FL.N) and Dick's Sporting Goods (DKS.N) shed 2.7% and 3.9%, respectively. Karuna Therapeutics (KRTX.O) soared 47.7% in the wake of Bristol Myers Squib's (BMY.N) agreement to acquire the drugmaker for $14 billion in cash. Advancing issues outnumbered decliners on the NYSE by a 2.25-to-1 ratio; on Nasdaq, a 1.92-to-1 ratio favored advancers. The S&P 500 posted 39 new 52-week highs and no new lows; the Nasdaq Composite recorded 176 new highs and 64 new lows. Volume on U.S. exchanges was 9.63 billion shares, compared with the 12.52 billion average for the full session over the last 20 trading days. https://www.reuters.com/markets/us/futures-inch-lower-with-all-eyes-inflation-data-nike-slides-2023-12-22/

2023-12-22 22:33

Dec 22 (Reuters) - U.S. oil giant ConocoPhillips (COP.N) on Friday gave the financial greenlight to its $8 billion Willow oil and gas drilling project in Alaska. "With this project authorization, we've begun winter construction," CEO Ryan Lance said. Environmental and indigenous groups in November asked a federal court in Alaska to temporarily bar ConocoPhillips from going forward with construction of the project in the state's Arctic, arguing a stay is necessary to stop imminent cultural and environmental harms. The Willow project area holds an estimated 600 million barrels of oil, and ConocoPhillips has said the project will produce up to 180,000 barrels of oil per day at its peak. The project development has been backed by Alaskan officials, who are hoping it will help offset oil production declines in a state whose economy relies heavily on the oil and gas industry. https://www.reuters.com/business/energy/conocophillips-move-forward-with-development-8-bln-willow-project-2023-12-22/

2023-12-22 22:15

WARSAW, Dec 22 (Reuters) - Poland's deputy infrastructure minister said on Friday that he hoped truckers' protests on the border with Ukraine could be solved before the end of the year. Polish drivers have been blocking several crossings with Ukraine since Nov. 6, demanding the European Union reinstate a system whereby Ukrainian companies need permits to operate in the bloc and the same for European truckers to enter Ukraine. "We had a long meeting with my (Ukrainian) counterpart ... today we are agreeing on the last details that will lead to the final agreement," Polish deputy infrastructure minister Pawel Gancarz said during a press conference in Kyiv. "I hope that after today's meeting, before Christmas, there will be a meeting between (Polish Infrastructure) Minister Klimczak and the protest committee at the border, we hope that for Christmas, before the end of this year, this problem will be solved." Ukraine's Ministry of Communities, Territories and Infrastructure Development said in a statement that the Kyiv meeting produced an "agreement on common positions to unblock the border. The parties have reached an understanding regarding compromise solutions and their implementation." It said the next stage in carrying out a "plan of action" would involve talks between the Polish ministry and the protesting truckers. Polish truckers resumed their blockade of one of the main crossings at the Ukrainian border this week after a short break. According to data from Poland's Customs office, the wait at the Dorohusk crossing was 78 hours on Friday. https://www.reuters.com/world/europe/poland-hopes-truckers-protests-can-be-solved-by-year-end-2023-12-22/