2023-12-21 01:48

BUENOS AIRES, Dec 20 (Reuters) - Argentine libertarian President Javier Milei on Wednesday signed a decree outlining economic reforms including an end to limits on exports plus measures to loosen regulations, as his new government combats a severe economic crisis. "This is only the first step," Milei said in a televised address. "The objective is to return freedom and autonomy to individuals and start dismantling the enormous amount of regulations that have impeded, hindered and stopped economic growth," he said. Among the reforms are plans to privatize state-owned companies, but Milei did not name specific firms. In the past, Milei, a self-described anarcho-capitalist, has said he favors the privatization of state-owned oil company YPF (YPFD.BA). Since his inauguration on Dec. 10, Milei has pledged "shock" therapy for the economy including deep spending cuts in a bid to tame triple-digit inflation. The former TV pundit rode a wave of popular anger to victory, campaigning on a promise to reverse the prolonged economic slump and blaming corrupt elites for the country's ills. His government, which has devalued the local peso currency by over 50%, has said it plans to hike taxes for Argentina's grains exports - a key source of global supply for processed soybeans, corn and wheat. The push for higher taxes intended to raise revenue so that other levies can be lowered was met last week with surprise and criticisms from farm groups that predicted the measure would hurt the industry. Grains exports are also a crucial source of foreign currency reserves for the central bank, needed to finance imports and pay down debts. Earlier on Wednesday, thousands took to the streets of Buenos Aires, the capital, to protest the government's austerity plans, lead by representatives for the unemployed demanding more support for the poor. Argentina's poverty rate soared past 40% in the first half of this year. https://www.reuters.com/world/americas/argentinas-milei-signs-decree-boost-exports-deregulation-2023-12-21/

2023-12-21 00:26

Consumer confidence index rises to 110.7 in December Labor market differential increases to 27.5 from 23.0 Existing home sales gain 0.8% in November Median house price rises 4.0% to $387,600 from a year ago WASHINGTON, Dec 20 (Reuters) - U.S. consumer confidence increased to a five-month high in December, with Americans growing more optimistic about current and future business conditions as well as the labor market, which could help to underpin the economy early next year. The jump in confidence reported by the Conference Board on Wednesday occurred across all age groups and household income levels. Though consumers continued to worry about inflation, many were planning to buy motor vehicles, houses and major appliances like refrigerators and clothes dryers over the next six months. More Americans also intended to go on vacations. The improvement in confidence was likely driven by rising stock markets, a decline in the average rate on the most popular mortgage from 23-year highs as well as lower gasoline prices. That fits in with economists' expectations that the economy would avoid a recession next year. "Consumer spirits are perking up for the holiday season which is a sign Christmas is still coming this year," said Christopher Rupkey, chief economist at FWDBONDS in New York. "This makes us more optimistic that economic growth will continue to stay in the plus column in the coming year." The Conference Board's consumer confidence index increased to 110.7 this month, the highest reading since July, from a downwardly revised 101.0 in November. Economists polled by Reuters had forecast the index would rise to 104.0 from the previously reported 102.0. The increase in confidence was largest among households in the 35-54 age group and with annual incomes of $125,000 and above. The survey's present situation index, based on consumers' assessment of current business and labor market conditions, rose to 148.5 from 136.5 last month. Its expectations index, based on consumers' short-term outlook for income, business and labor market conditions, jumped to 85.6 from 77.4 in November, bouncing above 80, a level historically associated with a recession within the next year. "The top issue affecting consumers remains rising prices in general, while politics, interest rates, and global conflicts all saw downticks as top concerns," said Dana Peterson, the chief economist at the Conference Board in Washington. Consumers' 12-month inflation expectations fell to a more than two-year low of 5.6% from 5.7% in November, good news for policymakers. It mirrored a decline earlier this month in inflation expectations in the University of Michigan survey. The Federal Reserve held interest 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 U.S. central bank has hiked its policy rate by 525 basis points to the current 5.25%-5.50% range. U.S. stocks, which have seen strong gains inspired by rate-cut hopes in the last week, were trading marginally higher. The dollar was little changed against a basket of currencies. Prices of U.S. Treasuries rose. LABOR MARKET RESILIENCE With inflation cooling, consumers planned to boost spending over the next six months, according to the Conference Board survey. It showed an increase in the share of consumers intending to buy motor vehicles and major household appliances. The share planning a vacation was the highest in three years. While there is not a strong correlation between confidence and consumer spending, the rise in buying and vacation intentions suggests that consumers should continue to support the economy, thanks to a resilient labor market. The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, widened to 27.5 this month from 23.0 in November. This measure correlates to the unemployment rate in the Labor Department's monthly employment report. The jobless rate fell to 3.7% in November from 3.9% in October. "We were expecting a return to more normal holiday shopping patterns this season after two years of stimulus-fueled gains, but the surprisingly robust pop in consumer confidence suggests a possible merrier outcome, which could well carry into the new year," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. The share of consumers planning to buy a house over the next six months was the highest since August. The rate on the popular 30-year fixed-rate mortgage has dropped from 7.79% in late October to an average 6.95% last week, according to data from mortgage finance agency Freddie Mac. While retreating mortgage rates could offer a boost to the housing market, a chronic shortage of previously owned houses available for sale remains a constraint. This could lead to house prices increasing further next year. A National Association of Realtors report on Wednesday showed existing home sales increased 0.8% to a seasonally adjusted annual rate of 3.82 million units in November, ending a five-month string of decreases. Home resales, which account for a large portion of U.S. housing sales, dropped 7.3% on a year-on-year basis in November. There were 1.13 million previously owned homes on the market last month, well below the nearly 2 million units before the COVID-19 pandemic. The median home price rose 4.0% from a year earlier to $387,600 in November. "As a more dovish Fed implies even lower mortgage rates, we would expect further increases in home prices in 2024, with strength particularly into the spring buying season," said Veronica Clark, an economist at Citigroup in New York. https://www.reuters.com/markets/us/us-consumer-confidence-perks-up-december-2023-12-20/

2023-12-21 00:17

LOS ANGELES/NEW YORK, Dec 20 (Reuters) - Roxanne Ross of Florida is one of a growing number of Americans dodging higher interest rates on credit cards by instead turning to "buy now, pay later" services as they shop for holiday merchandise. Ross has her eyes on the latest Apple (AAPL.O) AirPods for $249. As of Monday, she was considering using Klarna, a buy now, pay later service, to spread the cost across four installments that stretch into next year. With U.S. credit card balances at record levels and defaults rising, more shoppers than ever are tapping buy now, pay later services on key shopping days to stretch their budgets. While they can be a tool for shoppers like Ross, who plans to continue taking out weeks-long, interest-free loans she has used for everything from plane tickets to hair extensions - consumer advocates are raising red flags about cash-strapped shoppers who are adding months-long loans with rates that can top out at 36% - the maximum lenders can charge in many states. Demand for debt counseling services is up significantly from last year, defying the seasonal slowdown experienced during the holidays, said Bruce McClary, spokesman for the National Foundation for Credit Counseling. The increased use of buy now, pay later loans from providers like Klarna, Affirm (AFRM.O), PayPal (PYPL.O) and Afterpay (SQ.N) "signal an increase of short-term debt on top of the more than $1 trillion in outstanding credit card balances," McClary said. Shoppers can purchase anything from a $3,253 Jil Sander leather tote bag marked 30% off from luxury retailer Farfetch (FTCH.N), to groceries from Walmart (WMT.N) and Burger King gift cards valued at up to $500 — getting the merchandise before it's fully paid for. Walmart in 2021 scrapped its layaway program, which allowed people to take home merchandise after completing a series of financed payments. The world's biggest retailer, Walmart replaced that with buy now, pay later options through Affirm, setting the stage for the industry's capture of 5% of total e-commerce worldwide. Retailers pay fees of anywhere from 2% to 8% of the purchase price to buy now, pay later firms. In comparison, credit card processing "swipe" fees run 2% to 4%. Klarna's holiday "hot deals" include 51% off the last generation iPhone 14 Pro through Walmart, with a price tag of $699. Consumer advocates warn that the loans could nudge some shoppers to splurge on jewelry, trendy clothing, video game consoles or appliances they otherwise could not afford. Providers told Reuters they are giving shoppers alternatives to the average credit card now charging over 20% interest, and are only extending loans to people they believe are willing and able to repay. Credit analysts are also registering concern about the spike in shoppers turning to Affirm, Klarna and other ubiquitous payment schemes for gifts this Christmas, when higher costs for housing and food as well as borrowing on everything from credit cards to car loans squeeze budgets. "It feels like the holiday debt hangover could be particularly nasty this year," Bankrate analyst Ted Rossman said. CHARGING 36% INTEREST The services do check shoppers' credit ratings to determine whether and what rate of interest to charge. Most heavily advertise 0% interest, "pay in four" biweekly installment loans. But at Affirm, for example, interest-free loans accounted for 26% of its products in its latest quarter, while interest-bearing loans stretching as long as five years accounted for 74%, according to a company presentation. Affirm said consumers see the total cost of the loan, including interest, up front. Unlike some other providers, it said it has no hidden interest charges. While cash-flush consumers are users, data shows that the typical BNPL borrower "already has more debt, is already more financially vulnerable and under stress," said Jennifer Chien, senior policy counsel for Financial Fairness at Consumer Reports. Financially vulnerable households that use the loans to buy food and other essentials can see their debt snowball, which puts them in an even deeper hole. And for those shoppers, the loans may not offer a lower interest alternative to the 30% interest rates on the most expensive store credit cards. But even users who aren't delinquent in their payments can quickly become overextended, raising the risk of spiraling costs, credit analysts warned. Seattle-area construction foreman Robert Boyer learned the hard way. He has a balance of more than $4,000 from 18 different Affirm buy now, pay later loans on Amazon.com (AMZN.O) merchandise, including a $700 drone, a hard hat, work boots and tools. Boyer, 51, has a previous bankruptcy years ago, and is careful not to run up credit card debt. A recovering addict, he says he got hooked on the instant gratification of buying with small monthly payments of $18 to $40. "I just wanted the stuff," said Boyer, who admits he didn't read the fine print. In a recent review of the debt, he found that the interest rates on his loans range from about 30% to 36%. "It's a trap. I was absolutely caught in it," said Boyer, who shared a screenshot showing that one $572 loan at the highest interest rate will ultimately cost him $747. He intends to repay everything in full, and doesn't plan on taking on any more debt - even though the Affirm app shows he still has $1,630 of purchasing power at Walmart (WMT.N) and the same amount at jeweler Zales. https://www.reuters.com/markets/us/us-buy-now-pay-later-splurges-raise-holiday-debt-hangover-risk-2023-12-20/

2023-12-20 23:51

FedEx falls on dour annual revenue forecast General Mills slips after annual sales forecast cut Alphabet up as report says Google to restructure ad sales unit Indexes down: Dow 1.27%, S&P 1.47%, Nasdaq 1.50% NEW YORK, Dec 20 (Reuters) - U.S. stocks closed lower on Wednesday after an abrupt mid-afternoon nosedive ended Wall Street's impressive rally, which had been driven by falling interest rates and the Federal Reserve's dovish turn. All three major U.S. stock indexes veered lower late in the session to end 1.3% to 1.5% below Tuesday's close. Stocks were "near all time highs, they hit resistance," said Jay Hatfield, portfolio manager at InfraCap in New York, noting the downturn was "surprisingly vociferous, things went from hot to cold real fast." "It’s surprising how aggressive the sell-off is, but it makes sense considering how far we’ve come," Hatfield added. FedEx (FDX.N) shares tumbled 12.1% after the package delivery company missed quarterly profit estimates and cut its full-year revenue forecast as it battles United Parcel Service (UPS.N) in what is shaping up to be a weak holiday season. UPS dropped 2.9%. Some traders said the market selloff could have been aggravated by large purchases of near-term put options on the S&P 500, including put contracts that would guard against a drop below the 4,755 level on the index by the end of the session. Put options convey the right to sell shares at a fixed price in the future and at times options-linked hedging activity can heighten volatility. In extended trade, Micron Technology (MU.O) jumped 4.4% after the memory chipmaker forecast quarterly revenue above estimates. During the session, the S&P 500 got within 0.5% of its all-time closing high. Reaching a new closing high would have confirmed the benchmark index had been in a bull market since closing at the bear market floor in October 2022. The index is now more than 2.0% below its record closing high. "We've had this aggressive rally in December and investor sentiment is high, it went from bearish to bullish in almost record time," said Thomas Martin, Senior Portfolio Manager at GLOBALT in Atlanta. "So the markets are asking 'now what?'" Last week, the Federal Reserve signaled it had reached the end of its tightening cycle and opened the door to rate cuts in 2024. Chicago Fed President Austan Goolsbee late Tuesday reiterated that the rate at which inflation cools to the Fed's annual 2% target will drive policy on rate reduction. Financial markets were pricing in a 71.1% likelihood of that first cut arriving as soon as March, according to CME's FedWatch tool. On the economic front, bigger than expected jump in U.S. consumer confidence and a surprise increase in existing home sales helped turn the major indexes green. The Commerce Department is expected to wrap up the week with its third and final take on third-quarter GDP on Thursday, to be followed on Friday by its wide-ranging Personal Consumption Expenditures (PCE) report, which will cover income growth, consumer spending and, crucially, inflation. The Dow Jones Industrial Average (.DJI) fell 475.92 points, or 1.27%, to 37,082, the S&P 500 (.SPX) lost 70.02 points, or 1.47%, to 4,698.35 and the Nasdaq Composite (.IXIC) dropped 225.28 points, or 1.5%, to 14,777.94. All 11 major sectors in the S&P 500 closed in the red, with consumer staples (.SPLRCS) suffering the steepest percentage decline after packaged food company General Mills (GIS.N) cut its sales forecast. Alphabet gained 1.2% after the company announced it was restructuring Google's ad sales unit. Management consulting firm Aon (AON.N) tumbled 6.0% following its announcement that it would buy privately held insurance broker NFP in a $13.4 billion deal. Declining issues outnumbered advancing ones on the NYSE by a 2.64-to-1 ratio; on Nasdaq, a 2.26-to-1 ratio favored decliners. The S&P 500 posted 36 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 210 new highs and 89 new lows. Volume on U.S. exchanges was 12.84 billion shares, compared with the 12.15 billion average for the full session over the last 20 trading days. https://www.reuters.com/markets/us/futures-take-breather-after-rally-fedex-slides-2023-12-20/

2023-12-20 23:32

Dec 20 (Reuters) - The Canada Energy Regulator said on Wednesday it denied a variance request from the Trans Mountain expansion project because the application did not adequately address concerns about pipeline integrity and environmental protection impacts. Trans Mountain had asked to be allowed to install smaller-diameter pipe in a 1.4-mile (2.3 km) section of the oil pipeline's route after encountering "very challenging" drilling conditions due to the hardness of the rock in a mountainous area between Hope and Chilliwack in the province of British Columbia. The CER denied that request on Dec. 5. In a statement outlining reasons for its decision, the CER said it had concerns about the quality of materials Trans Mountain planned to use, and that Trans Mountain did not demonstrate how it would conduct in-line inspections or adequately address potential environmental impacts. "These concerns outweighed the benefits for earlier completion of the Trans Mountain Expansion Project (TMEP)," the regulator said. Trans Mountain, which originally said granting the variance would save 59 days of construction time, did not immediately respond to a request for comment. Last week the Canadian government-owned corporation asked the regulator to reverse its variance decision on the grounds that it could cause a "catastrophic" two-year delay and billions of dollars in losses. Trans Mountain asked the CER to make a decision no later than Jan. 9 to allow the project to stick to its current construction schedule. The expanded pipeline is meant to start shipping crude by the end of the first quarter of 2024. The risk of further delays is weighing on Canadian crude prices. The CER decision was yet another setback for the long-delayed project, intended to triple shipments of crude from Alberta to Canada's Pacific coast to 890,000 barrels per day once it starts operating. Prime Minister Justin Trudeau's Liberal government bought the troubled project in 2018 to ensure the expansion went ahead, but costs have ballooned to C$30.9 billion ($23.11 billion), more than four times the original budget. Asked what a two-year delay might mean for the federal government's plans to sell the pipeline once it is complete, Canada's deputy prime minister, Chrystia Freeland, told reporters in Calgary the government was "absolutely committed" to getting the project done. ($1 = 1.3369 Canadian dollars) https://www.reuters.com/sustainability/climate-energy/canada-regulator-denies-trans-mountain-variance-due-pipeline-integrity-2023-12-20/

2023-12-20 23:29

LONDON/MADRID, Dec 20 (Reuters) - Exporters are scrambling to find alternative air, land and ocean routes to get toys, apparel, tea and auto parts to retailers as disarray ripples through freight supply chains around the world during a wave of attacks in the Red Sea. Iran-backed Houthi militants in Yemen have stepped up attacks on vessels in the Red Sea since Nov. 19 to show support for Hamas during Israel's military offensive in Gaza. The attacks have disrupted a key trade route linking Europe and North America with Asia via the Suez Canal. Container shipping costs have surged, more than tripling in some cases, as companies seek to move goods via other, often longer, ocean routes. If there are extended disruptions, the consumer goods sector that supplies the world's top retailers like Walmart and IKEA will face the biggest impact, S&P Global said in a report. Alan Baer, CEO of OL USA, has teams advising shipping and logistics clients to prepare for at least 90 days of Red Sea disruptions. "It doesn't help that it's Christmas weekend," said Baer. "We'll have a quiet period from now until Jan. 2, and then everybody will be frenetic." Some fast-acting companies already are trying to switch to so-called intermodal transport, which can involve two or more modes of transportation, said Jan Kleine-Lasthues, chief operating officer airfreight with leading German freight forwarder Hellmann Worldwide Logistics. Hellmann has seen increased demand for combined air and sea routing for consumer goods like apparel as well as electronics and tech items, he said. For example, that could mean goods being transported first by sea to a port in Dubai, where they are then loaded onto planes. "This alternative route allows customers to avoid the danger zone in the Red Sea and the long voyage around the southern tip of Africa," Kleine-Lasthues told Reuters. While companies moving urgent or critical items might opt to use air freight, the expense means it is not a blanket solution, said Paul Brashier, vice president of Drayage and Intermodal for supply chain group ITS Logistics. Moving goods by air costs roughly 5-15 time more than by sea, where container shipping rates are still low by historical standards, said Brian Bourke, global chief commercial officer at SEKO Logistics. If the time it takes to get goods to shelves doubles, more shippers will switch to air - especially for high value goods like designer clothing and high-end electronics, said Bourke, who has already received queries from customers. MAJOR TRADE ROUTE Some 35,000 vessels sail through the Red Sea region annually, moving goods between Europe, the Middle East and Asia, representing about 10% of global GDP, said Corey Ranslem, CEO of British maritime risk advisory and security company Dryad Global. U.S. retailers including Walmart (WMT.N), Target (TGT.N), Macy's (M.N) and Nike (NKE.N) depend on the route to get goods ranging from cotton sheets and electric toothbrushes from India to footwear from China and Sri Lanka. "Under an extended threat you will see the price of fuel and goods into Europe increase substantially because of the increased costs of diverting around Africa which can add roughly 30 days to a transit depending on the arrival port," Ranslem said. Tailwind Shipping Lines, a subsidiary of German discount supermarket chain Lidl, which transports non-food goods for Lidl as well as goods for third-party customers, said it was shipping goods around the Cape for now. "Our aim is to remain as close to our schedule as possible," it said. Shipping companies remain in the dark over a new international navy coalition being assembled by the United States aimed at stablising the area. A Spanish fashion industry source told Reuters shipping lines were telling customers a lot was riding on the U.S.-led task force and whether it can prevent more attacks and make the route safe again. It is critical that European companies are able to use the Suez Canal again to ensure supplies of clothes from Asia, the industry source said. The timing of the Red Sea security issues compounds difficulties for shippers, said Jeb Clulow, partner in law firm Reed Smith's transportation industry group. The Panama Canal is struggling with severe drought and has slashed the number of ship passages it allows. In addition, there is a race to get goods in transit before Chinese New Year factory closures planned for Feb. 10-17, which can disrupt supplies for a month or longer. Meanwhile, large container ship owners have begun adding fees, including emergency surcharges, for cargo affected by the Red Sea disruptions. In a customer notice on Wednesday, French shipping group CMA CGM announced fees of $1,575 per 20-foot container, $2,700 per 40-foot container and $3,000 for refrigerated containers and special equipment for cargo traveling to and from Red Sea ports. https://www.reuters.com/markets/commodities/exporters-explore-air-freight-options-red-sea-chaos-deepens-2023-12-20/