2023-11-03 20:54

ANTWERP, Belgium, Nov 3 (Reuters) - Only a few weeks after Russia invaded Ukraine in February 2022, Antwerp-based diamond dealer Thierry Tugendhaft started receiving calls from big jewellers in Paris asking him to stop supplying them with Russian stones. He was not the only one. Other diamond firms in Antwerp, the world's biggest centre of trade in rough diamonds and cutting of the biggest gems, were asked to avoid Russian stones. No easy task when Russia supplies about one third of global demand. Now, Western powers want to make the boycott official with a formal ban on Russian stones. A G7 announcement has been expected for some weeks but disagreement over the details is holding things up, a source with knowledge of the matter said. Major Western jewellers, from Tiffany's to Cartier and Van Cleef & Arpels have all been keen to distance themselves from Russia's lucrative diamond trade. Imports of Russian rough diamonds are now at less than 5% of pre-war levels, the source said. Tugendhaft, the head of T. Diamonds BVBA, said about 50% of his rough diamonds used to come from Russia due to their high quality. His buyers gave him just six weeks to find alternative supplies. "The transition was quite fast because we were already in discussions with Canada, while we were still buying from Russia," Tugendhaft said from his office in the Antwerp diamond club. His company now sources about 80% of its diamonds from Canada and the remainder from African countries including Lesotho, South Africa and Botswana. Other Antwerp dealers were less nimble, Tugendhaft said, and had to suspend their rough stone trade because European banks would not finance their Russian supplies. Some 90% of the world's diamonds are now cut in India. Even though diamonds generate only a fraction of the revenue from oil and gas, they still bring the Kremlin more than $4 billion a year through state-owned Alrosa (ALRS.MM), the world's biggest producer of rough stones. With Russian oil and gas already under sanctions to diminish the Kremlin's ability to finance its invasion of Ukraine, the United States, Canada, Japan and the European Union now want to curb Moscow's diamond revenues as well. Belgium seems to be one step ahead. The port city of Antwerp has been a diamond hub since the 15th century and even though gem cutting is now mostly outsourced to India, the city still dominates the trade of rough and large stones. TRACEABILITY The U.S., Canada, Japan and the EU are weighing different proposals to ban Russian stones from their markets, submitted by Belgium, India, France and the World Diamond Council. Belgium was asked by the EU to draft a proposal and it hopes to retain Antwerp as the main hub for rough trade. The main problem in banning Russian diamonds from Western markets, which account for 70% of global diamond jewellery demand, is how to trace the origin of the stones. Tugendhaft, who has been in the diamond business for 30 years, said traceability was already quite advanced at his firm, which uses a helium scanner to produce three dimensional images at every stage of diamond processing which are then put in a blockchain ledger along with dates and invoices for every movement in the manufacturing process. It costs a few percent of his revenue and he said not only would a full Western ban on Russian gems be costly for the industry, it could take another year to implement fully. Antwerp is the only location that can handle the rough volume and customs and shipment costs would add up, he said. The biggest diamond miner by value, De Beers', uses a blockchain called Tracr. Other systems exist, but the technology's use is not widespread across the industry. "The real problem is the really small stones. They come in parcels of 20,000-40,000 stones. How do you take every stone and put it in a blockchain? It's just not realistic," he said. Most proposals under consideration by the G7 now focus on rough diamonds of 1 carat and above initially. Once a diamond is cut, reliably tracing its origins becomes nearly impossible without details of the rough stone to match, industry sources say, which puts the onus on the initial sorting stage of the rough stones in Antwerp. New technology may in time be able to determine the stone's origin by comparing it to the unique geology of the mines, but that technology is still under development. https://www.reuters.com/world/europe/diamond-centre-antwerp-russian-gems-are-already-shunned-2023-11-03/

2023-11-03 20:39

Nov 3 (Reuters) - Slowing jobs growth and cooling wage pressures may give Federal Reserve policymakers renewed confidence the U.S. economy is adjusting from the shock of the coronavirus pandemic, allowing inflation to ease further without more interest rate rises. That was the read from many analysts of the Labor Department report showing nonfarm payrolls increased by 150,000 last month, below the pre-pandemic trend for only the third time since December 2020, and hourly earnings rose 4.1% from a year earlier, the smallest increase since June 2021. That was also the betting in financial markets. Bond yields fell, and traders of contracts tied to the Fed's policy rate now see only about a 10% chance of a rate hike by January, down from 30% before the employment report. Rate futures pricing now reflects a better-than-even chance of a Fed rate cut by May 2024, with several more cuts expected later next year. U.S. policymakers themselves are not even thinking about rate cuts, Fed Chair Jerome Powell said this week after the central bank kept its benchmark overnight interest rate steady in the 5.25%-5.50% range. They are waiting for more confirmation the economy is coming into better balance after pandemic disruptions to the supply of goods and labor helped push inflation to 40-year highs in 2022. But Powell also signaled a further rate hike could yet be in the offing as he and his colleagues were not yet confident that monetary policy is restrictive enough to bring inflation down to the Fed's 2% target. He cited the rise in longer-term borrowing costs, including the rise in 30-year fixed-rate mortgages to nearly 8%, as potentially doing some of the Fed's work. Friday's drop in the yield on the benchmark 10-year Treasury note to below 4.5% after the jobs report poses a problem that, if it continues, may actually bolster the case for another rate hike to ensure overall borrowing conditions do not loosen. So far, neither analysts nor Fed policymakers are framing the bond-yield drop itself as a spoiler. "It's too soon to call," said Minneapolis Fed President Neel Kashkari, a skeptic of reading too much into financial market moves. "We just need to keep watching the actual data to see, are we actually making enough progress to get inflation down to our 2% target," he said, adding that the latest data "gives us more comfort that the economy is moving back into balance." A lot will hinge on inflation in the weeks leading up to the Fed's Dec. 12-13 policy meeting. Investors and analysts largely expect price pressures to continue easing and the Fed to remain on hold as a long-awaited hiring slowdown appears to take shape. The average monthly payrolls gain over the last three months has slowed to 204,000, the latest report showed, after peaking in the summer of 2021 at 708,000. That is nearing the average monthly gain of 183,000 in the decade leading up to the pandemic. The report, Richmond Fed President Thomas Barkin told CNBC, was "welcome to see" and backs up what he says businesses have been telling him. "What I've been hearing is normalizing," Barkin said, adding that key will be what inflation reports show in coming months. Inflation by the Fed's preferred measure has held around 3.4% for the last couple of months, down from 7.1% last summer but still above its 2% goal. Atlanta Fed President Raphael Bostic also said he's closely watching inflation data, but told Bloomberg TV he feels that the fresh jobs data adds to his long-held view that for now rates are "sufficiently restrictive." SOFT LANDING After lifting the policy rate rapidly last year, Fed policymakers are seeking a stopping point that is high enough to bring inflation down but not so high that it does excessive damage to the labor market. Powell on Wednesday indicated the Fed is still steering toward what has been that historically elusive "soft landing" for the economy. Overall, the latest jobs report was "tailor-made to match Powell's soft landing message from earlier this week," JPMorgan chief U.S. economist Michael Feroli said in a note to investors. Despite Friday's bond yield drop and surge in stock prices that has loosened financial conditions, Feroli said, it will be the economic data that determines what the Fed will do, "and the data say we're done with rate hikes." He and other analysts did note the report had hints of risk to that scenario, including a decline in the job-finding rate of those already unemployed, coupled with a second straight monthly uptick in unemployment. "Continued upward momentum would be troubling, and hopefully this recent rise levels off as the labor market recovery continues," said Indeed.com's Nick Bunker. Judging from the flow of workers into and out of jobs and job searches, said Inflation Insights' Omair Sharif, it appeared workers were having a tougher time landing employment, a reversal from the heady days of the "great resignation" when employees were skipping from job to job and some occupations were registering double digit wage gains. Employment at bars and restaurants, a locus of high labor demand during the pandemic, dropped in October, he noted. Still for now, most worries about the labor market appear to be focused on what might, or might not, be around the corner. "We are transitioning to the next phase of recovery," said acting U.S. Labor Secretary Julie Su. https://www.reuters.com/markets/us/traders-see-fading-chances-of-fed-rate-hike-bet-earlier-rate-cut-2023-11-03/

2023-11-03 20:30

TSX ends up 1% at 19,824.85 For the week, the index adds 5.8% Canada, U.S. add fewer-than-expected jobs in October Magna raises 2023 profit forecast, shares gain Nov 3 (Reuters) - Canada's main stock index climbed on Friday to a six-week high after data showed both Canada and the U.S. adding fewer-than-expected jobs in October, cementing hopes of central banks ending their interest rate hiking campaigns. The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE) ended up 198.51 points, or 1%, at 19,824.85, its highest closing level since Sept. 20. For the week, the TSX was up 5.8%, its biggest weekly advance since April 2020. Friday's rally was led by financial and industrial stocks and the market is "essentially tracking the U.S. higher," said Colin Cieszynski, chief market strategist at SIA Wealth Management. Wall Street's main stock indexes gained after news of slowing U.S. jobs growth boosted hopes that the Federal Reserve is done with its interest rate hiking campaign. "The Americans seem to think the Fed is done," Cieszynski said. "Treasury yields are coming off and stocks are going up." The Canadian economy also added jobs at a slower pace in October, supporting bets the Bank of Canada may not tighten further. The Toronto market's heavily weighted financials sector rallied 1.4%, industrials added 1.2% and consumer discretionary ended 1.9% higher, benefiting from an 8.6% jump in the shares of Magna International (MG.TO) after the auto parts supplier raised its 2023 profit forecast. The interest rate-sensitive real estate sector stood out with a 3% rise, and the materials sector, which includes precious and base metals miners and fertilizer companies, added 2.6%. It was helped as shares of First Quantum Minerals Ltd (FM.TO) rose 11.1%, rebounding from this week's decline, after the company said production at its Cobre Panama mine remains uninterrupted. Energy fell 1.4% as the price of oil settled 2.4% lower at $80.51 a barrel. https://www.reuters.com/markets/tsx-set-weekly-gains-oct-jobs-data-lifts-sentiment-2023-11-03/

2023-11-03 20:28

Nov 3 (Reuters) - The U.S. Forest Service wants to allow carbon capture and storage (CCS) projects on national forest land, according to a proposed rule published by the agency on Friday. Carbon capture is key to the climate strategy of the administration of President Joe Biden, which has pledged to halve greenhouse gas emissions by 2030. The proposed rule would amend existing Forest Service regulations by allowing "exclusive and perpetual use" of national forest land and pore space beneath it for approved CCS projects. Authorizing such projects on forest land would support the administration's climate goals, said the proposed rule. Some environmental groups opposed the rule, arguing it would amount to the privatization of public land. "Our nation’s forests should not be a dumping ground for polluters," said Jim Walsh, policy director of the environmental group Food & Water Watch. Some CCS projects in the U.S. are facing obstacles securing access to geological storage sites where captured carbon dioxide could be sequestered for hundreds of years. Regulators in North Dakota in August denied a permit application from Iowa-based Summit Carbon Solutions, which hopes to store as much as 18 million metric tons of carbon dioxide there as part of its multi-state CCS pipeline, due to concerns about the project's impact to residents and the environment. The state is reconsidering Summit's application. A CCS pipeline project from Nebraska-based Navigator CO2 Ventures struggled to get support from landowners living above its proposed sequestration site in Illinois before canceling the project in October. https://www.reuters.com/sustainability/climate-energy/us-agency-proposes-allowing-carbon-capture-projects-national-forests-2023-11-03/

2023-11-03 20:23

NEW YORK, Nov 3 (Reuters) - Federal Reserve Bank of Atlanta President Raphael Bostic, weighing in after the release of the latest round of jobs data, said on Friday that the economy's current path appears to indicate that further interest rate increases will not be required. "My outlook is that we are going to stay on that slow and steady (growth path) and if we continue to do that, then I think where we are now will be sufficiently restrictive to get us to the 2% level for inflation," Bostic said in an interview on Bloomberg's television channel. Even so, he said, "there's still a lot that’s going to happen between now and even the next meeting. We're going to get a couple of jobs numbers, we're going to get a couple of readings for inflation, and that'll tell us and give us more signals as to what's going on in the economy." Bostic talked to the television channel following the release earlier in the day of hiring data for October that showed the economy added 150,000 new jobs amid a small uptick in the unemployment rate to 3.9% from 3.8% the prior month. Wage gains also moderated. The jobs report came after the Fed earlier this week held its short-term interest rate target at the 5.25% to 5.5% level it has been at since late July. The Fed preserved the option to raise rates further but most investors believe it won't, and the jobs data helped bolster the case for no further action. When it came to the hiring news, Bostic said "I'm pleased with where the number came in," noting it is at a level "that is consistent with what my outlook has been, and it really tells me that our policies are really starting to work through the economy in a way that can help us get to our 2% target for inflation with minimal pain." Bostic said he is not looking for the U.S. to have a recession as part of his current forecast. The official also said that he expects to see inflation pressures close to the 2% arriving some time in the latter half of next year. And while he didn't say when the Fed would need to cut rates, Bostic said "as we get closer and closer to our target, we're going to have to think about moderating the level of our policy stance. But that's down the road." https://www.reuters.com/markets/rates-bonds/feds-bostic-says-hes-leaning-against-additional-rate-hikes-2023-11-03/

2023-11-03 20:15

WASHINGTON, Nov 3 (Reuters) - The U.S. Supreme Court on Friday agreed to hear a dispute over Coinbase's (COIN.O) effort to move a dispute with users of the cryptocurrency exchange out of courts and into private arbitration, which businesses often prefer over litigation. The justices took up Coinbase's appeal of a lower court's ruling that the trading platform had effectively waived its right to arbitrate a dispute stemming from a 2021 sweepstakes that users later alleged was false advertising. Companies generally prefer to arbitrate claims because the process is cheaper and faster than litigation in court, which can be harder to fight and carries a greater risk of hefty damages awards. At issue in the case is whether it is up to a judge or an arbitrator to decide which of two apparently conflicting agreements is controlling in the dispute between Coinbase and its aggrieved users. The decision about which contract prevails, in turn, would determine if the dispute proceeds in arbitration or in court. Upon creating their Coinbase accounts, users agreed to resolve any disputes with Coinbase in arbitration. But a subsequent agreement that related specifically to the sweepstakes said disputes over the contest should be heard in court in California. When users later accused the company of violating California's false advertising law by duping them into paying to participate in a sweepstakes that offered prizes in dogecoin, a type of cryptocurrency, they brought a class action suit in federal court. A federal judge in California refused Coinbase's request to force the dispute into arbitration, as the company argued the user agreements required. The San Francisco-based 9th U.S. Circuit Court of Appeals affirmed the judge's decision. The justices in June ruled 5-4 in Coinbase's favor in a similar dispute. In that case, the justices endorsed the company's bid to halt customer lawsuits while it pursued appeals aimed at moving the disputes out of courts and into private arbitration. https://www.reuters.com/legal/us-supreme-court-takes-up-coinbase-arbitration-dispute-2023-11-03/