2024-07-26 17:00

FRANKFURT, July 26 (Reuters) - The European Central Bank still faces a tough "last mile" in its fight against high inflation, as evidenced by stubbornly high growth in the prices of services, ECB board member Isabel Schnabel said in an interview published on Friday. Schnabel, the most influential among the hawkish policymakers who drove the ECB's steepest ever streak of interest rate hikes in 2022-23, stuck to her cautious tone even as many of her colleagues were opening the door to more rate reductions. "We continue to expect inflation to gradually converge to our 2% target over the course of next year," Schnabel told German daily Frankfurter Allgemeine Zeitung. "However, persistent services inflation shows that the 'last mile' of the fight against inflation is particularly difficult." After lowering rates in June, the ECB left them on hold last week but President Christine Lagarde said its next meeting in September was "wide open", with several policymakers openly considering more cuts as inflationary pressures ease. Schnabel said "some data...was not fully in line" with the ECB's expectations at the time of the June rate reduction and that this would not "automatically" be followed by "a whole series of further cuts". "The pace of rate cuts will depend on the data," she said. "The same can be said for how far interest rates can be cut overall – this is also uncertain at present." Schnabel's last-mile narrative was the subject of a lively debate at the ECB's policy symposium earlier this month, where an academic paper predicted an "easy last kilometre" for the euro zone's central bank. Even the head of the Bundesbank, a traditionally hawkish institution, has opened the door to rate cuts, expecting inflation to fall back to 2% by the end of next year or early 2026 at the latest. "I already expect, as I have already indicated, that if the data remains the same over the next twelve months, there may be a chance at some meeting or other that we will be able to reduce interest rates further," Bundesbank President Joachim Nagel told reporters in Rio on Thursday. Euro zone inflation was 2.5% in June. July figures will be published on Wednesday. Sign up here. https://www.reuters.com/markets/europe/ecbs-schnabel-still-sees-tough-last-mile-inflation-fight-2024-07-26/

2024-07-26 16:19

July 26 (Reuters) - Centene Corp (CNC.N) , opens new tab said on Friday it expects medical costs to improve next year as states catch up with reassessment of enrollments for its Medicaid plans that cover lower-income people, lifting its shares about 9%. The health insurer did not provide a forecast for 2025, but said it expects its Medicaid business to return to the pre-pandemic range. Costs have surged for insurers after states began reassessing Medicaid enrollment eligibility following the termination of a policy last year that required insurers to keep low-income Americans enrolled through the COVID-19 pandemic. The reassessment had led to an increase in the number of sicker patients in insurers' Medicaid membership profile and a fall in memberships. Though Centene still expects medical care use to remain higher than initially expected in the second half of 2024, an improvement in membership could help alleviate some cost pressures on the company. The company is confident that the mismatch between its expenses on Medicaid members and what states are paying the insurer to treat those members, is a "temporary fixable dynamic," said CEO Sarah London. Centene also expects robust growth in its commercial health plans. It increased its 2024 premium and service revenue forecast by $5 billion to be between $141 billion and $143 billion. However, it forecast annual medical loss ratio - a metric that tracks medical costs - to be at the higher end of its previous range of 87.3% and 87.9%. Analysts' were expecting a lower number, at 87.8%. "We prefer to take a wait-and-see approach" through the second half of the year to see how the trends continue to develop, said Mizuho analyst Ann Hynes. Centene expects to provide a detailed 2025 outlook in December. Its second-quarter medical loss ratio rose to 87.6% from 87% a year earlier. Analysts had expected 86.84%. Adjusted profit of $2.42 per share beat estimates of $2.07. Sign up here. https://www.reuters.com/business/healthcare-pharmaceuticals/centene-beats-profit-estimates-after-change-govt-risk-adjustment-2024-07-26/

2024-07-26 15:30

WASHINGTON, July 26 (Reuters) - Apple Inc (AAPL.O) , opens new tab has signed U.S. President Joe Biden's voluntary commitments governing artificial intelligence (AI), joining 15 other firms that have committed to ensuring that AI's power is not used for destructive purposes, the White House said on Friday. The original commitments, announced in July 2023, were signed on to by firms including Google and OpenAI partner Microsoft (MSFT.O) , opens new tab. In September, eight more firms including Adobe (ADBE.O) , opens new tab, IBM (IBM.N) , opens new tab, Nvidia (NVDA.O) , opens new tab signed on. Sign up here. https://www.reuters.com/technology/artificial-intelligence/apple-signs-voluntary-us-scheme-manage-ai-risks-white-house-says-2024-07-26/

2024-07-26 14:42

July 26 (Reuters) - Deckers Outdoor (DECK.N) , opens new tab shares jumped as much as 17% on Friday, after multiple brokerages raised their price targets following the company's bet on full-price sales of its hot-selling Hoka running shoes and UGG boots to raise its annual profit forecast. The stock touched a one-month high of $980 and is on track for its best day in nine months, if gains hold. Shares of On Holding , backed by Tennis star Roger Federer, and Nike (NKE.N) , opens new tab were up 6.2% and 1.7%, respectively. Products from brands such as Hoka and On, like the Clifton 9 and Cloudmonster 2 which are known for their extra cushion and durability, have largely resonated with customers, mainly in the running category. "Even in a choppier macro environment people are spending money on things they care about and these two are products that people care about," said Truist Securities analyst Joseph Civello. Civello added Hoka has "incredibly designed shoes" with different growth opportunities as the brand has also developed a fashion-following with people interested in buying their newest color shoes. Truist Securities increased Deckers' price target to $1,225 from $1,200, and is the highest on Wall Street. Retailers such as Dicks Sporting Goods (DKS.N) , opens new tab and Nordstrom (JWN.N) , opens new tab have also responded by offering more shelf space for those brands while trimming down on Nike's products, which are lagging in terms of innovation and appeal to customers. Deckers reported a nearly 30% rise in Hoka sales in the first quarter, driven by demand in wholesale channels. The UGG banner had a 14% jump in sales. Wedbush analyst Tom Nikic wrote in a note there has been less discounting with the UGG brand and it appears to be taking a share in the sandal market. Deckers now expects annual profit in the range of $29.75 to $30.65, compared with its previous forecast of $29.50 to $30. Sign up here. https://www.reuters.com/business/retail-consumer/deckers-outdoor-shares-surge-full-price-sales-hoka-ugg-footwear-help-raise-fy-2024-07-26/

2024-07-26 13:42

July 26 (Reuters) - Private equity firm Apollo Funds will take International Game Technology's (IGT.N) , opens new tab gaming and digital business and Everi Holdings (EVRI.N) , opens new tab private in an all-cash deal that values the combined business at $6.3 billion, the companies said on Friday. Shares of IGT jumped 20%, while casino platform provider Everi rose 40% in early trading. The deal is the latest sign of a resurgence in the private equity space following a period of dormancy due to high interest rates that had hindered debt financing for leveraged buyouts. IGT had said in February it would split its lottery unit from its gaming businesses, which would be merged with Everi to form a separate entity valued at $6.2 billion, including debt. Apollo Funds, a part of Apollo Global Management (APO.N) , opens new tab, would pay $4.05 billion in cash to IGT and said the value of combined companies would be better positioned under private ownership. Everi shareholders would receive $1.2 billion, according to Reuters' calculation. "We felt that the prior transaction meaningfully undervalued the Everi assets," said Craig Hallum analyst Sutton George. IGT expects to use a significant part of the cash proceeds to repay debt and return to shareholders. The deal, subject to approvals from regulators and Everi stockholders, is expected to be completed by the end of the third quarter of 2025. IGT shareholders approval is not required for the transaction. After the closing, IGT Gaming and Everi would be privately owned companies that are part of one combined enterprise. The newly formed combined company would be headquartered in Las Vegas. IGT's top boss Vince Sadusky would oversee the separation of the gaming and lottery units and support the transition through the latest deal completion. Post-closing, Sadusky would continue in his role, leading the lottery-focused company under its new name and stock ticker symbol, IGT said. Sign up here. https://www.reuters.com/markets/deals/apollo-funds-acquire-igts-gaming-business-everi-63-bln-deal-2024-07-26/

2024-07-26 12:54

MOSCOW, July 26 (Reuters) - Russian Central Bank Governor Elvira Nabiullina and her deputy Alexei Zabotkin addressed a press conference on Friday after the central bank raised its key rate to 18%. Nabiullina and Zabotkin spoke in Russian. The quotes below were translated into English by Reuters. NABIULLINA ON RATE DECISION "The absolute majority of the discussion participants were in favour of raising the rate to 18%, but there were also suggestions to keep the current rate level at 16%...there were also were proposals to raise the rate to 19%, to 20%." "We assumed that for inflation to return to the target, taking into account a 16% rate, simply more time is needed for the tightness of monetary conditions to show a decline in inflation, taking into account the lag." "We decided to raise (the rate) to 18%, but, as I have already said, we do not rule out further increases. Our further steps will depend on incoming data." ZABOTKIN ON RATE DECISION "I would urge you to pay attention not only and not so much to the change in rate here and now from 16% to 18%, but to the change in forecast trajectory of the rate. The average (expected) rate for next year. If you look at the centre of the range, is up from 11% to 15%, for 2025, it's up from 6.5% to 10.5%. Both are a change of not two percentage points, but four percentage points. And that's what gives additional rigour to today's decision." NABIULLINA ON DUTIES "...An increase in duties is always pro-inflationary, almost always a pro-inflationary factor, but we think that the effects of the current decision will be limited because they will not affected a very large group of goods, the market basket, up to 7%, if I am not mistaken. So we think that these effects are limited." NABIULLINA ON CHINA'S CENTRAL BANK "We are also watching the situation in China, of course, not only the central bank's policy, (but) what is happening with the development of the economy, this is our key trading partner." "As for their rate decision, they have a different monetary policy regime. Furthermore, their problem is not high inflation, but low inflation. China is now balancing around zero inflation, they are pursuing a policy diametrically opposed to ours, because our task is to reduce inflation, while their task is to avert deflation." NABIULLINA ON SHARP RATE HIKES "There are two sides to this coin, to this rate hike. We can achieve a halt in inflation and even provoke deflation with a prohibitive rate level, but the result will not be the economy's return to sustainable, balanced growth, but an excessive cooling of demand with excessive volatility in all parameters - in interest rates, in output, in employment, and a strong deviation of inflation downwards from the target." "And such excessive volatility will have negative consequences for economic development. So we have no need for these kind of shock increases." NABIULLINA ON THE PUBLICATION OF OVER-THE-COUNTER TRANSACTION VOLUMES "Regarding the publication of data, indeed, we started publishing in April, then we stopped publishing because we see the risks of secondary sanctions. We do not link the realised sanctions with the publication, but nevertheless, in order to reduce these risks, we have taken this decision, and no changes are expected here for the time being." NABIULLINA ON THE ECONOMY OVERHEATING "As for the overheating, yes, we do believe that the economy is overheating...We do not give a quantitative assessment of the scale of overheating, because it is still such an unobservable value, but the inflationary dynamics are a very important indicator of the overheating of the economy." "Therefore, our monetary policy is aimed at narrowing this output gap so that the economy moves to a balanced growth rate." NABIULLINA ON OPERATIONS WITHIN THE BUDGET RULE "We can conduct them both on the stock exchange and in the over-the-counter (OTC) market. The exchange rate will not be affected in any way. If the risks (the termination of exchange trading in yuan) are realised, we will explain the specific mechanism. But I can say that we are ready to conduct it on the OTC market as well." NABIULLINA ON CROSS-BORDER PAYMENTS "As far as cross-border payments are concerned, of course, we are considering different risk scenarios and preparing for different situations." "But in general, I think that companies will solve payment problems one way or another, because many countries need to trade with Russia, to carry out export and import operations. So there will be ways to make payments." "We take into account the fact that transaction costs of companies in this situation may grow." * "We see problems in cross-border payments, in the use of foreign currencies, the risk of secondary sanctions. But we are not - I have said it many times - ready to comment specifically on detailed mechanisms, ways to solve the problem of cross-border payments." ZABOTKIN ON INFLATION In terms of the overall pattern of sustained price increases, the peak was in the third quarter of last year, in the autumn, actually, from September to November. Then there was a slowdown in the first quarter. They increased slightly in the second quarter. July, in all likelihood, will also be quite substantial, high monthly prices..." "But further, during the second half of the year, we believe that the current rates of price growth will be significantly lower than they were on average in the first half of the year. And in fact this is included in the forecast." * NABIULLINA ON LABOUR MARKET DEFICIT "...The deficit in the labour market is increasing. The latest surveys of companies show that already 72% of companies consider labour shortages to be their main constraint." "Migration flows, of course, have an impact on the level of tension in the labour market, and we take this into account." Sign up here. https://www.reuters.com/markets/rates-bonds/russias-central-bank-governor-nabiullina-rates-economy-banks-2024-07-26/