Aurelia Butler

NEW YORK (Reuters) -As fervor for artificial intelligence sweeps Wall Street, some investors are seeking bargains in more conventional areas of the stock market.Value stocks, typically defined as companies trading at a discount on metrics such as book value or price-to-earnings, have largely been left behind as AI put a charge into their growth-focused peers. However, gains in some value-heavy sectors such as industrials and materials have accelerated lately. Proponents believe that’s a sign that the rally in the benchmark S&P 500 index is broadening beyond a handful of tech and growth names.“There’s clearly an investment case for value stocks over the long term,” said Que Nguyen, chief investment officer of equities at Research Affiliates. “These companies are still very, very cheap and many of them have already gone through the difficult process of restructuring their businesses and balance sheets.”The S&P 500 is up 7.7% in 2024 and stands at a record high. The S&P 500 Value Index is up 3.3% year-to-date, lagging the 11.6% gain in the S&P 500 Growth Index. Yet some value-heavy sector have shown signs of life in recent weeks. The S&P 500 industrial sector rose 7.1% last month, driven by rallies in General Electric (NYSE:GE) and Howmet Aerospace. The broader index gained 5.8% in that period. The materials sector gained 6.7% in February, led by Vulcan Materials (NYSE:VMC) and Ecolab (NYSE:ECL) . Consumer discretionary, home of recent gainers such as Chiptole Mexican Grill and Ralph Lauren (NYSE:RL), rose nearly 9%. One major draw: value stocks are relatively cheap compared to the rest of the market. The health care sector trades at 18.9 times forward earnings with energy trading at a 12.2 multiple, much less than the 20.8 forward earnings for the S&P 500 after a rally lifted the benchmark 42% from its October 2022 lows. Michael Hunstad, Northern Trust (NASDAQ:NTRS) Asset Management’s deputy chief investment officer and head of global equities, believes multiples have grown too steep for the S&P 500 and the so-called Magnificent Seven group of growth and technology stocks that have led its rally. Tesla (NASDAQ:TSLA)’s drop of nearly 20% this year illustrates how quickly such stocks can reverse, he said.”We expect to see more risk to the downside for multiples, particularly among the Mag 7,” said Hunstad, who has been increasing his positions in value-focused sectors such as healthcare and energy.Hunstad also believes value stocks could better weather a prolonged period of elevated interest rates than growth names, as their cash flows are shorter-term and less sensitive to borrowing costs. While investors still expect the Fed to cut rates this year, they have reduced expectations for how quickly and deeply the central bank will cut rates, as a stronger-than-expected economy could reignite inflation if monetary policy eases too soon. Next week’s congressional testimony from Fed Chairman Jerome Powell could shed light on policymakers’ views. Investors are also awaiting U.S. employment data next Friday.Betting against growth stocks has been dangerous over the last decade, when searing rallies in shares of companies such as Apple (NASDAQ:AAPL), Google-parent Alphabet (NASDAQ:GOOGL) and Meta Platforms (NASDAQ:META) led markets higher. The S&P 500 Value index is up about 110% over the last 10 years, compared with a nearly 235% gain in the S&P 500 Growth index. Broader sentiment toward value has waned, by some measures. A net 13% of fund managers polled by BofA Global Research expect growth stocks to outperform value names over the next year, the highest conviction level since May 2020. Still, some strategists argue the productivity gains promised by AI could lift all boats long-term, benefiting value stocks as well as growth shares.Robert Robotti, chief investment officer of Robotti & Company, believes value stocks are likely to see the largest efficiency gains from adopting AI, bolstering their margins and pushing up valuations. He has increased his stake in industrial and healthcare stocks as a result.”The application of AI is going to be across the entire company and that’s not limited to the guy selling the chip,” Robotti said. “It’s the guy buying the chip and increasing his efficiency who is going to benefit.” More

ABU DHABI (Reuters) – World Trade Organization (WTO) negotiators failed to break a deadlock on major reforms in the early hours of Saturday despite talks extending deep into overtime in Abu Dhabi, in what some delegates said was a triumph of national interest over collective responsibility.Here is a summary of what was achieved and what was not:E-COMMERCE- Countries agreed to extend a moratorium on placing tariffs on digital goods until the next ministerial conference in two years’ time. Then the deal is set to expire at the start of that meeting, requiring more extensive negotiations.- Several countries, including India and South Africa, were opposed to the extension of a moratorium on e-commerce backed by the vast majority of countries and seen as vital to businesses to avoid tariffs on digital goods like film downloads.- On the plus side, a draft programme has been agreed for future work beyond Abu Dhabi.DISPUTE SETTLEMENT- Countries agreed to commit to continue negotiations in 2024 to try to resolve a crisis in its dispute settlement system whose top court has been hobbled for four years due to U.S. opposition.- This means many trade disputes are unresolved since countries can appeal them into a legal void and the WTO’s rules cannot be enforced. – India’s minister Piyush Goyal has said it is “sad” countries are obstructing outcomes. He did not mention Washington directly but said he had raised a lack of progress on fixing the WTO’s dispute system with U.S. Trade Representative Katherine Tai in a meeting earlier this week.- Tai has said negotiations on this issue are positive and have shown progress. However, delegates say obstacles abound and are privately sceptical of them making much further headway in a U.S. presidential election year.- A group of countries sought to reach a friendly agreement, supported by the European Union, to refrain from appealing WTO disputes into the void but this did not win consensus among members in Abu Dhabi, trade sources said. AGRICULTURE- No agreement was reached in Abu Dhabi.- India, which is facing farmer protests at home and has elections due by May, had sought a permanent solution on public stockholding (PSH) – a term that refers to state policies on food procurement aimed at ensuring food security.- Two alternative solutions were envisaged in a draft agreement. One aimed to find a permanent solution to the issue at this meeting and the other one commits to intensify negotiations and extend to other developing countries the privileges only India currently enjoys under WTO rules.- India rejected the second proposal, intended to appease them, in talks between a few key countries including the United States, Brazil and China, a source in the room said. FISHERIES- No deal was reached in Abu Dhabi.- Countries had tried to agree to the second part of an international WTO agreement to curb government subsidies that critics say encourage industrial fishing fleets to empty the world’s oceans. A first part was agreed in 2022 and will take effect if and when enough countries ratify it. – Many participants, including USTR’s Tai, saw this as the most likely topic where a deal could be reached. Environmentalists say it is vital for the world’s oceans.- The chair of the talks issued a new draft agreement on Friday morning with a few sections still in yellow, indicating areas of non-agreement including rules for phase-in periods for developing countries. More

ABU DHABI (Reuters) -World Trade Organization (WTO) negotiators failed to break a deadlock on major reforms on Friday despite talks extending deep into overtime in Abu Dhabi, in what some delegates said was a triumph of national interest over collective responsibility.Talks ended early on Saturday after five days of negotiations which failed to see breakthroughs on agriculture, fisheries and other key topics. However, a moratorium on imposing tariffs on e-commerce data transmissions was extended by two years, in a relief to businesses.”On the big ticket items that are essential for the mandate that the WTO wants to sort out, the fisheries, the harmful subsidisation, that just did not happen, because there was not the spirit of give and take,” a senior European official said.On the fifth day of the ministerial meeting, most ministers had already gone home, although India’s trade minister Piyush Goyal and European Trade Commissioner Valdis Dombrovskis remained until the end.BLAME GAMEDombrovskis expressed disappointment over the lack of consensus on fisheries, agriculture and broader reforms, and singled out India for blame. “Agreements were within reach, supported by an overwhelming majority of members, but ultimately blocked by a handful of countries – sometimes just one,” he said in a statement.Goyal, who was a holdout on these topics, was seen smiling and shaking hands outside a meeting room late on Friday as delegates gathered in small groups next to a coffee stand. India insisted on a long promised permanent fix on public holdings of agriculture stocks which some developed countries opposed.”We have not lost out on anything. I go back happy and satisfied,” Goyal told reporters as talks started to wind down.Delegates had described the talks as intense and contentious at times, but WTO Director General Ngozi Okonjo-Iweala sought to put a positive spin on a difficult week, telling a closing session: “We’ve worked hard this week, we have achieved some important things and we have not managed to complete others.”India, along with South Africa, had opposed extending a moratorium on digital trade tariffs – a move that has overwhelming support of most governments and from business – but later relented after an appeal from host United Arab Emirates.WTO ministerial meetings have failed in the past and this year’s negotiations, held in the oil-rich Gulf state the United Arab Emirates, has highlighted fissures between some of the world’s top economies.BRICS DISAGREEMENTU.S. President Joe Biden’s trade chief, Katherine Tai, said in an interview with Reuters late on Thursday that if talks failed, fragmentation among the BRICS group would have contributed.India and China, core members of the BRICS group of nations, have disagreed on key issues including on investment. India’s commerce minister joined the negotiations two days after they started and after his Chinese counterpart had left Abu Dhabi.Pacific island nations have also complained at the talks about feeling marginalized and overlooked by most major powers, arguing that proposals did not go far enough to protect fish stocks.But Fiji’s delegate earned a standing ovation at the end of the closing ceremony after urging countries to support future negotiations on fisheries.U.S. support for global trade and multilateral groups like the WTO has been renewed under Biden. But negotiators were mindful that former President Donald Trump, who disrupted the multilateral system, could win a second term in the U.S. presidential election in November.John Denton, who heads the International Chamber of Commerce, warned that the weak outcomes from the meeting should “serve as a wake-up call on the need for a more nuanced and constructive debate on the role of trade in society – both locally and globally. No country stands to gain from a weakened multilateral trading system.”Earlier in the week, even the formal acceptance of completed negotiations on improving investment was blocked at an organization where all 164 members must agree by consensus. A consensus on major deals would have elevated the UAE’s status as a global interlocutor, as it seeks to place a bigger emphasis on multilateralism and dialogue, a turnaround from the assertive foreign policy it was pursuing a decade ago. More

Fitch forecast the country’s gross domestic product growth to slow in 2024, despite its economy proving resilient in the face of higher interest rates.The U.S. economy grew by 2.5% in 2023, partly reflecting the renewed fiscal policy easing as highlighted by the large general government (GG) deficit in 2023.Fitch estimated that the GG deficit had reached 8.8% of GDP in 2023 and forecast the 2024 GG deficit to narrow to 8% of GDP, on the back of escalating revenue growth, narrower spending, falling off of some large one-off spending on deposit insurance in 2023.”The interest burden, however, will continue to grow given the higher debt burden and impact of higher rates,” Fitch added.According to the agency, the outcome of the upcoming November presidential and congressional elections will be important for policymaking and the ability to pass and implement legislation.In November, peer Moody’s (NYSE:MCO) lowered outlook on the country’s credit rating to “negative”, citing large fiscal deficits and a decline in debt affordability. More

The space agency said in October that the On-orbit Servicing, Assembly, and Manufacturing 1 (OSAM-1) project continues to face an increase in costs and is expected to exceed its $2.05 billion price tag and the December 2026 launch date.For its decision to discontinue the project, NASA on Friday cited “continued technical, cost, and schedule challenges, and a broader community evolution away from refueling unprepared spacecraft, which has led to a lack of a committed partner”.Much of the project’s cost growth and scheduling delays could be attributed to the “poor” performance of contractor Maxar, NASA said in October.Maxar was previously contracted by NASA in 2019 to help build its Gateway platform in lunar orbit, a crucial outpost for America’s first mission to relay astronauts to the moon. More

ABU DHABI (Reuters) -It was billed as the “reform ministerial” that could lay a platform for updated global trading rules fit for modern challenges, from climate change to rising agricultural and industrial subsidies.But from day one at the World Trade Organization’s biennial gathering of ministers, the warning signs were clear that major trading nations were not in a mood for the sort of compromise required to achieve progress on any track.WTO Director-General Ngozi Okonjo Iweala had curbed expectations as the conference opened, with wars and tensions fragmenting the global economy into separate blocs and the U.S. and other elections limiting room for manoeuvre.The first day of negotiations did not go smoothly.Indian Commerce Minister Piyush Goyal only arrived during the course of Tuesday, by which time his Chinese counterpart Wang Wentao had departed.Almost all members arrived in Abu Dhabi wanting to restore the WTO’s ability to resolve trade disputes, which the United States has hobbled by blocking judge appointments to the appeals body that acts like a supreme court for global trade. Norwegian Foreign Minister Espen Barth Eide sought to broker a compromise and secure a WTO commitment towards a return to this system, but was rebuffed by U.S. Trade Representative Katherine Tai in a meeting sources said ended abruptly.Tai declined to comment on the meeting but was positive about ongoing negotiations. And WTO members did agree to continue talking on the matter in 2024. Light relief did at least come by the evening as the WTO toasted the accessions of East Timor and Comoros with sparkling wine and the jubilant East Timor delegation led a conga line around the room. The WTO treated the two accessions as a success, but it does swell its ranks to 166 members, each of whom have veto rights under its consensus-based system to stymie agreement. Indeed, in its near 30-year history the WTO has only struck two multilateral accords, one to cut red tape and another to curb fishing subsidies.By Wednesday, a multi-nation agreement designed to boost investment in poorer countries was blocked, despite some 120 countries having agreed to a text in November.Meanwhile, language on climate change, expected in a final WTO communique, was parked in an annex with an explanatory note referring to “deep divergences” among members.As negotiations continued behind closed doors on Thursday and into Friday, the United States trade representative departed, leaving trade chiefs from the European Union, India and a handful of other countries battling through to the close just beyond midnight.India had previously signalled it was not in a mood to compromise, particularly towards extending a waiver on digital tariffs, a moratorium developed countries in particular had sought. But it dropped its opposition at the last minute following a personal request from the UAE hosts, a senior Indian official said. At the end, Goyal expressed satisfaction that India had not lost out on anything. But one EU official said the overall impasse was sobering and not good for the future of trade, on which the European Union relies.”I think trade will be more and more characterised by power relations rather than the rule of law, and that I think is a big problem notably for smaller countries and for developing countries,” the official said.”The spirit was really everyone for themselves, zero sum game.” More

BUENOS AIRES (Reuters) – All eyes were on Argentina’s combative libertarian President Javier Milei on Friday ahead of a prime time state-of-the-union style speech set for the evening opening of Congress, even as protests started to build on the streets and markets rallied.The outsider economist and former TV pundit, who wants to shake up Argentina’s embattled economy with “chainsaw” cost cutting, privatizations and market-led policies, is winning over markets but facing push back from workers and lawmakers.His evening speech will be closely watched, after Congress rebuffed his signature reform bill last month and could take their knives to his sprawling decree rolled out when he took office in December as regular legislative sessions begin.Milei could moderate and reach across the aisle – he needs to with only a small share of the legislature – or come out fighting after he slammed lawmakers and governors as “traitors” for opposing his bill and said Congress was a “nest of rats”.”People are waiting to see the content and tone of the president’s words,” local finance firm SBS Group said in a report.”The event is taking place in the context of recent tensions, both with the provinces and with other political actors after the fall of the ‘omnibus law’ a few weeks ago, as well as distorted prices hammering people’s purchasing power.”Inflation over 250%, which predates Milei but rose after he devalued the peso currency sharply in December, has pushed up poverty levels seen nearing 60%, raising tensions among workers and unions, and prompting more strikes and protests.Further protests are expected around the capital on Friday afternoon against subsidy cuts and outside Congress.Some powerful regions have also hit back at Milei over planned funding cuts, including oil- and gas-rich Chubut province and the populous Buenos Aires province. La Rioja province has also warned it will miss bond payments due to the economic situation, a thorn in Milei’s side as he tries to win over long-suffering investors.Markets, meanwhile, edged up on Friday, with the black market peso dropping near 1,000 per dollar, further narrowing the gap with the controlled official rate at 843 pesos.Sovereign bonds, that have been on a bit of rally in the last month as investors have cheered Milei’s austerity measures and fiscal tightening, edged up some 0.2% on average, while the S&P Merval equities index was up 2.3%.(This story has been refiled to fix a typo in paragraph 1) More

(Reuters) -Federal Reserve Governor Adriana Kugler on Friday signaled she sees the elusive “soft landing” of falling inflation amidst a healthy labor market within reach for the U.S. economy, noting that inflation expectations remain anchored and the Fed has avoided a wage-price spiral.”I am cautiously optimistic that we will see continued progress on disinflation without significant deterioration of the labor market,” Kugler said in remarks prepared for delivery to the Stanford Institute for Economic Policy Research Institute’s annual economic summit. Kugler notably did not lay out her expectations for when or how fast the Fed should cut its policy rate, which it drove up rapidly in 2022-2023 and has held in the 5.25% to 5.5% range since last July. But she said her optimism stems from how quickly Fed interest rate hikes and the reversal of the supply shocks that contributed to inflation have eased price pressures even as the labor market stayed strong. Inflation surged post-pandemic because of sharp and rapid constraints on the supply of both goods and labor, to which businesses were not able to quickly adjust, she noted. But it has dropped nearly as rapidly, as supply of both workers and goods came on line last year. Wage growth slowed as a result, she noted, likely putting to rest the threat of a wage-price spiral that could have allowed inflation to entrench. Meanwhile inflation expectations have remained anchored, with businesses resetting prices less often than at the height of the inflation surge – a sign, she said, of cooling inflation.At 3.7%, the U.S. unemployment rate is only a few tenths higher than it was when the Fed started raising rates in March 2022. Meanwhile the inflation rate by the Fed’s targeted measure — the annual change in the personal consumption expenditures price index — is down by 4.5 percentage points, to 2.4% at its most recent reading. “We have seen inflation cool significantly, falling more rapidly than at any time since the 1980s,” Kugler said. “Yet unemployment remains near the lowest levels seen only a few times since the 1960s.”Kugler said the Fed’s job is not yet done. “We are laser focused” on bringing inflation down to the Fed’s 2% target, she said. More