Aurelia Butler

The week’s main focal point is due later Thursday, January’s personal consumption expenditures (PCE) price data, widely seen as the Federal Reserve’s preferred inflation gauge.Recent economic data releases, and the consumer prices release in particular, have prompted investors to push back bets on rate cuts by the Federal Reserve to later in the year.Investors will be watching closely to see if the upside surprise seen in the January CPI is replicated, underlining Fed caution about the timing of rate cuts.Year-on-year headline and ‘core’ PCE inflation rates are forecast to slip to 2.4% and 2.8% respectively, but monthly rises are expected to be a healthy 0.3% and 0.4%.U.S. stock futures edged lower Thursday, as investors warily await the release of key inflation data as well as more corporate earnings.By 03:45 ET (08:45 GMT), the Dow futures contract was 90 points, or 0.2%, lower, S&P 500 futures had dipped by 9 points or 0.2%, and Nasdaq 100 futures had fallen by 35 points or 0.2%.The three main indices closed lower Wednesday, but are on track to register gains this month after strong results from Nvidia (NASDAQ:NVDA) seemed to remove worries about the sustainability of the AI-driven rally. The Nasdaq Composite is on course to post a gain of over 5% this month, the S&P 500 has jumped 4.6%, while the Dow Jones Industrial Average has added 2.1%. This would mark the DJIA’s first four-month winning streak since May 2021.There are more earnings to digest Thursday, including from Best Buy (NYSE:BBY), Hewlett Packard Enterprise (NYSE:HPE) and Bath & Body Works (NYSE:BBWI), while the likes of Snowflake (NYSE:SNOW) and Salesforce (NYSE:CRM) will also be in the spotlight after they released results after the close Wednesday. The saga surrounding the leadership of OpenAI, and the potential that investors were misled, is set to be investigated by the Securities and Exchange Commission, according to a report by the Wall Street Journal, with the newspaper citing people familiar with the matter.The move followed OpenAI board’s decision in November to fire Sam Altman as CEO and remove him from the board, only for Altman to return to his position just days later. The regulator is specifically looking into internal communications involving Altman, and had also sent a subopena to OpenAI in December, the WSJ report showed.OpenAI shot into the public spotlight with the release of its ChatGPT software in late-2022, prompting a broader rush into generative artificial intelligence.Europe has its own inflation data to digest Thursday, with consumer prices due from the German states, France and Spain, ahead of the eurozone figures on Friday.Inflation in the eurozone is retreating, with February’s CPI seen falling to 2.5% on an annual basis, from 2.8% the prior month.However, officials at the European Central Bank have consistently cautioned that it’s still too early for the central bank to cut interest rates.Bundesbank President Joachim Nagel reiterated that view on Wednesday.”We still lack more reliable data on wage developments and confirmation that with these data, we will get inflation back to 2% in 2025,” Nagel said. “Next week’s projections will be an important milestone.”The ECB will release new quarterly economic projections next Thursday.Oil prices edged lower Thursday, adding to the previous session’s losses as a sharp build in U.S. crude stocks reinforced concerns about demand in the world’s largest economy.By 043:45 ET, the U.S. crude futures traded 0.6% lower at $78.03 a barrel, while the Brent contract dropped 0.7% to $81.60 per barrel. Crude inventories rose for the fifth consecutive week, increasing by 4.2 million barrels to 447.2 million barrels in the week ended Feb. 23, official data from the Energy Information Administration showed on Wednesday, heightening investors’ worries over a slow economy and reduced oil demand in the largest consumer in the world.Traders will be keeping an eye on the U.S. inflation data for clues about future economic activity, as well as events in the Middle East and the possible extension of voluntary oil output cuts from the producer group, the Organization of Petroleum Exporting Countries and its allies. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.India’s commerce minister has said that trade policy has no role in fighting climate change, dealing a blow to hopes of tackling global warming through trade deals.Piyush Goyal told the Financial Times that trade and the environment “are two separate issues” and the rich world’s attempts to embed sustainability into agreements were “biased”.“Trade has nothing to do with that,” he said in an interview at the World Trade Organization’s biennial conference, where governments are discussing how to green trade flows and abolish subsidies for overfishing.Goyal said that other UN institutions were best placed to tackle climate change and labour standards, such as the Framework Convention on Climate Change and International Labour Organization.“The world has prepared different multilateral organisations and they should be respected,” he said. “They should be allowed to do their job.” Countries that industrialised through fossil fuels should pay to arrest climate change, Goyal said, evoking the 2015 Paris Agreement, in which developed countries promised to finance developing countries to cut fossil fuel use and adapt to climate change.A 2009 commitment to spend $100bn per year for developing countries by 2020 has not been met.“All the environmental damage that has been done in the past has still not been made up for. What about that?” he asked.“Before we add new environmental issues, let’s first sort out who is responsible for the environmental degradation. Certain promises were made in Paris. They have to be delivered upon.”India accounts for 17 per cent of the world’s population but produces just 3 per cent of emissions, he said.Goyal attacked unilateral EU trade measures trying to protect the environment, saying: “There is clearly bias, discrimination and unfairness.”  They include the carbon border adjustment mechanism; a tax on imports of products such as steel that produce high emissions; and a deforestation law that would force importers of commodities such as rubber and coffee to prove they were not grown on land recently cleared of trees. He said Delhi had not decided whether to bring a WTO complaint about the measures. Goyal, who is under pressure over his tough stance at the ministerial conference, where he has threatened a veto in several areas, hit back at the US for its decision to hamstring the WTO’s dispute resolution function.Washington has blocked the appointment of arbitrators to appeal panels, which means countries that lose a case can simply ignore the judgment by appealing into the void. “I have many complaints that I need to be addressed by the WTO,” he said. “I have no recourse to justice. So until we have a functioning appellate body all other decisions have no meaning.”India is itself obstructing almost single-handedly two other negotiations. It insists on retaining a publicly funded food stockpile system, stalling talks on agricultural subsidies.There have been widespread protests by farmers in India ahead of elections, raising the stakes for Goyal.India also wants to end an agreement not to impose duties on electronic goods such as film streaming and social media. Goyal said this favours big tech companies over SMEs who need tariff protection to grow. The ecommerce moratorium is usually extended from meeting to meeting. India, backed by Indonesia and South Africa, is refusing to do so, although most WTO members favour the move.“I have start-ups. I have technology professionals who are happy to produce domestic technology. I have ecommerce platforms in India. But should I not be supporting them? Is it the right only of a few select big tech companies to do ecommerce?” he asked.The conference is scheduled to finish on Thursday but is expected to run over as delegations haggle over the moratorium.Goyal said India was ready to close a trade deal with the UK “immediately” but London had not taken a decision.Talks with the EU continued but India would “absolutely not” accept any sustainability commitments, which are a critical demand of Brussels.  More

BEIJING/HONG KONG (Reuters) – Chinese university graduate Zhang Baichuan travels hundreds of kilometres from one job fair to another in a final push to find a better offer than the unappealing one he received after more than 1,000 applications.He hopes the post-Lunar New Year recruiting season in China, when many companies advertise for new positions, brings more attractive opportunities than the livestream moderator role he was offered recently.While Zhang, 23, was fine with the 5,000 yuan ($695) monthly salary, with the company covering meals and accommodation, he dreaded the 12-hour shifts, six days a week – known in China as the “996” work culture.”I’m not keen on a 996 schedule, but I’m considering it as a safety net while I look for better options,” Zhang, who holds a business management degree from Hebei GEO University, said outside his 50-yuan-per-night hostel room in suburban Beijing.”I don’t like the devaluation of degrees, but the reality is that there are more college graduates now,” he said before travelling to another job fair outside of Beijing.Encouragingly for China’s first-quarter economic growth, the post-Lunar New Year recruiting season is off to a stronger start than in 2023, when the world’s second-largest economy was going through its biggest COVID-19 infection wave.But high youth unemployment gives employers a large pool of candidates to choose from, keeping wage growth sluggish and cementing worries China may struggle to boost household consumption enough to stabilise growth and lift the economy out of deflation.Zhaopin, one of China’s biggest recruiting platforms, said in the first week after the Feb. 10-17 break there were 45% more companies looking to hire than in the corresponding post-holiday week of last year.That demand hasn’t translated into higher wages, however, which were only up 3% on average.The pace, which lags China’s expected 2024 economic growth target of around 5%, suggests the job market remains an employers’ market for now, said ING chief China economist Lynn Song.”The recovery in the job market will likely be modest this year as economic momentum remains relatively weak,” Song said.More than 21% of Chinese aged 16-24 were unemployed last June, the last data point before officials suspended the series. China resumed publication this year, excluding college students from the data, to put youth unemployment at 14.9% in December.’NEW NORM’The travel sector – the fastest to recover after three years of COVID restrictions – led the way in hiring, offering 56.3% more jobs than last year, followed by logistics with 26% and transportation with 21.6%, Zhaopin said.At the Beijing job fair, one of thousands across China, a hotel human resources manager who only gave her surname Han, said her firm tweaked commission thresholds, which could lead to 30-40% higher take-home pay from last year.Others were less generous. Zhang Chengjin, director at housing information provider Mingwang, said he could only offer a “slight increase,” given the troubled property sector was generally cutting jobs.A civil servant from Lanzhou, capital of the northwestern Gansu province, said the local government’s debt woes forced it to cut bonus payments, reducing his annual pay by a fifth.”It might be the new norm,” he said.SUBSIDY HOPESWith China’s parliament starting its annual meeting next week, pressure is growing on leaders to come up with policies that address weak household spending, a long-standing structural imbalance.Analysts at Societe Generale (OTC:SCGLY) and HSBC say last week’s comments by President Xi Jinping calling for the “replacement of old durable goods” raised expectations policymakers could announce subsidies for home appliance purchases.But such subsidies would change little. Relative to economic output, household spending in China is about 20 percentage points below global average.For China to become a more consumption-driven economy, household incomes must rise faster than GDP for sustained periods and policymakers need to find ways to transfer resources from the government sector to households, analysts say.”Large enough subsidies and tax breaks are helpful in frontloading purchases,” said Gary Ng, Asia Pacific senior economist at Natixis. “However, consumption will only rebound if households become more optimistic or if income growth and wealth effects see real improvement.”Gao Tianyi, a 26-year-old attending the Beijing job fair, worries about a “trend of pushing salary expectations lower,” but says he tries to “remain humble” in his job hunting.”Some people can’t sleep at night because they can’t find a job,” said Gao. “For me, it’s the mornings. I wake up and immediately start to worry.”($1 = 7.1989 Chinese yuan) More

Argentina’s libertarian president Javier Milei is ready to bypass hostile legislators who blocked his landmark economic reforms and rely on decrees and other executive powers to implement his radical austerity plan.His strategy for reviving the stricken economy is widely perceived as high-risk, but Milei waved aside doubts during a confident interview at the pink-coloured presidential palace, the Casa Rosada. He said he was making faster progress than expected with a fiscal adjustment so drastic it had no parallel “not just in Argentina but the world”. The chance of ordinary Argentines rioting against austerity was “zero” and his message to Argentina’s growing number of poor, he said, was: “You don’t get out of poverty by magic. You get out of poverty with capitalism, savings and hard work.”A political outsider inaugurated in December on a promise to take a chainsaw to the state, Milei surprised Argentina by eking out the country’s first budget surplus in 12 years in January. That was achieved by slashing payments to provinces, freezing budgets and not uprating pensions and benefits fully for inflation, which was running at 254 per cent a year last month.Economists have warned that such drastic spending cuts may not be sustainable. But Milei, a former economist and TV pundit, believes that having brought down inflation from a peak of 25.5 per cent a month in December to 20.6 per cent in January and an expected 15 per cent in February, he can turn around the crisis-stricken economy this year without congress. “We have avoided hyperinflation,” the self-styled anarcho-capitalist leader told the Financial Times. “Our objective is to continue lowering inflation . . . [and] finish cleaning up the [central bank’s balance sheet]. Once the central bank is cleaned up, we are planning to lift exchange controls . . . the IMF estimates we could do it by the middle of the year.”Milei’s reform agenda ran into trouble almost immediately when the opposition-dominated congress began unpicking hundreds of deregulation measures proposed in his wide-ranging draft bill.Rather than see the bill “shredded”, the president withdrew it and plans to wait until after midterm legislative elections late next year before trying again with a comprehensive package. He said, however, that he would not wait that long to push ahead with large parts of his reform agenda — and was ready to do it without congress.“There are other reforms which we can do by decree . . . by changing the application of laws, and all that we will do,” Milei said. He pointed out that about a third of his proposed 1,000 reform measures were included in an emergency decree that will remain in force unless both houses of congress vote to reject it.“But while congress has its current make-up, we think it’s difficult to pass reforms because what became clear with the [economic reform bill] is that the politicians . . . have no problem damaging the interests of Argentines in order to keep their privileges.”Milei conceded that “in the long term you need congress” but insisted that Argentina’s historically low levels of investment meant that business could achieve big returns in the short term with only small outlays of capital.The president believes that lifting exchange controls would open a virtuous circle of economic recovery. “We could have a lot of investment despite not having institutional changes . . . and this could be the take-off point so that next year Argentina is growing in a strong, solid, sustainable way with low inflation.”This, he believes, would allow his insurgent La Libertad Avanza party, founded only two and a half years ago, to win more seats in next year’s midterm elections. Then he would try again to legislate. “We are ready to send back all the reforms after the 11th of December 2025. We have sent 1,000 but we still have 3,000 more to present.”In the meantime, Milei will continue to send reforms piecemeal to congress to expose what he called political games by the country’s political “caste” of professional politicians. “Those who vote against will be identified as the enemies of change,” he said. Casa Rosada, the presidential building in Buenos Aires More

SAO PAULO (Reuters) -Japan stands ready to take appropriate action against excessive exchange-rate moves, its top currency diplomat said following yen declines to levels seen by traders as heightening the chance of currency intervention.The warning by Masato Kanda, Japan’s vice finance minister for international affairs, likely reflects Tokyo’s desire to prevent further falls in the yen that would hurt households and retailers by boosting the cost of importing raw materials.”I won’t comment on recent currency moves. But it’s desirable for exchange rates to move stably reflecting fundamentals,” Kanda told reporters on Wednesday on the sidelines of the G20 finance leaders’ meeting in Sao Paulo.”We’re watching currency moves with a strong sense of urgency, and ready to respond appropriately if we see excessively volatile moves,” he said.The yen is the worst-performing major currency this year as funds and others have traded on the huge U.S.-Japan interest rate and bond yield gap, and bet that it will persist. It has shed 6% of its value against the dollar so far this year, falling below 150.00 per dollar to within sight of its post-1990 lows around 152.00 per dollar.Kanda, who is attending the G20 meeting on behalf of Finance Minister Shunichi Suzuki, said he called on policymakers to be mindful of the risk that volatility may heighten in financial markets, including for exchange rates.”I told the meeting that excess volatility in the currency market was undesirable, and that it was important to maintain the G20 commitment on exchange rates,” he said.The G20 and the smaller G7 group of advanced nations share a common understanding that stable currency moves are desirable, and that countries have authority to take action in the market when exchange-rate moves become too volatile.Japan intervened in the currency market three times in 2022 when the yen plunged to 32-year lows near 152 yen to the dollar, conducting rare dollar-selling, yen-buying intervention.While authorities have not stepped in to the market since then, traders are on alert for any sign of intervention as the yen flirts at the 150-level seen as Tokyo’s line-in-the-sand.Japanese authorities have repeatedly said they were paying more attention to the speed of currency moves, rather than levels, in deciding whether and when to intervene.The yen’s recent declines have been driven in part by heightening market expectations that the Bank of Japan will keep interest rates ultra-low, even after pulling short-term borrowing costs out of negative territory. More

SEOUL (Reuters) – North Korean leader Kim Jong Un has called for an “industry revolution” in rural regions by building factories nationwide, state media KCNA said on Thursday, amid chronic food shortages and widening economic inequality. Attending the groundbreaking ceremony for a plant in Songchon County, east of the capital Pyongyang, Kim pledged to push ahead with his “Regional Development 20×10 Policy”, under which the country seeks to open modernised factories in at least 20 remote counties every year for the next 10 years. The policy was unveiled as Kim’s key economic initiative at a meeting last month of the Supreme People’s Assembly, the country’s rubber-stamp parliament.”Establishing regional industry factories equipped with modern equipment and production lines in every city and county of the country within the next 10 years is truly a great revolution with enormous epochal significance,” Kim told the ceremony, according to KCNA. Kim handed over regimental colours at the ceremony to a military unit that has recently been created to carry out the initiative, saying that they would “create an era of great change for radically developing regions”. Kim has been pushing for modernising the farming sector and rural communities as North Korea’s economy heavily relies on agriculture but has long grappled with food shortages amid sanctions over its weapons programmes and seasonal impacts from natural disasters. North Korean defectors have reported deepening inequality between largely elite residents of Pyongyang and other major cities, and the farming population in rural areas. South Korea’s unification ministry said last month that the economic gap between them appears to have further widened in terms of everything from food rations and housing to education and access to healthcare. More

CHISINAU (Reuters) -Moldova’s breakaway Transdniestria region asked Russia on Wednesday to help its economy withstand Moldovan “pressure,” at a meeting of hundreds of officials dismissed by the pro-European Chisinau government as a propaganda event to gain headlines.  The region, long seen as a potential flashpoint with Russia in Europe, held a “congress of deputies of all levels” after Moldova required Transdniestrian firms to pay import duties to the central budget from January.The congress passed a resolution saying it would appeal to both houses of Russia’s parliament “with a request to implement diplomatic measures to protect Transdniestria in the face of increasing pressure from Moldova”. The unrecognised statelet, which borders war-stricken Ukraine to the east, has maintained autonomy from Chisinau for three decades with support from Moscow, which has more than a thousand troops stationed there since a brief war in 1992. After Russia’s full-scale invasion of Ukraine in 2022, tensions surged around the separatist region, which says it has 220,000 Russian citizens.Relations between Moldova and Russia have also frayed as the Chisinau government has steered a pro-European course and accused Moscow of trying to destabilise it.   President Maia Sandu, in Albania for a summit of southeast European countries, said Moldova remained committed to a peaceful resolution of the Transdniestrian conflict. “What the government is doing today is making small steps for the economic reintegration of the country,” she said. Ukrainian President Volodymyr Zelenskiy said he and Sandu, meeting on the sidelines of the summit, discussed “the latest events in Moldova’s Transdniestria region and Russia’s efforts to destabilise the situation in the region”.Ukraine’s Foreign Ministry said Kyiv “will remain an active participant in the Transdniestrian settlement process” and called for the “speedy withdrawal of Russian troops”.Oleg Serebrian, a Moldovan deputy prime minister, said the congress was a propaganda event, and that the breakaway region and all Moldova’s citizens were benefiting from Moldova’s push to join the European Union. WASHINGTON WATCHING REGIONAL DEVELOPMENTSThe United States “firmly supports” Moldova’s sovereignty and territorial integrity, State Department spokesperson Matthew Miller said on Wednesday in Washington. “Given Russia’s increasingly aggressive role in Europe, we are watching Russia’s actions in Transdniestria and the broader situation there very closely,” Miller said, using another name for the region.Commenting on the congress, Russia’s Foreign Ministry said defending the interests of Transdniestria’s citizens was a priority and that the request would be reviewed carefully, the RIA news agency reported.The region’s economy minister told the congress, held in the regional capital Tiraspol, that customs revenues paid into Transdniestria’s budget had fallen by 18% under the new regulation.”There is social and economic pressure on Transdniestria, which directly contradicts European principles and approaches to the protection of human rights and free trade,” the resolution said. More