Aurelia Butler

Milei, speaking in an interview with local news broadcaster TN, said he would look to stop the monetary authority from printing more bills in a bid to rein in inflation, which currently tops 200% annually.The libertarian president, who took office in December with a promise of controlling the economy in a country facing spiraling poverty, said the International Monetary Fund (IMF) supports his policies.”The fund is very satisfied with what we’re doing,” Milei said following a meeting earlier in the day with Gita Gopinath, the fund’s first deputy managing director.Gopinath said in a statement that the Milei administration’s “initial actions are starting to bear fruit, although the path ahead remains challenging.”The IMF recognized Argentina’s efforts to establish a strong fiscal anchor. In December, Argentina devalued the local peso currency by more than 50% against the U.S. dollar.”Consistent and well-communicated monetary and (foreign-exchange) policy will be necessary to continue to bring down inflation durably, rebuild reserves, and strengthen credibility,” Gopinath said. More

Core consumer prices rose 0.4% in January from a month earlier, well above the pace consistent with the Fed’s 2% annual inflation goal. That, along with a 3.3% annualized increase in fourth-quarter GDP and the more than 350,000 jobs added to the U.S. economy in January, “has reinforced my view that we need to verify that the progress on inflation we saw in the last half of 2023 will continue and this means there is no rush to begin cutting interest rates to normalize monetary policy,” Waller said in remarks prepared for delivery in Minneapolis.Progress on inflation, he said, has been both “real” and “considerable.” Accounting for the latest data, he said, January inflation by the core personal consumption expenditures index – to be released next week – will likely come in at 2.8%. It stood at 4.9% a year ago.While inflation is still “likely” on track to reach the Fed’s 2% goal, he said, “I am going to need to see at least another couple more months of inflation data before I can judge whether January was a speed bump or a pothole.”And with most other economic data suggesting the economy is still fundamentally solid, he said, “the risk of waiting a little longer to ease policy is lower than the risk of acting too soon and possibly halting or reversing the progress we’ve made on inflation.” The U.S. central bank has held its policy rate steady in the 5.25%-5.5% range since last July, and minutes of its policysetting meeting last month show most central bankers were, like Waller, worried about moving too quickly to ease policy. Waller’s take on the economy and monetary policy have often been a bellwether for the Fed as a whole, and his remarks Thursday marked a change in tone from his last speech, in which he said the Fed is within “striking distance” of its inflation goal. Now, he said, he will be closely watching wage growth, economic activity and employment not only for any signs of weakness that could force the Fed to act more quickly, but also for whether they are “consistent with continued progress toward 2% inflation.” Waller also pushed back on the idea that the Fed risks sending the economy into recession if it waits too long to cut rates, saying the Fed can afford to “wait a little longer” to ease policy. “In the absence of a major economic shock, delaying rate cuts by a few months should not have a substantial impact on the real economy in the near term,” Waller said. “And, I think I have shown that acting too soon could squander our progress in inflation and risk considerable harm to the economy.” Traders of futures contracts tied to the Fed’s policy rate are betting the Fed will not start cutting interest rates until its June 11-12 meeting. More

SEOUL (Reuters) – South Korea hopes to mirror Japan’s efforts to boost the value of its companies as the neighbour’s stock market surges to a record high, with measures Seoul hopes will narrow a “Korea discount” on stock prices.But while years of effort at pushing Japanese companies to be more responsive to shareholders have helped lift Tokyo shares above their 1989 “bubble”-era peak, the reforms floated last month by South Korean President Yoon Suk Yeol may not continue to boost the Seoul bourse, analysts say.The benchmark KOSPI index hit a more than 20-month high this week on optimism over the “Corporate Value-up Programme”, to be announced on Monday, but some market participants are bracing for investors to take profits next week. They suspect gains may not continue beyond national elections in April.”At this stage, we can’t be sure how consequential the value-up programme will be for the corporate sector,” Societe Generale (OTC:SCGLY) analysts said. “What we can say with greater confidence is that the probability of a re-rating has increased.”The analysts cited two encouraging factors that could make this programme different from previous, failed reform efforts: the example of Japan and higher retail investor participation than the past.The reforms aim to unlock value in South Korean companies, which have underperformed their global peers largely due to poor decision making and weak governance by the country’s opaque chaebol conglomerates.Yoon also wants to cheer domestic retail investors, who have been heavy sellers of Seoul shares. Signs of reform have accelerated purchases by foreign investors.Corporate reform is a major reason Japan’s benchmark Nikkei stock average broke its 34-year-old record on Thursday, marking a 17% spike so far this year after surging 28% in 2023.Some analysts say Seoul’s programme, the latest in a series of steps since late last year, could provide greater upside potential than in Japan, but they warn that reforms must have teeth to make a real impact.FOLLOW-UP NEEDEDThe measures will nudge listed companies with low valuations to report plans to boost corporate value, and will introduce an index of firms with strong shareholder value, the Financial Services Commission says.The government is considering tax incentives to encourage companies to return more to shareholders, the finance minister said last week. Also planned are individual savings accounts with tax breaks on dividend and interest income from local stocks.Some companies are responding. Hyundai (OTC:HYMTF) Mobis, Samsung (KS:005930) C&T, and SK Innovation are among firms announcing plans this year to cancel 3.4 trillion won ($2.6 billion) worth of company-held shares – boosting share value by reducing supply – compared with 4.9 trillion won for all of 2023.”Valuations could be boosted by at least 25% if we assume Korean deep value sectors drift towards even half the valuations of their Taiwanese counterparts,” HSBC analysts said in a note.Monday’s measures will likely bolster confidence that South Korean reforms can be sustained, Morgan Stanley analysts said, but without follow-up the KOSPI will be kept “range-bound but lean slightly to the downside due to some level of profit-taking, with the focus turning more to stocks that really matter on the reform drive”.The KOSPI rose 19% last year, underperforming the Nikkei and the U.S. S&P500. In 2022, its performance beat only Russia among the Group of 20 big economies.Domestic retail investors sold a net 13.8 trillion won ($10.4 billion) of local shares last year, their biggest sell-off in 11 years. So far this year, they have sold 5.1 trillion won, while their purchases of record high U.S. stocks have more than doubled from the same period last year and they have scooped up Japanese shares. Foreigners, by contrast, bought 11.3 trillion won of South Korean shares last year and have already added 10.2 trillion won so far in 2024 – 6.7 trillion won this month alone.To sustain the momentum, the authorities should consider requiring, not just encouraging, change, analysts say. Hurdles include high inheritance taxes and greater family ownership of companies than in Japan.”The government has come up with a well-drawn blueprint. Now it needs to bring carrots and sticks that will really change the companies,” said Han Ji-young, an analyst at Kiwoom Securities. ($1 = 1,326.4100 won) More

BENGALURU (Reuters) – The recent rally in global stocks has only a little further to go given last year’s unexpectedly sharp run-up, according to a Reuters poll of equity strategists who were evenly split on whether there will be a correction in the next three months.Starting in late 2023, the rally has pushed many indices close to lifetime highs and in some cases to new records on now-extinguished expectations that the U.S. Federal Reserve would start cutting rates as early as next month.Although rate cut bets have been tempered, indexes have continued to gain on strong earnings and booming tech stocks, even as bonds have retreated. The poll of around 150 equity analysts taken Feb. 9-22 showed all 15 major stock bourses surveyed were expected to rise this year, but only three were expected to gain more than 10%.By comparison, only two failed to rack up double-digit percentage gains in 2023.”We believe investors should be open-minded that there is a scenario in which rates need to stay higher for longer, and the Fed may need to tighten financial conditions,” said global markets strategists at JPMorgan in a recent note.Still, they added that the more than 20% rally in U.S. stocks since October “did not correct at all” despite the shift in rate expectations, saying that volatility was unusually low. “Investor positioning has increased significantly over the past few months, which may present an increasing headwind for the market,” they noted. While higher-for-longer interest rates could cap gains, strong corporate earnings are likely to cushion stocks from any major falls despite high valuations.A more than 85% majority of analysts, 71 of 83, who answered a separate question said corporate earnings would increase over the next six months.When asked if there will be a correction in the next three months, analysts were almost evenly split, with 45 of 88 across 12 markets saying unlikely and the remaining 43 saying likely.US, INDIA MARKETS TEND TO OUTPERFORM FORECASTSOf the 15 bourses, U.S. and India indices have most frequently outperformed analyst expectations since at least 2010.Backed by a strong economy, India’s benchmark BSE index is forecast to add 8% this year, extending 2023’s near 19% surge but the S&P 500 is seen gaining only 2.4%, a fraction of last year’s 24% rally.”The Indian economy remains a ‘star performing’ economy against other emerging markets,” said Neeraj Chadawar, head of quantitative equity research at Axis Securities.”Moreover, we firmly believe it will likely continue its growth momentum in 2024 and remain the land of stability against the backdrop of a volatile global economy.” Japan’s Nikkei index, which has risen nearly 50% since end-2022 to hit a record high on Thursday, was forecast to hold on to its gains to trade around 39,000 by year-end.The pan-European STOXX 600 advanced to an all-time high on Thursday boosted by technology stocks and is expected to gain around another 3% by year-end.”We think Europe will see sluggish growth and a mild contraction in activity in the U.S. will affect earnings – even though we don’t see an earnings recession, we think market expectations are high,” said Amundi strategists.Britain’s FTSE, also forecast to rise about 3.0% from current levels to touch 7,900 by the end of the year, is the only index in the poll that analysts downgraded their outlook for. In a November poll it was seen touching 8,000.(Other stories from the Reuters Q1 global stock markets poll package:) More

(Reuters) -A surge of interest in bitcoin exchange-traded funds is prompting some investors to swap out holdings in gold-backed ETFs, although analysts and fund managers said they are unlikely to challenge bullion longer term.Spot bitcoin ETFs could offer investors looking to hedge against inflation an alternative to gold. ETFs track an index, commodities, bonds or a basket of assets like an index fund.And January’s U.S. regulatory green light for ETFs that track the price of the world’s largest digital asset has set the ETF market – worth trillions of dollars – up for further gains.The advent of ETFs in gold in the early 2000s added a major pillar of support to the market by creating new demand, causing prices to soar in subsequent years. “We anticipate that bitcoin could substitute for gold in some investor portfolios. It may serve a similar role as a hedge against global disorder and financial system dysfunction,” said Jason Benowitz, senior portfolio manager at CI Roosevelt. Since the Jan. 10 U.S. approval, two of the biggest new spot bitcoin ETFs, iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund, had accumulated $5.45 billion and $4.13 billion in assets respectively as of Feb. 14, LSEG Lipper data shows. Meanwhile, the largest gold-backed ETF, New York’s SPDR Gold Trust (P:GLD), saw outflows of $768.9 million over the same period, while the iShares Gold Trust had outflows of $284.6 million. NEW HAVEN?The launch of the new products comes against a rally in the prices of crypto tokens. Bitcoin surged more than 150% in 2023, while gold climbed a far more modest 13%. “Overall, the crypto industry is maturing and … with more regulatory approval and a new legitimized product, it’s a growing threat to older havens like gold in some regions,” Nicky Shiels, head of metals strategy at MKS PAMP SA said in a note. Even so, some fund managers and analysts urged caution against migrating from gold ETFs, citing bitcoin’s volatility. “Gold has been valued for thousands of years, while bitcoin is in its infancy,” said Bryan Armour, an ETF analyst at Morningstar. Gold is typically seen as a safe place to park money in times political or economic uncertainty, such as a rapid rise in inflation. “Given that gold doesn’t pay dividends like many stocks, its more useful for wealth preservation than wealth generation,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.”Bitcoin speculators have vastly different aims and appear willing to gamble on rapid price rises in a search for hot returns, which are by no means guaranteed,” Streeter added. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.UK consumer confidence waned in February, according to research company GfK, suggesting that the early optimism for 2024 has abated in the face of persistently high inflation.The consumer confidence index, a leading indicator of consumer spending that measures people’s views of their personal finances and the state of the economy, fell to minus 21 in February from a two-year high of minus 19 in January. The reading followed three consecutive months of increases.Driving the change were two-point month-on-month decreases in both consumers’ assessment of their personal financial situation and their views on the general economic situation in the past 12 months. These were probably driven by inflation remaining at 4 per cent in January, analysts said. “Fears that inflation is about to return and the associated erosion of purchasing power will have had a negative influence,” said Tomasz Wieladek of T Rowe Price.Consumer confidence in the economic outlook for the next 12 months also declined in February, down by three points to minus 24, as markets start to price an increasingly hawkish scenario for the Bank of England after inflation remained flat in January. “There is a mixture of bad news and good news for February,” said Joe Staton, client strategy director for GfK. “The bad news is that the improvement in the overall index score seen over recent months stalled slightly . . . the good news is that optimism for our personal financial situation for the next 12 months has not slipped back.”Consumers’ expectations for their personal financial situations for the coming year did not change from January, holding steady at 0. January was the first time this rating had been positive since December 2021.“This metric is key to understanding the financial mood of the nation, because confident householders are more likely to spend despite the cost of living crisis,” said Staton.The fall in UK sentiment contrasts with a simultaneous larger-than-expected rise in European consumer confidence, according to data released earlier in the week.Retail sales were up in January and the UK’s business activity beat expectations in February, suggesting that the UK economy is emerging from its economic torpor. However, simultaneous rises in mortgage rates and recent evidence that the UK dipped into a recession in 2023 have left consumers wary. Despite the month-on-month slip in February, consumer confidence is 17 points higher than in February last year and 38 points higher than its recent low in September 2022.However, the consumer confidence index remains negative, meaning that most respondents are still doleful about the economy, and it is still below the average of minus 17 over the past few decades.Many analysts believe consumers still have much to be optimistic about.“There are some supporting forces for consumers, such as expectations of oncoming quantitative easing, the two [percentage] point cut to national insurance, and strong wage growth,” said Ellie Henderson of Investec. More

(Reuters) -Federal Reserve Bank of Philadelphia President Patrick Harker said on Thursday a rate cut is the next step for monetary policy and the timing of that action is getting closer, although he declined to say when the central bank will be able to lower the cost of short-term borrowing. “I believe that we may be in the position to see the rate decrease this year,” Harker said in a speech given before the 2024 Lyons Center for Economic Education and Entrepreneurship event, hosted by the University of Delaware. “But I would caution anyone from looking for it right now and right away,” he said. “We have time to get this right, as we must.” In comments after his formal remarks, Harker said a May rate cut was possible but not likely, as he’s eyeing the start of action some time in the second half of the year. Harker said he needs a couple more months to gain confidence the economy will support an easing. Whatever the Fed does will be driven by incoming data, he said, adding when it comes to a cut, “I think we’re close, give us a couple of meetings.” Harker, who does not hold a voting role on the rate-setting Federal Open Market Committee (FOMC) this year, spoke on a day in which a number of Fed officials were also weighing in on the outlook for the economy and monetary policy. On Wednesday the Fed released minutes from its January FOMC meeting that showed officials eying rate cuts, albeit cautiously. Fed Chair Jerome Powell has already taken the Fed’s March meeting out of the running for action, and markets are currently expecting an easing to come some time in the summer. Harker drove home the point that when the Fed does cut rates it must act at the right time. “I find our greatest economic risk comes from acting to lower the rate too early, lest we reignite inflation and see the work of the past two years unwind before our eyes,” he said. The bank president said that inflation is moving back to the 2% target but he still wants more evidence it is doing so durably. He noted the so-called last mile of hitting the target could be challenging.Recent higher-than-expected consumer price level inflation was a reminder that progress on lowering price pressures can be bumpy and uneven, he said. When it comes to gaining confidence inflation is on track for 2%, he said he was not looking for much more data. “I just wanted to get a couple more months” of news to be sure. Harker also said U.S. growth continues to be strong, and the robust labor markets are coming into better balance. Harker also said news of job layoffs doesn’t look to be a recessionary signal to him, adding that he views the consumer sector as strong. Harker also weighed in on the Fed’s balance sheet drawdown effort, which sees the central bank trimming its bond holdings to withdraw liquidity from the financial system. He said market liquidity levels remained strong, and echoing the meeting minutes, he expressed support for slowing the pace of the drawdown before stopping it.Harker said that was important because there is great uncertainty about the point where liquidity will grow too tight in markets. More

“I would like to have greater confidence that inflation is converging to 2% before beginning to cut the policy rate,” she said in remarks prepared for delivery to Princeton University’s School of Public and International Affairs. While it is “reasonable” to expect inflation to get to the Fed’s 2% goal over time, the path toward that goal has been and could still be “bumpy and uneven,” she said, citing recent stronger-than-expected readings on consumer price inflation. At the same time, she said, the risks to the economy are no longer weighted toward excessive inflation alone. Supply chains have recovered, and so has labor supply; consumer spending has been strong, but with wage growth slowing, there are “reasons to expect some moderation going forward,” she said. There are also a raft of uncertainties ahead, including the potential for conflict in the Red Sea to impede supply more than it has so far, as well as longer-term issues including climate change, productivity growth and deglobalization.As for monetary policy, she said, “I am now weighing the possibility of easing policy too soon and letting inflation stay persistently high versus easing policy too late and causing unnecessary harm to the economy.” Once data delivers greater confidence that disinflation is sustainable, she said, “at some point” the Fed will be able to cut rates. “We should continue to move carefully as we receive more data, maintaining the degree of policy restriction needed to sustainably restore price stability while keeping the economy on a good path,” she said.The U.S. central bank has held its policy rate steady in the 5.25%-5.5% range since last July, and minutes of its policysetting meeting last month show most central bankers were worried about moving too quickly to ease policy. Traders are betting the Fed will not start cutting interest rates until its June 11-12 meeting. More