Aurelia Butler

WASHINGTON (Reuters) – U.S. lawmakers expressed shock and outrage at the death of Russian opposition leader Alexei Navalny on Friday, but the news looked unlikely to bridge deep divides over whether the United States should continue its military support for Ukraine. “There are some (members of Congress) that I don’t think can be persuaded because the narrative is so strong,” Republican Representative Michael McCaul, chairman of the House Foreign Affairs Committee, told reporters on Friday.”I think the brainwashing, if you will, that we have to choose between our southern border and Ukraine has been out there. I don’t agree with that,” McCaul, an advocate for aid to Kyiv as it battles a nearly two-year-long Russian invasion, said at a breakfast sponsored by the Christian Science Monitor.The reports of Navalny’s death come as the U.S. political world battles over how and whether to stand up to Russia, particularly after Washington has approved more than $110 billion in defense assistance for Ukraine, and Biden’s request for another $60 billion for Kyiv is stalled in the U.S. Congress.Hardline conservatives, many of whom argue that U.S. funds should not be sent abroad at a time of steep federal deficits, were clear on Friday that Navalny’s death will do little to settle those political fights. Asked if Navalny’s death affected his thinking on the need to counter Russia more forcefully, Republican Representative Matt Gaetz said in an emailed statement: “No. I don’t think we were another $60 billion to Ukraine away from saving Navalny.” With its $95 billion military aid package for Ukraine, Israel and Taiwan in peril, President Joe Biden’s administration has been issuing increasingly dire warnings that Ukraine needs more assistance. “History’s watching the House of Representatives … Failure to support Ukraine at this critical moment will never be forgotten,” Biden told reporters at the White House on Friday.NO CHANGE TO DOMESTIC POLITICSSo far, opponents of Ukraine aid appear unmoved. “The death of Russian opposition leader Alexei Navalny is a tragedy and demonstrates the fact that Vladimir Putin is a dictator,” Republican Representative Byron Donalds said in an emailed statement. “However, it does not change domestic politics within the United States.” Biden asked for the additional Ukraine funds in October, but they did not pass as Republicans insisted the package include unrelated changes in U.S. policy on immigration and control of the border with Mexico.Former President Donald Trump, the party’s frontrunner in the race for the White House this year, rejected a Senate compromise that included border provisions, and Senate Republicans blocked it. But in a surprise shift, the Democratic-controlled Senate overwhelmingly passed the security package without most of the border measures this week.Republican House of Representatives Speaker Mike Johnson, whose caucus is closely allied with Trump, said the Republican-controlled chamber would not rush to vote, insisting that the bill must include tougher border measures. The House is not expected to take up the bill for weeks.Johnson issued a statement harshly criticizing Putin as “a vicious dictator” after reports of Navalny’s death.He did not, however, refer specifically to the aid package, in calling for opposition to Russia and measures to limit Putin’s ability to pay for the war.”As Congress debates the best path forward to support Ukraine, the United States, and our partners, must be using every means available to cut off Putin’s ability to fund his unprovoked war in Ukraine and aggression against the Baltic states,” Johnson’s statement said.Among Russia hawks in the Republican party there is growing skepticism that even major events, like the death of a prominent opposition leader or this week’s revelation of a possible Russian nuclear-related threat in space, can tilt hardliners who embrace a more isolationist “America First” approach to world affairs advocated by Trump.Asked whether he thought reports of Navalny’s death would change the discussion, McCaul said: “Well to the extent members of Congress know who he is.” More

WASHINGTON/NEW YORK (Reuters) -A week of disappointing U.S. economic data, including stronger-than-expected inflation and weakening spending, has Federal Reserve policymakers doubling down on their wait-and-see approach to interest rate cuts this year, but not discouraged.The latest bit of bad news came early on Friday in the form of a 0.5% month-on-month surge in January’s producer price index excluding food and energy, potentially undoing some of what policymakers have called “remarkable” progress on inflation.That followed on reports earlier this week showing that consumer prices rose more than expected last month, even as a big drop in retail sales and a slide in factory production amid severe cold in some parts of the country raised questions about economic momentum. Fed policymakers speaking on Friday took it all in stride, seeing continued if “bumpy” progress toward the Fed’s 2% goal and continued, if cooling, labor market strength that leaves the economy on track to a soft landing. “It has not shaken my confidence we are going the right direction,” San Francisco Federal Reserve Bank President Mary Daly told a roomful of economists in Washington on Friday, of the run of recent data. “It’s about how quickly are we going to go there.” Daly said that while there’s still “work to do” on inflation – a phrase policymakers lately have used to signal a longer hold at current rates, rather than any further rate increases – she continues to see three quarter-point cuts to the Fed’s policy rate this year as a “reasonable” path forward. The Fed has held the policy rate in the 5.25%-5.5% range since last July. “We will need to resist the temptation to act quickly when patience is needed and be prepared to respond agilely as the economy evolves,” Daly said.Speaking to CNBC, Atlanta Federal Reserve Bank President Raphael Bostic appeared to be consulting the same playbook. “We just have to be patient and let’s not get too far ahead and assume that the job is done, because there’s still work to do,” he said, noting that he expects to start rate cuts this summer, with two moves his baseline for this year, but potentially more if the data justifies it.EXPECTATION SHIFTFinancial markets, which began the year pricing in as many as six Fed rate cuts this year, have moved closer to the view of Fed policymakers, most of whom as of December penciled in 50 to 75 basis points of rate cuts by the end of 2024. In just the past week, futures contracts tied to the short-term policy rate abandoned bets on a May start to rate cuts, and now see June as more likely, with the policy rate seen ending the year in the 4.25%-4.5% range. Both Daly and Bostic noted that the rapid decline in inflation last year – from 5.5% in January to 2.6% in December by the Fed’s targeted measure of the personal consumption expenditures price index – has happily taken place with only a small rise in the unemployment rate, to 3.7% last month.The combination, Daly said, is “unequivocally good news,” but both she and Bostic said it is unclear whether that will continue, and are on the lookout for more data. Fed Chair Jerome Powell has said the central bank needs greater confidence in inflation’s downward trajectory before it can cut rates. The latest data suggests more time may be needed.Analysts at Citi calculated that based on the latest reading of the producer price index, the core PCE measure of inflation likely re-accelerated in January to 2.4% on a six-month basis, from a previous 1.9%. More

(Reuters) – Bond manager PIMCO said on Friday it has withdrawn from the Climate Action 100+ investor coalition, following the withdrawal of other fund firms.In a statement sent by a representative, PIMCO said “we have concluded that our Climate Action 100+ participation is no longer aligned with PIMCO’s approach to sustainability. PIMCO operates its own portfolio-relevant engagement activities with issuers on sustainability.” More

Formal negotiations between the U.S. planemaker and its largest union — District 751 of the International Association of Machinists and Aerospace Workers — were set to begin in early February, but the start date was pushed back at Boeing (NYSE:BA)’s request after a Jan. 5 in-flight cabin blowout on a 737 MAX 9.IAM District 751’s contract agreement with Boeing ends at midnight on Sept. 12. The union, which represents about 31,000 workers in the area around Puget Sound, Washington, will be looking to obtain wage increases of around 40% over the three- to four-year life of the contract and will propose reinstating pensions, which were phased out in a 2014 deal, IAM District 751 President Jon Holden said in a recent interview with Reuters.It will also seek a commitment from Boeing to build its next airplane in the Puget Sound area, Holden said. “That’s the commitment our members have earned.”Labor makes up less than 15% of the total cost of a Boeing aircraft, with engineering, support and manufacturing jobs built into that figure, Boeing Chief Financial Officer Brian West said during an investors conference on Tuesday.Asked about Boeing’s strategy for negotiations, West said, “We fully expect to get to a point that we have an agreement and work constructively with our partners in the IAM.” More

This article is an on-site version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a weekToday’s top storiesFor up-to-the-minute news updates, visit our live blogGood evening.UK prime minister Rishi Sunak has suffered one of the worst weeks of his premiership with data confirming he had led the country into recession followed by the loss of two safe seats in parliamentary by-elections.The opposition Labour party proved that its high opinion poll ratings could be translated into actual votes at the ballot box as it snatched the seats in Wellingborough in Northamptonshire and Kingswood near Bristol. There were also growing signs that the Conservatives are losing votes on the right to the populist Reform UK party.Last night’s results cap a challenging few days for the Tories, who had spent yesterday fighting accusations that they were responsible for tipping the UK into a recession. GDP data showed the economy shrinking 0.3 per cent in the final quarter of 2023 following a decline of 0.1 per cent in the third. You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Some economists argue the dip is only a “technical” recession — defined as two successive quarters of negative growth — in comparison with the more serious downturns in the past featuring mass unemployment. The argument that growth was now returning was also given credence by this morning’s positive retail sales figures for January, suggesting the economy was picking up momentum. There was also more positive data earlier in the week showing inflation holding steady at 4 per cent, lower than analysts had expected.This was however drowned out by the political furore around the GDP figures, given the fact that Sunak had made restoring growth one of his key promises to voters. Instead, said Labour shadow chancellor Rachel Reeves, we now had “Rishi’s recession”.  GDP per capita was gloomier still. An increase in population would normally lead to higher growth: instead the fall in output per head of 0.7 per cent in 2023 was the first contraction since the financial crisis, barring the pandemic emergency of 2020.The string of data comes as Chancellor Jeremy Hunt prepares for a crucial Budget on March 6, possibly the last big chance to turn around Tory fortunes before a general election expected before the end of the year. The FT revealed earlier this week that Hunt was considering another squeeze on public spending to pay for tax cuts but a new set of internal fiscal forecasts showed he has little room for manoeuvre. Economists have warned that Hunt’s planned 1 per cent real terms annual increase in public spending through to 2029 is a “fiction” that would seriously damage already stretched public services.Back in the world of politics, the GDP figures are welcome news for the Labour party, which has suffered its own week of dire headlines, or as one of its officials commented: “To have people talking about recession in an election year isn’t good for Rishi Sunak. His selling point was supposed to be that he knew how to run the economy.”  Need to know: UK and Europe economyBrussels has downgraded forecasts for EU and eurozone growth this year to 0.9 per cent and 0.8 per cent respectively, but has also revised lower inflation expectations as energy and other commodity prices fall faster than expected. European Central Bank chief Christine Lagarde pushed back against suggestions interest rate cuts were imminent.Germany’s withdrawal of support for a piece of EU legislation that it had long appeared to back, the new supply chain law, is the latest incident causing frustration among other member states at Olaf Scholz’s unpredictable governing coalition. European comment editor Tony Barber says gains for the hard right in June’s European parliamentary elections could disrupt EU climate, migration and trade policies.Need to know: global economyEconomic growth in Africa slowed to 3.2 per cent in 2023 from 4.1 per cent the year before because of “multiple shocks” and increasing global economic uncertainty, the African Development Bank said. For this year the AfDB forecasts growth of 3.8 per cent and 4.2 per cent for 2025.Australia classified nickel, crucial for electric vehicle batteries, as a “critical” mineral, eligible for government funds, to support an industry hit hard by a flood of cheap nickel from Indonesia.Hedge funds have piled into the cocoa market, exacerbating a surge in prices sparked by poor harvests in West Africa. Their bet, which has already earned bumper profits for trend-following hedge funds, helped drive the London price to a record close of £4,757 per ton last week. Japan’s economy joined the UK in contracting for a second straight quarter on weak domestic demand, adding to pressure on the Bank of Japan as it considers raising interest rates for the first time since 2007. Prabowo Subianto, Indonesia’s likely new president, first ran for office as a military hardliner but has morphed into a more benign grandfatherly figure. He is expected to pursue a populist path that could test the country’s fiscal strength. Need to know: businessJPMorgan and State Street, two of the world’s biggest asset managers, are quitting a climate investor group, while BlackRock, the world’s largest money manager, is downsizing its commitment, reflecting a green backlash from US Republicans and others.Business is also under pressure from the opposite political direction: a Cambridge-led coalition of UK universities has warned banks and asset managers they are prepared to shift billions of pounds into greener institutions unless the financial providers accelerate net zero plans and stop financing new fossil fuel projects.Longi Green Energy Technology, the world’s biggest solar panel manufacturer, warned Europe and the US not to restrict Chinese companies from their renewable energy supply chains if they were serious about transitioning away from fossil fuels. Just six weeks after a private equity rescue was completed, The Body Shop’s international network has been dismantled, its crown jewel, the UK business, has collapsed into administration, and then-chief executive Ian Bickley has departed. Here’s how it happened. Calstrs, the US pension giant, said private equity needed to share more wealth with the workers of the companies it takes over. Columnist Gillian Tett says the industry ignores protests at its peril.A Big Read investigates whether OpenAI, one of the fastest growing companies in history, can create superintelligence before it runs out of cash.Science round upA new satellite mission, set to launch next month aboard a SpaceX rocket, aims to track planet-warming emissions of methane gas to help build a global map of oil and gas infrastructure and monitor it for leaks. A campaign to plant trees across Africa will not only damage ancient grassland ecosystems that absorb carbon dioxide but also fail to fully restore depleted forests, according to a new report. The study will intensify debate on whether global tree-growing projects backed by western governments and philanthropists will help mitigate climate change and other environmental damage.In the largest analysis of its kind to date, researchers have found that blood proteins can predict dementia up to 15 years before clinical diagnosis. It bolsters the findings of smaller studies suggesting certain proteins are “biomarkers” of susceptibility to Alzheimer’s and other neurodegenerative diseases.Scientists have invented a breakthrough antibiotic that successfully combats “superbugs” in non-human tests. Cresomycin was found to be effective in mice against several bacteria that cause serious infections and are increasingly resilient to drugs used to kill them. Brussels told the UK it must ease visa procedures and costs for scientists or risk missing out on the full benefits of the Horizon Europe research programme. The tensions threaten UK efforts to restore the prominent role it had in Horizon before it dropped out for three years.Scientists are still grappling with the puzzle of what causes long Covid and how it could be treated. The disease is defined as the continuation or development of symptoms three months after initial infection with Sars-Cov-2, with these symptoms lasting for at least two months. Some good newsThe reconstructed spire of Paris’s Notre-Dame cathedral, damaged in the devastating fire of 2019, can now be seen after scaffolding was removed following almost five years of reconstruction.Notre-Dame’s new spire, topped with a cross and golden rooster More

January’s jump in retail sales provided a glimmer of positive news about the health of the UK consumer on Friday after grim data earlier this week showed the country slid into recession at the end of 2023.  But analysts were quick to caution against overly optimistic conclusions from the sales volumes, which rose at a month-on-month pace of 3.4 per cent, given the broader picture of stagnation that continues to hang over Britain.Retail sales may well gain further momentum in the coming months as real incomes grow alongside falling inflation, but this is unlikely to translate into stellar growth given the underlying weakness in UK productivity. With the Bank of England forecasting that gross domestic product will expand by just 0.25 per cent this year, the country is a long way from finding its way out of the low-growth trap that seems likely to bedevil the ruling Conservatives in the election expected this year. The pressure on Prime Minister Rishi Sunak to meet his pledge to “grow the economy” was underscored overnight with the loss of two more seats to Labour in by-elections in England. “We would be reluctant to assume that this signifies the return of a rip-roaring consumer economy,” said Ellie Henderson, economist at Investec. The bounce in retail sales volumes reversed a sharp fall of 3.3 per cent in December, leaving them hovering at similar levels to November 2023. Analysts said difficulties in seasonally adjusting numbers around the close of the year might have contributed to the gyrating figures. “The rapid rebound suggests the dip was more likely down to the ever-shifting seasonal trends in spending, which have continued to change pace since Covid-19,” said James Smith, economist at ING bank. In addition, volumes remain 1.3 per cent below pre-pandemic levels, confirming the broader picture of stagnation that was painted by Thursday’s GDP data. In 2023, overall household consumption increased by just 0.3 per cent, according to estimates from the Office for National Statistics.UK output per head shrank by 0.7 per cent in 2023, falling every quarter last year, the ONS said. GDP per capita has not grown since the beginning of 2022, the longest series of declines or stagnation since 1955.  “Overall, the trend looks close to flat,” said Allan Monks, economist at JPMorgan, of the retail numbers. The bigger than expected retail bounce last month may not be a reliable guide to this year’s consumer spending outlook, but there are some ingredients in place for further improvements in 2024. Most importantly, further declines in inflation from the current 4 per cent towards the Bank of England’s 2 per cent target should relieve some of the pressure on household finances in the coming months — especially if drops are coupled with reductions in the central bank’s key interest rate. Strong wage growth is now outpacing inflation, boosting disposable incomes. Inflation-adjusted total pay rose by 1.6 per cent in the three months to December, according to the ONS, the biggest increase since 2021. Consumer price inflation will decline to just 1.5 per cent in April, according to the National Institute of Economic and Social Research, allowing the BoE to start cutting rates from their 16-year high of 5.25 per cent in May. Given the better inflation picture, the Niesr think-tank is predicting an increase in real household disposable income of about 2 per cent in 2024-25. ONS polling suggests people are starting to feel the easing of inflation pressures. Some 46 per cent of adults reported an increase in their cost of living over the past month, down from 76 per cent between March 22 and April 2 2023, according to a survey released by the statistics agency on Friday. Households will experience a further modest lift because of the tax cuts announced by chancellor Jeremy Hunt in November, although those reductions will not change the longer-term trend of a surging tax burden that is heading to a postwar high. Such improvements need to be seen in perspective, however. Analysis by Niesr shows that lower-income households are still set to be grappling with living standards that will be 7-20 per cent lower in 2024-25 than in 2019-2020. In separate research, the Resolution Foundation think-tank found that GDP per capita is 4.2 per cent below its path before the onset of the cost of living crisis — equivalent to a £1,500 hit per person. Given the continued flatlining of productivity, this broader picture of stagnation seems unlikely to change radically. A first estimate from the ONS this week showed output per hour was down 0.3 per cent in the final quarter of 2023 compared with a year earlier, and just 2 per cent higher than before Covid struck. Jens Larsen, economist at the Eurasia Group consultancy, said the UK should enjoy brighter economic prospects this year than last but structural issues remained. Interest rates are at high levels compared with two years ago and consumer prices are still rising, albeit more slowly. “The recovery is nowhere near complete,” Larsen said, pointing to the weak supply side of the economy, with poor productivity growth and sluggish investment. “It is not a sharp cyclical rebound where you see production or incomes off to the races.” More

NEW YORK (Reuters) – Federal Reserve Bank of Atlanta President Raphael Bostic said on Friday that while he needs more data to convince him inflation pressures are truly falling, he’s open to lowering rates at some point in the next few months. “My outlook is to start the normalization, start returning our policy stance to a more neutral stance in the summer time,” Bostic said in a CNBC interview. “We’ve seen tremendous progress” in lowering inflation and that’s pulled forward the likely timing of a rate cut from where he had been expecting it, Bostic said.The progress on price pressures makes the outlook for policy fluid, Bostic noted. If inflation makes strong progress moving back toward 2% “I’ll be willing to pull [rate cut expectations] forward even further, but I want to see it continue before making that judgment.” Bostic appeared on the television channel in the wake of recent data showing that consumer and wholesale price rises were bigger than expected during January, which challenged the view that inflation is retreating swiftly back to 2%. Bostic said data like this affirm the need for the central bank to be patient, something it can afford to be given the broader strength of the economy.Bostic noted he was modestly surprised by the data “but not in a big way.” He foresees more declines in inflation but reiterated the path back to 2% could be uneven. The recent data means “we just have to be patient and let’s not get too far ahead and assume that the job is done, because there’s still work to do,” he said. Bostic also told CNBC that ample market liquidity means the central bank can continue to press forward with its work to shrink the size of its balance sheet, but he warned he didn’t want to push the process too far. More

“We will need to resist the temptation to act quickly when patience is needed and be prepared to respond agilely as the economy evolves,” Daly said in remarks prepared for delivery to the National Association for Business Economics. Inflation declined rapidly last year, from 5.5% in January to 2.6% in December by the Fed’s targeted measure of the personal consumption expenditures price index. Unemployment, meanwhile, was 3.7% last month, up just three tenths of a percentage point from the start of the year. The combination, Daly said, is “unequivocally good news,” but it is unclear whether that will continue. Risks for this year include the potential that inflation’s progress slows, or that the labor market falters, she said. And while projections embedded in financial market pricing and reflected in surveys suggest inflation is on track to the Fed’s 2% target, she said, “we need more time and data to be sure that they will be realized.” Data Friday showing underlying wholesale prices surged last month appeared to reinforce that view, though Daly did not cite it specifically. Financial markets are pricing in about four quarter-point interest-rate cuts this year, starting in June, that will bring the Fed’s policy rate to the 4.25%-4.5% range by year end. Fed policymakers in December largely felt three rate cuts would be appropriate, though they will update those forecasts at their meeting next month. More