Aurelia Butler

NEW DELHI (Reuters) -India’s retail inflation eased in August as food prices moderated, but remained above the upper end of the central bank’s target band for a second consecutive month, keeping policymakers watchful.Annual Retail inflation in August was 6.83%, compared with 7.44% in July – a 15-month high – according to data released by the ministry of statistics on Tuesday. The August print was lower than the 7% estimate of 45 economists polled by Reuters.Food inflation, which accounts for nearly half of the overall basket, was up 9.94% in August compared with a rise of 11.51% in July. “Offering a modicum of relief, the CPI inflation eased below the 7% mark … largely led by vegetables, amidst some moderation in the prints for clothing and footwear, housing and miscellaneous items as well,” said Aditi Nayar, economist at ICRA. Food prices have been a key concern for policymakers since last year as erratic weather conditions have hurt the output of vegetables, milk and cereals. Inflation has been above the central bank’s 2%-6% target band for seven months out of the last 12.Earlier this month, Reserve Bank of India (RBI) Governor Shaktikanta Das said India’s monetary policy committee would remain watchful of the evolving inflation situation, but the recent spikes in vegetable prices would start to ebb.Vegetable inflation eased to 26.14% in August from 37.34% in the previous month. Cereal inflation in August eased to 11.85% from 13.04% in July. In its efforts to rein in domestic inflation, India’s government banned exports of non-basmati white rice last month and imposed a 20% duty on exports of parboiled rice, while imposing a 40% tax on onion exports. It has banned exports of wheat since last year.UPSIDE RISKInflation is expected to remain elevated in the coming months as a weak monsoon, lower reservoir levels and rising crude prices are likely to keep the pressure on food prices.”Upward pressure on food inflation persists with nearly 60% of the food and beverages subcomponents by weight seeing 6% plus inflation in August,” said Gaura Sen Gupta, economist at IDFC First Bank (NASDAQ:FRBA) Economics Research. Crude oil prices have also started inching up, with Brent rising above $90 a barrel last week for the first time in 10 months.India also lowered the price of cooking gas cylinders sold to 330 million households and might even expand its free food programme beyond December.Core inflation, which strips out volatile food and energy prices, was estimated to be between 4.6% and 4.9%, compared with 4.9% to 4.97%, according to three economists. The Indian government does not release core inflation figures.”RBI is likely to hold on to repo rate and stance under these conditions. Chances of rate hike are kept aside under the declining inflation scene,” said Madan Sabnavis, chief economist at Bank of Baroda. More

BRASILIA/BRUSSELS (Reuters) -Splits within South American trade bloc Mercosur have dampened hopes in the European Union of a trade deal, which could fall apart if it does not get done by the end of the year, diplomats and members of the European Parliament told Reuters.Two of Mercosur’s four countries have yet to reply to an addendum in which Brussels included environmental safeguards to address reservations by many EU member states, diplomats said. EU negotiators have been waiting for a reply since March. Many had hoped for a swift conclusion to the trade deal under President Luiz Inacio Lula da Silva, who overhauled Brazil’s environmental policies to protect the Amazon (NASDAQ:AMZN) rainforest since taking office this year. But that hope has since fizzled.”It has deflated like a balloon,” said Austrian MEP Thomas Waitz, a critic of the agreement, who recently visited Brazil.He said Lula’s comments on the Russian invasion of Ukraine, blaming both sides for the war, have contributed to Europeans’ disenchantment.”That caused much disappointment and reduced the excitement and the hopes for a quick finalization of the trade agreement with Mercosur,” Waitz said in an interview.A spokesperson for Brazil’s foreign ministry said a Mercosur meeting this week “will serve to clarify the latest details of the common position” and European negotiators would travel to Brasilia next week for a round of “negotiations on the texts.”As president pro tempore of Mercosur since July, Lula has pushed back against more open government procurement in both blocs, as provided for in the trade deal negotiated under his predecessor after nearly two decades of discussions.Even Lula has recognized publicly that patience is wearing thin with the talks over the accord, which has been on hold since 2019 due to European environmental concerns.”We must reach an agreement in the next few months. Either agree or stop discussing the agreement, because after 22 years no one believes in it anymore,” Lula told reporters on Monday in New Delhi following the G20 summit.European diplomats, however, said Mercosur has yet to send a consolidated counterproposal. As of Monday, officials in Uruguay and Paraguay said no written reply had been sent to the EU.”If anything was sent, it was Brazil’s position, not Mercosur’s,” a Uruguayan foreign ministry source said.Bernd Lange, chair of the international trade committee of the European Parliament, which must clear any deal, said the EU had hoped for a speedier resolution, while recognizing Lula’s domestic challenges. The EU received no response to date on its demands for commitments on climate and deforestation.Differences between Brazil and Uruguay on their response to the EU, plus a change of government in Paraguay, have delayed a joint Mercosur reply on the so-called side letter, diplomats said. They said there would not be another negotiating round until the EU receives a joint Mercosur response.The delays dashed hopes of finishing the trade deal in July during a summit between EU and Latin America in Brussels. After meeting with Lula, European Commission President Ursula von der Leyen spoke of finishing the accord by the end of 2023.Even that timeline is now in doubt, according to Uruguay’s ambassador to Brazil Guillermo Valles Galmés, whose country has expressed interest in going ahead without Mercosur to sign a bilateral trade agreement with China.”The window of opportunity is closing and if the agreement is not signed by the end of this year, it is unlikely that it will ever happen,” said Valles, who was envoy to the EU when negotiations got going in 1996 and later led talks as Uruguay’s deputy foreign minister.The front-runner in Argentina’s October elections, Javier Milei, is a libertarian climate skeptic who has pledged to pull out of Mercosur, which he calls a “defective customs union.”EU interest could also wane after Spain, the most vocal EU advocate of the Mercosur deal, concludes its six-month presidency of the European Union at the end of the year.A European Parliament election in June 2024 is also expected to cloud the agenda next year.”If the agreement is not signed by the end of this year, the Commission will not move ahead pushing for it. They will do their best to keep it out of the election campaign,” said MEP Waitz. “I don’t think it will happen. This is a hot potato.” More

LONDON (Reuters) – Tesla (NASDAQ:TSLA) topped a list of the most shorted large-cap U.S. stocks for a third consecutive month in August, securities lending data firm Hazeltree said in a report on Tuesday. Tesla stock rallied over 5% on Monday after a Morgan Stanley note suggested the automaker’s Dojo supercomputer could bolster Tesla’s market value. A short bet expects a stock price to fall. Hazeltree, which tracks 12,000 equities globally, said the second and third most shorted stocks last month were Charter Communications (NASDAQ:CHTR) and Apple (NASDAQ:AAPL) respectively.Tesla, Charter Communications and Apple did not immediately respond to requests for comment. Data compiled by research firm Whale Wisdom showed a range of different strategies underlying short bets against Tesla disclosed to the Securities and Exchange Commission on June 30. Those included investors with funds taking long and short positions in stocks: Diamond Hill, Leuthold Funds and Forum Funds. A Blackstone (NYSE:BX) fund of funds contained the short positions of other hedge funds and investment managers. Trades held by the hedge fund AQR Capital Management and the investment manager Federated Hermes (NYSE:FHI) aimed to avoid market risk by offsetting rising and falling prices on different asset classes. Tesla’s CEO Elon Musk on Monday posted on his social media platform X a reaction to the short position that Microsoft (NASDAQ:MSFT) co-founder Bill Gates has held against the firm, according to a recent biography of Musk by Walter Isaacson. “Taking out a short position against Tesla, as Gates did, results in the highest return only if a company goes bankrupt!” posted Musk. Hedge funds have been shorting U.S. stocks at a rapid pace in recent weeks, a Goldman Sachs note this week showed, and total short bets reached their highest value in six months. Hedge funds were net short consumer discretionary stocks, which would include Tesla, for the year ending Sept. 8, according to the Goldman note.”If I’m honest, I’ve only lost money trying to short TSLA,” said Dan Izzo, founder of the hedge fund Blackbird Capital, who did not disclose whether he currently had a position in Tesla.”Not because I’m wrong about it, but because the market can be irrational for longer than I can afford to be proven right.” More

DUBLIN (Reuters) -Ireland’s Smurfit Kappa is buying U.S. rival WestRock (NYSE:WRK) for an agreed $11 billion to create the world’s biggest paper and packaging company and try to better navigate weak economies on both sides of the Atlantic. The deal will combine Europe’s biggest paper and packaging producer with the second largest player in the United States and forge a company worth nearly $20 billion.Smurfit Kappa shares dropped 10%, while WestRock’s were up 7.2% in pre-market trade on Tuesday, as analysts said the premium paid by the Irish company was higher than most of its investors had hoped for.WestRock stockholders will get one share in the new company, called Smurfit WestRock, and $5 in cash for each share they hold, which works out to $43.51 per share, the companies said in a statement.Analysts at JP Morgan and Jefferies questioned the 36% premium to WestRock’s $31.88 Sept. 6 closing price – the day before talks were disclosed. JP Morgan said most investors it had spoken to had assumed a 15%-20% premium.The deal represents a 28% premium to Monday’s closing price and Smurfit Kappa finance chief Ken Bowles, who will take the same role in the new company, told Reuters that was a fairly normal market rate but was not the important part of the deal.”The two companies are coming together at the same multiple, when you add in the $5, of about seven times. That’s much less than any transaction that has been done in this sector in the last number of years, most have been double-digit,” Bowles said. “We’re not putting this together at the top of the cycle, we’re not putting it together at the bottom either. It’s in that sweet spot where we feel there are much better times ahead.”Smurfit Kappa CEO Tony Smurfit and chair Irial Finan will also keep their roles in the new company after talks Bowles said kicked off over the last eight months.Smurfit Kappa shareholders will receive one new Smurfit WestRock share for each share they hold. They are expected to own around 50.4% of the new company following completion of the deal, expected in the second quarter of 2024.Smurfit said he did not see any antitrust issues given the limited overlap of Smurfit Kappa’s European, South and Central America-dominated operations and WestRock U.S. footprint, except for in Mexico which the companies would work to overcome. COVID HANGOVERPackaging (NYSE:PKG) firms benefited from a boom in demand for goods and e-commerce during COVID-19 lockdowns, but have struggled to match those volumes since consumers resumed spending on services and producers started cutting back packaged stocks.Smurfit Kappa reported a fall in first-half core profit last month as it struggled to offset the decline in volumes but predicted inventory reductions by customers were coming to an end with scope to increase box prices again as demand recovers.While WestRock beat Wall Street expectations for third-quarter profit, it said it remained focused on streamlining its portfolio and further reducing costs.JP Morgan estimated the combined entity would have market shares of around 20% in the corrugated packaging market in Europe and North America.The companies’ combined adjusted core profit of $5.5 billion and revenue of about $34 billion for the year ended June 30 would put it clear of nearest rivals International Paper and Ball Corporation (NYSE:BALL) Smurfit Kappa rejected a takeover proposal worth $9.5 billion in 2018 from International Paper.The combined entity will target pretax cost savings of more than $400 million at the end of the first full year following completion at a one-off cash cost of around $235 million.That could make the deal more than 20% accretive to Smurfit Kappa’s earnings per share, it said. Bowles said he was confident the synergies would ultimately go beyond that figure.Smurfit WestRock will be domiciled in low tax Ireland with its global headquarters in Dublin. It will be listed in New York and also have a standard listing on the London Stock Exchange. Smurfit Kappa will de-list from Euronext Dublin, the latest blow for the Irish bourse as building materials giant CRH (NYSE:CRH) prepares to leave later this month. More

The Wall Street Journal, citing sources and documents it had viewed, reported last week that fee increases were scheduled to start in October and April at Mastercard (NYSE:MA) and rival Visa (NYSE:V).”Mastercard is not raising interchange rates in the U.S. this fall and has no plans to do so,” the company said. It is also not raising network fees in the U.S. required for the processing of Mastercard transactions this fall, the firm added.Visa also said in a blog post that recent press coverage on the issue was “misleading”, and that despite strong growth in the use of its cards, overall interchange fees on Visa transactions have been flat for the past decade.”Moreover, over the past few years, Visa has lowered interchange for the vast majority of small businesses and in key segments such as supermarkets and quick service restaurants,” a Visa spokesperson said in an emailed statement to Reuters. “We stand by our reporting,” the Wall Street Journal said in a statement to Reuters. More