Aurelia Butler

(Reuters) -Canadian media and telecom firm Bell is cutting 1,300 jobs, shuttering six radio stations and selling another three as revenues dry up at its legacy phone and news business, parent company BCE (NYSE:BCE) Inc said on Wednesday. The layoffs will mostly affect management and follow thousands of cuts in the media industry that has been wrestling with dwindling ad dollars, elevated levels of inflation and the ongoing shift from cable TV to streaming. The company expects Bell Canada’s legacy phone revenue to decline by $250 million each year, while the news operation posts annual operating losses of $40 million. “Our industry is experiencing a major disruption,” said senior executive Wade Oosterman in an internal memo seen by Reuters. He also blamed “a challenging regulatory environment that has been too slow to adjust”. The Canadian telecom industry has over recent years come under pressure from the government to bring down phone bills in a concentrated market. A proposed legislation designed to compel internet giants like Google (NASDAQ:GOOGL) and Facebook (NASDAQ:META) to pay news publishers for content has also run into hurdles this year, with the U.S. firms running tests to limit some users from viewing or sharing news content as a potential response. “A SHAME” As part of the restructuring, Bell will close the CTV television network’s bureaus in London and Los Angeles, and scale back the Washington outpost. “I think it is a shame,” Canadian Finance Minister Chrystia Freeland told reporters in Ottawa on Wednesday. “CTV has some really experienced, hardworking, talented journalists who Canadians have come to rely on, and so that’s a real loss for Canada and Canadians.” Affected employees will be informed this week, Bell said, adding that vacant positions were eliminated to minimize the impact on teams.”Bell had other choices, in anticipation of policy changes, but chose to pull the trigger on these layoffs. If the government doesn’t act now, there will be little left of Canadian journalism to save,” said Lana Payne, national president of the Unifor trade union. More

(Reuters) -Health insurer stocks dropped sharply on Wednesday after UnitedHealth Group (NYSE:UNH) said its costs were on the rise due to an increase in surgeries among older adults.Shares of UnitedHealth, the largest U.S. healthcare provider by market value, closed down 6.4% at $459.86, wiping out roughly $29 billion from the industry bellwether’s market capitalization.Medicare-focused insurer Humana Inc (NYSE:HUM) closed about 11% down, and a broader index of managed care providers closed 6.9% lower. Insurers have been benefiting from a delay in non-urgent surgeries due to the COVID-19 pandemic and hospital staffing shortages, but UnitedHealth’s comments show that the gains may be waning. Meanwhile, stocks of medical device makers and hospital operators rose, as increased frequency of surgeries mean more revenue for them. Older adults aged 65 and above covered under Medicare, who had largely stayed indoors during a large part of the pandemic, are getting “more comfortable accessing services for things that they might have pushed off a bit like knees and hips,” UnitedHealth executives said. The company highlighted strong demand for hip and knee procedures at outpatient centers, as well as for home health services and behavioral services. Insurer Elevance Health, CVS Health Corp (NYSE:CVS), Centene (NYSE:CNC) Corp and Cigna (NYSE:CI) Group closed between 3% and 8% lower. UnitedHealth’s warning was, however, in sharp contrast to commentary from other insurers, including Elevance, which said on Monday that medical care trends were in line with expectations. Elevance executives had said they did not expect a surge in demand due to people making up for delayed procedures. UnitedHealth said it expects second-quarter medical loss ratio – a percentage of spend on claims compared to premiums collected – to rise to the high end, or moderately above its full-year outlook of 82.1% to 83.1%, due to pent-up demand for surgeries. The company’s 18.51 forward 12-month price-to-earnings ratio, a common benchmark for valuing stocks, is higher than rival Cigna’s 10.29 and CVS Health’s 8.26. “A lot of this (increase in demand) is being driven by physician offices opening up and increasing capacity,” Jefferies analyst Brian Tanquilut said, adding that he expects the pent-up demand to act as a tailwind for hospitals at least for the next two quarters.Shares of hospital operators HCA Healthcare (NYSE:HCA) and Tenet Healthcare (NYSE:THC) closed up between 1.5% and 2.5%, while implant and joint replacement product makers Stryker Corp (NYSE:SYK) and Zimmer Biomet closed about 4% higher. More

WASHINGTON (Reuters) – Federal Reserve Chairman Jerome Powell said on Wednesday that financial conditions are likely to allow the central bank to press forward with the drawdown of its massive balance sheet through the remainder of the year. As the Treasury moves toward selling massive amounts of debt to rebuild its financial position after the resolution of the debt ceiling battle, Powell noted there is a “very high” level of reserves in the banking system and stashed away at the Fed’s reverse repo facility. Because the system is so flush with cash, it gives the Fed ample room to press forward with letting Treasury and mortgage bonds run off its balance sheet. “We don’t think reserves are likely to become scarce in the near term or even over the course of the year,” Powell said. That observation implied the Fed can continue to move just under $100 billion per month from its balance sheet, as it has been doing since last summer, possibly into 2024. The balance sheet drawdown has complemented the central bank’s more high- profile campaign of rate rises, which has seen its interest rate target go from near zero in March of last year to its current 5% to 5.25% range. The Fed on Wednesday refrained from another rate hike at its Federal Open Market Committee meeting but said it’s eyeing a cumulative half percentage point in further increases this year. There have been ongoing questions regarding how long the Fed can go with its balance sheet drawdown, given that the last time it did something similar reserves ran scarce in September 2019, forcing the Fed to take action to rebuild them by borrowing and buying bonds.A shortage of reserves challenges the Fed’s ability to control its short-term rate target, although the existence of a new and untested facility, called the Standing Repo Facility, offers a liquidity safety valve that should in theory prevent a replay of the 2019 volatility. Still, some forecasters have begun to believe that the impact of the existing balance sheet drawdown, which has taken Fed holdings from just shy of $9 trillion last summer to the current $8.4 trillion, coupled with Treasury borrowing, could make bank reserves scarce enough to make it possible to end active Fed efforts to reduce holdings sometime in the final months of this year. Powell also said in the press conference that the Fed is not considering tweaking the setting on its reverse repo facility, which has been pulling in over $2 trillion per day for months, to induce some of that cash to flow out into the broader economy. Market analysts believe new Treasury issuance will bring a quick and noticeable contraction in the reverse repo facility, which exists to put a floor underneath short-term interest rates. The reverse repo facility stood at $2.109 trillion Wednesday. More

Can we stop comparing the economy to a car?This overused metaphor has inspired a million overconfident statements about “overheating”, or the lack thereof. It may also be behind one of the more puzzling combinations of Federal Reserve statements and forecasts in recent memory. The Fed’s voting members unanimously decided against raising rates today:

They also overwhelmingly agreed that they want to raise rates more in the future. Find the dots below, with our doodles in red. (The arrow is where rates are today.)

But, again, they didn’t raise rates today. ¯_ (ツ)_/¯ Commenters, economists and journalists were confused. Why not just raise rates now if they need to keep rising? When directly asked this question by the WSJ’s Nick Timiraos, Fed Chair Powell pulled out a metaphor that appeals to not only the highly calculus-brained economists on the Fed staff (it’s a second derivative/deceleration issue!) but also folksy regional-bank officials. Also goldfish-brained journalists, who like to talk about things in terms that are easy for Americans to understand. Like cars. “The question of speed is a separate question from that of level,” Powell said. “Speed was very important last year, and as we get closer and closer to the destination,” it’s common sense to slow down a little, he said.But is this journey a race? A road trip? A commute? Really, the comparison only makes sense if the Metaphorical Economy Car isn’t about to speed into a brick wall. So we suppose Powell could be expressing . . . confidence that there isn’t looming economic disaster? Maybe? Stocks are up slightly in late trading, after they fell as much as 0.7 per cent on the statement, so that’s cool. More

The Bank of England has launched a review of how it makes and uses economic forecasts after coming under fire from politicians for repeatedly failing to predict the rise and persistence of UK inflation.In a letter on Wednesday, David Roberts told the House of Commons Treasury committee that the central bank’s governing body, which he chairs, had in May decided to commission a broad external review of its “forecasting and related processes during times of significant uncertainty”.The announcement of the review came as traders increased bets on further interest rate rises, and mortgage lenders rushed to reprice loans, on the back of BoE governor Andrew Bailey’s admission that it would take “a lot longer than we expected” for inflation to come down from its current level of 8.7 per cent.Markets are betting that interest rates, now at 4.5 per cent, will peak close to 5.75 per cent later this year, following economic data that suggests the UK’s inflation problem will be harder to tackle than elsewhere.The cross-party group of MPs had called for an overhaul of forecasting processes after members of the Monetary Policy Committee, which sets the base rate, told them that the BoE’s own modelling was not producing accurate results and that the MPC had reduced its role when setting rates. In a letter earlier this week, committee chair Harriett Baldwin this week urged the BoE’s court of directors to assess “the current effectiveness of the Bank’s forecasting platform”, the transparency of the forecasting process and whether it was sufficiently open to external challenge. Roberts described her call as “timely”.

While the BoE has yet to set the terms of the review or decide who will lead it, it is likely to draw on international expertise and give it a broader scope than the Treasury committee had suggested — looking both at technical ways to improve the BoE’s modelling and at how the MPC uses the forecasts when it sets policy and communicates its decisions.Huw Pill, BoE chief economist, told the committee last month that it was “almost inevitable” that models based on the past 30 years would go wrong in the face of big new shocks. He added that the MPC was “trying to understand why we have made those errors . . . and then make an assessment as to whether that behaviour will continue into the future”. Broader questions, however, include whether the MPC should still centre its communication on a central forecast — presented as the committee’s collective judgment — or whether it would be better to publish scenarios, helping MPC members to explain their vote when the committee was split. More