Aurelia Butler

NICE/TOURS (Reuters) – French workers went on strike and joined marches across the country on Thursday, halting trains and cutting electricity production in a nationwide day of protest against government plans to raise the retirement age by two years to 64.The stoppages are a major test for President Emmanuel Macron, who says his pension reform plan, which opinion polls show is hugely unpopular, is vital to ensure the system does not go bust. Pushing back the retirement age by two years and extending the pay-in period would bring additional 17.7 billion euros ($19.1 billion) in annual pension contributions, allowing the system to break even by 2027, according to Labour Ministry estimates.”This reform is necessary and fair,” Labour Minister Olivier Dussopt told LCI TV.But the protesters disagreed.”It’s salaries and pensions that must be increased, not the retirement age,” read one large banner carried by workers that opened the protest march in Tours, in western France.”I’ll have to prepare my walking frame if the reform goes through,” said Isabelle, 53, a social worker, saying her job was too tough to add two more years.Brigitte Meny, an early retiree, said she was protesting to show solidarity with former colleagues.”Sixty-four it’s too old,” she said. “And I’m also here because I’m fed up with Macron.”In Nice, in southern France, a large banner read: “No to the reform.”Unions argue there are other ways to ensure the viability of the pension system such as taxing the super-rich or increasing employers’ contributions or those of well-off pensioners. The challenge for them is to transform opposition to the reform – and anger over a cost-of-living crisis – into a mass social protest which could eventually force the government to change tack.Union leaders, expected to announce more strikes and protests in the evening, said Thursday was just the beginning.”We need a lot of people to join the protests,” Laurent Berger, head of France’s largest union, CFDT, told BFM TV. “People are against this reform … we need to show it (in the streets).”MUSICAL INTERLUDEThe pension reform still needs to go through parliament, where Macron has lost his absolute majority but is hoping to get it passed with the support of conservatives.Train drivers, teachers and refinery workers were among those who walked off their jobs. France Inter radio ran its music playlist instead of its usual programming and bus drivers and civil servants also went on strike.Only between one-in-three and one-in-five high-speed TGV lines were operating, with barely any local or regional trains running, the SNCF rail operator said. In Paris, some metro stations were closed and traffic was seriously disrupted, with few trains running.In the busy Gare du Nord station, people rushed to catch the few trains still operating while employees in yellow vests were assisting frazzled commuters. Restaurant worker Beverly Gahinet, who missed work because her train was cancelled, said she agreed with the strike even if she was not taking part.But not all were so understanding. “I don’t understand, it’s always the same (people) who are on strike … and we have to endure it,” said real estate worker Virginie Pinto, as she struggled to find a metro to go to work. A 2007 ban on wildcat walkouts and restrictions on strikes to guarantee minimum public services have limited unions’ ability to wear down governments’ reform ambitions.The fact that working from home is much more common now since the pandemic could also have an impact.TAX THE RICH?Public sector workers are often at the forefront of strikes, and some seven out of 10 primary school teachers stopped work, and nearly as many in high schools, their unions said, though the Education Ministry gave much lower figures.In Paris, students blockaded at least one high school in support of the strike action.EDF (EPA:EDF) and grid operator RTE data showed electricity production was down by roughly 12% of total power supply, prompting France to raise imports.Shipments were blocked at TotalEnergies’ refineries in France, union and company officials said. TotalEnergies chief executive Patrick Pouyanne said on Wednesday that one day of strikes would not disrupt refinery operations, but this could change if protests continued.The impact on air traffic was largely limited to a reduction of about 20% of flights in Orly, Paris’ second-biggest airport. Air France said it was operating all its long-haul flights and 90% of its short and medium-haul flights. Macron and several of his ministers meanwhile were in Barcelona on Thursday for a meeting with Spanish officials. More

Investing.com — Brace for another U.S. data dump, a day after weak retail sales and industrial production numbers forced markets to reappraise the risk of a recession. The Philadelphia Federal Reserve’s manufacturing index, weekly jobless claims, and December’s housing starts and building permits may all have the potential to shock (or reassure). Procter & Gamble earnings will also act as a cross-check on the strength of the consumer. Alcoa has already set a bleak tone for industry, meanwhile. The denouement of the latest big crypto mess approaches, as Genesis is reported to be planning a filing for chapter 11 bankruptcy. And oil slumps as another big jump in U.S. inventories counteracts the China-inspired bullishness of earlier in the week. Here’s what you need to know in financial markets on Thursday, 19th January.1. Incoming! Another dump of weak data loomsAnother dump of U.S. economic data is set to follow hard on the heels of the numbers that sent stock markets reeling on Wednesday.Of most importance is arguably the Philadelphia Fed’s manufacturing survey, which may corroborate the alarming lurch downward in the Empire State Manufacturing index earlier in the week and December’s bigger-than-expected drop in industrial production.By contrast, December’s housing starts are likely, at worst, only to confirm a familiar downward trend. Even so, the negative mood that dominated after Wednesday’s triple whammy will make it harder for weekly jobless claims to fulfill their usual role as palliative. Bad news, it seems, is now bad news again.2. Genesis reportedly prepares to file for bankruptcyAfter hanging in the air for two months, the next big shoe in the crypto universe is finally set to drop. Genesis, the lending arm of Barry Silbert’s Digital Currency Group, is reported by Bloomberg and others to be planning to file for chapter 11 bankruptcy protection as early as this week.The move will formally put the customers of investment platform Gemini’s own lending operation, Earn, into line with Genesis’ other creditors. Who gets paid first will be up to the court administering the procedure.Gemini owners Tyler and Cameron Winklevoss say Genesis owes Earn customers $900 million.The Block reported that Silbert is offering Genesis creditors deferred cash payments and equity in the DCG parent group as part of a package to restructure Genesis’ debts. It’s not clear what chance this plan has of succeeding.3. Stocks set to extend losses at open; P&G earnings key, while Alcoa disappointsU.S. stock markets are set to extend losses at the opening later, as Wednesday’s barrage of data forces investors to reassess the risk of a sharp earnings recession this year.By 06:25 ET, Dow Jones futures were down 241 points at a two-week low, while S&P 500 futures were down 0.8%, and Nasdaq 100 futures were down 0.9%. The three main cash indices had all lost between 1.5% and 2% on Wednesday after December’s retail sales, manufacturing output, and producer price inflation all came in weaker than expected.Procter & Gamble (NYSE:PG) earnings, due early, will offer a cross-check on the strength of U.S. consumer spending, given the breadth of its product mix, while the slowing industrial outlook is also reflected in Alcoa’s (NYSE:AA) performance in premarket, after it reported lower-than-expected earnings amid weak pricing for aluminum and alumina.4. Strikes, strikes, strikes in EuropeEurope’s winter of discontent reached new highs on Thursday, as millions of French workers walked out in protest at President Emmanuel Macron’s proposals to raise the retirement age from 62 years to 64.In addition to trains, schools, and local government, workers are also striking at the country’s refineries, which is likely to have indirect impacts not just on French productivity this month but on inflation too.In the U.K. meanwhile, health unions said that ambulance staff will strike four more times over the next three months, while talks between the government and unions to head off more strikes by train drivers and teachers also failed to make any headway.5. Oil slumps on weaker demand outlook; EIA set for another rise in U.S. inventoriesCrude oil prices reversed all of the week’s gains in response to the U.S. data on Wednesday, which put the outlook for demand from the world’s largest economy into a whole new light.By 06:40 ET, U.S. crude prices were back below $80 a barrel, down 0.7% at $79.23, while Brent crude was also down by 0.5% at $84.52 a barrel.Prices were also depressed by new estimates from the International Energy Agency suggesting that Russia is still pumping at around 11M barrels a day, despite the increasingly steep discounts that it is being forced to accept for its benchmark export blend, Urals.Energy Intelligence reported that one cargo of Urals was bought for $37.90 a barrel in the last few days, a reflection of the absence of buyers for it in the West.The U.S. government’s weekly inventory data are due at 11:00 ET, a day later than usual due to the Martin Luther King day holiday. The American Petroleum Institute reported another 7.6M barrel jump in crude stocks last week, bringing the total increase over the last three weeks to 25M barrels. More

Yoon made the remarks at the World Economic Forum’s annual meeting in Davos, Switzerland, saying the war in Ukraine had further disturbed the stability of supply chains following the disruption of the COVID-19 pandemic. “We are witnessing segmentation of supply chains due to the pandemic, geopolitical conflicts, competition for technology and the decline of the multilateral trade system, and the war in Ukraine has added to their disruptions,” Yoon said.Free trade remained important despite growing protectionism, the South Korean president said, and vowed to work with “trustworthy” countries to stabilise global supply chains.”Building walls and strengthening protectionism can never be the right answer,” he added. Also referring to the climate crisis, Yoon said South Korea would gradually seek carbon neutrality by expanding the use of nuclear energy and that Seoul was willing to cooperate with other countries that needed nuclear power technologies. More

Investing.com — European Central Bank president Christine Lagarde has warned that inflation figures remain “way too high” despite optimism that price growth may have recently peaked.Speaking at a panel at the World Economic Forum in Davos, Switzerland, Lagarde reiterated the ECB’s plan to bring inflation in the euro zone back down to its 2% target through aggressive monetary policy decisions. The central bank has increased interest rates by a combined 250 basis points at its last four meetings as part of its ongoing fight to cool down red-hot inflation.”We shall stay the course until such time when we have moved into restrictive territory for long enough so that we can return inflation to 2% in a timely manner,” Lagarde said.Lagarde previously told markets that the wave of borrowing cost hikes will not come to an early end this year, saying that there is still “more ground to cover.”Data earlier this month showed that headline price growth in the Eurozone slowed in December to an annual rate of 9.2%, thanks in large part to lower energy costs. However, the core inflation figure, which strips out volatile items like food and energy, rose to a fresh high of 5.2%, potentially dampening some hopes that the recent price spike has subsided. More

TOKYO (Reuters) – The Bank of Japan (BOJ) rejected market pressure this week, maintaining ultra-low interest rates, but its bullish views on wages and growing strains from its policy suggest it may still end its expansionist experiment this year.Even unremittingly dovish BOJ Governor Haruhiko Kuroda is talking up wage increases in Japan, a factor critical to raising rates after decades of trying to stoke inflation and growth, suggesting to some that the BOJ could change policy after he leaves office in April.Bond investors have sought in recent days to break the BOJ’s cap on the key 10-year yield, but the BOJ stood pat on Wednesday on its policy of yield curve control (YCC), which applies a negative rate to some short-term funds parked at the central bank and targets the 10-year yield in a range around zero.Kuroda said the BOJ expects wages to rise at “quite a fast pace” unseen in the past, a sign of the self-sustaining cycle the central bank and government have sought, in which rising economic growth pushes up inflation and people’s income.The BOJ’s decision to introduce new tools to defend its yield cap also suggests YCC is nearing an end and could require an overhaul of the policy, analysts say.Kuroda likely put YCC on life support so his successor can strategise an orderly exit, said former BOJ official Nobuyasu Atago.”For the BOJ, the top priority now is to smoothly hand the baton to the new leadership,” said Atago, chief economist at Ichiyoshi Securities.”Once the new governor settles in, it will overhaul YCC fairly soon,” said Atago. “The BOJ can’t keep on manipulating markets like this. At some point, it needs to let market forces drive yields.”EYING THE EXITThe next test will likely come on April 28, the first BOJ decision under Kuroda’s successor, when the bank will announce inflation forecasts extending into early 2026.Companies and unions will have held their annual wage talks by then. Together with upbeat price forecasts, that could give the BOJ justification to phase out stimulus.”Mr. Kuroda argues that the BOJ hasn’t started moving toward the exit. But the BOJ has already put its shoes and coat on,” ready to proceed towards ending YCC, Columbia University professor Takatoshi Ito, a longtime close associate of Kuroda, told Reuters.”The BOJ just needs some more time to make sure wages will indeed rise before pulling the trigger,” said Ito, considered a contender for a top BOJ job. He said the bank could raise the 0.5% yield cap to as high as 1% around mid-year and ditch negative rates by year’s end.Already, there are signs of change in Japan’s decades-long era of stagnant wage growth. The parent of casual clothing giant Uniqlo says it will raise wages as much as 40%. A Reuters poll on Thursday showed more than half of big Japanese firms plan to raise wages this year, although the smaller firms that employ the vast majority of Japanese workers are less able to afford pay raises.BOJ policymakers are already bracing for a possible near-term tweak to YCC, minutes of recent meetings show, with inflation on track to exceed the BOJ’s 2% target for a ninth straight month.Kuroda told parliament in November the BOJ can head toward policy normalisation when achievement of its inflation target, accompanied by wage increases, comes into sight.BANKS BRACEJapan’s mega-banks are also preparing for lift-off.Mizuho Financial Group has closed almost all the positions in its Japanese government bond portfolio, assuming the BOJ will eventually phase out stimulus, president Masahiro Kihara told Reuters this month.”If the BOJ ends negative rates, that would widen the spread between deposit and lending rates so would definitely be positive for us,” he said.A natural first step in exiting YCC would be to first raise or remove the 10-year yield target, then push its short-term rate target above zero and mop up liquidity from the market, say sources familiar with BOJ thinking.With YCC creaking under market pressure, the BOJ may not be able to wait too long.”Because the BOJ is capping the 10-year yield at a level no one in the market sees as appropriate, it’s hard to trade bonds or to use them for arbitrage,” said Satoru Kado, an analyst at Mitsubishi UFJ (NYSE:MUFG) Research and Consulting.”It’s pretty clear YCC is becoming unsustainable.”The BOJ’s decision in December to raise the cap to 0.5% from 0.25% sought, unsuccessfully, to fix market distortions caused by its huge bond buying.The central bank on Wednesday beefed up a market operation tool to pump liquidity into markets in hope of capping yields, though analysts doubt how effective it will be in taming rises.”The new operation could compensate the BOJ’s bond buying, but not for too long,” said Tetsuya Inoue, a former BOJ official who is now a senior researcher at Nomura Research Institute.”At some point in the near future, YCC must go.” More