Aurelia Butler

NEW DELHI (Reuters) -A union in India has sued General Motors (NYSE:GM)’ local unit and its global CEO for failing to pay court-ordered compensation to sacked factory workers, deepening the U.S. automaker’s struggles to exit the country years after it shuttered local operations.GM stopped selling cars in India in 2017 after years of low sales but its complete exit from the market has been marred by complications including legal tussles with workers and failure to find a buyer for a plant in the western state of Maharashtra after talks with China’s Great Wall Motor collapsed last year.GM and the factory workers – who allege illegal termination after the company decided to exit – have been locked in legal battles since 2021. The latest filing signals an escalation in the dispute as workers accuse GM’s India unit and its executives, including CEO Mary Barra, of failing to follow court orders.In a filing to the High Court of Bombay dated Jan 16, the General Motors Employees Union of 1,086 factory workers states the company has failed to pay them compensatory wages of 50% of their monthly salary starting April last year, as ordered by a local industrial court while it continues to hear the dispute, the documents show.A union leader told Reuters that GM so far owes the workers around 250 million rupees ($3 million) in wages, based on the industrial court’s order.A GM spokesperson said the company remains “very confident” of its legal position. Adding: “GM is continuing to explore options for the sale of the (plant) site.”In its earlier court filings, it has said the industrial court acted beyond its power in ordering the compensation. The company has previously said it has tried to settle the issue amicably and has offered workers a generous severance package.The union disagreed, and said GM continues to “blatantly violate” the industrial court’s order by not paying the workers a single cent. In its latest filing, the union urged the court to hold the company and its executives in contempt, and punish them with imprisonment.”The workers are unable to feed their families, pay for medical expenses, pay for their children’s education,” the union said in the filing, which has not previously been reported.The lawsuit is likely to be heard in the coming days.India has been a graveyard for some Western carmakers, especially U.S. companies, that have struggled to break the dominance of Japan’s Suzuki Motor and South Korea’s Hyundai Motor, which together hold a market share of about 60%. Like GM, Ford Motor (NYSE:F) ceased operations in India in 2021. GM stopped selling cars in India at the end of 2017 but one of its two factories continued to produce vehicles for export until December 2020. After that, GM ceased all operations and moved to close the plant in Maharashtra, but it has not received permission.The state government has rejected applications by GM to close the plant – a move that the company has previously said sends a “concerning message” to potential future investors. More

The Bank of Japan’s meeting this week had been hyped up by much of the financial community, which thought the ultra-dove of global central banking might throw in the towel on its policy of “yield curve control”. To remind you all, the BoJ targets the level of the 10-year government bond rate — currently zero plus or minus 0.5 per cent — in addition to fixing the short policy rate at 0.1 per cent. That long-term yield fix had come under market pressure — the BoJ had to buy a huge number of bonds to defend it — through the bank’s unforced own goal of widening the fluctuation band around the yield target last month. As with currency pegs, it was an invitation for traders to speculate against the central bank’s resolve.In the event, the BoJ did nothing; if anything, it committed more strongly to YCC by announcing some technical tweaks to make it work more smoothly. Those who had bet against it lost; with huge moves down in the 10-year yield and the yen. So if markets had equalised the score with the BoJ since the December meeting — even pushing the yield slightly above the central bank’s permitted band at one point — the bank’s governor Haruhiko Kuroda has now pulled ahead again.But the debate on whether it makes sense to keep the policy continues. Megan Greene’s recent FT comment sets out many of the economic arguments.The problem is that most of the commentary I have seen mixes up two very different things: what are the right monetary policy instruments and what is the best monetary policy stance (ie how should the central bank wield whatever instruments it has adopted). So the question of what the BoJ should do with YCC is treated as a matter of whether it is time to tighten. And specifically, many argue from a hawkish point of view: the current monetary policy stance is inappropriately loose (so the argument goes), therefore it is time to prepare for the retirement of YCC.But if we conflate things in this way, we lose sight of another possible policy development, namely to keep YCC but adjust the targeted yield level upwards when it is right to give less monetary stimulus to the economy. In fact, I think this is the most attractive path of all.Take the second question first: is it time to tighten Japan’s monetary policy? Recall that Japan has been in a low-inflation (or even deflationary) trap for decades, and getting the economy out of it has been Kuroda’s quest throughout his tenure. With below-target inflation so long entrenched, and with Japan even in the current crisis experiencing weaker price pressures than other advanced economies, surely the BoJ should err on the side of stimulating too much rather than too little.

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While there are signs that Japan’s employers and workers may finally have put a disinflationary mindset behind them, the country has seen a false dawn before — a spike in inflation in 2014 proved shortlived. The BoJ’s own forecasts are for inflation to fall below its target again in the next two years. All this makes me conclude that until all actors in the economy internalise long-term expectations for normal inflation, there should be no rush to withdraw monetary stimulus.But as I have said, the degree of stimulus is a different question from how best to deliver it. So we should assess YCC as an instrument for potentially delivering a whole range of possible monetary stances. Understood as one among many possible central bank instruments, the question is whether it is better suited than the alternatives. And all the signs are that it is.We should think of YCC as a substitute for quantitative balance sheet policies — that is, targeting a certain quantity of bonds that the central bank should hold. Where other central banks have stuck with “quantitative easing” — buying government bonds to drive down long-term interest in the broader economy — the BoJ has moved to directly targeting the benchmark 10-year rate at the low level it thinks it ought to be, committing to buying as much as the market wants to sell at that rate. In two ways, targeting the yield itself has worked a lot better than the targeting the quantity of bonds bought, sold or held, which is the strategy pursued by almost every other central bank. (Australia is the one other country that has recently employed YCC. The US did it in the 1940s. All three examples show that YCC is a workable policy tool to be judged on its merits.)The first is that YCC seems to deliver the desired financing conditions with a much more effective use of the central bank’s balance sheet. The chart below shows the assets held by the world’s three largest central banks, indexed to 100 in September 2016 when the BoJ adopted YCC. (Bear in mind that this does not mean the three had similarly sized balance sheets — the Fed has always absorbed less of its securities markets than the others — but what I am interested in is the evolution over time.) It shows two important things: that the BoJ slowed down its assets purchases when it moved from quantitative to yield-targeting policy, and that it shifted from growing its balance sheet faster than its counterparts to doing so more slowly when the latest crises hit.Those who worry about bloated central bank balance sheets and the associated money creation should, in other words, prefer YCC to quantitative policies. The second way in which YCC is superior to quantitative policies is that financing conditions (that is to say, interest rates) in the broader economy are after all what central bankers try to influence. With quantitative policies you have to hope that you choose the right amount of bonds to hold to get interest rates where you want them, and then for that level of rates to get inflation to the right place. With YCC you only have the latter uncertainty; you don’t need to worry that the long-term benchmark rate behaves differently from what you want.That worry has been serious. One big challenge for most central banks is to manage and communicate their current tightening policies without (a) being second-guessed by markets that offset their policies with contrary asset price moves; and (b) disorderly shifts in long-term yields caused by dysfunctions in market plumbing (see the US’s 2020 “dash for cash” or the UK’s 2022 pensions funds debacle) or self-fulfilling dynamics (see the rise in Italian borrowing costs). Ask this question: if the central banks in those cases had been using YCC, would the disruptions have happened in the first place and would there have been a need for the ad hoc interventions each required? It is hard to see how.And that shows why YCC should not be seen as monetary loosening, but as an instrument that can work in both directions. Much like lowering the 10-year yield target is a substitute for quantitative easing (buying a pre-determined quantity of bonds), so raising the 10-year yield target is a substitute for quantitative tightening. So let me give the opposite advice from many others: the BoJ and the Japanese government should not use the imminent change of the guard (Kuroda’s term ends soon) as an opportunity to retire YCC, but rather to normalise it as a regular tool in the monetary toolbox. Narrow the fluctuation corridor again, and take the first good opportunity to show YCC can be used for tightening by raising the target yield. And as I argued two years ago, other central banks should — again — learn from Tokyo: if it works for the BoJ, it could work for them too.On Sweden and the euroMy newest FT column is on Sweden, which I visited last week to take the pulse on the country now chairing the EU’s ministerial councils. Astute readers will have noticed I didn’t mention the euro; nor did I mention Sweden in my defences of the euro in last week’s column and newsletter. Sweden, of course, is a small open EU economy that has managed very well outside the euro. While it obviously has not avoided a burst of inflation that is international in cause and character, it has not required the punitive interest rates of the central European non-euro countries, and its public finances are among the most solid in western Europe (with public debt about 30 per cent of national income and falling). It seems to be doing quite well with the krona.And yet. The euro question is not quite dead — though it has long been in suspended animation, as one economist put it to me. At the new year, financier Christer Gardell sparked a debate by arguing in an interview that Swedes were made poorer by having a “shitty little currency”. Gunnar Hökmark, a former MEP, marked Croatia’s euro accession by noting that a country that only joined the EU a decade ago has now come closer to Europe’s core than Sweden. Newspapers have pricked up their ears and started to solicit arguments for and against.No doubt the stirring is related to the pretty awful performance of the Swedish krona recently, which makes it a good time to come as a visitor but a bad time to be either a Swedish consumer or a Swedish policymaker worried about inflation.It’s unlikely that Sweden will change its status any time soon. But it is clear that the question is not definitively settled.Other readablesThe New Yorker asks whether 3D printing can change house construction.I found John Naughton’s comment on ChatGPT to be an extremely useful discussion for lay readers like myself of the new machine learning bot that has taken the world by storm. It’s the simplest explanation I have seen of what it does (“next-token prediction”) and makes the important point that the user needs to be knowledgeable to make the most out of it. His analogy with spreadsheet software is enlightening — it makes me note that Excel did not take over the world, but it did make a lot of clerical jobs obsolete. Toby Nangle is a fund manager who confronted the philosophical inconsistency between holding certain values of politics or even basic human decency — eg don’t put people in concentration camps or kill and torture your opponents — and managing the financial assets for regimes that do (you know who they are). His FT op-ed on the dilemma and what to do about it is excellent.We should prepare for potential energy abundance, not just scarcity, writes Andrew Sissons.Martin Wolf interviews Philip Lane, the European Central Bank’s chief economist. More

South Korea is easing regulation of the country’s financial markets in an effort to lure more foreign investors as it seeks to fulfil its long-held goal of graduating to MSCI’s developed markets status.The government will scrap complex registration requirements for foreign investors to trade Korean stocks. It will also allow offerings of security tokens — digital forms of stocks and bonds — in a bid to advance the digital asset market.By winning the upgraded status and seeing its stocks included in the MSCI world index, the global stock benchmark, South Korea hopes to attract more long-term foreign fund flows into the local market. Foreigners will be allowed to invest in local capital markets with internationally recognised identifications, such as passports, according to Kim Joo-hyun, chair of the Financial Services Commission.The country’s top financial regulator also said that authorities would come up with a safe trading system for security tokens to better protect investors after the country was rocked by the collapse of several high profile cryptocurrency groups. “We will strive to meet the global standards of our capital markets this year,” Kim told a meeting with regulators and financial market executives.“We expect the investment environment that meets the global standards will help increase foreign investment in the domestic market and raise the international standing of our capital markets.”Finance minister Choo Kyung-ho said earlier this month that the country would extend forex market trading hours to 2am from as early as the second half of 2024. The country’s forex market currently runs from 9am to 3.30pm.Choo said that the government would make it mandatory for big listed firms with more than Won10tn ($8.1bn) in assets to file important regulatory filings in English from 2024 as part of efforts to make the country’s capital markets more accessible for foreign investors.South Korea has been classified by the index maker MSCI as an emerging market, mainly due to the country’s refusal to allow offshore trading in the Korean won and its convoluted registration process for foreign investors. The government is also trying to improve South Korea’s bond market environment for foreign investors in order to be included in the World Government Bond Index.FTSE Russell, a global index provider, added South Korea to a watch list for possible inclusion in the index in September, following the country’s decision to cut taxes on foreign bond investment.Experts welcomed the move to deregulate, saying that it would increase foreign access to the domestic capital markets. But they cautioned that the world’s 10th-largest economy had to allow offshore trading in the won in order for the country to win the MSCI upgrade.

“The measures will be welcomed by foreign investors,” said Hwang Sei-woon, a researcher at Korea Capital Market Institute.“But getting rid of the key barrier against the MSCI upgrade, which is allowing offshore trading in the won, will take time as authorities are still fearful of losing full control over forex trading as the emotional scars of the Asian financial crisis still remain.”South Korea still bans offshore trading in the Korean won while most other advanced countries — including Japan, Canada, Australia and New Zealand — allow offshore trading in their currencies, Hwang noted. South Korea also bans foreign investors’ direct participation in the local forex market, but the ban is expected to be lifted soon. More

SINGAPORE (Reuters) – The dollar rose broadly on Thursday as growth concerns about the U.S. economy drove demand for the safe-haven greenback, while the yen renewed its ascent as investors doubled down on bets that the Bank of Japan would shift away from its yield curve control policy.Weak U.S. data released on Wednesday showed that U.S. retail sales fell by the most in a year in December and manufacturing output recorded its biggest drop in nearly two years, stoking fears that the world’s largest economy is headed for a recession.”Those weak data really reinforced market concerns about an imminent U.S. recession … (which) really supported the dollar, and I think that will become a growing narrative in the coming months,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY) (CBA).Sterling fell 0.17% to $1.2327, away from the previous session’s one-month high of $1.2435, while the Aussie skidded 0.49% to $0.6907, after suffering a 0.64% loss on Wednesday.The euro shed 0.02% to stand at $1.0792, similarly some distance from Wednesday’s nine-month high of $1.08875, even as French central bank chief Francois Villeroy de Galhau maintained a hawkish stance over the European Central Bank’s future rate-hike path.The fresh wave of risk aversion – compounded by news of job cuts by tech giants Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN) – also kept the dollar in bid.”The effects of the FOMC tightening will just become more and more visible,” Kong said.However, the greenback failed to eke out a gain against the Japanese yen and was last 0.4% lower at 128.42 yen, unwinding most of its previous day’s rally in the immediate aftermath of the BOJ’s decision to stand pat on its ultra-loose monetary policy.Defying market expectations, the BOJ kept its interest rate targets and yield band intact, and instead crafted a new weapon to prevent long-term rates from rising too much, in a show of resolve to maintain its YCC policy for the time being.The decision sent the yen plunging some 2% against the greenback and against other currencies shortly after, alongside Japanese government bond yields, which tumbled the most in two decades at one point on Wednesday.The euro was last 0.39% lower at 138.58 yen, while sterling fell 0.23% to 158.27 yen, as markets continued to test the resolve of the BOJ’s ultra-dovish stance.”I think it’s really reflecting the fact that market participants are still speculating a shift in the Bank of Japan’s policy despite their inaction yesterday,” said CBA’s Kong. “While there’s still high expectations for a policy shift … I think that will keep the yen pretty elevated in the near term.”Elsewhere, the kiwi fell 0.31% to $0.6425. New Zealand Prime Minister Jacinda Ardern will not seek re-election and plans to step down no later than early February, she said in a televised statement on Thursday.Against a basket of currencies, the U.S. dollar index rose 0.09% to 102.42. More

(Reuters) – The maker of Pyrex kitchenware agreed to pay a fine and change its marketing practices to settle U.S. claims that it falsely advertised its popular glass measuring cups as “Made in USA” while importing some of them from China.Instant Brands LLC did not admit or deny wrongdoing in Wednesday’s settlement with the Federal Trade Commission, which approved it by a 4-0 vote.The FTC said Instant Brands shifted some production of Pyrex cups, which are used in home baking, to China from March 2021 to May 2022 after being unable to meet demand on Amazon.com (NASDAQ:AMZN)’s website early in the COVID-19 pandemic.Despite the shift, Instant Brands marketed the Chinese-made cups as “Made in USA” and as “American as Apple (NASDAQ:AAPL) Pie” though the cups were marked “Made in China,” the FTC said.More than 110,000 Chinese-made cup sets that were advertised as “Made in USA” were sold to U.S. consumers, many of whom complained after seeing where the cups were made, the FTC said.Some consumers are willing to pay more for products made in the United States. The settlement calls for Instant Brands to pay a $129,416 fine, and stop claiming its products are U.S.-made unless their final assembly and all significant processing take place there, and virtually all components are sourced domestically.Instant Brands did not immediately respond to requests for comment. The Downers Grove, Illinois-based company is controlled by private equity firm Cornell Capital LLC.In 2021, the FTC adopted a “Made in USA Labeling Rule” to protect businesses and consumers from what it called “rampant” fraud by marketers over their products’ origins. More

WASHINGTON (Reuters) -A group of four U.S. senators on Wednesday asked passenger railroad Amtrak Chief Executive Stephen Gardner to answer questions about a Virginia to Florida train last week that faced extreme delays.The senators noted one passenger dubbed it the “train ride from hell.” During the 20-hour scheduled trip with 563 passengers that turned into a 37-hour-long ordeal “passengers reported limited access to food, bathrooms, and medical care, as well as limited ability for pet owners to disembark, resulting in feces on train floors,” the senators wrote.The Democratic senators – Commerce Committee Chair Maria Cantwell, Richard Blumenthal, Ed Markey and Ben Cardin – asked Amtrak to detail its policies and procedures for passenger care and compensation in the event of similar delayed incidents.”While we understand the train was rerouted to avoid an incident on the track and that Amtrak must abide by hours of service laws, it is difficult to imagine a sufficient justification for the distressing conditions passengers described experiencing,” the senators wrote. Amtrak said in a statement the delay for Amtrak Auto Train 53 stemmed from a CSX (NASDAQ:CSX) derailment, which required the passenger train to detour from its regular route, adding additional travel time. Amtrak said passengers were provided regular updates, along with meals, snacks, and beverages.”Onboard staff worked with pet owners to provide bathroom breaks. Passengers remained onboard for their safety and continued to have access to services and accommodations. We have offered refunds to all customers,” Amtrak said. “We are reviewing our actions to ensure we can provide the service and communication our customers deserve and expect when we encounter significant disruptions.”Amtrak has seen ridership return over the last year. In November, Amtrak said ridership jumped by more than 10 million riders in the year ending Sept. 30 and had nearly returned to pre-COVID-19 levels.Amtrak said ridership rose 89% over 2021 levels to 22.9 million riders, up 10.8 million passengers over the prior year. Overall ridership hit about 85% of pre-COVID levels in the last six months of the 2022 budget year. More