Aurelia Butler

The $430 billion green subsidy law, which grants tax credits for buying U.S.-produced electric vehicles (EVs) and other green products, has triggered fears it could make the United States a world leader in the EV market at the expense of European countries.The Commission, which coordinates trade policy for the 27-nation European Union, said the U.S. guidance, published on Thursday, showed EU producers could benefit from tax credits for sales to commercial operators, but their vehicles would not be eligible for such credits when sold to private consumers.The scheme will start on January 1.The Commission said the Qualified Commercial Clean Vehicle Credit would be available to EU companies without requiring changes to established or foreseen business models of EU producers.A commercial clean vehicle, the guidance says, “is made by a qualified manufacturer”. However, for the New Clean Vehicle Credit for consumers, the vehicle must have final assembly in North America.The Commission said the scheme remained a concern, with provisions that discriminated against clean vehicles and inputs made in the European Union, and it violated international law. By weakening competition, it also risked raising prices.The Commission said a joint task force set up to discuss the topic would continue to seek solutions to EU concerns, such as by treating the European Union in the same way as all U.S. free-trade-agreement partners.”We welcome the U.S. announcement today that more time will be taken to work on the outstanding guidelines, allowing it to address these issues satisfactorily,” it said. More

(Reuters) – Global hedge funds are set to register their worst returns in 14 years in 2022 after aggressive U.S. interest rate rises hit asset prices hard, however, their declines are overall smaller than the slump seen in equity and bond markets this year.Some hedge fund strategies that put money in commodities and currencies using macro-focused strategies and exploited price differences between related securities outperformed in 2022, handing decent gains to investors. Hedge funds’ yearly price returns: https://www.reuters.com/graphics/GLOBAL-MARKETS/xmpjkozzavr/chart.png “More than at any time in recent history, both equities and bonds have been very sensitive to macro events, particularly to inflation prints,” said Meisan Lim, managing director of hedge fund research at Cambridge Associates.According to investment data firm Preqin, hedge fund returns have fallen 6.5% this year, their biggest since a 13% decline in 2008. Hedge fund flows by core strategy: https://www.reuters.com/graphics/GLOBAL-MARKETS/klvygkyyyvg/chart.png That compares with the MSCI World index’s decline of 18.7% and the ICE (NYSE:ICE) BofA U.S. Treasury index’s decline of 11.9%.Strategy-wise, macro funds gained 8.2% through November this year, while equity-hedged and event-driven strategies lost 9.7% and 4.7%, respectively, according to HFR data.”As a strategy, macro has historically been less correlated to movements in the broader stock market, helping to diversify portfolios,” said UBS in a note.”We think a continuation of tight monetary policy and high volatility should prove favourable for macro managers in 2023.”Activist funds, which use minority stakes to push for strategy and management changes to unlock shareholder value, slumped 13.8%, according to the HFR data.Trend-following strategies succeeded in 2022 because of the inflationary environment, said Andrew Hendry, head of Asia at Janus Henderson Investors, a global asset manager that also runs a 900 million euro ($955.17 million) long-short Global Multi-Strategy Fund.”Trend-following works on the idea that markets process information inefficiently and at different speeds, and markets that move in one direction to start with, are more likely to continue to move in that direction,” Hendry said. “The trend has had a great 2022 with things like strong commodity prices and weak bonds contributing substantially to performance.” Hedge fund flows by region https://www.reuters.com/graphics/GLOBAL-MARKETS/mopaknaekpa/chart.png Alongside the tumble in traditional assets from equities to bonds, net assets of global hedge funds fell 4.8% in the first three quarters of this year to $4.3 trillion. They saw a combined outflow of $109.8 billion in that period, according to Preqin data. Hedge funds’ assets under management by strategy: https://www.reuters.com/graphics/GLOBAL-MARKETS/zgpobmxgjvd/chart.png Just 915 funds were launched this year, the fewest in 10 years, the data showed. Global hedge fund launches by inception year: https://www.reuters.com/graphics/GLOBAL-MARKETS/zjpqjjaqovx/chart.png($1 = 0.9422 euros) More

MEXICO CITY (Reuters) – Mexico’s peso, which is ending 2022 with one of its strongest performances in a decade, could have its gains wiped out in 2023 after an expected end to the Bank of Mexico’s rate hikes cycle and a possible recession in top trade partner the United States.The peso last month clawed its way back to pre-pandemic levels and has appreciated over 5% versus the U.S. dollar in 2022, making it one of the best-performing global currencies alongside Brazil’s real.But the peso’s impressive run may be ending as markets expect the large capital flows to Mexico in recent months, attracted by the Bank of Mexico’s restrictive monetary policy stance, could soon start to slow.Banxico, as the central bank is known, has been increasing its benchmark interest rate since June 2021 to stem inflation, and hiked it to a record 10.5% at its last policy meeting.In the coming months, Banxico is expected to end its rate hiking cycle and likely decouple from the U.S. Federal Reserve, which is seen continuing to increase rates. That would narrow the rate differential and could spark an outflow of capital.”The carry trade, the phenomenon that has benefited (the peso) this year, will likely dissipate a bit,” said CI Banco analyst James Salazar. The carry trade refers to a trading strategy of taking advantage of yield differences between Mexico and other economies.The peso’s strength, which President Andres Manuel Lopez Obrador often boasts as one of his government’s big accomplishments, has also benefited from a robust inflow of remittances, growth in exports and foreign direct investment.Concerns about a U.S. recession and a trade spat Mexico is embroiled in with the United States and Canada over Lopez Obrador’s energy policy, which critics call nationalist, muddy the outlook for the peso.”The perception of risk could rise due to the consultations in the framework of the USMCA (trade deal), which could lead to the imposition of measures against Mexico,” said Banco Base.Traders at the Chicago Mercantile Exchange, considered a bellwether of market sentiment, have started to bet the peso will begin depreciating. More