Aurelia Butler

PARIS (Reuters) – Sales of luxury goods are set to rise at least 5% this year as shoppers in the United States and Europe continue to snap up high-end watches, jewelry and shoes despite political uncertainty linked to conflict in Ukraine and soaring inflation, consultancy Bain said Tuesday.“Consumption doesn’t seem to be affected so far,” Bain partner Claudia D’Arpizio told Reuters in an interview. Bain estimates that global sales of personal luxury goods will reach at least 305 billion euros ($320 billion) this year, according to its most conservative estimate — and up to 330 billion euros in a more optimistic scenario — building on its fast rebound from pandemic lockdowns. This compares with a previous estimate for 300 billion to 310 billion euros. Bain widened its projections to account for strong current sales, said D’Arpizio, despite a wobbly stock market in the United States and concerns about an economic recession.“We are aware that we are in a very turbulent environment,” she said. Analysts at Bain said global sales of personal luxury goods, which include clothing, accessories and beauty products, reached 288 billion euros last year, surpassing a previous forecast for 283 billion due to strong spending over the holidays.Even with high inflation and disruptions from COVID-19 lockdowns in mainland China, luxury firms tapped into local demand in Europe and the United States with effective marketing.“We were for sure astonished,” by resilient consumer confidence despite inflation, D’Arpizio said.Domestic spending from Chinese consumers will likely recover through the second half of the year, according to Bain, which also highlighted South Korea as a booming market.The United States overtook Europe as the largest luxury market last year, Bain said in a previous report.($1 = 0.9522 euros) More

WASHINGTON (Reuters) – President Joe Biden’s pointed criticism of oil and gas companies for earning massive profits as families suffer from high gasoline prices challenges a pillar of American capitalism: that U.S. companies should make as much profit as they legally can, and direct that windfall back to investors. Biden told Shell (LON:RDSa) Plc, Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX) and other refining giants last week they have another responsibility: to do everything they can to bring down high gasoline prices that are squeezing American consumers and driving up inflation.”We see it as a patriotic duty,” White House press secretary Karine Jean-Pierre said Wednesday. Russia’s invasion of Ukraine has caused gas price hikes, she said. “We know where to put the blame, on the war. But oil companies, oil refiners they have responsibilities too. What they have been doing is taking advantage of the war.”  Particularly galling to the White House is the jump in industry stock buybacks, returning to investors profits that the administration wants invested in more refining capacity to bring gasoline prices down. Biden’s criticism is being soundly rebuffed by industry executives and trade groups as having no place in an economic discussion. “The injection of ‘patriotism’ into this is an attempt to put shame on folks,” said Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, the pro-business lobby group. “These are market forces and market functions.” Instead, Bradley and other industry officials say the administration should remove import tariffs and cut regulations to allow more domestic fossil fuel production and refining, which would signal to energy markets that supplies will increase.But the idea that U.S. chief executives should serve other stakeholders besides investors, and take direction from other masters besides market forces isn’t new for Biden, the U.S. presidency, or for corporate America. His recent push is part of a slow-boil rethink of the role that companies, chief executives and the very wealthy should play in the U.S., what workers and average citizens deserve and whom governments should champion and protect.Biden himself campaigned on a promise to fix American inequality, raise wages and force companies to pay their “fair share” in taxes, part of a broader attempt to reshape the U.S. economy. Democrats’ roughly 100-member Congressional Progressive Caucus has pushed bills expanding workers’ and consumers’ rights, playing a growing role in Washington lawmaking. And these companies have made promises too. In the summer of 2019, CEOs of more than 180 big U.S. companies, including Exxon and Chevron, pledged https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans they would not only work for shareholders, but employees, customers, suppliers and their communities to “build an economy that serves all Americans.”Inflation hits poorer Americans particularly hard because they spend a greater percentage of their income on food and fuel. Asked last week about the pledge in the context of Biden’s remarks, the Business Roundtable group that organized it said in an email: “BRT CEOs, including our energy members, are attempting to do just that while navigating a global energy crisis, high costs for crude oil and other inputs, and an adverse regulatory and investment environment.” Biden’s attempt to shame these companies into taking less profit has historical precedent. President John F. Kennedy attempted to curb steel prices https://www.jfklibrary.org/archives/other-resources/john-f-kennedy-press-conferences/news-conference-30 60 years ago, criticizing “a tiny handful of steel executives whose pursuit of private power and profit exceeds their sense of public responsibility,” and accusing them or showing “utter contempt for the interests of 185 million Americans.”Kennedy’s diatribe in April 1962 came in response to steel companies announcing a $6-a-ton price increase, shortly after agreeing to a new contract — brokered by Kennedy’s administration — with the United Steelworkers union. A day after Kennedy’s remarks, the companies rescinded the price hike. Unlike today, the exchange came at a time when steel profits were declining, imports were increasing and shares were falling. Announcing disappointing earnings a month later, U.S. Steel Corp CEO Roger Blough reportedly told shareholders: “This concept is incomprehensible to me – the belief that government can ever serve the national interest in peacetime by seeking to control prices in competitive American business, directly or indirectly, through force of law or otherwise.”Jawboning companies “to reduce inflation has never been very effective,” said Martin Bailly, a senior fellow in economic studies at the centrist Brookings Institution think tank.”Biden’s frustration is understandable because there is no tool to reduce inflation except to put the whole economy into a downturn,” said Bailly, an expert on regulation and productivity.”I think the right approach is to tough this situation out. Tell Americans that the inflation is the result of disruptions from COVID-19 and the huge price shock from the Russia-Ukraine conflict. Support the Federal Reserve and say that things will be bad for some time, but we will get through this and restore growth and price stability as soon as possible.” More

WASHINGTON (Reuters) -U.S. President Joe Biden is considering scrapping tariffs on a range of Chinese goods to curb inflation, but no decision is likely before next week’s Group of Seven summit, people familiar with the matter said.White House officials discussed options on Friday with Biden for reducing some of former President Donald Trump’s punitive duties on China, including potentially substantial cuts, three of the sources said. The scale of any potential final move is not yet decided, they said.Biden’s advisers are poring over Trump-era tariffs on hundreds of billions of dollars of Chinese goods – many of which they see lacking strategic value, the sources said. A White House spokesperson said the goal was to align the tariffs with U.S. economic and strategic priorities, safeguarding the interests of workers and critical industries, while not “unnecessarily raising costs on Americans.” After weeks of fierce debate among key aides over the issue, Biden has come to favor swift action on the tariff issue, keen to use any leverage to reduce surging inflation ahead of the Nov. 8 midterm elections for control of Congress, two of the sources said.The president told reporters on Saturday that he was in the process of making up his mind.”Conversations on this issue are ongoing and intensifying,” a senior administration official told Reuters. “But this is not a binary (choice to) lift all tariffs or don’t. It has to make sense strategically.”Margaret Cekuta, a former U.S. trade official who is now a principal with the Capitol Counsel lobbying firm, said easing tariffs would likely have a limited impact on inflation and could take about eight months to become fully effective.”Economically it doesn’t make sense, but it could help combat the psychological impact of high inflation,” she said, adding that the administration was trying to analyze which tariff lines could have the greatest impact on prices.One administration proposal calls for eliminating a large chunk of Trump’s punitive tariffs on Chinese consumer exports, except those on $50 billion of goods tied to an initial so-called Section 301 probe, which focused on circuit boards, semiconductors, and other “strategic” goods, said one of the sources. The proposal also excluded changes to tariffs on steel and aluminum.But it could remove tariffs on a large number of consumer goods hit with tariffs in 2018 and 2019 as Trump’s trade war with Beijing escalated – some $320 billion at the time they were imposed. These included internet routers, Bluetooth devices, vacuum cleaners, luggage and vinyl flooring. More

Investing.com — Everyone thinks a recession is getting more likely. Well, Goldman Sachs, Deutsche Bank, and Elon Musk do anyway, and more and more central bankers are talking like they’ve made peace with the idea. Relations between Russia and the West plumb new lows after Lithuania blocks Russian rail access to the Baltic exclave of Kaliningrad. Existing home sales data are due, JetBlue makes a decisive move in its pursuit of Spirit Airlines and there’s big news afoot in the world of liquefied natural gas. Here’s what you need to know in financial markets on Tuesday, 21st June.1. Russia-EU relations sink to new lowWhile the U.S. holidayed, relations between Russia and Europe deteriorated sharply. After last week’s series of gas supply cuts by Gazprom (MCX:GAZP) to its European buyers, Lithuania has stopped the transit of most goods across its territory to the Russian exclave of Kaliningrad on the Baltic Sea. The European Commission in Brussels approved the measure.Russia called the move ‘illegal’ and ‘unprecedented’ and promised to retaliate, the Security Council saying its measures “will have a serious negative impact on the Lithuanian population.”Kremlin spokesman Dmitry Peskov told MSNBC meanwhile that relations are likely to suffer long-term damage from the current crisis, and refused to rule out the execution of two U.S. citizens fighting in Ukraine who have been captured by Russian proxies.2. Recession risk rising, say Goldman, MuskRecession fears are on the increase, with both Deutsche Bank and Goldman Sachs analysts warning of a rising risk of an economic contraction. Goldman raised its estimate of the likelihood of a recession over the next year to 30% from 15% previously, citing both inflation and the effects of the Ukraine conflict on the world economy.Goldman is in good company. Elon Musk told a conference in Qatar overnight that he thinks a U.S. recession “more likely than not” in the near term. He also confirmed that he expects to lay off around 10% of Tesla’s salaried staff, or 3.5% of its total workforce.The warnings come as more and more central bank officials talk openly about their willingness to sacrifice growth in the pursuit of stable prices. The Bank of England’s chief economist Huw Pill became the latest to take up that refrain earlier Tuesday, while on Monday, St. Louis Fed President James Bullard had warned that U.S. inflation expectations could become unmoored without credible Fed action.Richmond Fed President Tom Barkin speaks at 11 AM ET and Cleveland’s Loretta Mester will speak an hour later.3. Stocks set to bounce at open despite warnings; JetBlue, Spirit eyedThe holiday appears to have brightened the mood of U.S. stock market investors. Markets are set to reopen comfortably higher later, amid some dip-buying by those who think the recent selloff has been overdone.By 6:20 AM ET, Dow Jones futures were up 496 points, or 1.7%, while S&P 500 futures, and Nasdaq 100 futures were both up 1.8%.Individual stocks likely to be in focus later include Spirit Airlines (NYSE:SAVE) after JetBlue (NASDAQ:JBLU) raised its offer and finally accepted it will have to dispose of more assets to get antitrust clearance for its plans. Spirit was up 12% in premarket on perceptions that JetBlue’s bid, which is higher than rival Frontier Group’s will now succeed.The data calendar is relatively light, with the Chicago Fed’s manufacturing survey due at 8:30 AM ET and May numbers for existing home sales at 10 AM.4. Qatar seals massive LNG development dealsThe search for alternatives to Russian gas in Europe took two big steps forward, as the Gulf state of Qatar signed a series of deals to develop what will be the world’s biggest liquefied natural gas project.QatarEnergy said on Tuesday that Exxon Mobil (NYSE:XOM) will take a 6.25% stake in the North Field East project, joining others including France’s TotalEnergies (NYSE:TTE), Italy’s Eni (BIT:ENI), and ConocoPhillips (NYSE:COP), who have all signed similar deals in recent days. The project – which will increase Qatar’s LNG capacity by nearly 50% to 110 million tons annually – is, however, only expected to come online in 2026.Separately, Venture Global became the first U.S. company to sign a long-term LNG supply contract with Germany.5. Oil extends recovery as Biden prepares tax holiday decisionCrude oil prices extended their recovery from last week’s selloff, amid expectations that U.S. President Joe Biden will announce a suspension of the federal tax on gasoline to cushion the impact of high prices on U.S. drivers.Biden told reporters on Monday that he expects to make a decision by the end of the week on levying the tax, which currently stands at 18.4c a gallon.By 6:30 AM ET, U.S. crude futures were up 2.2% at $110.41 a barrel, while Brent futures were up 1.5% at $115.81 a barrel. Newswires quoted Russell Hardy, CEO of one of the world’s biggest traders Vitol, as saying that markets were unlikely to come much lower unless there were signs of a substantial “abatement of demand.” More

The ECB has pledged fresh action to prevent financial “fragmentation” between the euro zone’s most indebted countries, such as Italy, and safe-haven Germany after a sudden, sharp widening of spreads between bond yields.But Slovak central bank governor Peter Kazimir and his Finnish peer Olli Rehn set a high bar for any ECB intervention on the bond market.Kazimir said it was not just the ECB’s job to cap spreads, which are also caused by certain countries’ economic fragility and the euro zone’s incomplete architecture as a currency union with no fiscal backstop.”When we talk about fragmentation, often we are knocking on the wrong door, and the key and substantial question is for the economies of the countries to modernise, innovate, be more resistant to these problems,” he told reporters in Bratislava.Rehn said no country will automatically be eligible to benefit from the upcoming ECB tool designed to limit spread widening – a possible reference to conditions attached to any ECB purchase of a country’s debt. Sources told Reuters last week the ECB is likely to attach some loose strings to the scheme, such as compliance with the European Commission’s economic recommendations. “To me it is very clear there is no automaticity and there is no one single benchmark,” Rehn told a news conference in Helsinki. “There has to be plenty of room for judgment … practiced by the ECB Governing Council.” The ECB unveiled plans to devise this new tool last week but it failed to provide any detail and policymakers’ comments since then highlight there is no agreement yet on what it should look like. The Bank of Italy’s Ignazio Visco said last week the premium paid by Italy over Germany to borrow for 10 years was unjustifiably high at more than 200 basis points while it should be below 150.But Latvian governor Martins Kazaks later told Reuters the ECB shouldn’t target specific spread levels but simply ensure that its interest rates are passed on to all corners of the euro zone. More

FAYETTE, Alabama, (Reuters) – Rising from a muddy field on the outskirts of the small town of Fayette, Alabama is a bricks-and-mortar symbol of the global COVID pandemic: A new glove factory.When completed in 2024 the complex, owned by Japan’s SHOWA Glove Co will be able to produce about 3 billion medical-grade nitrile gloves a year from its dozen massive new, five-stories-tall, automated assembly lines.That may seem like a lot but is only a small slice of the over 100 billion consumed in the United States annually.”There’s a burgeoning glove manufacturing industry popping up in this country, a lot of it funded by the government,” said Dan Izhaky, chief executive of New York-based United Safety Technology, which got $96 million in federal backing to begin to transform an empty Baltimore steel plant.Demand for gloves spiked early in the pandemic, spotlighting a glaring weakness in the U.S. supply chain for all types of medical safety equipment. Most of it comes from factories in Asia.”The market went absolutely crazy during the pandemic,” said Richard Heppell, head of SHOWA’s U.S. division, as buyers scrambled to find supplies and prices exploded.SHOWA was expanding a small, decades-old glove factory in Fayette – originally built to make old-style latex gloves – when the pandemic struck. Seeing an opening for a revival of larger-scale U.S. glove manufacturing as the government reconsidered the wisdom of heavily relying on foreign sources, the company decided to triple the size of its expansion.At least 12 other companies – a mix of domestic startups and Asian and U.S. producers looking to gain or expand U.S. footholds – are building new glove plants, including the one inside the former Baltimore steel mill and another in a former Caterpillar (NYSE:CAT) factory outside Chicago. One entrepreneur wants to build a plant on a Navajo reservation in New Mexico.The U.S. Department of Health and Human Services (HHS) has so far committed $572 million to five glove projects, including $81.3 million for SHOWA, “that will result in domestic capacities that can produce more than 600 million nitrile gloves per month,” according to a HHS spokesperson.PANDEMIC-RELATED BUSINESS RISKSIzhaky knows the risks of jumping into a pandemic-related business.He and a partner hastily built a face mask factory with private funds in Los Angeles early in the COVID crisis but was forced to shutter it when mask prices collapsed and customers evaporated. Most of the mask factories that sprang up during the pandemic have closed.Despite that experience, Izhaky and other producers are counting on customers willing to pay some premium for U.S.-made gloves, as well as federal mandates such as requiring them in government safety stockpiles. A group of glove makers are discussing forming a trade group to push for such mandates and lobbying is underway, company officials said.”The VA, DHS, TSA, they all use huge amounts of gloves,” said Izhaky, reeling off a list of federal agencies. “We’re expecting that they’ll be mandated to purchase Made in America.”But it remains a risky proposition. The Biden administration has not guaranteed it will buy the output of these new operations, and the cost of producing domestically, even using the latest equipment, is expected to remain higher than imports.Glove making is far more capital intensive than masks, raising the stakes for those building large factories.Modern glove factories are modeled on those developed in Asia, a reverse of the decades-old pattern of companies in advanced economies developing industries in low-cost regions. Izhaky’s project has 45 U.S. employees and a team of 28 in Malaysia with industry experience.Alison Bagwell is an American engineer who spent most of her career working for Kimberly-Clark (NYSE:KMB), setting up glove factories in Thailand and Malaysia. With private backing, she is building a $70 million plant in Sandersville, Georgia, set to open next year. “I feel pretty confident that I can do this,” she said, “having done it in a third world country.”In Fayette, the SHOWA factory is churning out gloves in the original production area and a towering new addition that holds the first four new production lines. Behind the building, a new structure for four additional lines is nearly complete, while another four-line building has yet to break ground.Plant manager Scott Robertson leads the way past a team of women catching clumps of blue gloves as they are automatically pulled off ceramic hands used to mold them and piled into stacks.”We have to use these auto stackers,” he said, referring to the machines that gather the gloves, “because gloves are coming off the line so fast there’s no way a person could keep up.”The company is planning to install new machinery in this spot that will do the job of putting the gloves into boxes.”We have to do everything we can to control cost,” said Gilbert LeVerne, the company’s marketing director, “because this country is cost impulsive – the disaster goes away and the mindset shifts back to the bottom line.” More