Aurelia Butler

Lagarde has made joining the fight against climate change a key goal and the ECB pledged https://www.reuters.com/business/environment/ecb-ramps-up-its-role-tacking-climate-change-2021-07-08 last year to take greater account of the environment in core policy decisions, such as which bonds to buy in its multi-trillion-euro stimulus programme.But with Lagarde due to appear in parliament on Monday, lawmakers from the European People’s Party were taking exception to what they saw as a foray into a policy area beyond the ECB’s remit, especially when inflation is running high.The ECB is independent of parliament but lawmakers’ objections may weigh down an already slow-moving debate on the euro zone central bank’s climate role and strengthen the reservations of some conservative rate setters.”The ECB’s primary mandate is ensuring price stability, which at the moment the ECB is not doing a great job at,” German lawmaker Markus Ferber said in an emailed statement to Reuters. “Everything else such as the ‘green shift’ is simply a distraction from achieving that primary mandate.”He and colleague and Georgios Kyrtsos have tabled several amendments to paragraphs relating to the ECB’s climate strategy in a report by the European Parliament up for vote on Tuesday.In one amendment, they insisted the ECB should stick to “market neutrality”, that is buying bonds in proportion to the outstanding amount. This would implicitly close the door to buying more “green” debt and fewer bonds from highly polluting companies.”Ferber and Kyrtsos’ attempt to reinstate explicit European Parliament support for the principle of market neutrality would be a major step back in the debate on green monetary policy,” said Alessia Del Vasto, advocacy officer at campaign group Positive Money Europe.But Ferber said environmental goals should not be pursued via monetary tools and the ECB would “create distortions” by “only or predominantly buying green bonds”, because that market was still small.An ECB spokeswoman did not immediately offer a comment. Lagarde is due to appear in parliament at 1615 GMT. More

Investing.com — Global equity markets tumble and commodity prices are squeezed higher by fears of a Russian invasion of Ukraine and its possible consequences (in the shape of Western sanctions). U.S. stocks are also set to extend their declines at the open. The Fed’s Esther George repeats her calls for the central bank to sell down its bond portfolio, and uber-hawk James Bullard will speak later. Only commodities are bucking the trend, as global buyers start to look frantically for alternative suppliers of energy, agricultural and industrial products. Here’s what you need to know in financial markets on Monday, 14th February.1. Russia fears prepare a St. Valentine’s Day massacre for marketsFears that Russia will invade Ukraine continued to rattle global markets, with European stocks selling off heavily in the wake of warnings by the White House and other governments of an imminent move by Moscow.Benchmark European stock indices lost as much as 3.2% in the first half of the trading session, against a backdrop of what appear to be last-ditch diplomatic efforts to avoid war.German Chancellor Olaf Scholz will visit both Kyiv and Moscow Monday for talks amid hints of Ukrainian concessions, but the tone was set on Saturday after a phone call between U.S. President Joe Biden and his Russian counterpart Vladimir Putin, after which Biden again threatened “swift and severe costs” on Russia if it invades.A White House readout after the call said that while the U.S. was eager to continue diplomatic engagement “in full coordination with our Allies and partners, we are equally prepared for other scenarios.” G7 Finance Ministers followed that up on Monday with a warning of “massive and immediate” consequences for the Russian economy.2. George beats the drum again for QT; Bullard, Lagarde speeches eyedA fresh barrage of central bank-speak is underway after repeated negative shocks from U.S. inflation data last week.Kansas City Federal Reserve President Esther George repeated her view in an interview with The Wall Street Journal that the Fed should start selling bonds out of the $9 trillion portfolio it has amassed through previous bouts of ‘quantitative easing’. George argued that the Fed’s huge portfolio makes it more difficult to carry out monetary policy, and that asset sales would keep the yield curve from flattening – a nod to those afraid that the recent yield curve flattening presages a recession.Later in the day, St. Louis Fed President James Bullard – who has already nailed his inflation hawk colors to the mast – will speak. So too will European Central Bank President Christine Lagarde, who spent most of last week trying to reverse the hawkish turn she had signalled at her latest press conference. The data calendar is, thankfully, relatively empty however.3. Stocks set to extend post-Michigan declines; Lockheed Martin in focus U.S. stock markets are set to open markedly lower due to war fears, which are further souring a mood that had already turned negative at the end of last week in response to the University of Michigan’s consumer sentiment index for February.By 6:20 AM ET (1120 GMT), Dow Jones futures were down 273 points, or 0.8%, while S&P 500 futures were also down 0.8% and Nasdaq 100 futures were down 1.1%. The NASDAQ had also underperformed on Friday, as traders contemplated a simultaneous combination of weakening consumer activity and tighter monetary policy to bring down inflation.Stocks likely to be in focus later include Lockheed Martin (NYSE:LMT), which bowed the inevitable over the weekend and dropped its deal to buy Aerojet Rocketdyne (NYSE:AJRD) due to antitrust concerns. That development is the latest sign of the Biden administration clamping down on industry concentration, after its resistance to Nvidia’s bid for ARM and multiple Canadian bids for railroad operator Kansas City Southern (NYSE:KSU).4. Trade flows resume as U.S.-Canada bridge reopensThere was brighter news from the U.S.-Canadian border, where the Ambassador Bridge in Windsor reopened after an Ontario court allowed the forcible removal of truckers protesting against the Trudeau government’s Covid-19 policies.With the virus’ dominant strain, Omicron, now causing a much reduced incidence of serious illness in many countries, it is getting harder to maintain the public health policies that have disrupted so much of social and economic life in the last two years.However, the pandemic still has teeth. In Hong Kong, authorities said that the city’s hospitals had been overwhelmed with Covid-19 cases, in a reflection of how the highly-contagious Omicron is still capable of spreading like wildfire through populations with inadequate vaccination.5. Oil, commodities squeezed higher on Russia fearsCrude oil prices hit fresh seven-year highs overnight on concerns about the availability of Russian oil exports in the event of Western sanctions in response to an invasion of Ukraine.By 6:30 AM ET (1130 GMT), U.S. crude futures were down 0.2% on the session at $92.88 a barrel, while Brent crude was down 0.2% at $94.22 a barrel. Overnight, WTI had risen as far as $94.81 a barrel, partly due to fears that the U.S. and EU will shut Russian banks out of the SWIFT financial messaging system, the channel through which almost all international buyers execute their payments for Russian energy exports.A lack of access to SWIFT would force international buyers to chase alternative energy supplies in the short term, at a time when the oil market already has little spare capacity to speak of. Squeezes were also visible in other products where Russia is a key exporters, such as Wheat, Nickel and Palladium. More

Bumper US growth and pandemic stimulus helped boost remittances to Mexico and northern Central American countries more than 25 per cent last year to record levels, providing much-needed support to those economies as they struggled to rebound from the coronavirus crisis.Experts say the pandemic economic recovery created strong US demand for essential and migrant labour. The relative weakness of economies south of the border also meant migrants tried to send more, they added. “It was a very, very unusual year,” said Dilip Ratha, head of the World Bank’s global knowledge partnership on migration and development. “Resilience and recovery [in remittances] is a global story, in that picture . . . Central America in particular and Mexico, they stand out.”Remittances to Mexico grew 27 per cent to more than $51bn, according to data from the World Bank. Guatemalan migrants sent 35 per cent more, while payments grew 26 per cent in Honduras and El Salvador. The strength of the US economy — which grew 5.7 per cent in 2021 as it bounced back from the worst of the pandemic — was crucial, as it is by far the main source for money sent to the region. Mexican migrants working in the US recovered their jobs faster than average workers across the American economy, according to Jesús Cervantes González, head of economic statistics at the Center for Latin American Monetary Studies.Stimulus packages pushed by President Joe Biden also deposited more money in workers’ pockets. Migrants who are legal residents were eligible to receive stimulus cheques and, in a few states, some undocumented migrants also received payments. The money sloshing around also helped boost the broader economy and support migrant jobs.“A percentage of that ended up in Latin America,” Cervantes González said.Marco Flores, 31, from the Mexican state of Jalisco, works as a waiter in Kentucky and sends about one quarter of his $5,000 monthly income to his parents and wife back home. He said that there were so many jobs in the US right now because of a lack of personnel.“People don’t want to work, I don’t know why honestly . . . there aren’t enough people,” Flores, a university graduate, said.He said he may have to send more back this year to compensate for the bad economic situation at home — inflation is running above 7 per cent in Mexico.“I’m more worried about the insecurity [in Mexico] and the economic situation.”Economies in the region are coming to rely on remittances more than ever — they are now equivalent to more than one-fifth of gross domestic product in El Salvador and Honduras.In Mexico, which has almost 20 times the population of El Salvador, the figure is 4 per cent of GDP. Remittances now account for more foreign income than either oil exports or foreign direct investment.The remittances sent back help prop up economies that are contending with high unemployment and slow growth. Economists at Bank of America estimated in 2014 that every dollar in remittances spurs about $1.70 in expenditure in Mexico, mostly in consumption, with some in investment.In 2022, remittances would probably grow again but at a slower clip, experts said, with the unique set of pandemic circumstances fading in an environment of slower growth and higher interest rates.Last month, Andrés Manuel López Obrador, Mexico’s president, described the country’s emigrants as heroes, comparing them to doctors and nurses saving lives. Flores, working in Kentucky, was unimpressed.“It’s ridiculous and even outrageous that the president of the country boasts about historic records from people who have to flee their home and send money,” he said. “It’s an issue of national shame rather than pride in my opinion.” Fermín Martínez, 23, worked picking cherries and apples for more than six months in the US in 2021. He sent money to his mother and to pay for the house he is building for himself back home.

“What you made in a day’s work in Mexico you could make there [the US] in an hour,” he said, adding that he hopes to go back this year, conscious that high inflation on both sides of the border meant he needed to earn more.The World Bank’s Ratha said he does not see reliance on remittances as a bad thing and that money sent home from other countries is a natural part of development driven by unemployment and low wages.“The dependence on remittances is, in a good way, very high,” he said. “Remittances are a financial lifeline . . . people truly depend on it, otherwise they would probably fall into poverty.” More

ISTANBUL (Reuters) – Tourism in Turkey is set to return to near pre-pandemic levels this year, boosting the crisis-hit economy with the help of a recent currency crash that has made it a more attractive destination than ever, industry officials say. Despite the high hopes, hotel and tourism officials warned that sharp rises in utilities, food and wage costs will limit profits and broader benefits for an economy rattled by inflation soaring to a 20-year high.The high season starts in May for Turkey’s Mediterranean and Aegean beaches and historic treasures.Europeans especially are already booking trips in good news for President Tayyip Erdogan’s government, which has adopted a sweeping new economic policy relying heavily on foreign income to curb the current account deficit. “Early bookings started with high speed. We’ve got strong bookings especially from Britain. They’re almost in line with 2019,” said Turkish Hoteliers Federation vice chair Bulent Bulbuloglu.He said early bookings traditionally start with Britons and are taken as a reference for the season, with strong demand also expected from other European countries, Russia and Central Asia.Foreign arrivals in Antalya, among Turkey’s most popular holiday destinations, totalled 117,818 in January, matching the 2019 level, data showed.But a further escalation of the Russia-Ukraine crisis may pose some risk for the season, Bulbuloglu added.”We get good signals from Germany, Belgium, Netherlands and the Scandinavian market too… Turkey has become a destination where visitors can have the most affordable holidays with their own currencies. It is now a paradise for foreigners.”The lira weakened 44% against the dollar last year and all-inclusive deals make Turkey even cheaper.’SERIOUS PROBLEMS’ WITH COSTS”A five-star hotel’s average price per night is around 70 euros in Turkey, whereas it is around 200 euros in Spain,” said Turkish Tourism Investors’ Association head Oya Narin.Finance Minister Nureddin Nebati last week forecast tourism revenues of $34.5 billion this year, up from 2021’s $24.5 billion. They were $34.5 billion in 2019. Erdogan’s new economic policy aims to cut inflation by creating a current account surplus, with tourism revenues a key factor.”It seems we will achieve the $34-$35 billion target. But revenues are not enough themselves. There is also the costs angle,” said Narin. She said foreign arrivals will be near 2019 levels, or just 10% below, but making a profit matters more to the industry than how many millions come.”We have serious problems with the course of our costs. We are facing rampant cost increases regarding electricity, gas and other costs,” Narin said.Turkey’s annual inflation hit 48.69% in January. Ulkay Atmaca, general manager of Innvista Hotel Belek in Antalya, said he had to increase prices by 42% for this season but still cannot compensate for the rising costs. Hotel Association of Turkey head Muberra Eresin said sharp cost increases were eroding industry margins, with costs rising 60%-65% in just one month.”We have already signed contracts with operators and set our prices. It’s not possible to reflect all these additional costs on our prices now,” she said. More

BRASILIA (Reuters) – Leading economists in and around Brazil’s Workers Party are nearly united in scorn for a new law shielding the central bank from presidential influence – but there is an important voice of dissent in the party: ex-President Luiz Inacio Lula da Silva.    As Lula gears up for his presidential campaign this year, he has pointedly avoided naming a spokesman for economic proposals. That has made clear that Lula alone is the deciding voice on his economic agenda – and he has shown no qualms seeking common ground with centrists, even where it breaks with his left-wing party’s consensus.    The early signs of moderation from the front-runner in this year’s election have turned some investors bullish on Brazil, helping to draw nearly $10 billion in foreign flows to local markets and boosting the country’s currency and stocks.    In interviews with a half dozen economists and ex-ministers advising Lula or his party’s policy think tank, all made clear that they did not speak on the former president’s behalf.    Nowhere was that clearer than in their criticism of a law passed last year to formalize the central bank’s autonomy by giving its governor a term straddling presidential elections and removing the role from the government cabinet.    Five of the six economists interviewed by Reuters disparaged the law, warning that it tied the president’s hands on macroeconomic policy. Lula himself criticized the idea a year ago, but he has since played down concerns.    “People take issue with the so-called independent central bank. Look, this central bank has to be committed to Brazil, not to me,” Lula told journalists last month, adding that he was ready for a constructive dialogue with the current central bank president. “I see differences of opinion, but no obstacle.”    Two other political advisors to Lula, speaking on condition of anonymity, ruled out any efforts to change the central bank law if Lula wins the October election, which polls show him carrying by a healthy margin.     Elsewhere, the consensus among advisors to Lula and the Workers Party has lined up more clearly with the economic agenda he has previewed publicly. All agreed on loosening fiscal rules to allow an expansion of public investments, social programs and ‘green’ growth initiatives, while scrapping the major privatizations proposed by current President Jair Bolsonaro.’DEVELOPMENTALIST’ DOUBTERSStill, Brazil’s left-leaning economists seem wary of relinquishing government control of monetary policy.Pedro Rossi, a member of the Perseu Abramo Foundation (FPA) think tank created by the Workers Party and a professor at the State University of Campinas (Unicamp), a hotbed for the PT’s “developmentalist” school of state-led economic policy, said the central bank must follow the president’s lead.”Monetary and fiscal policies cannot go against each other,” argued Esther Dweck, an economics professor at the Federal University of Rio de Janeiro and former budget secretary in the most recent PT government.Luiz Gonzago Belluzzo, a Unicamp economics professor who has advised Lula for decades, argued government policy should be able to use some $360 billion in foreign reserves held by the central bank in order to more forcefully stabilize the country’s exchange rate.His criticism echoed that of former Finance Minister Guido Mantega, who engaged in what he called “currency wars” while serving under both Lula and his PT successor Dilma Rousseff, battling against what he considered an overvalued exchange rate.Mantega told Reuters the current central bank’s hands-off approach to Brazil’s currency market had led to excessive depreciation, contributing to Brazil’s double-digit inflation.The law establishing central bank autonomy last year included a mandate to stabilize economic growth and encourage full employment. But Eduardo Moreira, a founder of asset manager Brasil Plural who has advised Lula on economics, argued in an interview that the newly independent central bank had not changed its policy or communication to reflect that new mandate.Nelson Barbosa, a professor at the Getulio Vargas Foundation who served as finance minister under Rousseff, was the only economist surveyed who saw no problem with the central bank’s new formal independence, arguing it had little effect on economic policy.”I don’t think it will be a big problem with the eventual return of Lula,” he said. More

“The ongoing Russian military build-up at Ukraine’s borders is a cause for grave concern. We, the G7 Finance Ministers, underline our readiness to act swiftly and decisively to support the Ukrainian economy,” they wrote in a joint statement.”Any further military aggression by Russia against Ukraine will be met with a swift, coordinated and forceful response,” they added. “We are prepared to collectively impose economic and financial sanctions which will have massive and immediate consequences on the Russian economy.” More