Aurelia Butler

WASHINGTON (Reuters) -The International Monetary Fund is likely to lower its global economic growth estimates due to the new Omicron variant of the coronavirus, the global lender’s chief said at the Reuters Next conference on Friday in another sign of the turmoil unleashed by the ever-changing pandemic.Omicron has spread rapidly to at least 40 countries since it was first reported in South Africa last week, officials say, and many governments have tightened travel rules to try to keep it out.”A new variant that may spread very rapidly can dent confidence, and in that sense, we are likely to see some downgrades of our October projections for global growth,” IMF Managing Director Kristalina Georgieva told the conference.Much remains unknown about Omicron. Researchers said it could have picked up genetic material from another virus, perhaps one that causes the common cold, which would allow it to more easily evade human immune system defences.Parts of Europe and the United States are grappling with a wave of infections of the more familiar Delta variant. The new strain could further destabilize economies that are still emerging from COVID-19 related lockdowns and disruptions.A corporate Christmas party in the Norwegian capital Oslo resulted in at least 13 infections, making it the biggest outbreak outside of South Africa, officials said.The World Health Organization’s (WHO) chief scientist Soumya Swaminathan told Reuters Next that the fast-spreading variant would have to become more transmissible to out-compete Delta, which accounts for 99% of current transmissions. “We need to be prepared and cautious, not panic, because we’re in a different situation to a year ago,” she said.WHO’s emergencies director Mike Ryan said there was no evidence that existing vaccines needed to be modified to fight Omicron. He said officials should work on getting more people inoculated with vaccines currently on the market. “We need to focus on getting people most at risk vaccinated,” Ryan said at a social media event.However, WHO spokesman Christian Lindmeier told a United Nations briefing in Geneva that vaccine makers should prepare for the likelihood of adjusting their products.Ugur Sahin, CEO of Germany’s BioNTech, which makes a COVID-19 vaccine with Pfizer (NYSE:PFE), told Reuters Next https://www.reuters.com/business/healthcare-pharmaceuticals/biontech-ceo-says-can-adapt-vaccine-quickly-omicron-2021-12-03the company should be able to adapt the shots relatively quickly.Sahin also said current vaccines should continue to provide protection against severe disease, despite mutations.”I believe in principle at a certain timepoint we will need a new vaccine against this new variant. The question is how urgent it needs to be available,” Sahin said.WORRYING GAPS IN VACCINATIONAustralia became the latest country to report community transmission of the new variant. Officials have found the new strain in 10 U.S. states, adding another challenge to a healthcare system that is already dealing with more COVID-19 illness caused by Delta.More than 264 million people have been reported to be infected by the coronavirus since it was first detected in central China in late 2019 and 5.49 million people have died, according to a Reuters tally. Cases in Europe, the pandemic’s current epicentre, crossed the 75 million mark on Friday.Vaccination rates vary from country to country but there are worrying gaps in poorer nations. Indonesia, the world’s fourth most populous country and once Asia’s COVID-19 epicentre, has fully inoculated only about 35% of its population.In the United States, fewer than 60% of the population have been fully vaccinated, one of the lowest rates among wealthy nations.Aside from wreaking havoc in the travel industry, the clampdown has pounded financial markets and undermined major economies just as they were beginning to recover from the lockdowns triggered by Delta.Germany said it would bar the unvaccinated from all but essential businesses, and legislation to make vaccination mandatory would be drafted for early next year.Several countries, including Britain and the United States, were bringing forward plans to offer booster shots, but, like travel bans, they are controversial.Many scientists say the way to stop the virus spreading is to make sure poorer countries have access to vaccines, not to give blanket booster shots to people in richer countries. More

Powell’s 16 chats with lawmakers that month included phone calls or meetings with 10 of the Senate Banking committee’s 24 members. The Fed Chair and Senator Jon Ossoff spent an hour and a half over dinner on Wednesday, Oct. 27, though the content of their conversation – or even where and what they ate – wasn’t included in the Fed’s monthly accounting of Powell’s doings. The meetings came as Elizabeth Warren, also a member of the Senate Banking panel that must approve any Fed nominee before consideration by the full Senate, called Powell a failed leader and said she would oppose his renomination. Progressives were pushing for Biden to appoint Fed Governor Lael Brainard to take over after Powell’s term ends in February, saying she would be stricter on Wall Street and would also sharpen the Fed’s response to climate change.Biden last month settled on keeping Powell as chair and elevating Brainard to vice-chair. The last time Powell met more lawmakers in a single month was in February, when he had 22 meetings, his calendars show. More

The law funds the U.S. government through Feb. 18, giving the narrowly divided Congress another 11 weeks to either hammer out a longer-term funding plan or another short-term fix.In White House remarks earlier, Biden said Congress should now work toward a bipartisan agreement on a full funding bill. More

(Reuters) – Fundraising is likely to become momentarily tougher for financial startups in Latin America as the prospect of higher interest rates has reduced investor appetite for riskier assets, chief financial officers told the Reuters Next conference.Panelists said investors will ask for more indications of profitability before pouring money into fintechs in the region. “There will be larger scrutiny around the projects, like around the prospects of what’s the real business; more insights around unit economics, around a path to profitability; around how we actually run the business,” said Mariano Carranza, chief financial officer at Mexican payments fintech Clip.Latino startups, mainly fintechs, raised $14.8 billion in new money in the first nine months of this year, a jump of 174% since last year, according to CBInsights.However, signs that investors are more cautious have emerged recently. Earlier this week, Nubank, Latin America’s biggest fintech, was forced to trim its planned valuation in an initial public offering by 20% to roughly $40 billion after facing weak demand from investors. “The outlook for the growth of these companies in the region continues to be very attractive, despite high interest rates. So I believe that many investors might end up being more selective. Some startups will have to deliver more prior to having access to such a large amount of debt,” said Helena Caldeira, chief financial officer at Inter, a Brazilian digital bank backed by SoftBank Group Corp.Still, she believes this should not be a long-term trend, as financial inclusion in the region is low.Caldeira said that the 5.5 billion reais ($971.94 million) Inter raised in a share offering and client deposits will help it navigate a potentially tougher period for capital raising. Clip also raised $250 million with SoftBank Latin America Fund and Viking Global Investors LP in July. More

(Reuters) – Federal Reserve policymakers look likely to accelerate the winddown of their bond-buying program when they meet later this month as they respond to a tightening labor market and move to open the door to earlier rate hikes than they had projected.U.S. employers added 210,000 jobs last month, a U.S. Labor Department report showed Friday, less than half of what economists had expected. But average hourly earnings over the past 12 months rose 4.8%, the unemployment rate dropped to 4.2%, and the workforce grew by the most in 13 months. Analysts said they believe the moderate job gains understate labor market strength and that they would likely be revised upward. St. Louis Fed President James Bullard took the moment to intensify his call for faster action by the Fed’s policy-setting panel, and said that rapidly strengthening economic data was making more of his colleagues comfortable with the idea of speeding up the bond-buying taper and laying the groundwork for a liftoff from zero rates. In September a slight majority of the Fed’s 18 policymakers thought a rate hike would not be warranted until at least 2023.”The danger now is that we get too much inflation… it’s time for the (Fed) to react at upcoming meetings” Bullard said, arguing that the Fed should finish its bond program by March, and reiterating his view the central bank should raise rates at least twice next year. “The inflation numbers are high enough that I think (ending the taper by March) would really help us to create the optionality to do more if we had to, if inflation doesn’t dissipate as expected in the next couple of months,” he told reporters.LIFTOFF BEFORE JUNE?The Fed has kept interest rates near zero since March 2020. In November it began reducing its $120 billion in bond purchases each month on a pace that would end them entirely by June 2022. But, with inflation running at more than twice the Fed’s 2% target and risks rising that it won’t recede next year as quickly as policymakers would like, Fed Chair Jerome Powell said this week that at the Fed’s next policy meeting on Dec. 14-15 they would consider speeding up the taper by a few months. Friday’s labor market report “doesn’t do anything to derail the Fed from a faster taper,” said Sameer Samana, senior global market strategist at Wells Fargo (NYSE:WFC) Investment Institute.Bullard has for months been on the hawkish end of the Fed’s policy spectrum, but in the last few weeks more of his colleagues have joined him in wanting at least the option of raising rates earlier than June. Fed policymakers generally agree that a liftoff from near-zero rates should only start after the Fed has stopped buying bonds. Friday’s labor report showed labor force participation rose to 61.8%, the highest since it fell off a cliff in the early days of the pandemic, and women – many of whom stayed home from jobs to fill in childcare, schooling and eldercare gaps – entered the labor force at the fastest rate since March.”We think the Fed will view the economy as near full employment,” Barclays (LON:BARC) economists wrote in a note, adding that not only do they expect the central bank to speed up its taper in December, but also to begin raising rates in March.Interest-rate futures traders are pricing in a rate increase in June, with two more by the end of 2022. Economists at Goldman Sachs (NYSE:GS) noted following the report that the survey response rate that feeds into the payrolls number was the lowest for a November in 13 years. Several months this year have seen upward revisions in later readings, owing in part to the difficulty of data collection during the pandemic. From May through September, 748,000 more jobs were created than reported in the Labor Department’s initial estimate. Bullard echoed that in comments to reporters, adding he expected upward revisions to the payrolls number.He downplayed the potential impact of the Omicron COVID-19 variant, saying the economy had adjusted to prior strains of the virus and he’d expect a similar pattern this time, Still, some analysts noted, even if the Fed wraps up its quantitative easing program within months, that doesn’t necessarily mean a string of rate hikes is a given. “We think that it is clear that QE has overstayed its welcome,” Blackrock (NYSE:BLK) chief investment officer Rick Rieder wrote in a note to investors, but added, “the next few months will be fertile with information on Omicron risks, supply and demand influences, a potentially moderately slowing demand for goods and services, having moved further from the immense fiscal and monetary stimulus, and the potential alleviation of some of the supply-chain pressures that have pressed prices higher.” More

WASHINGTON (Reuters) – U.S. employment growth slowed considerably in November amid job losses at retailers and in local government education, but the unemployment rate plunged to a 21-month low of 4.2%, suggesting the labor market was rapidly tightening.The four-tenths-of-a-percentage-point drop in the jobless rate from October reported by the Labor Department in its closely watched employment report on Friday occurred even as 594,000 people entered the labor force, the most in 13 months. Workers put in more hours, boosting aggregate wages, which should help to underpin consumer spending.”Don’t be fooled by the measly payroll jobs gain this month because the economy’s engines are actually in overdrive as shown by the plunge in joblessness,” said Christopher Rupkey, chief economist at FWDBONDS in New York.The survey of businesses showed nonfarm payrolls increased by 210,000 jobs last month, the fewest since last December. But the economy created 82,000 more jobs than initially reported in September and October, a sign of strength. That left employment 3.9 million jobs below the peak in February 2020. Nonfarm payrolls: https://graphics.reuters.com/USA-STOCKS/gdvzymwrqpw/nfpr.png Despite November’s slowdown in hiring, which also reflected a small gain in the leisure and hospitality industry, 6.1 million jobs have been added this year. Economists say the economy is very close to maximum employment, putting an early interest rate increase from the Federal Reserve on the table.Fed Chair Jerome Powell told lawmakers this week that the U.S. central bank should consider speeding up the winding down of its massive bond purchases at its Dec. 14-15 policy meeting.”The Fed will see the report as more than adequate to stay on course to accelerate tapering of asset purchases at the December meeting implying an end to purchases in March,” said Andrew Hollenhorst, chief U.S. economist at Citigroup (NYSE:C) in New York. “Moreover, an unemployment rate that is poised to fall below 4.0% perhaps in the coming months keeps a first Fed rate hike in June or even earlier firmly on the table.” Economists polled by Reuters had forecast that payrolls would advance by 550,000 jobs. Hiring continues to be hampered by worker shortages. There were 10.4 million job openings at the end of September.U.S. stocks were trading sharply lower. The dollar rose against a basket of currencies. U.S. Treasury yields fell.TIGHT LABOR SUPPLY Employment growth was held back by a decline of 20,400 jobs in the retail sector. State and local government education employment fell by 12,600 jobs. That led to a drop of 25,000 in overall government jobs, the fourth straight monthly decrease. Pandemic-related staffing fluctuations have distorted normal seasonal patterns in state and local government education. There have also been shortages of bus drivers and other support staff.The leisure and hospitality sector added only 23,000 jobs compared to 170,000 in the previous month. Professional and business services payrolls increased by 90,000 jobs. There were also solid gains in transportation and warehousing as well as in construction. Manufacturing employment increased by 31,000 jobs.November’s modest job growth did little to temper expectations that the economy was poised for stronger growth this quarter after hitting a speed bump in the third quarter.A measure of services sector activity scaled a fresh record high in November. Consumer spending and manufacturing activity have been strong. Spending should remain supported by rising wages as companies scramble for scarce workers. Average hourly earnings increased 0.3%, keeping the annual increase in wages at 4.8%. The average workweek climbed to 34.8 hours from 34.7. As a result of the longer workweek, aggregate wages rose 0.7%. But the spread of the new, highly contagious Omicron variant of COVID-19 poses a risk to the brightening picture. While little is known about the impact of Omicron, some slowdown in hiring and demand for services is likely, based on the experience with the Delta variant, which was responsible for the slowest economic growth pace in more than a year last quarter.While labor supply remains tight, there are signs that some of the millions of Americans who lost their jobs during the pandemic-induced recession are wading back into the labor force.The smaller survey of households, from which the unemployment rate is derived, showed the labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was 61.8%. That was the highest level since March 2020 and was up from 61.6% in October. The workforce remains 2.4 million below it pre-pandemic level. Labor market participation: https://graphics.reuters.com/USA-STOCKS/movanqkxxpa/participation.png “If more people are starting to look for work again, this would allow for stronger near-term hiring,” said Gus Faucher, chief economist at PNC Financial (NYSE:PNC) in Pittsburgh, Pennsylvania.The household survey also showed a rise of 1.136 million in the number of people employed. The employment-to-population ratio, viewed as a measure of an economy’s ability to create jobs, jumped to 59.2%, also the highest since March 2020, from 58.8% in October. More