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    World Bank, IDB grant Argentina $8.8 billion in financing for economic development

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    The announcement follows meetings in Washington this week between senior officials, including Economy Minister Luis Caputo, and international lenders as Argentina’s government works to reverse a prolonged economic slump.The World Bank’s financing over the next few months will cover $2 billion, which will be directed toward social spending including education as well as transportation and electricity costs, aimed at the poor, according to the statement.Funding from the lender for private sector initiatives over the next couple years will finance $3 billion for projects including mining, renewable energy, health, as well as steel and aviation.IDB funding, meanwhile, includes more than $2.4 billion for the government that should help finance additional social spending, including education and energy services, also focused on the poor, the statement noted.Assistance from the IDB will also seek to boost the private sector over the next two years, adding another $1.4 billion. More

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    Tesla surprises with sales forecast and cost efficiency, shares jump

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    (Reuters) -Tesla CEO Elon Musk said he expects vehicle sales to grow 20% to 30% next year, reassuring investors the company was improving its core business of selling electric vehicles profitably, and reducing concerns about when it could produce a robotaxi.The forecast, building on a target for “slight growth” in deliveries this year, pushed the company’s shares up 12% in post-market trading on Wednesday. This set up Tesla (NASDAQ:TSLA) to add about $80 billion in stock market value.A drop in the cost of making vehicles added comfort for investors who saw Musk focusing on boosting Tesla’s industry-leading margin, even as he talked about a future dominated by autonomous cars.   Tesla’s long-awaited unveiling of its robotaxi on Oct. 10 failed to impress investors. “No EV company is even profitable,” Musk told analysts on a conference call on Wednesday. “And to the best of my knowledge, there was no EV division of any company, of any existing auto company that is profitable. So it is notable that Tesla is profitable despite a very challenging automotive environment.” Shares of Tesla’s smaller EV rivals Rivian (NASDAQ:RIVN) and Lucid (NASDAQ:LCID) both rose 2% after-hours.Musk said Tesla would roll out driverless vehicles offering paid rides next year, after the company received regulatory approval in California and Texas.He said adoption – and sales – of the company’s supervised autopilot software, known as Full Self-Driving, increased substantially after the robotaxi event. Tesla this month again offered FSD free for a month to its current customers, for the second time this year.The company said in a statement earlier it remained focused on expanding its vehicle lineup, cutting costs and making critical investments in AI projects and production capacity, despite uncertain demand and rivals pulling back on EV investments.”Preparations remain underway for our offering of new vehicles – including more affordable models – which we will begin launching in the first half of 2025,” it said.’SWEET SPOT’Tesla’s third-quarter profit margin from vehicle sales, excluding regulatory credits, grew to 17.05% from 14.6% in the prior three-month period, according to Reuters calculations. Wall Street had expected 14.9%, according to 24 analysts polled by Visible Alpha.But Tesla’s finance boss, Vaibhav Taneja, said it would be “challenging” to sustain these margins in the fourth quarter ending December.The EV giant said that the labor and material costs of making vehicles, known as the cost of goods sold per vehicle, dropped to its lowest-ever level, about $35,100. Adjusted profit of 72 cents per share in the third quarter beat an average estimate of 58 cents.Prices of raw materials used to make EV batteries have been falling and Tesla has said its costs will decline as a result this year, with the effect diminishing over time.Taneja forecast more than $11 billion in capital expenses for next year.”The improving numbers across the board signal the company may have finally found a nice sweet spot for the pricing-versus-production-costs equation,” said Thomas Monteiro, senior analyst at Investing.com. “The report also diminishes the urgency for a cheaper model.”INCENTIVESAfter slashing prices last year, Tesla started offering lucrative financing options this spring to boost demand.It has already delivered 1.29 million vehicles in the first nine months of this year. It needs to hand over another 514,925 vehicles to beat last year’s record.”The fear going into results was that the huge incentives effort to push volumes into the tough EV market would materially dent margins – that doesn’t look the be the case,” said Matt Britzman, a senior equity analyst at Hargreaves Lansdown who also personally owns Tesla shares.Revenue for the July-September quarter was $25.18 billion, compared with estimates of $25.37 billion, according to data compiled by LSEG. It reported sales of $23.35 billion in the corresponding quarter of 2023.Tesla said it recognized its second-highest quarter of regulatory credit revenue. This metric was up 33% year-over-year to $739 million, but down from $890 million in the second quarter. More

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    Analysis-Bears circle China’s yuan gearing for Trump win

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    SINGAPORE (Reuters) – China’s currency is feeling the pressure from a possible return of Donald Trump as U.S. president, not just from speculators shorting the currency but also mainland exporters who have been hoarding dollars.The yuan has been weak since early 2023, bearing the brunt of China’s anaemic economy and low yields. The heavily managed currency has spent the past 17 months on the weaker side of the 7-per-dollar level and fallen roughly 2%.Now, even as mainland stock markets celebrate Beijing’s sweeping stimulus plans and investors rush back into the country, the prospect of Trump winning the November presidential election and his threats of bigger trade tariffs on China are heaping more pressure on the yuan. It has weakened some 1.5% on a three-week rolling basis, the sharpest such fall in over a year. “In the next 12 to 18 months, as China faces the prospect of higher trade tariffs from every direction, the easiest policy adjustment mechanism for the economy is likely to be currency depreciation,” said Rong Ren Goh, a fixed income portfolio manager at Eastspring Investments. It’s a policy choice the country has made before. During Trump’s first presidency, the yuan weakened about 5% against the dollar during the initial round of U.S. tariffs on Chinese goods in 2018, and fell another 1.5% a year later when trade tensions escalated.Market participants say the People’s Bank of China (PBOC) allowed the yuan to weaken then, ostensibly to offset the impact of tariffs through better export revenues. As part of his pitch to boost American manufacturing, Trump has this time promised voters he will impose tariffs of 60% or more on goods from China.Brad Bechtel, global head of FX at Jefferies, reckons the yuan could shed as much as 12% over several months if Trump returns to the White House and Republicans win control of Congress.Lemon Zhang, a macro and FX strategist at Barclays, sees the offshore yuan trading at around 7.10 per dollar in the fourth quarter of this year, in the middle of the 7.00-7.30 range it has been in since June. LOOKING OFFSHOREDepressed bond yields at home are also undermining the yuan.Yields on 10-year U.S. Treasury notes are double that on their Chinese counterparts, which merely return 2% a year.Domestic investors and exporters have been stashing money abroad. Some of that sits as FX deposits at commercial banks, which had risen to $849 billion at the end of September, and the rest in overseas assets including dollar bonds issued by Chinese state-owned enterprises (SOEs).Chinese buyers are piling into the Chinese SOE bonds because “if the onshore bond yield is so much lower than the offshore bond yield, it seems like a very easy decision for them,” said Yifei Ding, a portfolio manager at Invesco.Faced with the threat of more U.S. trade tariffs and the prospect of a weaker yuan, businesses are in no hurry to repatriate the cash kept abroad.”Tariffs and Trump mean higher U.S. rates and a more expensive dollar, right?” said Ms Zhu, owner of a Shanghai-based electronic components exporter, who declined to give her full name.”We do have accounts offshore, in Hong Kong. And we have kept some dollar deposits there, which I don’t think we will convert any time soon.”Authorities seem to prefer a weak yuan. Major state-owned banks were seen buying dollars to slow down the yuan’s ascent when it strengthened to an eight-month high in August, possibly to help protect export revenues.The PBOC did not immediately respond to Reuters’ request for comment.While the yuan is on track for a third straight year of losses against the dollar, it has risen 1.8% on a trade-weighted basis.”If Trump does what he says he’s going to do… he’s talking about a 60% tariff on China, that’s bad,” said Tony Sycamore, a market analyst at IG.”I suspect it’s probably the reason why Chinese authorities started to get ahead of the curve there – lowering monetary policy, talking about fiscal stimulus. Because if those tariffs do start to get implemented, it’s not going to be good for Chinese growth, and you want to have a cushion there.” More

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    UK finance minister Reeves promises economic ‘reset’ in upcoming budget

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    WASHINGTON (Reuters) – British finance minister Rachel Reeves said she would be presenting her upcoming budget as a chance to reset the country’s economy and boost investment when she meets international partners in Washington on Thursday.Reeves is on a two-day trip to the International Monetary Fund and World Bank annual meetings, less than a week before she presents the Labour Party’s first budget after 14 years out of power.Government sources said last week she would be aiming to raise around 40 billion pounds ($52 billion) through a mix of tax rises and limited savings in public spending to boost public services and fill a budget hole left by the previous administration.Britain’s Guardian newspaper reported on Wednesday that Reeves would also use the IMF meetings to tee up a change to the fiscal rules which constrain government borrowing. Asked about the report, a Treasury spokesperson said the ministry did not comment on budget speculation.”I’ll be in Washington to tell the world that our upcoming Budget will be a reset for our economy as we invest in the foundations of future growth,” Reeves said in a statement released to mark the start of her trip.”It’s from this solid base that we will be able to best represent British interests and show leadership on the major issues like the conflicts in the Middle East and Ukraine.”Earlier this week Britain said it would lend Ukraine $3 billion to buy weapons as part of a wider loan by the Group of Seven rich nations, backed by frozen Russian central bank assets.Britain’s finance ministry said Reeves would support proposals in Washington to expand development financing for poorer countries to meet the United Nations’ sustainable development goals and encourage generally richer G20 countries to be more transparent about their own debt.On Tuesday the IMF upgraded its 2024 growth forecast for Britain more than for any other G7 country, although at 1.1% for 2024 and 1.5% for 2025 its forecasts remain modest by historic standards.The global lender also said Britain, like most other G7 countries, needed to stem a rise in public debt.Reeves has been eyeing changes to Britain’s domestic budget rules to make it easier to finance public investment, potentially by using a looser definition of public debt that allows a wider range of public assets to be offset against borrowing.The Guardian said Reeves planned to target a measure known as public sector net financial liabilities – which allows illiquid financial assets to count against debt – rather than the existing target of public sector net debt, excluding the Bank of England.Britain’s Institute for Fiscal Studies think tank previously estimated that such a change would potentially allow an extra 50 billion pounds of borrowing.($1 = 0.7746 pounds) More

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    Brazil’s central bank committed to lowering inflation to target, policymakers say

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    The central bank in Latin America’s largest economy last month delivered a 25-basis-point increase to its benchmark interest rate, bringing it to 10.75%, and is expected to speed up the pace of tightening when its board meets in November.Brazil’s monetary authority has been trying to tackle a challenging inflation outlook driven by stronger-than-expected economic activity.Central bank Governor Roberto Campos Neto said that it was important to convince investors that policymakers will do “what is necessary” to reach inflation targets, echoing remarks made earlier by Paulo Picchetti, the central bank’s international affairs director.Both men indicated that the central bank would maintain its data-driven approach going forward, and noted they are worried about inflation expectations exceeding the target.”When you see the inflation de-anchoring and the risk premium where it is today, (those are) signs that worry us a lot,” Campos Neto said at an event hosted by UBS. A poll of private economists showed earlier this week that Brazil’s inflation rate is expected to close out the year at 4.5%, hitting the upper-end of the central bank’s 1.5%-4.5% target range, and decelerate to 3.99% by the end of next year.Markets are pricing in an 89% chance that the central bank will hike borrowing costs by 50 basis points next month, while the other 11% point to an even larger increase of 75 basis points.”We chose to be completely data-dependent” on the next policy steps, Picchetti told an event hosted by XP (NASDAQ:XP), “with a clear commitment to do what is necessary in terms of monetary policy to make inflation converge to the target.”Annual inflation in Brazil hit 4.42% in September. More