Economy

SAO PAOLO (Reuters) – Strong U.S. economic growth has been a “key driver” of better than expected global growth, U.S. Treasury Secretary Janet Yellen will tell a news conference on Tuesday ahead of this week’s meeting of G20 finance officials in Sao Paolo, Brazil.In excerpts of her remarks released by Treasury, Yellen said the International Monetary Fund and other forecasters had projected a broad-based slowdown in the global economy in 2023 that did not happen.Instead, growth came in at 3.1%, exceeding expectations, and inflation fell, with prices expected to continue falling this year in about 80% of economies, she said. “Going forward, we remain cognizant of the risks facing the global outlook and continue to carefully monitor the economic challenges in certain countries, but the global economy remains resilient,” she said.Yellen said U.S. economic strength had underpinned global growth, fueled by Biden administration policies supporting businesses hit hard by the COVID-19 pandemic and investments in domestic manufacturing, clean energy and infrastructure.U.S. inflation had also declined significantly from its peak and the U.S. labor market was historically strong, she said, with the prime-age labor force above its pre-pandemic level and the unemployment rate near historic lows.”Had a U.S. recession come in 2023, like many predicted, global growth would have been thrown off track. While there are risks to our outlook, America’s growth has consistently exceeded projections,” Yellen said.The IMF last month edged its global growth outlook to 3.1% in 2024, up two-tenths of a percentage point from its October forecast, and left its 2025 forecast unchanged at 3.2%. The IMF’s chief economist, Pierre-Olivier Gourinchas, said the global lender’s updated World Economic Outlook showed a “soft landing” was in sight, but overall growth and global trade remained lower than the historical average. Yellen said growth in many economies, including Brazil, the current president of the Group of 20 economies, had also contributed to global growth, although other economies still faced challenges. She did not specify which countries were facing problems.IMF spokesperson Julie Kozack last week told reporters the global lender would take new information on the Japanese and British economies, which both slipped into recession, into account as it prepared a new global forecast to be released in April. More

“With inflation running above target, labor markets tight and demand showing considerable momentum, my own view is that there is no need to preemptively adjust the stance of policy,” Schmid said in his first extensive public remarks since he began the job last August. “Instead, I believe that the best course of action is to be patient, continue to watch how the economy responds to the policy tightening that has occurred, and wait for convincing evidence that the inflation fight has been won.”Schmid’s cautious approach suggests a hawkish outlook in sync with recent Kansas City Fed presidents. But it is also one that resonates with the message of other Fed policymakers in recent weeks signaling they want to keep the policy rate in its current 5.25%-5.5% range until they have greater confidence that inflation is headed to the Fed’s 2% goal. Shipping disruptions in the Red Sea could put renewed upward pressure on goods prices, Schmid said, and hotter-than-expected consumer price inflation in January, especially for services, argues for “caution” on expectations for further disinflation.Schmid also signaled hawkishness with regards to the Fed’s balance sheet. While he said he is in “no hurry” to halt the ongoing reduction in the size of the balance sheet, Schmid said he does not favor an “overly cautious approach.” Some Fed policymakers have argued that the time may soon come to slow those reductions to give time for the Fed to assess how far it can shrink its portfolio without roiling markets. “Some interest-rate volatility should be tolerated as we continue to shrink our balance sheet,” he said. More

OTTAWA (Reuters) -Canada on Monday unveiled draft legislation to combat online hate that would force major companies to quickly remove harmful content and boost the penalty for inciting genocide to life in prison.The Liberal government of Prime Minister Justin Trudeau introduced the bill with the stated aim of protecting children from online predators.The bill says major social media companies must quickly remove content that sexually victimizes a child as well as intimate content communicated without consent. In both cases, the content would have to be removed within 24 hours, subject to an oversight and review process.A company found guilty of contravening the law could be fined a maximum of 6% of its gross global revenues, government officials said during a technical briefing. “There must be consequences for those who violate the rules online … bad actors target our most vulnerable – our children. They spread vile hate and encourage impressionable people to commit violence,” Justice Minister Arif Virani told reporters.Content providers would have to introduce special protections for children, including parental controls, safe search settings and content warning labels.The bill covers social media, user-uploaded adult content and live-streaming services but not private and encrypted messaging services.The bill would also sharply raise the penalties for those found guilty of advocating or promoting genocide. The proposed maximum sentence would be life in prison, up from the five years at present. Whether all the provisions make it through to the final version is unclear. The bill must be studied by a parliamentary committee and then the upper Senate chamber, both of which can demand changes.Other nations are moving to shield children from danger on the internet. Last October, Britain’s new Online Safety Law set tougher standards for social media platforms. Canadian government ties with major internet companies are strained over Ottawa’s demand that they pay Canadian news publishers for their content.Alphabet (NASDAQ:GOOGL)’s Google agreed last November to pay C$100 million ($74.05 million) annually to publishers while Meta decided to block news on Facebook (NASDAQ:META) and Instagram in Canada.A Meta spokesperson said the company looks forward to collaborating with lawmakers and industry peers “on our long-standing priority to keep Canadians safe.” A spokeswoman for Google said the company was unlikely to respond on Monday.($1 = 1.3505 Canadian dollars) More

LONDON/NEW YORK (Reuters) -Global hedge funds sold tech stocks at their highest pace in almost eight months in the week to Feb. 23, Goldman Sachs said, piling into bets against the sector just as Nvidia (NASDAQ:NVDA)’s latest earnings fuelled a surge in tech shares. The tech share selling by hedge funds ranked among the highest seen in the last five years, according to the Goldman Sachs note released on Friday and seen by Reuters on Monday.In a separate note, Morgan Stanley said tech was the most net sold sector last week.Stock indexes, including the tech-heavy Nasdaq, have rallied to record highs on optimism about artificial intelligence. Chipmaker Nvidia added $277 billion in stock market value on Thursday, Wall Street’s largest one-day gain in history, after the company’s quarterly report beat expectations. But in a sign that sentiment may be turning, the number of hedge funds that now have short bets that tech stock prices will fall is twice versus those with long positions, Goldman Sachs said. Hedge funds took short bets against stocks from tech companies across the sector. They exited long positions and added short punts on manufacturing and service equipment for the semiconductor industry, tech hardware, storage and IT services, the bank said. The speculators added short bets to software companies, Goldman Sachs said, while Morgan Stanley said hedge funds bet against semiconductor and tech hardware companies. However, traders remained reluctant to completely sever their positive positions in tech, a separate note from Goldman Sachs said. That pointed to a two-year high in call options on Nvidia. These are derivatives bets which only make the trader long if the stock passes a certain price threshold – a way to express a positive position in the stock but only if it rises to a certain extent. Speculators were generally short U.S. stocks, piling into the largest net selling of the region’s equity markets in five weeks, the first Goldman Sachs note said. Persistent price rises by U.S. service sector businesses have underscored the stickiness of inflation and pushed back expectations for interest rate cuts in 2024, denting hopes for a soft landing. Traders ditched tech, health care and industrial stocks and instead bought the largest amount consumer staples stocks in 10 weeks, adding companies which make products that people routinely buy, Goldman Sachs said. Morgan Stanley said hedge funds sold equities Monday through Wednesday, but changed their minds after the Thursday tech rally sparked by Nvidia and bought back all of what they previously sold, mainly in industrials, materials and financials. More

(Reuters) -Australia’s top oil and gas explorer Woodside (OTC:WOPEY) Energy posted a 37% drop in annual underlying profit on Tuesday, as lower realised prices for its products offset higher sales and production.Oil and natural gas prices softened in 2023, as slowing global growth and a weaker-than-expected economic recovery in China weighed on demand.”Compared with 2022, 2023 full-year financial statements primarily reflected lower prices across all commodities, partly offset by higher sales volumes,” Woodside Energy said in a statement.For the year ended Dec. 31, Woodside received $68.6 per barrel of oil equivalent (boe), compared with $98.4 per boe a year earlier, while annual sales volume rose 19% to 201.5 million barrels of oil equivalent (mmboe).As a result, underlying net profit after tax (NPAT) came in at $3.32 billion for 2023, down from $5.23 billion in 2022. However, that beat an LSEG estimate of $3.03 billion.Shares of the company rose 1.3% to A$30.39 by 2313 GMT, while the benchmark index was down about 0.3%.”Today’s underlying NPAT reflects an 10% ROE (return on equity), well below offshore peers of about 19%,” analysts at Citi said in a note.”With no credible new growth projects after Trion in the hopper, the company will likely have to acquire assets to generate shareholder wealth,” they said, adding that there was little reason to own Woodside shares on Tuesday.Woodside’s Sangomar oil and gas project in Senegal remains on track for first oil production in mid-2024, while the Scarborough gas project off the Pilbara coast in Western Australia continues to target first LNG cargo in 2026.Last week, the company announced the sale of a 15.1% non-operating stake in its Scarborough project to Japan’s JERA for about $1.4 billion – its second stake sale to a Japanese LNG buyer in six months.Woodside, which recently scrapped talks on a potential $52 billion merger with smaller rival Santos, announced a final dividend of 60 cents per share, lower than the 144 cents apiece declared for 2022.It maintained its fiscal 2024 production guidance of between 185 and 195 mmboe and reaffirmed its capital expenditure forecast of between $5.0 billion and $5.5 billion. More

OTTAWA/TORONTO (Reuters) – Canada’s move to keep foreigners out of its property market for two more years will do little to alleviate acute housing shortages, as non-residents were never the main driver fuelling property demand, economists and realtors say.The surprise announcement on a Sunday morning last month to extend the ban that was first imposed in 2022 has been labelled by some as a political stunt to quell opposition pressure and show that the government is taking action on the property market, they added.Housing affordability is emerging as a hot-button issue ahead of next year’s election, and Prime Minister Justin Trudeau’s main opponent, Conservative Party leader Pierre Poilievre, has blamed the Liberal government for the crisis.The federal government has responded with a series of measures to boost supplies over the past year, but those actions won’t provide immediate relief. The extension of the ban 11 months before its expiry came as Trudeau’s public support tumbled to its lowest point in years.”The politics is more important than the impact on the economics,” said Craig Alexander, president of Alexander Economic Views, an independent economic research organization.Foreign ownership of houses in Canada has dropped to a single percentage point from 2-3% two years ago, economists and realtors estimate in the absence of any official data beyond 2021. The numbers hovered in the same range even before the pandemic, data from Statistics Canada showed.While foreign buyers have been blamed for runaway housing prices in countries like Australia, the U.K. and New Zealand, no nation has taken a hard stand by banning foreign ownership like Canada.The Finance Ministry last month said that foreign ownership had fuelled worries about Canadians being priced out of the housing market and increased housing affordability concerns.Katherine Cuplinskas, a spokesperson for the finance minister, said the ministry believes Canadian homes should be places for Canadians to live in and not a speculative asset class for foreign investors.The housing challenge in Canada will not be resolved within a year, so the ministry is extending the ban by two more years to see where the market goes, she said.Economists and realtors say the solution is to increase the pace of building new houses then sustain it.Trudeau has admitted that the current crisis is largely due to the lack of houses being built amid a surge in population, and has recently hit the brakes on immigration.Since Trudeau came to power in 2015, Canada has welcomed 2.5 million new permanent residents, driving the country’s population to a record 40 million, while 1.8 million homes were built in the same period. Canada’s benchmark house price has risen by 30%, official data show.Canada’s home-building pace has been similar to that of Australia, another country favoured by immigrants, but Canada’s increase in population has been double that of Australia.To fix the housing shortage, Canada needs to build 315,000 new residences every year between now and 2030 to keep up with the rising population, according to Robert Hogue, assistant chief economist at RBC.”That’s more than a third above the pace of housing completions in the past few years,” he said, adding that an extension of the ban will be a “drop in the bucket.”Realtors also say foreigners scooped up prime and top-end residential units in the bustling localities of Toronto, Vancouver and Montreal. Hence, the extension of the ban will not increase supply for first-time home buyers, who account for close to half of all people buying houses, realtors say.To be sure, house prices in Canada have eased 1.3% in the last year and a half, but that’s largely due to the record pace of interest rate increases by the Bank of Canada. The Canadian Real Estate Association called the ban completely unnecessary. There is “no analysis, evidence or data” to prove that foreign ownership is affecting housing affordability, CEO Janice Myers said.”It’s a purely xenophobic measure aimed at politically scapegoating foreign buyers that were an immaterial share of home purchases,” Derek Holt, head of capital markets at Scotiabank, said in a note. More

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Investing billions in social housing would “save the taxpayer money” over the long term by cutting benefits payments and health costs, according to research by England’s National Housing Federation and the charity Shelter.The upfront cost of £11.8bn to the government of building 90,000 new social homes would be paid back within 11 years through savings on public services and extra tax revenue, according to the report published on Tuesday.The findings follow a report on house building by the UK competition watchdog on Monday that found an over-reliance on private development had resulted in too few homes being built while the country grapples with a national housing shortage.  “Building more social homes is a win-win solution. It will immediately boost the construction industry, supporting thousands of jobs, and will save the government and taxpayer money over the longer term,” said Kate Henderson, NHF chief executive.The government has set a target of building 300,000 homes a year in England alone, which it failed to meet last year, adding about 230,000 homes to existing UK stock.The Competition and Markets Authority said that historically the 300,000 target had only been met when councils were providing a “significant supply” of new housing. The NHF, which represents housing associations, and Shelter called on politicians to commit to building 90,000 social homes, the number they say is needed annually to resolve the housing crisis. “Our commitment to building more homes and boosting social housing supply remains, and our £11.5bn Affordable Homes Programme will deliver thousands more affordable homes to rent and buy across the country,” said the Department for Levelling Up, Housing and Communities.Shadow housing minister Matthew Pennycook said the CMA report rightly drew attention to the “limitations of speculative private development” and made clear “more fundamental interventions are required”. The Labour party has pledged “the biggest boost to affordable, social and council housing for a generation” but will face daunting financial constraints if it wins a general election expected later this year. England lost 11,700 social homes last year as sales and demolitions outpaced construction. Meanwhile, investment in new social housing is falling, with 1.3mn households stuck on waiting lists as homelessness has risen sharply. Many local councils have been forced to spend more on temporary accommodation and homelessness services, adding strain to their finances.Reducing the bill by building more social homes would save taxpayers £4.5bn over three decades, the report carried out by consultancy CEBR found. A further £4.5bn would be saved in housing benefits.  The research projects £51.2bn in overall economic benefits, including an employment boost from the extra construction, tax revenue and savings in the NHS due to people living in more healthy environments.“There’s no doubt that building more affordable housing now would likely save the public sector . . . money in the long run,” said John Tattersall, managing director at Centrus, a financial adviser to housing associations. “People who are housed in quality homes are likely to be healthier, happier and also more likely to be able to work,” he added. More