Economy

(Reuters) -A surge of interest in bitcoin exchange-traded funds is prompting some investors to swap out holdings in gold-backed ETFs, although analysts and fund managers said they are unlikely to challenge bullion longer term.Spot bitcoin ETFs could offer investors looking to hedge against inflation an alternative to gold. ETFs track an index, commodities, bonds or a basket of assets like an index fund.And January’s U.S. regulatory green light for ETFs that track the price of the world’s largest digital asset has set the ETF market – worth trillions of dollars – up for further gains.The advent of ETFs in gold in the early 2000s added a major pillar of support to the market by creating new demand, causing prices to soar in subsequent years. “We anticipate that bitcoin could substitute for gold in some investor portfolios. It may serve a similar role as a hedge against global disorder and financial system dysfunction,” said Jason Benowitz, senior portfolio manager at CI Roosevelt. Since the Jan. 10 U.S. approval, two of the biggest new spot bitcoin ETFs, iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund, had accumulated $5.45 billion and $4.13 billion in assets respectively as of Feb. 14, LSEG Lipper data shows. Meanwhile, the largest gold-backed ETF, New York’s SPDR Gold Trust (P:GLD), saw outflows of $768.9 million over the same period, while the iShares Gold Trust had outflows of $284.6 million. NEW HAVEN?The launch of the new products comes against a rally in the prices of crypto tokens. Bitcoin surged more than 150% in 2023, while gold climbed a far more modest 13%. “Overall, the crypto industry is maturing and … with more regulatory approval and a new legitimized product, it’s a growing threat to older havens like gold in some regions,” Nicky Shiels, head of metals strategy at MKS PAMP SA said in a note. Even so, some fund managers and analysts urged caution against migrating from gold ETFs, citing bitcoin’s volatility. “Gold has been valued for thousands of years, while bitcoin is in its infancy,” said Bryan Armour, an ETF analyst at Morningstar. Gold is typically seen as a safe place to park money in times political or economic uncertainty, such as a rapid rise in inflation. “Given that gold doesn’t pay dividends like many stocks, its more useful for wealth preservation than wealth generation,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.”Bitcoin speculators have vastly different aims and appear willing to gamble on rapid price rises in a search for hot returns, which are by no means guaranteed,” Streeter added. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.UK consumer confidence waned in February, according to research company GfK, suggesting that the early optimism for 2024 has abated in the face of persistently high inflation.The consumer confidence index, a leading indicator of consumer spending that measures people’s views of their personal finances and the state of the economy, fell to minus 21 in February from a two-year high of minus 19 in January. The reading followed three consecutive months of increases.Driving the change were two-point month-on-month decreases in both consumers’ assessment of their personal financial situation and their views on the general economic situation in the past 12 months. These were probably driven by inflation remaining at 4 per cent in January, analysts said. “Fears that inflation is about to return and the associated erosion of purchasing power will have had a negative influence,” said Tomasz Wieladek of T Rowe Price.Consumer confidence in the economic outlook for the next 12 months also declined in February, down by three points to minus 24, as markets start to price an increasingly hawkish scenario for the Bank of England after inflation remained flat in January. “There is a mixture of bad news and good news for February,” said Joe Staton, client strategy director for GfK. “The bad news is that the improvement in the overall index score seen over recent months stalled slightly . . . the good news is that optimism for our personal financial situation for the next 12 months has not slipped back.”Consumers’ expectations for their personal financial situations for the coming year did not change from January, holding steady at 0. January was the first time this rating had been positive since December 2021.“This metric is key to understanding the financial mood of the nation, because confident householders are more likely to spend despite the cost of living crisis,” said Staton.The fall in UK sentiment contrasts with a simultaneous larger-than-expected rise in European consumer confidence, according to data released earlier in the week.Retail sales were up in January and the UK’s business activity beat expectations in February, suggesting that the UK economy is emerging from its economic torpor. However, simultaneous rises in mortgage rates and recent evidence that the UK dipped into a recession in 2023 have left consumers wary. Despite the month-on-month slip in February, consumer confidence is 17 points higher than in February last year and 38 points higher than its recent low in September 2022.However, the consumer confidence index remains negative, meaning that most respondents are still doleful about the economy, and it is still below the average of minus 17 over the past few decades.Many analysts believe consumers still have much to be optimistic about.“There are some supporting forces for consumers, such as expectations of oncoming quantitative easing, the two [percentage] point cut to national insurance, and strong wage growth,” said Ellie Henderson of Investec. More

(Reuters) -Federal Reserve Bank of Philadelphia President Patrick Harker said on Thursday a rate cut is the next step for monetary policy and the timing of that action is getting closer, although he declined to say when the central bank will be able to lower the cost of short-term borrowing. “I believe that we may be in the position to see the rate decrease this year,” Harker said in a speech given before the 2024 Lyons Center for Economic Education and Entrepreneurship event, hosted by the University of Delaware. “But I would caution anyone from looking for it right now and right away,” he said. “We have time to get this right, as we must.” In comments after his formal remarks, Harker said a May rate cut was possible but not likely, as he’s eyeing the start of action some time in the second half of the year. Harker said he needs a couple more months to gain confidence the economy will support an easing. Whatever the Fed does will be driven by incoming data, he said, adding when it comes to a cut, “I think we’re close, give us a couple of meetings.” Harker, who does not hold a voting role on the rate-setting Federal Open Market Committee (FOMC) this year, spoke on a day in which a number of Fed officials were also weighing in on the outlook for the economy and monetary policy. On Wednesday the Fed released minutes from its January FOMC meeting that showed officials eying rate cuts, albeit cautiously. Fed Chair Jerome Powell has already taken the Fed’s March meeting out of the running for action, and markets are currently expecting an easing to come some time in the summer. Harker drove home the point that when the Fed does cut rates it must act at the right time. “I find our greatest economic risk comes from acting to lower the rate too early, lest we reignite inflation and see the work of the past two years unwind before our eyes,” he said. The bank president said that inflation is moving back to the 2% target but he still wants more evidence it is doing so durably. He noted the so-called last mile of hitting the target could be challenging.Recent higher-than-expected consumer price level inflation was a reminder that progress on lowering price pressures can be bumpy and uneven, he said. When it comes to gaining confidence inflation is on track for 2%, he said he was not looking for much more data. “I just wanted to get a couple more months” of news to be sure. Harker also said U.S. growth continues to be strong, and the robust labor markets are coming into better balance. Harker also said news of job layoffs doesn’t look to be a recessionary signal to him, adding that he views the consumer sector as strong. Harker also weighed in on the Fed’s balance sheet drawdown effort, which sees the central bank trimming its bond holdings to withdraw liquidity from the financial system. He said market liquidity levels remained strong, and echoing the meeting minutes, he expressed support for slowing the pace of the drawdown before stopping it.Harker said that was important because there is great uncertainty about the point where liquidity will grow too tight in markets. More

“I would like to have greater confidence that inflation is converging to 2% before beginning to cut the policy rate,” she said in remarks prepared for delivery to Princeton University’s School of Public and International Affairs. While it is “reasonable” to expect inflation to get to the Fed’s 2% goal over time, the path toward that goal has been and could still be “bumpy and uneven,” she said, citing recent stronger-than-expected readings on consumer price inflation. At the same time, she said, the risks to the economy are no longer weighted toward excessive inflation alone. Supply chains have recovered, and so has labor supply; consumer spending has been strong, but with wage growth slowing, there are “reasons to expect some moderation going forward,” she said. There are also a raft of uncertainties ahead, including the potential for conflict in the Red Sea to impede supply more than it has so far, as well as longer-term issues including climate change, productivity growth and deglobalization.As for monetary policy, she said, “I am now weighing the possibility of easing policy too soon and letting inflation stay persistently high versus easing policy too late and causing unnecessary harm to the economy.” Once data delivers greater confidence that disinflation is sustainable, she said, “at some point” the Fed will be able to cut rates. “We should continue to move carefully as we receive more data, maintaining the degree of policy restriction needed to sustainably restore price stability while keeping the economy on a good path,” she said.The U.S. central bank has held its policy rate steady in the 5.25%-5.5% range since last July, and minutes of its policysetting meeting last month show most central bankers were worried about moving too quickly to ease policy. Traders are betting the Fed will not start cutting interest rates until its June 11-12 meeting. More

NEW YORK (Reuters) -The U.S. government said on Thursday it approved a request from Midwestern governors allowing expanded sales of gasoline with higher blends of ethanol in their states, starting in 2025.Reuters had exclusively reported the impending announcement earlier this week.The government currently restricts sales of E15 gasoline, or gasoline with 15% ethanol, in summer months due to environmental concerns over smog, though the biofuel industry says those concerns are unfounded. The corn-based ethanol industry has been fighting for years for year-round sales of E15 but was frustrated by the 2025 start date, one year later than proposed.In 2022, the governors of Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin made the request for year-round E15 sales, saying the move could help lower pump prices by boosting fuel volumes.Some oil refiners have argued that allowing E15 in select states as opposed to nationwide could prompt localized fuel price spikes and supply issues.The delay enables President Joe Biden’s administration to put off potential price spikes stemming from the decision until after the 2024 U.S. presidential election in November. Two states the decision affects, Wisconsin and Minnesota, are battleground states in this year’s contest.Inflation and the economy are key vulnerabilities for Biden’s re-election campaign.The Environmental Protection Agency had sent a final rule on the proposal to the White House in December with an effective date of April 28, 2024. The new timeline would push the effective date to April 28, 2025.”By extending the implementation date, this final action reduces the risk of gasoline supply issues this summer and the price impacts that could have come with 2024 implementation,” an EPA official said on Thursday.The EPA did not comment on whether it would issue a temporary waiver enabling E15 sales this summer. “We cannot speculate about the 2024 summer driving season. We will continue to monitor the situation, consult closely with the Department of Energy, and be prepared to act should conditions warrant,” the agency said. After the news, the Renewable Fuels Association, a biofuels trade group, called on the administration to take action to ensure consumers have access to E15 this summer, and said it was disappointed over the new rule’s 2025 start date.The American Petroleum Institute, an oil industry group, meanwhile, said it supported a legislative solution that would allow year-round sales of E15 nationwide. More

(Reuters) -Reddit disclosed on Thursday that its net loss narrowed to $90.8 million and revenue growth was roughly 21% in 2023, as the social media company made its IPO filing public in the run-up to its highly anticipated planned U.S. stock market debut in March. The initial public offering (IPO) filing comes almost two decades after Reddit’s launch and will be a major test for the platform that still lags the commercial success of social media contemporaries such as Facebook (NASDAQ:META) and Twitter, now known as X.Reddit said it had an average of 73.1 million daily active users and 267.5 million weekly active users in the three months ended Dec. 31, 2023. The company said over 100,000 active communities used its platform, which had 1 billion cumulative posts. In the IPO filing, Reddit reported a narrower net loss of $90.8 million for the year ended Dec. 31 and logged revenue growth of $804 million, up from $666.7 million a year earlier. Reuters reported on Wednesday, citing sources, that San Francisco-based Reddit has struck a deal with Alphabet (NASDAQ:GOOGL)’s Google to make its content available to train the search engine giant’s artificial intelligence models. The contract is worth about $60 million each year, according to one of the sources.Reddit was valued at $10 billion in a funding round in 2021 and it is unclear what valuation the company will aim for during its share sale in the coming weeks. It is expected to seek a sale of nearly 10% of its shares in the IPO, Reuters reported earlier.The IPO filing showed CEO Steven Huffman holds Class B common stock that is issuable upon achieving a vesting condition – that Reddit attains $5-billion market capitalization valuation after the offering. The social media firm is reportedly expected to hit the valuation target from the get-go. GROWTH PROSPECTSWhile Reddit was launched around the same time as other social media pioneers like Meta, which operates Facebook, and Twitter, its user base is far smaller than its contemporaries. Reddit’s growth numbers also pale in comparison to larger social media peers as the company has struggled to successfully monetize its platform over the years. There have also been questions about the company’s approach to content moderation, which has been a sticking point with advertisers. It already faces stiff competition for advertising dollars from TikTok and Facebook.Reddit has, however, built a loyal base among its users. Its message boards have powered several “meme-stock” rallies in the last few years, most notably in 2021, when retail traders teamed up to spark a meteoric surge in shares of highly shorted companies like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) Holdings.Founded in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian, husband of tennis champion Serena Williams, Reddit has been backed by several marquee investors, from venture capital giant Andreessen Horowitz to China’s tech behemoth, Tencent Holdings (OTC:TCEHY). Rapper Snoop Dogg is also an investor in the company. Since being spun off from magazine conglomerate Conde Nast in 2011, Reddit became best known for its niche discussion groups and its users voting “up” or “down” for content other members posted.It has made efforts in recent years to freshen its appeal among younger users through its acquisition of TikTok competitor Dubsmash in 2020.The company, which generates its revenue primarily through advertising and also offers premium access for a monthly fee, has yet to turn a profit, Huffman said in a Reddit post last June.It had confidentially filed for the U.S. IPO in late 2021, but tough economic conditions and the poor performance of listed technology stocks compelled it to delay the offering.Morgan Stanley and Goldman Sachs have been tapped as the lead underwriters for Reddit’s IPO, which includes more than a dozen other banks. More

(Reuters) – A look at the day ahead in Asian markets.Investors in Asia could not be going into Friday’s trading in more bullish spirits as the U.S.-led surge in mega tech fuels a global stock market boom, although there will be temptation to book some profit ahead of the weekend.Japan’s Nikkei smashed its way to a new all-time high on Thursday after Nvidia (NASDAQ:NVDA)’s post-market surge following its fourth-quarter results, a path followed later in the day by Europe’s Stoxx 600, the S&P 500 and the Dow Jones Industrials.The relentless rise around the world on Thursday, propelled by Nvidia’s 16.5% surge, should set the tone for Asia on Friday.Chinese stocks, of course, are nowhere near all-time highs, but they are on a roll too. Since plumbing five-year lows a few weeks ago, they have rebounded more than 10% and are on their longest winning streak in over three and half years.A close in the green for the CSI 300 index on Friday will seal its best run in more than six years.Improving sentiment towards China is in large part down to the various steps taken by authorities in Beijing to revive economic activity and prop up markets, especially the battered housing market. These measures include a cut in the benchmark 5-year lending rate, which influences the pricing of mortgages. It is too soon to determine the success or otherwise of this week’s move, but Chinese house price figures on Friday will be closely watched. House prices have been outright declining year-on-year for the last two years. A return to growth will go a long way to reassuring investors that the worst of the property sector meltdown is over and that the economy is back on a firmer growth track.Will Japan’s extraordinary rally continue or fizzle out on Friday? The scale of the rally equally points to both – the Nikkei’s 17% surge this year shows that momentum is strong; but a 17% surge in less than two months will tempt some investors to take some chips off the table.While the mood across global markets is being set by equities, the rise in U.S. bond yields and dogged resistance of the dollar cannot be ignored in Asia and emerging markets.The 10-year Treasury yield rose to a three-month high of 4.35% on Thursday and rates markets continue to pare back U.S. rate cut expectations – the first Fed cut is now fully priced for July, and barely 80 basis points of easing is in this year’s curve.Rising U.S. yields and a ‘higher for longer’ Fed at some point are likely to bump up against the tech-fueled euphoria sweeping global equities, and when they do, Asia could be hit hard.But that probably won’t be Friday. Here are key developments that could provide more direction to markets on Friday:- China house prices (January)- Singapore, Malaysia inflation (January)- New Zealand retail sales (Q4) (By Jamie McGeever) More

Many nations insist on not taking sides in the war in Ukraine, while China, India and Brazil are filling Russia’s coffers.The Biden administration and European allies call President Vladimir V. Putin of Russia a tyrant and a war criminal. But he enjoys a standing invitation to the halls of power in Brazil.The president of Brazil says that Ukraine and Russia are both to blame for the war that began with the Russian military’s invasion. And his nation’s purchases of Russian energy and fertilizer have soared, pumping billions of dollars into the Russian economy.The views of the president, Luiz Inácio Lula da Silva, encapsulate the global bind in which the United States and Ukraine find themselves as the war enters its third year.When Russia launched its full-scale invasion of Ukraine on Feb. 24, 2022, the Biden administration activated a diplomatic offensive that was as important as its scramble to ship weapons to the Ukrainian military. Wielding economic sanctions and calling for a collective defense of international order, the United States sought to punish Russia with economic pain and political exile. The goal was to see companies and countries cut ties with Moscow.But two years later, Mr. Putin is not nearly as isolated as U.S. officials had hoped. Russia’s inherent strength, rooted in its vast supplies of oil and natural gas, has powered a financial and political resilience that threatens to outlast Western opposition. In parts of Asia, Africa and South America, his influence is as strong as ever or even growing. And his grip on power at home appears as strong as ever.The war has undoubtedly taken a toll on Russia: It has wrecked the country’s standing with much of Europe. The International Criminal Court has issued a warrant for Mr. Putin’s arrest. The United Nations has repeatedly condemned the invasion.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More