Economy

(Reuters) -Investment banking giant Morgan Stanley is planning to cut hundreds of jobs in its wealth management unit, according to a person familiar with the matter, the latest in a string of layoffs that Wall Street firms have undertaken since last year. The cuts will impact less than 1% of the division’s employees, the person said, requesting anonymity.While hopes of a soft landing for the economy have grown in recent months, companies are still looking to trim costs amid uncertainty around the trajectory of interest rate cuts by the U.S. Federal Reserve.In the last quarter, revenue from Morgan Stanley’s wealth management unit was flat compared to a year earlier, and the medium-term margin forecast for the business was below what some analysts had expected. The wealth management unit became an important moneymaker for the bank after it clinched major acquisitions, including Eaton (NYSE:ETN) Vance and E*Trade, under former CEO James Gorman. The unit has helped make Morgan Stanley less dependent on its traditional mainstays of trading and investment banking, revenues from which can be volatile.Last month, the bank’s new CEO Ted Pick reiterated the target, set by Gorman, of reaching $10 trillion in assets under management. The workforce reduction would be one of the first significant moves by Pick, who took over the helm at the beginning of this year. The bank had nearly 80,000 employees as of the end of last year, its latest quarterly report showed. Morgan Stanley’s job cut plans were first reported by the Wall Street Journal. The bank declined to comment. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Argentina’s annual inflation rate has reached a three-decade high of 254.2 per cent, even while the month-on-month pace cooled slightly, as President Javier Milei embarks on a high-risk battle to tame price pressures that are set to define the economic fortunes of his presidency.Milei, a libertarian economist, was elected in November on a pledge to end the South American country’s chronic inflation crises. He said last month that a January rate below 25 per cent would be “reason to celebrate” and a sign of the success of his strategy, which centres on slashing spending to end Argentina’s reliance on money printing.Data published by the country’s statistics agency on Wednesday confirmed that the increase from the month prior was 20.6 per cent in January, slightly lower than in December, when prices rose 25.5 per cent following Milei’s sharp devaluation of the Argentine peso and the expiry of price- control agreements dating from the previous government.Analysts said Milei’s fiscal adjustments have helped to contain inflation. But the greater brake on price rises was the onset of recession in Argentina, which the IMF expects will shrink GDP by 2.8 per cent this year.“We are still in a first phase here,” said Amilcar Collante, an economics professor at La Plata National University.He noted that the government was relying on the recession to curb prices, and on short-term strategies to cut spending, such as freezing the budget at 2023 levels.“It is not sustainable,” he added. “At some point the government will need to launch a stabilisation plan that allows us to lower inflation while also growing the economy.”People use public transportation in Buenos Aires. President Javier Milei’s planned cuts to Argentina’s transport subsidies are expected to lead to significant price pressures More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Thousands of Porsche, Bentley and Audi cars have been impounded in US ports after a supplier to parent group Volkswagen found a Chinese subcomponent in the vehicles that breached anti-forced labour laws.According to two people with knowledge of the matter, the carmaker has delayed delivery of the vehicles until as late as the end of March as it replaces an electronic component that was found to have come from “western China”.The people stressed that VW was not aware of the origin of the part, which was sourced by an indirect supplier further down its supply chain, until the supplier alerted it to the issue.They added that VW notified US authorities as soon as it was made aware of the part’s origin.US-China relations remain mired in their worst state since the countries established diplomatic ties in 1979. But Washington and Beijing have been trying to stabilise their relationship following the summit that President Joe Biden and his Chinese counterpart Xi Jinping held in San Francisco in November.The US prohibits the import of products that have been made with forced labour in the western Xinjiang region and other areas in China under the Uyghur Forced Labor Prevention Act of 2021.The people would not confirm whether the part in question was produced in Xinjiang itself.The issue affects about 1,000 Porsche sports cars and SUVs, several hundred Bentleys, and several thousand Audi vehicles, according to people briefed on the details. In a statement, VW said it “takes allegations of infringements of human rights very seriously, both within the company and in the supply chain” including “any allegations of forced labour”. It added: “As soon as we received information of allegations regarding one of our sub-suppliers, we have been investigating the matter. We will clarify the facts and then take appropriate steps. These may also include the termination of a supplier relationship if our investigations confirm serious violations.” Questions around forced labour found within its Chinese supply chain are particularly sensitive for VW, which has been facing mounting pressure from human rights groups and investors alike over a facility it jointly owns in Xinjiang’s capital, Urumqi.The German car company on Wednesday said it would discuss “the future direction of business” in the Xinjiang region with its Chinese joint venture partner SAIC, following the publication of fresh allegations of forced labour in German media.Chinese officials have defended work programmes in the region as helping employment, but the UN’s top human rights body has said China’s actions may constitute “crimes against humanity”.A Human Rights Watch report this month warned that carmakers were at risk of buying aluminium produced by victims of forced labour in the region. VW is balancing falling sales in China with a desire to increase its presence in the US at a time of growing political tension between the two countries. In mid-January, VW discovered that some of its luxury cars bound for North America contained a part that was not compliant with US customs rules, two people with knowledge of the matter said.The part had been sourced by a supplier further down the company’s supply chain and not by VW directly, according to the people. Typically carmakers deal directly with their largest suppliers and may sometimes be unaware of the provenance of smaller parts produced by other businesses further down the supply chain.A letter from VW to waiting customers blamed “a small electronic component that is a part of a larger control unit, which will be replaced”, but did not specify the origin of the part. With the approval of US customs authorities, the company ordered replacement electronic modules, and had already begun fixing cars, two people said. While some were fixed last week, the backlog is unlikely to be cleared until at least next month. Swapping the modules is relatively straightforward and does not require the disassembly of the vehicles, although some more complicated models might take several hours to fix, according to people with knowledge of the process. Additional reporting by Edward White in Shanghai More

This article is an on-site version of our Disrupted Times newsletter. Sign up here to get the newsletter sent straight to your inbox three times a weekToday’s top storiesFor up-to-the-minute news updates, visit our live blogGood evening.Thinking of a nice meal delivered from your favourite restaurant to mark Valentine’s Day this evening? Think again: today’s the day for an international strike of gig workers on traditionally their busiest night of the year.Couriers from Deliveroo and Just Eat, as well as drivers for ride-hailing companies such as Uber and Lyft are protesting across the US, Canada and the UK in a dispute over pay, just as the big gig economy companies face increased pressure from shareholders to finally deliver on their promise of consistent profits.Uber today announced its first share buyback programme, just days after reporting its first full year of operating profit. The company has reflected the broader trend in tech for profligate spending to grab market share before being forced to refocus on profitability as interest rates rose and it became harder to raise capital. Rival Lyft also reported improving finances (albeit not as dramatic as an earnings release typo had implied).Europe’s food delivery apps are also beginning to serve up profits, notes the Lex column (for Premium subscribers). Even in the middle of a cost of living crisis, they have been able to extract more from their customers without causing them to quit the apps. Demographics are also working in their favour as delivery-prone youngsters carry on with their habit as their disposable income increases.The rights of gig workers meanwhile have become a legal battleground on both sides of the Atlantic as campaigners push for greater transparency on how fares are split between drivers and apps, and policymakers grapple with how to regulate the growing sector.New York last year imposed a new minimum wage law for gig workers, while European parliament and Council negotiators last week reached a provisional deal on improving their working conditions after landmark rules were agreed by EU regulators in December following years of discussions.Gig economy companies protest that they will be hit by higher costs, such as extra payments for paternity leave and healthcare. The European Commission estimated the regulations would push up prices for services from companies such as Uber and Bolt by 40 per cent, but Nicolas Schmit, commissioner for jobs and social rights, told the FT that consumers would be happy to pay more to protect workers’ rights. In the UK, gig workers received a setback when the Supreme Court ruled in November that Deliveroo riders could not be recognised as workers in an employment relationship or represented by trade unions for collective bargaining. The Independent Workers’ Union of Great Britain (IWGB), which has the largest membership of app-based couriers in the country, had fought the case for more than seven years.Alfie Pearce-Higgins, co-founder of Rodeo, an app used by UK delivery drivers to track and analyse earnings, said today’s action highlighted the lack of transparency around pay as a “serious failing” of the gig economy model. “There are a lot of drivers who want to be flexible and independent, but that independence only really works if there is a competitive, transparent market and we think that is lacking,” Pearce-Higgins said.The Uber Game: Can you make it in the gig economy? You’re a full-time Uber driver with two kids and a mortgage. Can you earn enough to pay the bills — and make more than other players?Need to know: UK and Europe economyEurozone industrial production rose in December for the first time since February last year, despite the bloc’s major economies reporting flat or falling output. In Germany, output fell for the second consecutive month as a manufacturing slump continued but investors are starting to turn more optimistic on the country’s prospects for this year.European Central Bank vice-president Luis de Guindos said it was too early to cut interest rates. “Wage pressures remain high and we do not yet have sufficient data to confirm they are starting to ease,” he said.The EU is scaling back its post-Brexit ambitions to lure lucrative derivative trading business away from London and bolster its own financial markets.Need to know: global economyInvestors dialled down their expectations of a US interest rate cut in May after higher than expected consumer price inflation of 3.1 per cent in January.The sell off in global bond markets combined with a rally in stocks suggests a return to the longer term norm now that investors’ obsession with inflation and interest rates seems to be ending.The US Senate approved a $95bn bill that includes aid to Ukraine, but the proposal risks languishing in the House of Representatives because of Donald Trump’s opposition. Nato members, also the target of Trump’s ire, have hit record levels of spending on defence. Our latest Big Read discusses whether Germany can deliver on its grand military ambitions.Global demand for liquefied natural gas will surge 50 per cent by 2040 as the green transition solidifies, according to Shell. LNG has grown in importance since Russia slashed its pipeline gas supplies to Europe, prompting the region to secure the supercooled fuel to replace the lost volumes.Counting is under way in Indonesia in the poll to elect a successor to president Joko Widodo. Prabowo Subianto, a former general with a controversial military past who promises to retain Widodo’s policies, is the frontrunner in the three-way race to become leader of the youthful, resource-rich democracy.The FT editorial board said the Pakistan election result sent a clear message: the country is tired of being led by “self-serving political elites and the military’s arbitration”. Jailed former PM Imran Khan slammed his rivals in the country’s dynastic parties as they manoeuvred to form a ruling coalition.The Indian opposition coalition is disintegrating months before national elections, hit by infighting, defections and arrests, leaving incumbent prime minister Narendra Modai in an even stronger position to win a third term. Have rising insurance premiums become a de facto carbon levy for consumers? A Big Read looks at the spiralling cost of insuring against climate disasters. Columnist Pilita Clark discusses how to do climate policy in the age of the green backlash.Need to know: BusinessLatham & Watkins, the world’s second highest-grossing law firm, is cutting off automatic access to its international databases for its Hong Kong-based lawyers, underlining how Beijing’s closer control of the territory is forcing global firms to rethink the way they operate.Tui, Europe’s largest travel operator, reported better than expected sales in the last quarter of 2023 thanks to “more customers and higher prices,” underlining the strength of the post-pandemic travel boom.Heineken, the world’s second largest brewer, said higher prices had knocked back sales as it delivered a “disappointing” profit outlook for this year. Coca-Cola on the other hand was able to report better than expected revenues while continuing to raise prices by as much as a quarter.Should you believe the hype? Lex columnist June Yoon says the transformation for business triggered by AI may take many years longer than today’s stock prices and funding expectations suggest. Academic and EU adviser Marietje Schaake claims AI is too important to be monopolised and that public investment is essential.Sunday’s Super Bowl was the second most-watched broadcast in US history after the Apollo Moon landing in 1969, with 123mn households tuning in.The World of WorkThe Working It podcast speaks to Stanford professor and author Huggy Rao on why “sh*t-fixers” make the best managers, clearing unnecessary obstacles from the path of their teams, while making sure they don’t go too fast for their own good. Academic and peer Alison Wolf makes the case for improving the UK’s failing apprenticeships system. Apprentices are increasingly older people who are already employed and then get reclassified as apprentices, she writes, while openings for young people, especially the most deprived, have fallen fast. Some good newsThe vital marine habitats of coral reefs cover much more of our planet than previously thought, according to a breakthrough in mapping technology which will allow scientists to better understand and manage reef systems.A coral reef off the coast of Isla Mujeres in Mexico, famed for its crystal clear waters and biodiversity More

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The recovery from the pandemic lockdowns has prompted economists to consider whether their playbook is outdated or just missing a page.The pandemic created an economic crisis unlike any recession on record. So perhaps it shouldn’t be surprising that the aftermath, too, has played out in a way that almost no economists expected.When unemployment soared in the first weeks of the pandemic, many feared a repeat of the long, slow rebound from the Great Recession: years of joblessness that left many workers permanently scarred. Instead, the recovery in the labor market has been, by many measures, the strongest on record.In early 2021, some economists foresaw a surge in inflation. Others were skeptical: Similar predictions in recent years — in some cases from the same forecasters — had failed to come true. This time, however, they were right.And when the Federal Reserve began trying to tamp down inflation, there were warnings that the job market was sure to buckle, as it had threatened to do every time policymakers began raising interest rates too rapidly in the decade before the pandemic. Instead, the central bank has raised rates to their highest level in decades, and the job market is holding steady, or perhaps even gaining steam.The final chapter on the recovery has not been written. A “soft landing” is not a done deal. But it is clear that the economy, particularly the job market, has proved far more resilient than most people thought probable.Interviews with dozens of economists — some of whom got the recovery partly right, many of whom got it mostly wrong — provided insights into what they have learned from the past two years, and what they make of the job market right now. They didn’t agree on all the details, but three broad themes emerged.

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Unemployment usually rises when job openings fall. Not this time.
Notes: Job openings are shown as a share of employment. Unemployment is shown as a share of the labor force. All data is seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York Times

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The racial unemployment gap is narrowing
Note: Data is seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York Times

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Job growth has far surpassed prepandemic expectations
Notes: Change since fourth quarter 2014. Projection based on 2015 Congressional Budget Office forecast.Source: Bureau of Labor Statistics; Congressional Budget OfficeBy The New York TimesWe 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

HARARE (Reuters) – The International Monetary Fund (IMF) on Wednesday encouraged Zimbabwe to speed up currency reforms at the end of a staff visit, saying authorities should move towards a market-driven exchange rate and remove distortions currently in place.The visit discussed Zimbabwe’s request for an IMF staff-monitored programme, part of the southern African country’s efforts to re-engage with the international financial community by demonstrating a track record of sound economic policies.Zimbabwe has not been able to secure financing from the likes of the IMF for more than two decades due to arrears in servicing its debt to lenders including the World Bank, the African Development Bank and European Investment Bank.”The IMF is currently precluded from providing financial support to Zimbabwe due to its unsustainable debt situation … and official external arrears,” the IMF said in a statement. “An IMF financial arrangement would require a clear path to comprehensive restructuring of Zimbabwe’s external debt, including the clearance of arrears and a reform plan that is consistent with durably restoring macroeconomic stability.”Zimbabwe’s central bank and finance ministry have said they are working on measures to stabilise the Zimbabwean dollar, which has fallen about 40% against the U.S. dollar since the start of the year.One option being considered is linking the exchange rate to assets such as gold.The IMF said policymakers should eliminate a restriction on the 10% allowable trading margin for pricing domestic transactions and narrow the central bank’s legal mandate to core functions.Addressing a joint press conference with the IMF, Zimbabwe’s Finance Minister Mthuli Ncube said officials agreed the local currency needed to be more reflective of market conditions.The Zimbabwean dollar was relaunched in 2019 after a decade of dollarisation, but it rapidly lost value and the use of foreign currencies in domestic transactions was reauthorised soon after.Central bank Governor John Mangudya said the focus of an upcoming monetary policy statement would be stabilising the exchange rate. More

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