Economy

1. Futures mixedU.S. stock futures hovered around both sides of the flatline on Monday, as traders geared up for a week of key corporate earnings and central bank decisions.By 05:07 ET (10:07 GMT), the Dow futures contract had shed 55 points or 0.1%, S&P 500 futures had dipped by 3 points or 0.1%, and Nasdaq 100 futures had added 19 points or 0.1%.A solid start to the new year for the main averages on Wall Street will likely face a stern exam in the coming days. Investors will be parsing through numbers from some of America’s largest businesses and digesting influential commentary from the Federal Reserve, both of which may help clarify the outlook for the broader economy (see below).The S&P 500 dipped by 0.1% on Friday, leaving the benchmark index near all-time highs, a move that reflects market hopes that inflation may be cooling without a meltdown in growth — a scenario commonly referred to as a “soft landing.” The tech-heavy Nasdaq Composite also fell by 0.4% to end the prior trading week, while the 30-stock Dow Jones Industrial Average gained 0.2%.2. Big-name earnings aheadA parade of high-profile and possibly market-moving results are due out from a string of companies this week, including many of the so-called “Magnificent Seven” stocks that have powered a recent surge in equities.On Tuesday, Microsoft will report after the bell, only days after the tech giant’s market capitalization surpassed $3 trillion. Google-parent Alphabet (NASDAQ:GOOGL), which like Microsoft has been a beneficiary of a wave of hype around artificial intelligence, will also unveil its latest numbers following the close of markets.Wednesday will feature semiconductor manufacturer Qualcomm (NASDAQ:QCOM), with investors on the lookout for the San Diego-based group’s view of the year ahead for chipmaking. Quarterly figures are also due from Boeing (NYSE:BA), the embattled planemaker who has come under fresh scrutiny following a dangerous mid-flight blowout on one of its 737 Max 9 models earlier this month, as well as Novo Nordisk (NYSE:NVO), the Danish drugmaker behind the popular weight loss medication Wegovy.More megacap tech firms are set to step into the limelight on Thursday, including iPhone-maker Apple, e-commerce behemoth Amazon and Facebook-owner Meta Platforms (NASDAQ:META).3. Fed decision in focusMarkets will also be keeping their eye on the Federal Reserve, as the world’s most influential central bank holds its latest two-day policy meeting.Fed officials are tipped to keep interest rates on hold at more than two-decade highs following the gathering on Wednesday, placing extra focus on any comments regarding the outlook for borrowing costs in the near term.In December, the Fed signaled that it could reduce rates six times this year, fueling hopes for a cut as early as March. But several policymakers have moved to temper these expectations, indicating that worries remain that a rapid loosening in financial conditions could reignite cooling inflationary pressures.A stronger-than-expected advance estimate of fourth-quarter U.S. growth last week also bolstered the case for the Fed to hold off on lowering rates any time soon. Meanwhile, economists expect January nonfarm payrolls on Friday to show ongoing resilience in the U.S. labor market — although the Fed will not be able to factor this particular piece of data into its latest projections.How the Fed sees price gains and economic activity evolving in 2024 will likely influence bets over the timing of the first cut. According to Investing.com’s Fed Rate Monitor Tool, there is an almost 50% chance the bank will roll it out in May.4. China Evergrande ordered to liquidateChina Evergrande has been ordered to be wound up by a Hong Kong court after the world’s most indebted property developer failed to secure a restructuring agreement with its creditors.The group, which has over $300 billion in total liabilities, has been attempting to secure the deal for more than two years in the wake of a bond repayment and a series of court hearings.But Justice Linda Chan on Monday appointed management consultancy Alvarez & Marsal to liquidate Evergrande, arguing that the move will provide some certainty to creditors. “It is time for the court to say enough is enough,” Chan said in the morning court session, Reuters reported.Evergrande’s Chief Executive Siu Shawn told Chinese media that the decision will not impact the operations of its onshore and offshore units. But analysts have flagged that the liquidation process could be complicated and lengthy, as well as damaging to already downbeat sentiment around the state of China’s property market.Shares in Evergrande slumped by just under 21% after the announcement.5. Crude volatile amid Middle East turmoilOil prices were choppy on Monday, as traders fretted over increased disruptions to supply in the Middle East following a drone attack on U.S. forces in Jordan over the weekend.By 05:08 ET, the U.S. crude futures contract traded 0.4% lower at $77.73 a barrel, while the Brent contract fell 0.3% to $82.68 per barrel. Both contracts had risen earlier in the day.The attack, which U.S. President Joe Biden said was carried out by Iran-backed militants, resulted in the death of three American service members. It was the first deadly strike against U.S. forces since the Israel-Hamas war erupted.Iran has denied involvement in the attack, but it does raise concerns over a more direct confrontation between the two countries, potentially resulting in regional energy supply disruptions in the oil-rich Middle East. More

(Reuters) – China Evergrande (HK:3333) on Monday acknowledged a Hong Kong court’s decision ordering the liquidation of the world’s most indebted property developer after it failed to offer a concrete restructuring plan more than two years after defaulting on a bond payment.The liquidation of China Evergrande, which currently has more than $300 billion of total liabilities, will likely send ripples through China’s dwindling financial markets as policymakers struggle to contain a deepening crisis. More

Many feared that artificial intelligence would kill jobs. But hospitals, insurance companies and others are creating roles to navigate and harness the disruptive technology.In September, the Mayo Clinic in Arizona created a first-of-its-kind job at the hospital system: chief artificial intelligence officer.Doctors at the Arizona site, which has facilities in Phoenix and Scottsdale, had experimented with A.I. for years. But after ChatGPT’s release in 2022 and an ensuing frenzy over the technology, the hospital decided it needed to work more with A.I. and find someone to coordinate the efforts.So executives appointed Dr. Bhavik Patel, a radiologist who specializes in A.I., to the new job. Dr. Patel has since piloted a new A.I. model that could help speed up the diagnosis of a rare heart disease by looking for hidden data in ultrasounds.“We’re really trying to foster some of these data and A.I. capabilities throughout every department, every division, every work group,” said Dr. Richard Gray, the chief executive of the Mayo Clinic in Arizona. The chief A.I. officer role was hatched because “it helps to have a coordinating function with the depth of expertise.”Many people have long feared that A.I. would kill jobs. But a boom in the technology has instead spurred law firms, hospitals, insurance companies, government agencies and universities to create what has become the hottest new role in corporate America and beyond: the senior executive in charge of A.I.The Equifax credit bureau, the manufacturer Ashley Furniture and law firms such as Eversheds Sutherland have appointed A.I. executives over the past year. In December, The New York Times named an editorial director of A.I. initiatives. And more than 400 federal departments and agencies looked for chief A.I. officers last year to comply with an executive order by President Biden that created safeguards for the technology.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?  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.The writer is president of Queens’ College, Cambridge, and an adviser to Allianz and GramercySeemingly everywhere you look these days across economies and markets, a tug of war is playing out. On the one hand, there is a brighter outlook that boosts hopes for sustainable prosperity, attractive investment returns and genuine financial stability. On the other is the legacy of over-indebtedness, low quality growth and policy mistakes. This must be dealt with while transitioning away from exhausted economic management approaches that fail to deliver durable and inclusive prosperity consistent with the wellbeing of our planet.Fortunately, most of the historical burden is manageable. Where it is not, more timely responses from both the public and private sectors can make it so. Let’s start with the economic prospects. Advanced countries rightly anticipate a year of lower inflation, less costly borrowings and more ample funding. This means improved affordability and increased mortgage availability for households, while companies benefit from easier access to market financing at notably low levels compared with borrowing benchmarks.The challenge for both sectors lies in handling the legacy of recent years. The full impact of central banks’ aggressive interest rate hiking cycle is yet to be felt, and household debt levels have risen to quite near worrisome levels. A looming debt “maturity wall” awaiting corporates will need to be refinanced at less favourable terms than originally contracted.Robust demand underpinned by a healthy labour market is not sufficient to ensure the management of these historical challenges. Policymakers are also constrained.Governments have limited fiscal space owing to high deficits, debt and more costly refinancing. Central banks, eager not to lengthen an already long list of 2021-23 policy mistakes, will be hesitant to aggressively reduce policy rates. Additionally, there’s a growing recognition that old-style stimulus is not just less feasible but also less desirable now that we operate in a world of insufficiently flexible supply of goods and services — a vulnerability exacerbated by geopolitical shocks. Despite some economic bright spots in Asia and among Gulf countries, the developing world lacks the capacity to act as a global growth engine that would help lift debt overhangs. This is most striking in China. There has been some progress here in pivoting to “quality growth” through a focus on technological development, green energy and a transition towards more domestic consumer-led activities. But there is enormous pressure to crank up an old debt-fuelled, public sector-led growth engine that is inefficient and creates unintended consequences.In financial markets, the excitement about new highs in the stock markets of a growing number of advanced countries must be balanced against the threat posed by the stock of overleveraged and unreasonably valued assets. The leading example is, of course, commercial real estate where the revaluation lower of projects underwritten in the heydays of floored interest rates is happening too slowly.Fortunately, it is a problem that poses only limited risk to overall financial stability. Yet the longer it takes for overleveraged investors to grasp their unfortunate reality, the longer readily-investible funds will wait lest they be contaminated by the eventual recognition of large unrealised losses, and the greater risk of contagion to adjacent asset classes.Stronger steps to overcome debt overhangs and revamp growth models would help pave the way for overcoming past mistakes and exploiting future opportunities. It is a path that can be better secured by, first, timely government actions to help enable the new drivers of growth; second, greater realism on the part of some households, corporates and investors that we are not returning to a world of artificially low interest rates; third, better safety nets to protect the most vulnerable in society; and fourth, a more rapid restructuring of non-viable debt.These challenges have been made harder by the darkening geopolitical backdrop, which fuels fragmentation, unleashes stagflationary winds and hinders international co-operation. This of course matters not just for the economic outlook. Ongoing wars have come to the boil in a shockingly destructive manner that has seen hundreds of thousands of innocent civilians lose their lives, livelihoods and homes. The economic and market tug of war will always pale in comparison with such profound suffering.  More

Food industry bodies in Europe and the UK are warning of impending supply chain disruption as Britain introduces new border bureaucracy on EU food and drink and imports for the first time since Brexit.The introduction of complex paperwork to certify all EU products of plant and animal origin entering the UK from January 31 risks fouling up the supply of a number of products, including pork and sugared liquid eggs used in cake and sauces.A shortage of vets to sign export health certificates on the continent, the failure to fully introduce a trusted trader scheme and continued lack of clarity about the application of some rules and regulations were heightening the risk of disruptions, they added.“The entire EHC [system] is based on stuff arriving on a slow boat from China. It is not designed for short shelf life and quick supply chains,” said Karin Goodburn, director-general of the Chilled Food Association, which represents some of the UK biggest chilled food manufacturers. She added that her members were “deeply concerned” about the impact of border delays on perishable products where shelf life was critical to their value.The introduction of the new border controls, with physical inspection beginning from the end of April, will see European companies facing the pain of border bureaucracy for the first time since the EU-UK post-Brexit trade deal came into force in January 2021.The British government has delayed the introduction of the checks five times since 2021, but now says the border is essential to both deliver biosecurity and level the playing field for British business in its interactions with Europe.The UK meat industry, which imports 50 per cent of its pork from Europe, said it was particularly concerned about the lack of official veterinarians in key markets such are German and Italy who are licensed to sign off consignments.The British Meat Processors Association said that British love of particular cuts of pork, including bacon, made the country reliant on the EU for more than 700,000 tonnes of pork meat every year.“That volume means we are highly dependent on imports for market balance. If there is any delay there will be shortages,” said Peter Hardwick, trade policy adviser for the BMPA.Germany, the second largest EU supplier of pork to the UK, was a particular area of risk because of the bureaucratic approach taken by its government-run veterinary service, Hardwick added.Several German state authorities contacted by the Financial Times warned of the difficulties created by the new system.“The introduction of EHCs . . . is creating serious difficulties for the companies concerned, as well as the relevant authorities,” the rural affairs ministry for the south-western state of Baden-Württemberg said in a statement.The agriculture ministry of the western state of North Rhine-Westphalia said the new border rules were “leading to challenges and more work for the relevant veterinary authorities”.The Italian agrifoods trade association Confagricoltura said the British had held seminars to try to prepare Italian exporters to cope with the new system, but warned a lack of capacity would mean the transition could be rocky.“The official vets are already busy and we have so many controls, and this is something that doesn’t help,” said Cristina Tinelli, Confagricoltura’s director of EU relations and international affairs. “In the end, we will be able to do everything to comply but it won’t be easy.” Hardwick added that BMPA members had raised concerns that Ireland, a key UK supplier of beef, would not be able to supply vets for industry at weekends, with some members warning they might have to close factories two days a week if the issue was not addressed.The Chilled Food Association has warned that UK health certificates do not always match industry requirements meaning that products such as liquid eggs mixed with sugar — a key ingredient for food businesses — will no longer be allowed to enter the UK. In 2022 the UK imported more than 40,000 tonnes of liquid eggs from the EU, according to the CFA, which has warned in a letter to Stephen Barclay, the environment, food and rural affairs secretary, that food businesses will face shortages if the certificates are not amended.“British food businesses producing, for example desserts, mayonnaise, sauces, baked goods, will have insufficient supply to continue to produce these and other foods using them,” the CFA wrote.Both EU and UK industries bodies have also warned that the new border paperwork and inspections will drive up costs for consumers. The government said last October that it estimated the paperwork would cost businesses £330mn a year and add 0.2 per cent to inflation over three years. The government has still not announced the final cost to business for each border inspection, but said it could be up to £43 per individual consignment of a good, with a single lorry potentially containing multiple consignments.The Italian agribusiness association, Coldiretti, said it was concerned about the prospect of a “flat charge” for all incoming products, “regardless of whether they are inspected or not”.The CFA has estimated that since 2021 the food industry has spent a total of £170mn on more than 850,000 EU export health certificate charges, a sum that does not include the additional costs to business for management and oversight.Arne Mielken, a customs expert and managing director of trade facilitation business Customs Manager, said European companies sending goods to the UK would try to pass on the cost of the new border requirements on to their British customers, who would in turn pass on that cost to the consumer.  “Your prices are going to go up,” he said. “If you’ve been to Switzerland and wondered why everything is so expensive, welcome to what we have created here.”Industry has also complained about the weak Whitehall management of the new border controls, with poor communications and last minute changes to rules and regulations and the failure to get trusted trader schemes fully operational.The flower and horticulture industry in both the UK and the EU has already warned that the introduction of physical border inspections in April is an “accident waiting to happen” because of a lack of capacity at border posts.Adding to the confusion, the UK food department last week unexpectedly reclassified a range of fruit and vegetables from low to medium risk, meaning that produce such as apples, carrots and avocados will be subject to physical checks at the border alongside animal products. However, officials have not said when the checks will begin.Marco Forgione, director-general of the Institute of Export & International Trade, said that the lack of communication from the government around the reclassification was “not very encouraging”.“Business leaders have revealed to me their frustration that their preparation efforts are undermined because of a lack of clear communication,” he said. The Cabinet Office, which is responsible for implementing the new border, said it had consulted extensively with industry and was phasing in the extra controls progressively to give business time to adapt.“The changes we’re bringing in will help keep the UK safe, while protecting our food supply chains and our agricultural sector from disease outbreaks that would cause significant economic harm,” the department added.This article has been amended to reflect that the food industry has spent an estimated £170mn on EU export health certificate charges since 2021 More

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SINGAPORE (Reuters) – Singapore’s central bank on Monday kept its monetary policy settings unchanged, as expected, in its first review of the year as inflation pressures continued to moderate and growth prospects improved.The Monetary Authority of Singapore (MAS) said it will maintain the prevailing rate of appreciation of its exchange rate-based policy band known as the Nominal Effective Exchange Rate, or S$NEER.The width and the level at which the band is centred did not change.”Barring any further global shocks, the Singapore economy is expected to strengthen in 2024, with growth becoming more broad-based. MAS core inflation is likely to remain elevated in the earlier part of the year, but should decline gradually and step down by Q4, before falling further next year,” MAS said in a statement.Maybank economist Chua Hak Bin said the central bank is maintaining the current tightening bias as both core and headline inflation gauges are above 3% and historical comfort zones.Core inflation in December was 3.3% year-on-year, slowing from its peak of 5.5% early last year. MAS said core inflation is projected to ease to an average of 2.5–3.5% for 2024 after rising in the current quarter because of a 1 percentage point sales tax hike from January that MAS said will have a “transitory impact”.Gross domestic product (GDP) was up 2.8% on a yearly basis in the fourth quarter of last year, according to advance estimates published by the trade ministry in early January.GDP for the full year of 2023 was 1.2%, and the trade ministry projects GDP to grow by 1-3% in 2024.”Prospects for the Singapore economy should continue to improve in 2024,” said the MAS, although both upside and downside risks to the inflation outlook remain.OCBC economist Selena Ling said that suggests the MAS is on an extended policy pause for now.”April monetary policy is likely another hold and the earliest window for an easing could only come later in the year when core inflation eases more convincingly,” she said.The MAS policy decision on Monday was the first under its new review schedule, in which the central bank will make policy announcements every quarter instead of semi-annually.The central bank left monetary policy unchanged in April and October last year, reflecting growth concerns, having tightened policy at five consecutive reviews prior to that.As a heavily trade-reliant economy, Singapore uses a unique method of managing monetary policy, tweaking the exchange rate of its dollar against a basket of currencies instead of domestic interest rates like most other countries. More