Economy

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 storiesThe International Court of Justice in an interim ruling ordered Israel to limit harm to Palestinians in Gaza in a politically explosive case brought by South Africa that alleges the country is committing genocide. The court stopped short however of granting South Africa’s request that Israel should “immediately suspend” its military operations. The case is seen as a test for international justice. The FT revealed that Elon Musk’s xAI start-up was in talks to raise up to $6bn, as the Tesla and X chief looks to global investors to finance his challenge to Microsoft-backed OpenAI. The International Energy Agency warned of gas price volatility as conflict in the Middle East and Ukraine created an “unusually wide range of uncertainty” in its forecasts. The US, the world’s biggest exporter of liquefied natural gas, paused approvals for new LNG export terminals under pressure from climate campaigners.For up-to-the-minute news updates, visit our live blogGood evening.News today that the Federal Reserve’s preferred measure of US inflation fell below 3 per cent for the first time since 2021 caps a week of encouraging news for the US economy, raises the prospects of interest rate cuts and delivers a boost to President Joe Biden in his quest for re-election.The core personal consumption expenditure index rose an annual 2.9 per cent in December, down from 3.2 per cent the previous month. The headline measure, including more volatile food and energy prices, held steady at 2.6 per cent. The core reading provides some reassurance that inflation is waning after disappointing readings from the more widely followed consumer price index.Today’s data follows yesterday’s much stronger-than-expected growth figures for the final quarter of 3.3 per cent, capping off a “standout” performance for the year with growth of 3.1 per cent, confirming the US was the world’s fastest growing advanced economy in 2023. Treasury secretary Janet Yellen said the strong GDP data did not raise “inflationary concerns” after some people expressed fears that demand would remain too strong to bring inflation back to the Fed’s target of 2 per cent without further rate rises.As economics commentator Chris Giles notes, the Fed, ahead of its policy meeting next Wednesday, is probably in the best position among its central bank peers to cut interest rates because inflation is moderating without an economic downturn.Business indicators also look benign for President Biden.January’s PMI survey results for manufacturing and services, published on Monday, were better than expected as business benefited from improved operating conditions and cooling inflation. US consumer confidence also appears to be healthy after hitting a five-month high in December, a factor confirmed by this week’s earnings update from Procter & Gamble. The household products bellwether reported unexpectedly strong growth in demand even after pushing through further price increases. Government and Fed officials had been worried that companies were getting used to passing on large price rises to their customers, undermining their efforts to tame inflation.Biden still has many obstacles to overcome in his bid for re-election, not least a “polycrisis” of political problems from the Middle East to Ukraine — as well as a resurgent Donald Trump, who now looks nailed on to be his opponent in November.  Biden has also struggled to convince Americans that the economy is back on track, despite indicators showing progress. He will though be encouraged by a new poll from Pew Research that shows — finally — that US voters are becoming more optimistic.Need to know: UK and Europe economyUK chancellor Jeremy Hunt’s hopes of offering big pre-election tax cuts have hit a snag: internal Treasury forecasts suggest he will have only limited scope for giveaways. Opposition leader Sir Keir Starmer accused the Conservatives of “trying to salt the ground” by leaving the next government with painful spending cuts and grim public finances. There was better news for Hunt in data showing UK consumer confidence hitting a two-year high in January.Our new series on the infrastructure challenges facing the UK begins with a look at second-city Birmingham as an example of how chronic under-investment outside London and the south-east has contributed to regional inequality and poor productivity.The European Central Bank held interest rates steady at 4 per cent, signalling that inflation was falling as expected. Central banks in Japan, Canada and Norway also left policy unchanged this week, with similar outcomes expected from the Fed and the Bank of England next week.As we reported in Wednesday’s DT, the costs of nuclear power pose a huge headache for governments. Paris is now pressing the UK to help plug a multibillion-pound hole in the budget of projects being built in Britain by France’s electricity operator EDF. Need to know: global economyChina said that Ian Stones, a British consultant who disappeared five years ago, was convicted in 2022 of “illegally providing intelligence” to overseas parties and sentenced to a five-year prison term. “Opportunistic” Chinese shipping lines have been redeploying their vessels to serve the Red Sea and the Suez Canal as they try to exploit China’s perceived immunity from the Houthi attacks that have driven operators out of the area. Arati Prabhakar, the White House science chief, said the US would work with China on the safety of artificial intelligence systems despite trade tensions. Agreement is sorely needed: the FT Magazine lays out how AI-aided disinformation could lead to disaster as fakes and forgeries swamp the world.A political furore has broken out in South Korea over a $2,000 Dior handbag gifted to its first lady. Kim Keon Hee, wife of President Yoon Suk Yeol, received the bag from a Korean-American pastor, triggering an investigation into whether the presidential couple had been violating anti-bribery laws.Need to know: businessShares in LVMH surged after the world’s biggest luxury goods group reported better than expected quarterly sales, boosting hopes that the sector can avoid a slowdown in 2024. The decision on who succeeds ruling clan chief Bernard Arnault is still in the balance. The US aviation regulator blocked Boeing expanding production of its most popular plane after a door panel blew out of a 737 Max 9 in mid-flight earlier this month. Boeing chief Dave Calhoun’s leadership is under increasing pressure. Airline profits are likely to be dented by the Max 9 groundings.The UK car industry gave an upbeat assessment of its future after securing £24bn of new investment last year, more than the combined total for the past seven years. After years of curtailed spending owing to Brexit uncertainty and political instability, Nissan, Jaguar Land Rover, Tata and BMW all made big announcements.For electric-car maker Tesla the message was quite different. The company’s shares plunged after warning that sales growth would be “notably lower” this year because of flagging demand, intensifying competition and high interest rates.Slowing demand in China for electric vehicles meanwhile has led to a steep drop in lithium prices, a key battery component. They are now at their lowest level since 2020.Bollywood is banking on another star-studded blockbuster to extend its box office revival that has lifted revenues to all-time highs and pulled the giant entertainment industry out of a historic slump after a series of pandemic-era flops. The streaming wars are over and Netflix won. That’s the view of the Lex column (for Premium subscribers only), which says streaming remains an expensive business with low revenue per subscriber.Science round upThe major drought that hit the Amazon rainforest last year was mainly due to climate change rather than naturally occurring weather patterns, according to a new study.“Regenerative agriculture” — improving soil quality by better stewardship and planting more diverse temporary pasture — is being touted as an effective way of cutting greenhouse gas emissions. A Big Read assesses whether the claims stack up.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.New research shows carbon credits from cookstove emissions, used by companies including Shell and British Airways to justify their own pollution, are largely worthless.A commercially available blood test has boosted hopes of early diagnosis of Alzheimer’s. The disease, a type of dementia, is currently diagnosed through invasive and expensive tests such as a lumbar puncture to release spinal fluid or through a tomographic scan. The first malaria vaccination campaign for children backed by the World Health Organization began this week in Africa. Nearly 30mn jabs will be administered in up to 12 countries in the coming months, beginning with a medicine developed by UK pharma company GSK.The UK is hoping to secure a major new vaccines investment by AstraZeneca with a possible state aid package worth tens of millions of pounds, in a potentially huge boost to the country’s life sciences sector. The chair of the G7-backed group urged governments and business to invest as much on preparing for other potential pandemics as they have on Covid-19 research to avoid costly lockdowns. Nine other high-risk pathogens have been identified as threats by the World Health Organization.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Some good newsUS researchers have high hopes that a new drug, originally developed as a potential cancer treatment, could shrink kidney cysts. Polycystic kidney disease affects more than 12mn people around the world, with many patients needing dialysis or a kidney transplant by the time they reach their 60s.Recommended newslettersWorking it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up hereThe Climate Graphic: Explained — Understanding the most important climate data of the week. Sign up hereThanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here to receive future issues. And please share your feedback with us at [email protected]. Thank you More

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(Reuters) -Lonza said on Friday Chairman Albert Baehny will step down in May after six years in the job, in a second senior management reshuffle in recent months as the Swiss contract drug manufacturer grapples with the loss of COVID-related business.The company also reported better-than-expected sales and margins last year and confirmed its 2024 and mid-term margin targets.Its stock, which lost 23% last year hurt by guidance cuts and concerns over medium-term targets, was up 13%, topping the pan-European STOXX 600 and heading for its best day ever. Analysts cited relief over outlook confirmation and replacement of a chairman who had overseen guidance cuts and the departure of CEOs.Lonza said it had proposed Jean-Marc Huet, current chairman of the supervisory board of Dutch brewer Heineken (AS:HEIN), as a new chairman.Baehny, who has also served as interim CEO since Pierre-Alain Ruffieux quit in September, will continue in that role until a new CEO commences tenure, Lonza said.Baehny told reporters Lonza wanted to appoint a new CEO by the end of the first quarter or beginning of the second quarter.The Basel-based company confirmed its core earnings margin target of “high 20s” for this year, roughly in line with expectations, and its mid-term guidance that includes a 32–34% margin target for core earnings before interest, taxes, depreciation and amortisation (EBITDA).Sales at constant exchange rates jumped 10.9% last year to 6.7 billion Swiss francs ($7.72 billion), driven by its Biologics and Small Molecules divisions, and beating the 8.2% growth expected by analysts.This year, however, Lonza sees flat sales due to lost revenue from vaccine maker Moderna (NASDAQ:MRNA), which canceled an mRNA COVID-19 vaccine manufacturing contract on lack of demand.Lonza’s business was also weighed down last year by drug developers pursuing fewer early-stage ventures.Baehny said the company saw “signs of improvement”, but not yet a clear rebound, which would probably come in 2025.Analysts have said that higher interest rates are dampening investor appetite for risky biotech drug ventures, compounding a decline in coronavirus-related activities.Lonza’s EBITDA margin came in at 29.8% last year, just above the 29.2% expected by analysts in a Vara Research consensus.Among other companies providing gear and services for drug production, Sartorius on Friday issued a stronger-than-expected sales growth, boosting its shares by 7.55%.($1 = 0.8674 Swiss francs) More

Here are some of the job cuts announced by tech and media companies in January. Amazon (NASDAQ:AMZN) Jan. 18 – The Buy with Prime unit laying off less than 5% of its employees.Jan. 11 – Audiobook and podcast division Audible laying off 5% of its workforce, according to a memo from the head of the division. Jan. 10 – Amazon set to lay off several hundred employees in its streaming and studio operations, extending job cuts into 2024. Jan. 9 – Streaming unit Twitch to cut 35% of its staff, or about 500 workers, as reported by Bloomberg News. Alphabet (NASDAQ:GOOGL) Jan. 22 – X Lab, Alphabet’s division for developing new technology, laying off dozens of workers and turning to outside investors for funding.Jan. 16 – Google, part of Alphabet, laying off hundreds of employees in its advertising sales team. Jan. 11 – Google laying off hundreds of people across teams, including the hardware team responsible for Pixel, Nest and Fitbit (NYSE:FIT), and the majority of those in the augmented reality team. Salesforce (NYSE:CRM) Jan. 26 – Salesforce laying off about 700 employees, roughly 1% of its global workforce, according to the Wall Street Journal.Microsoft (NASDAQ:MSFT) Jan. 25 – Microsoft set to lay off 1,900 employees at Activision Blizzard (NASDAQ:ATVI) and Xbox.Paramount Global Jan. 25 – Paramount Global plans an unspecified number of layoffs, aims to become a leaner organization.Business InsiderJan. 25 – Business Insider plans to lay off around 8% of its staff, according to CEO Barbara Peng. IBM (NYSE:IBM) Jan. 24 – IBM plans to lay off some employees in 2024, but will hire more for AI-centered roles, likely ending the year with its headcount unchanged.Aurora Innovation Jan. 24 – Autonomous vehicle technology company Aurora Innovation said it had cut 3% of its workforce as part of a reorganization exercise.eBay (NASDAQ:EBAY) Jan. 23 – eBay plans to cut about 1,000 roles, or around 9% of its current workforce.Los Angeles TimesJan. 23 – The Los Angeles Times plans to lay off 94 journalists who are members of the newspaper’s union.Walt Disney (NYSE:DIS) Jan. 11 – Pixar Animation Studios, part of Walt Disney, set to cut jobs after completing production on some shows and having more staff than needed.Unity Software Jan. 8 – Videogame software provider Unity Software plans to lay off approximately 25% of its workforce, to cut around 1,800 jobs. More

(Reuters) -European shares rose over 1% on Friday, boosted by upbeat quarterly updates from luxury group LVMH and spirits maker Remy Cointreau, while investors assessed interest rate cut prospects following the European Central Bank’s latest policy decision. The pan-European STOXX 600 index ended 1.1% higher, hitting its highest level in two years and clocking a weekly advance of 3.1%.LVMH jumped 12.8% after the world’s largest luxury group posted a 10% rise in fourth-quarter sales, driven by resilient demand, including from Chinese buyers. The stock led sectoral advances, helping the personal and household goods index add 5.2%.A gauge of the top 10 European luxury stocks gained 6.7%, while investors added some $70 billion to the market value of top luxury shares on Friday.”The shares are up in relief because there’s been so much negative commentary … referring to a bit of a slowdown,” said Russ Mould, investment director at AJ Bell.”One of the core (components) of luxury goods stocks is the plutocratic customer base, that will be relatively insensitive to what goes on in the wider economy.” Remy Cointreau advanced 15.2% after the French spirits maker posted a slightly smaller-than-expected decline in third-quarter sales. Rivals Pernod Ricard (EPA:PERP) and Diageo (LON:DGE) also added 7.9% and 5.1%, respectively.France’s CAC 40 index, which houses both stocks, rallied 2.3% and outperformed other regional bourses.Heavyweight healthcare stocks added 1.3%, lifted by a 14.4% rise in Lonza after the Swiss contract drug manufacturer reported sales and core earnings beats for 2023. The ECB held interest rates at 4% on Thursday and reaffirmed its commitment to fighting inflation even as the time to start easing borrowing costs approaches.A slew of strong earnings from European companies this week and a slight dovish tilt in the ECB’s commentary helped the benchmark index notch its best weekly performance in 12 weeks.Taking cues from the central bank’s stress on progress in tackling inflation, money market traders are now pricing in nearly 141 basis points of rate cuts this year, up from around 130 bps a day earlier. [0#ECBWATCH]On Friday’s data front, German consumer sentiment is set to tumble in February as households continue to brace for uncertainty, while Spain’s unemployment rate unexpectedly dipped in the fourth quarter to end the year at its lowest since 2007.In the United States, data showed prices rose marginally in December, keeping the annual increase in inflation below 3% for a third straight month. More

The core personal consumption expenditures price index for December, an important gauge for the Federal Reserve, increased 0.2% on the month and was up 2.9% on a yearly basis.
Including volatile food and energy costs, headline inflation also rose 0.2% for the month and held steady at 2.6% annually.
Consumer spending increased 0.7%, stronger than the 0.5% estimate. Personal income growth edged lower to 0.3%, in line with the forecast.

An important inflation gauge released Friday showed that the rate of price increases cooled as 2023 came to a close.
The Commerce Department’s personal consumption expenditures price index for December, an important gauge for the Federal Reserve, increased 0.2% on the month and was up 2.9% on a yearly basis, excluding food and energy. Economists surveyed by Dow Jones had been looking for respective increases of 0.2% and 3%.

On a monthly basis, core inflation increased from 0.1% in November. However, the annual rate declined from 3.2%. The 12-month rate is the lowest since March 2021.
Including volatile food and energy costs, headline inflation also rose 0.2% for the month and held steady at 2.6% annually.
The release adds to evidence that inflation, while still elevated, is continuing to make progress lower, possibly giving the Fed a green light to start cutting interest rates later this year. The central bank targets 2% as a healthy annual inflation rate.
Markets took little notice of the data, with stock futures indicating only a slight change at the open and Treasury yields mostly lower.
“Inflation dynamics inside the metric that the Fed uses to formulate policy strongly imply that the central bank will hit its inflation target in the near term,” said Joseph Brusuelas, chief economist at RSM. “This will create the conditions in which it makes [its] policy pivot and begins a multiyear campaign in which it reduces the policy rate towards a range between 2.5% and 3%.”

The Fed’s benchmark overnight interest rate is currently targeted between 5.25%-5.5%.
As inflation drifted closer to the Fed’s target, consumer spending increased 0.7%, stronger than the 0.5% estimate. Personal income growth edged lower to 0.3%, in line with the forecast.
The data indicated that consumers are dipping into savings to pay for their expenditures. The personal savings rate fell to 3.7% for the month, down from 4.1% in November.
Within the inflation numbers, prices for goods declined by 0.2% while services prices rose by 0.3%, reversing a trend when inflation began to spike. As the pandemic forced people to stay home more, demand for goods spiked, adding to supply chain problems and exacerbating price increases.
Food prices increased 0.1% on the month while energy goods and services rose 0.3%. Prices for longer-lasting durable goods such as appliances, computers and vehicles decreased 0.4%.
Looked at in conjunction with a separate report Thursday showing that gross domestic product grew at a much faster-than-expected 3.3% pace in the fourth quarter, the most recent round of data shows an expanding economy and inflation at least moving back to the Fed’s 2% annual target.
“It is hard to say which is more remarkable: that GDP growth accelerated last year following the Fed’s most aggressive tightening campaign in decades, or that core inflation nevertheless fell back to the 2% target in annualized terms over the second half of the year,” wrote Andrew Hunter, deputy chief U.S. economist at Capital Economics.
“Either way, it is time for Fed officials to take the win and start dialing back the level of policy restrictiveness soon,” he added.
While the public more closely follows the Labor Department’s consumer price index, Fed policymakers prefer the PCE because it adjusts for shifts in what consumers actually buy, while the CPI measures prices in the marketplace.
Inflation has been a nettlesome problem since the early days of the Covid pandemic, when price increases surged to their highest levels since the early 1980s. The Fed initially expected the acceleration to be temporary, then responded with a series of interest rate hikes that took its benchmark rate to its highest in more than 22 years.
Now, with the inflation rate cooling markets largely expect the Fed to start unwinding its policy tightening. As of Friday morning, futures traders were assigning about a 53% chance the Fed will enact its first rate cut this cycle in March, according to CME Group data. Pricing points to six quarter-percentage point decreases this year.
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(Reuters) – U.S. stock index futures slipped on Friday as chip stocks sagged on a dour revenue forecast from Intel (NASDAQ:INTC), while a crucial inflation print that could influence the Federal Reserve’s monetary policy outlook topped investors’ watch list.Intel lost 10.3% in premarket trading after forecasting that its first-quarter revenue could miss estimates by over $2 billion, driving losses between 0.8% and 1.6% in other chip stocks including Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD), Qualcomm (NASDAQ:QCOM) and Micron Technology (NASDAQ:MU).This, along with Tesla (NASDAQ:TSLA)’s growth warning on Wednesday, likely deepened worries over rich valuations of heavily weighted megacap companies. Five of the “Magnificent Seven” – Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon.com (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL) and Meta Platforms (NASDAQ:META) – are due to report their results next week.Chipmaking tools maker KLA Corp also shed 4.6% following its third-quarter revenue forecast below estimates.A recent run in chip and technology stocks helped resurrect a Wall Street rally, which had lost steam at the year’s start after bumper gains in 2023, as investors grappled with growing uncertainty over when interest-rate cuts could arrive this year.All eyes are now on the core personal consumption expenditures (PCE) price index – the Federal Reserve’s preferred measure of inflation – that is expected to rise by 0.2% month-on-month and by 3% on an annual basis in December. The data is due at 8:30 a.m. ET. “The bigger picture is that evidence of a durable return in inflation to the Fed’s target is mounting,” Pantheon Macroeconomics analysts said in a note, expecting the inflation data to trigger a 150-basis-point in rate cuts this year.Traders now see a 90% likelihood of the Fed delivering its first rate cut this year in May, as per the CME Group’s (NASDAQ:CME) FedWatch Tool, from earlier expectations in March.The S&P 500 closed at an all-time high for a fifth straight session on Thursday after data reflecting strong fourth-quarter U.S. economic growth shrugged off dire predictions of a recession in the aftermath of the Fed’s rapid rate hikes.All the three major indexes are set for their third straight week of gains, marking their 12th weekly advance out of 13.At 7:10 a.m. ET, Dow e-minis were down 19 points, or 0.05%, S&P 500 e-minis were down 4.75 points, or 0.1%, and Nasdaq 100 e-minis were down 72.5 points, or 0.41%.Dow component American Express (NYSE:AXP) added 2.6% as the credit card firm forecast a higher-than-expected annual profit, while peer Visa (NYSE:V) declined 3.0% after the world’s largest payments processor’s tepid current-quarter revenue growth forecast eclipsed an earnings beat.T-Mobile dropped 2.7% as the wireless carrier missed fourth-quarter profit expectations.Data-storage products maker Western Digital (NASDAQ:WDC) fell 4.2% following its quarterly results, while Sweden-based Autoliv (NYSE:ALV) gained 3.2% after reporting fourth-quarter operating profit above expectations. Of the S&P 500 companies that have reported earnings so far, 82% have surpassed expectations, LSEG data showed on Thursday, compared with a long-term average beat rate of 67%.Tesla rebounded 0.4% in early trade after the electric-vehicle-maker’s market value dropped below Eli Lilly (NYSE:LLY) and was just above Broadcom (NASDAQ:AVGO) on Thursday.Crypto stocks like Coinbase (NASDAQ:COIN) , Bit Digital and Riot Platforms (NASDAQ:RIOT) rose between 4.4% and 5.9% as bitcoin prices gained above 3.5%. More

SAO PAULO/BUENOS AIRES (Reuters) – Brazil’s central bank will cut its key rate by 50 basis points next week for the fifth time in a row, a Reuters poll showed, but may also give slightly more restrictive guidance, with an eye on some worrying inflation and fiscal trends.The bank’s rate-setting committee, known as Copom, has already reduced the cost of credit by a cumulative 200 basis points to 11.75% since August from a six-year high of 13.75%, as inflation fell back to single digits, ending 2023 at 4.6%.However, the outlook for further cuts this year is becoming less clear with inflation expectations remaining above the center of the official target amid a political tug of war over fiscal adjustment plans.Copom is set to lower the Selic rate by another half-percentage point at its Jan. 31 meeting to 11.25%, said all 44 economists surveyed over Jan. 21-25. It would be the first of two 50 basis point cuts policymakers have all but guaranteed for 2024.Citibank analysts expect 50 basis point cuts at each meeting throughout the first half of this year, starting on Jan. 31, with a final 25 basis point cut in June to 10.0%.They wrote in a note that “the tight labor market, the stickier inflation, worse fiscal fundaments, and the less friendly international environment point to a higher-than-pre-pandemic rate at the end of the cycle.”The Selic rate stood at 6.50% for a long period before the central bank began an easing cycle in 2019.Of particular concern to policymakers is persisting forecasts of a potential rise in consumer prices across the foreseeable horizon above 3.0%, the center of the central bank’s target, which has a margin of plus or minus 1.5 percentage points.Brazil will likely see an average inflation rate of 3.8% this year, dropping only slightly to 3.6% in 2025 and 3.5% in 2026, according to a separate Reuters poll compiled earlier this month.Laiz Carvalho, Brazil economist for BNP Paribas (OTC:BNPQY), said the central bank’s statement on next week’s decision should mention “the importance of staying patient…and also inflation expectations that are still above target.”This in turn stems from a worsening fiscal picture, acknowledged more recently in a report by a federal audit body that forecast a primary budget shortfall in 2024, contradicting the government’s “zero deficit” promise.Another factor on the bank’s radar is the prospect of less easing in the United States this year than markets now expect, as the U.S. Federal Reserve will probably wait until the second quarter before cutting rates.”The movement towards global rate easing could be affected if external conditions worsen, and, consequently, domestic monetary policy could be affected as well,” said Yuri Alves, an economist at Guide Investimentos. (Reporting and polling by Gabriel Burin in Buenos Aires and Luana Benedito in Sao Paulo; Editing by Ross Finley, Kirsten Donovan) More