Economy

NEW YORK (Reuters) – U.S. Treasury Secretary Janet Yellen said on Wednesday U.S. President-elect Donald Trump’s plan to set up a new government agency to collect tariffs would duplicate an existing agency and was unlikely to save money.Yellen, taping an appearance on “The Late Show with Stephen Colbert,” dismissed Trump’s plan for an “External Revenue Service,” first announced on Tuesday on his social media platform Truth Social.”If they’re looking to save money for American taxpayers, setting up a duplicative agency doesn’t seem like a good first step,” she told the U.S. television comedian.Trump on Tuesday said he would create the new agency on Jan. 20, the day he takes office, “to collect tariffs, duties, and all revenue” from foreign sources.He did not specify if the new agency would replace collections of tariffs, duties, fees and fines by the existing U.S. Customs and Border Protection, or the collection of taxes on foreign corporate and individual income by the Internal Revenue Service.It was unclear whether the move would create additional government bureaucracy, which would appear to go against the plans of Trump’s informal Department of Government Efficiency, an effort led by billionaire Elon Musk and former biotech executive Vivek Ramaswamy aimed at finding trillions of dollars in budget savings by streamlining government operations.Yellen also took aim at Trump’s repeated promises to impose new tariffs, saying they would amount to a “tax increase for the American consumer.”Trump has proposed a 10% tariff on global imports, a 25% punitive duty on imports from Canada and Mexico until they clamp down on drugs and migrants crossing borders into the U.S., and a 60% tariff on Chinese goods.Trade experts say the duties would upend trade flows, raise costs and draw retaliation against U.S. exports.Yellen said U.S. consumers would face higher costs for any imported goods and tariffs would make U.S. companies less competitive globally, while failing to address Americans’ concerns about higher prices.”What they’re going to see is the cost of making goods and services is going to go up. They’re going to be less competitive in the global economy,” she said. “So this doesn’t seem like a way to address the things that Americans have said are bothering them.” More

Labour shortages in Japan, particularly among non-manufacturers and small firms, are reaching historic levels, the government has said, stoking concerns that this supply-side constraint could stifle economic growth.Some 66% of respondents indicated that labour shortfalls were seriously or fairly seriously affecting their businesses, while 32% said the impact was not very serious.”It goes without saying this drives up personnel costs, but it could even pose a business continuity risk,” a manager at a railroad operator wrote in the survey. The number of bankruptcies caused by labour shortages in 2024 surged 32% from a year earlier to a record 342 cases, according to credit research firm Teikoku Databank. Nearly a third of respondents to the Reuters survey said the labour shortage is worsening, with only 4% reporting improvements and 56% saying the situation is neither getting better nor worse. The survey was conducted by Nikkei Research for Reuters from Dec. 24 to Jan. 10. Nikkei Research reached out to 505 companies and 235 responded on condition of anonymity. When asked about specific measures to address the labour shortfall in a question that allowed multiple answers, 69% said they were intensifying recruitment activities for new graduates and 59% were implementing such measures as extending retirement ages and re-hiring retired employees.The official retirement age is set at 60 for about two-thirds of Japanese companies, although most have introduced measures allowing employees to keep working until they turn 65, a poll by the Health Ministry showed last year. In response to a Reuters survey question about investment priorities for 2025, 69% chose capital investment and 63% selected wage hikes and other human resources-related investments. This question also allowed multiple answers.”What’s essential are wage hikes for retaining employees and capital investment for rationalising production,” an official at a chemicals company said.This trend in investment priority among Japanese firms aligns with the government’s policy of seeking economic growth through higher wages and investments. With labour shortages driving up wages and a weak yen raising import costs, 44% of Japanese companies plan to raise prices for their goods and services this year, the survey found. That compares with 17% that intend to keep their prices unchanged and 26% that plan to raise some prices but cut others.”We just cannot help but raise prices because of an across-the-board increase in wages and other fixed costs, in transportation costs and in costs of raw materials,” a manager at a metals company said in the survey. Tokyo’s core consumer price index, which excludes volatile fresh food costs, rose 2.4% in December from a year earlier. That was an acceleration from a 2.2% rise in November, keeping alive market expectations for a near-term interest rate hike. More

Maduro, whose nearly 12 years in office have been marked by deep economic and social crisis and mass migration, was sworn in for a third term on Friday, despite a six-month-long election dispute and international calls for him to stand aside.The government has employed orthodox methods to try to tamp down inflation, which has reached triple digits in recent years, with some success. Inflation was 189.8% in 2023, according to the central bank. Maduro said this month that the economy grew 9% last year. More

NEW YORK (Reuters) -Drake sued his longtime label on Wednesday, accusing Universal Music Group (AS:UMG) of defamation for promoting Kendrick Lamar’s “Not Like Us,” saying the song’s false accusation that the Canadian rapper is a pedophile has put him and his family in danger.In a complaint in Manhattan federal court, Drake said the song was “intended to convey the specific, unmistakable, and false factual allegation that Drake is a criminal pedophile” and the public should exert “vigilante justice” in response.Drake said it led to attempted break-ins at his home, prompting him to travel with extra security, and pull his seven-year-old son from his Toronto elementary school and the Toronto area.He and Lamar, an American rapper who won the 2018 Pulitzer Prize for Music, have feuded for about a decade. The lawsuit seeks compensatory and punitive damages for defamation and harassment.”UMG may spin this complaint as a rap beef gone legal, but this lawsuit is not about a war of words between artists,” according to the complaint from Drake, whose given name is Aubrey Drake Graham.”Notwithstanding a relationship spanning more than a decade, UMG intentionally sought to turn Drake into a pariah, a target for harassment, or worse,” the complaint added. “UMG chose corporate greed over the safety and well-being of its artists.”In a statement, UMG said it has not defamed anyone, called Drake’s claims untrue, and said it would be illogical to harm his reputation after investing massively to make him commercially and financially successful.UMG also accused Drake of trying to “weaponize” the legal process in seeking damages, and trying to silence Lamar’s creative expression for “having done nothing more than write a song.”Lamar is not a defendant, though Drake called “Not Like Us” defamatory. Drake’s lawyers had no additional comment.COMPETING ‘DISS’ TRACKSWednesday’s lawsuit followed a November petition in a New York state court in which Drake, through his company Frozen Moments, accused UMG and Spotify (NYSE:SPOT) of using payola and streaming bots to promote “Not Like Us” at his music’s expense.Drake withdrew that petition on Tuesday night. His related case against UMG and radio company iHeartMedia (NASDAQ:IHRT) remains pending in a Texas state court, online records show.The feud between Drake and Lamar has played out in part through so-called “diss” tracks including “Not Like Us.”In that song, released last May 4, Lamar mentioned Drake by name, saying “Drake, I hear you like ’em young” and calling him and others “certified pedophiles.”A day earlier, Drake released “Family Matters,” appearing to accuse Lamar of physical abuse and infidelity, and questioning whether Lamar’s business partner fathered one of his children.”Not Like Us” topped Billboard’s Hot 100 for two weeks last year. It received five nominations for the Feb. 2 Grammy Awards, including record of the year and song of the year.The case is Graham v UMG Recordings Inc, U.S. District Court, Southern District of New York, No. 25-00399. More

(Reuters) – A look at the day ahead in Asian markets. At last, some breathing room for investors after U.S. and UK inflation figures on Wednesday eased the vice-like grip that the soaring dollar and global bond yields had increasingly been exerting over markets.It is too early to say this marks a turning point, but fixed income and emerging markets have been beaten down so much lately that they were primed for a ‘good news’ reversal. Upbeat U.S. bank earnings and, on the margins, the ceasefire between Israel and Hamas will also help support market sentiment on Thursday.But it’s the UK and especially the U.S. inflation news that will drive markets more, and the rapid slide in bond yields and jump in stocks should pave the way for a positive day in Asia on Thursday.These numbers may not ultimately alter the Fed’s direction or even pace of rate cuts this year. But they do take the heat off policymakers and buy them more time to assess their next steps.For investors, they were instant triggers to reverse some of the bond selling that had snowballed in recent weeks and which had started to bleed into equity markets. Yields across the U.S. Treasury curve posted their biggest one-day declines since Nov. 25, and rates traders brought forward the next expected Fed rate cut to June from September.Curiously, however, the impact on the dollar was muted. It fell sharply against the yen, but barely budged against the euro. Perhaps country-specific factors are playing a greater role in setting exchange rates right now rather than solely U.S. yields and rate expectations.That may be the case in Asia, where policy and politics are spicing up local markets. Indonesia’s rupiah sank to its lowest in more than six months and the country’s stocks leaped on Wednesday after the central bank delivered a surprise rate cut. Not one of the 30 analysts polled by Reuters expected the move.The Bank of Korea delivers its latest decision on Thursday, and it could not be at a more volatile time for the country, after impeached President Yoon Suk Yeol was arrested on Wednesday and questioned for hours by investigators in relation to a criminal insurrection probe.The BoK is expected to cut its base rate by 25 basis points to 2.75%, according to 27 out of 34 economists polled by Reuters, with the remaining seven forecasting no change.Given the tense domestic political situation and in light of the cooler-than-expected U.S. inflation data, could the BoK surprise markets with a 50 bps cut to try and boost growth and loosen financial conditions? Bank Indonesia’s shock move shows that even unanimous consensus forecasts are not always the one-way bet they might seem.Here are key developments that could provide more direction to markets on Thursday:- South Korea interest rate decision- South Korea fallout from President Yoon’s arrest- Australia unemployment (December) More

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(Reuters) – A relatively benign U.S. reading on consumer price increases triggered a sharp relief rally in stocks and bonds on Wednesday, but traders and investors warn that markets are likely to remain anxious about the pace of inflation.The path ahead remains shadowed by ongoing uncertainty about the outlook for further Federal Reserve interest rate cuts and incoming president Donald Trump’s actions on issues like taxes and tariffs, market participants said.”The issues that have been driving rates higher and weighing on stocks are still out there,” said Art Hogan, market strategist at B. Riley Wealth. “We just don’t know whether we’ll see tariffs that are surgical or sweeping, what kind of policy moves we’ll see in other areas that could feed into inflation or growth.”While the consumer price index for December rose at a faster-than-expected pace, markets seized on the core CPI, which excludes the volatile food and energy components. Core CPI increased 0.2% in December after rising 0.3% for four straight months.Stocks surged following the CPI report with the benchmark S&P 500 jumping 1.8%.The benchmark 10-year Treasury reversed losses incurred in the wake of last Friday’s strong job creation report, pushing yields back down to 4.66%. Yields fall when bond prices rise.”This reading beat expectations modestly, but traders pounce aggressively on any whiff of good news,” said Steve Sosnick, market strategist at Interactive Brokers (NASDAQ:IBKR). “It’s a number and a reaction that we have to view positively, although quite possibly it’s magnified by the negativity we’ve been battling.”Yields had climbed sharply in recent weeks after the Fed in December tempered its outlook for rate cuts and projected firmer inflation in 2025 than it had previously.Before the CPI report, “there was some whispering that we might actually see a rate hike,” said Jeff Weniger, head of equity strategy at WisdomTree Inc., a New York asset management firm. But fears about the potential fallout that Trump’s policies could have on inflation remain a concern. Fed officials on Wednesday noted heightened uncertainty in the coming months as they await a first glimpse of the incoming administration’s policies, even as they said Wednesday’s data showed inflation was continuing to ease.Following the CPI report, Rick Rieder, BlackRock’s chief investment officer of global fixed income, said progress on inflation “may be slow and uneven, not least due to the great uncertainties that face the economy with fiscal policy changes coming over the next year.”For example, Rieder said in emailed comments, changes to the tariffs and trade regime “do hold the potential to increase core goods inflation for a time.”As the market remains data dependent, volatility could become more common. Kevin Flanagan, head of fixed income strategy at WisdomTree, expects that moves of 10 to 15 basis points daily for the 10-year Treasury could become the new norm.Following the data, traders of interest-rate futures still projected the Fed waiting until June to deliver its next rate cut. But now they are pricing about even odds the central bank will follow with a second rate cut by year’s end. Before the report, markets reflected bets on only a single cut in 2025. Tina Adatia, head of fixed income client portfolio management for Goldman Sachs Asset Management, said in a note to clients that the CPI data strengthens arguments for further cuts but “the Fed has scope to be patient.””More good inflation data will be required for the Fed to deliver further easing,” Adatia said. More