Economy

DAVOS, Switzerland (Reuters) – Initial public offering activity should recover in 2024 as borrowing costs come down and equity markets are less volatile, the vice-chair of the New York Stock Exchange said in an interview on Monday.”We have a robust pipeline from across sectors and geographies,” John Tuttle told the Reuters Global Markets Forum ahead of the World Economic Forum’s annual meeting in Davos. “It’s just finding that time when investors have the appetite for these companies, and companies are ready to go.”After 2016, IPO activity had been at its lowest level in 2023, as rapid interest rate hikes and uncertainty over global economic growth crimped investor interest in new listings.Tuttle attributed the pickup in confidence to more stability in U.S. interest rates, record-high equity indexes and relatively low market volatility.”We certainly see an upward trajectory, (with IPO activity) returning to the mean,” he said.Tuttle, however, added that the levels of IPO activity and equity issuance seen in 2020 and 2021 were unlikely to return anytime soon.He cited the IPO of Smith Douglas Homes, which notched a valuation of $1.21 billion in its market debut on Thursday, as evidence of the market’s resurgent interest.The November U.S. elections will also influence the timing of companies coming to market, Tuttle said, adding that he expected a window of activity in the late summer leading up to the election and another one post-election.On newly listed exchange traded funds (ETFs) tracking the spot price of bitcoin, Tuttle said the NYSE saw significant demand from both institutional and retail investors as the funds began trading, and the exchange continues to monitor the market for new demand.(Join GMF, a chat room hosted on LSEG Messenger: ) More

CARACAS (Reuters) – Venezuela’s economy grew more than 5% in 2023 and growth will reach 8% this year, President Nicolas Maduro said on Monday during his annual address to the government-allied legislature.Venezuela’s economy has suffered a prolonged meltdown marked by triple-digit inflation and a mass exodus of millions of migrants seeking better prospects elsewhere, though its inflation rate is no longer Latin America’s steepest since Argentina’s sped past 200%.Inflation reached just under 190% last year, according to the central bank, marking an easing from 234% the year before. “In 2024 we will continue the policy of stoking national production, of recovering national income, of recovering income for workers,” Maduro told lawmakers. “For this year we project a gross domestic product growth of around 8%.”Growth was 15% in 2022, Maduro has said.Inflation will be two digits this year, Maduro said.State oil company PDVSA contributed $6.23 billion to the country’s coffers last year, Maduro added.The figure, which Maduro said funded salaries, healthcare, education and housing, corresponded to what the company handed over to the government, not to total earnings.According to a document seen by Reuters late last year, the government foresees a 27% increase in its income from PDVSA this year, after a relaxation in U.S. sanctions and despite stagnant production.Sanctions relief, which is set to last until April, has increased prices for Venezuelan crude and analysts expect the income to lead to more social spending as the government tries to ensure support in a coming presidential election.Oil income has previously been battered by low production due to deteriorated infrastructure and lack of investment.Maduro’s administration estimates total spending in 2024 will be equivalent to $20.5 billion and income from oil exports and taxes paid by PDVSA would cover 58%, the document seen in December showed. The U.S. eased sanctions in October after the government inked an elections deal with the opposition. In December, United States President Joe Biden granted clemency to a Maduro ally in exchange for the release of 10 Americans and at least 24 opposition-linked Venezuelans.A date for the election has not been set, but it is expected in the second half of the year. More

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DAVOS, Switzerland (Reuters) – Global executives are increasingly worried about the long term viability of their businesses, a PricewaterhouseCoopers pre-Davos survey showed, with pressures mounting from generative artificial intelligence (AI) and climate disruption.Some 45% of more than 4,700 global CEOs surveyed do not believe their businesses will survive, barring significant changes, in the next ten years, the “Big Four” auditor said.”There’s the 55% who think they don’t have to change radically, and I would argue that’s a little naive because the world is changing so fast around them,” PwC Global Chairman Bob Moritz told the Reuters Global Markets Forum (GMF) ahead of the World Economic Forum’s annual meeting in Davos.Advancements in generative AI were top of the concerns for most survey respondents, with almost 75% predicting it would significantly change their business in the next three years.The majority expect AI to require training in new skills for employees, while many expressed concerns about cybersecurity risks, misinformation, and bias towards specific groups of customers or employees.”If you just look at the same skills, I think yes, there will be impact,” said Juergen Mueller, SAP’s chief technology officer, referring to job losses and hiring freezes on junior positions in the tech sector.”Therefore, what you do need is even better skilled people,” Mueller told GMF at Davos.The PwC survey also showed a stronger focus on environmental concerns pressuring margins, with four in ten executives saying they accepted lower returns for climate-friendly investments.Less than 50% reported progress, including on climate risks in financial planning, with 31% saying they had no plans to do so.Overall, companies were more confident in the global growth picture, with 38% optimistic on growth, which was more than double those surveyed in 2023.However, they were also less optimistic on revenue growth over the next year, with 37% confident of their ability to increase revenue, versus 42% in 2023.”The ability to raise rates and raise prices is not as easy as ever before … that’s going to be a trend that we’re likely to see over the next two to three years,” Moritz said.BRITAIN CALLINGPwC’s survey found that Britain was the top country to invest in, with nearly a third of U.S. CEOs selecting the traditionally popular country as their top target.Britain’s standing among China’s CEOs rose dramatically, to joint sixth, up from sixteenth last year.However, the former European Union member has become slightly less strategically important for global CEOs, falling one place to fourth behind Germany, with the U.S. and China keeping their first and second places respectively.(Join GMF, a chat room hosted on LSEG Messenger: ) More

NEW YORK (Reuters) -The holiday weekend brought dangerous freezing temperatures across much of the United States, snarling everything from political campaigning to football games and travel, and knocking power out to about 350,000 customers in the Northeast and Pacific Northwest. An Arctic blast from Canada caused temperatures to plummet across a vast swath of the country, from the Northwest into the Rust Belt, the U.S. National Weather Service (NWS) said in a Sunday bulletin. “To highlight just how intense this outbreak of Arctic air is, over 95 million citizens fall within a Wind Chill Warning, Advisory, or Watch as of midnight tonight,” the agency said. Sunday could bring some of the coldest temperatures in states including Montana, South Dakota and North Dakota. There, meteorologists forecast wind chills as low as -70 degrees Fahrenheit (-57 Celsius.) In Iowa, a powerful blizzard pulled the brakes on the ever-churning political campaigning machine as Republicans vying for the 2024 presidential candidacy canceled events due to the inclement weather.Snow piled high on the side of every road in Des Moines at the center of the Iowa caucuses’ frenzy rendered political yard signs practically useless. Reporters spotted a pickup truck full of yard signs touting Republican presidential hopeful Ron DeSantis covered in snow with nowhere to go, sitting outside the hotel where the Florida governor is staying.David Barker, treasurer of the Republican Party of Iowa, said the brutal temperatures forecast for Monday might test even weather-resistant Iowans. “Iowans are pretty good at handling cold and snow, so I think we’ll see good turnout, although the weather is likely to bring turnout down somewhat. It may end up being a test of how committed the candidates’ supporters are,” Barker said.The cold weather’s grip over Iowa is not expected to loosen until well into next week, with wind chills around -40 Fahrenheit (-40 Celsius) expected across the state “at least into Tuesday,” the NWS office in Des Moines said in a post on X. The winter storm swept across the Midwest on Saturday, cutting power to tens of thousands of households. More than 102,000 customers lost power across Pennsylvania on Sunday afternoon. Across Michigan, New York, and Wisconsin, another 86,000 customers lost power.Maine saw historic flooding up and down the entire coast, with water swamping roads and buildings. Maine’s Governor Janet Mills warned everyone to stay home.The floods in Portland Harbor reached 14.57 feet, above the historic record set in the Blizzard of 1978. Some small buildings were swept away in the tide, media reported. Portland police said there were too many roads closed to list them all on X, the social media site formerly called twitter.Extreme weather also impacted the Pacific Northwest and parts of the northeastern United States at the weekend. The city of Portland, Oregon, usually more accustomed to rain, was hit with snow, ice and strong winds that downed trees and knocked out power to over 160,000 customers on Sunday. Local fire officials and media reported at least two weather-related fatalities.Thousands of flights were canceled across the country over the Martin Luther King Jr. holiday weekend due to the extreme weather conditions. New York Governor Kathy Hochul issued a travel ban for Erie County on Saturday and the National Football League postponed the Pittsburgh Steelers vs. Buffalo Bills game to Monday due to an expected blizzard. Hochul encouraged everyone in Western New York to stay off the roads this weekend.Forecasters expect treacherous winter weather in the middle and southern United States on Sunday, bringing a mix of snow, sleet and freezing rain.Snow, sleet and freezing rain is also expected early this week across Texas, Arkansas, Louisiana and the Southern Appalachians, the weather service forecast. Frigid air will hit the deep South, bringing a rare 14 degree Fahrenheit weather to Atlanta by Wednesday.The extreme weather is a reminder of the February 2021 freeze that left millions in Texas and other U.S. central states without power, water and heat for days, and a winter storm in December 2022 that almost caused the collapse of power and natural gas systems in parts of the eastern half of the country.The storm is coming ahead of what will likely be the nation’s coldest weather since December 2022, according to data from financial firm LSEG.The Texas power grid operator ERCOT (Electric Reliability Council of Texas) on Sunday issued an appeal to the public calling for energy conservation from 6 a.m. – 10 a.m. CT (1200-1600 GMT) on Monday.”Operating reserves are expected to be low Monday morning due to continued freezing temperatures, record-breaking demand, unseasonably low wind,” the grid operator said in a statement. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is co-president of the Club of Rome and executive chair of Earth4All This year’s World Economic Forum at Davos is focused on the theme of “rebuilding trust”. The topic could not be more timely, with public trust in governments still low in many countries. Yet if those gathered in Switzerland are serious about tackling declining trust, they must also raise tough questions about growing inequality. We are living in a time of phenomenal extremes. Between 2019 and 2020, global inequality grew more rapidly than at any time since the second world war. When it comes to income inequality, the most compelling example is the exorbitant pay divide between chief executives and workers. In 2022, CEOs in the US were paid 344 times as much as a typical worker, compared with 21 times back in 1965. Equally concerning is the so-called wealth gap, with the fortunes of billionaires having grown by 109 per cent over the past decade. According to Oxfam, during the pandemic, a new billionaire was created every 30 hours. But this wealth hasn’t trickled down to the 1.7bn workers living in countries where inflation is rapidly outpacing their wages. Such divides are the sign of something fundamentally wrong with the system. The concentration of immense wealth in the hands of a few can also bring disproportionate influence over governments, thereby entrenching even deeper divides. The results? As Earth4All’s Social Tension Index concludes, with worsening inequality, social tensions will continue to rise in this century, thereby fuelling populist nationalism and the erosion of democracy and public trust around the world.Yet economic inequality is a political choice. While billionaires have massively increased their wealth, governments have become significantly poorer, with the share of wealth held by public actors now close to zero or negative in rich countries. To address the issue, governments will have to raise funds, while also redistributing income and wealth. Here are three critical tax-based measures that they can take. First and foremost, governments must increase tax progressivity. Countries with such schemes have lower income inequality, because their governments have sufficient revenues for social spending. But in high-income countries, the top marginal tax rates on corporate income have declined in recent years. And only a few governments in low and middle-income countries use progressive taxation to reduce inequality. Indeed, some are being forced by IMF-driven austerity policies to cut public spending. Progressive taxation must therefore be prioritised.The second step is wealth taxation. A wealth tax starting at just 2 per cent annually for multimillionaires and rising to 5 per cent annually for billionaires could generate $2.52tn a year. Taxing the super-rich may also be key in addressing the climate crisis — the richest 10 per cent account for about half of global carbon emissions. Third, governments must enact windfall taxation on the extreme profits that have been generated by corporations in recent years. Oil companies including BP, ExxonMobil, Chevron, Shell and TotalEnergies posted combined record profits of $200bn in 2022. As things stand, most of this money flowed back directly to executives and investors. Instead the revenue claimed back from fossil fuel industry windfall profits should be redistributed to those who are struggling with rising food and energy prices, or with the effects of the climate crisis. And of course it must be redirected to the just energy transition. A few years ago, UN secretary-general António Guterres gave a speech in which he asked: “Will we succumb to chaos, division and inequality? Or will we right the wrongs of the past and move forward together for the good of all?” We are at a point where leaders must decide. A new global conversation on economic inequality is long overdue but essential if leaders are serious about restoring public trust. More

OTTAWA (Reuters) -Canadian firms say their order books declined as interest rates crimped consumer spending, and they see inflation easing despite increased concerns over wages for the next year, the central bank said on Monday in a quarterly survey.Some 38% of businesses expect a recession over the next year, according to the survey, which was conducted by the Bank of Canada (BoC) at the end of the fourth quarter. That was up from a third in the previous survey. Sixty-one percent of consumers expected a recession, compared with 55% in the previous survey.Businesses reported a decline in their order books compared with a year earlier, and more firms expect wages to increase over the coming year than in the previous quarter. Still, many businesses see sales volumes increasing over the next 12 months.The business outlook indicator turned slightly more positive in the final quarter of 2023, rising to -3.15 from -3.45, as expectations for input and output prices eased.”Overall, businesses and consumers are feeling the pain of higher interest rates and are responding accordingly,” said Royce Mendes, head of macro strategy at Desjardins Group. “Consumers are curtailing spending and businesses, seeing falling sales, are tapping the brakes on hiring.”Thirty-nine percent of businesses said their sales volumes had declined over the past year. They attributed the decline to slowing growth, the impact of higher interest rates and inflation.The Canadian central bank raised its key policy rate to a 22-year high of 5% last year and has left it at that level since July. Annual inflation was 3.1% in November, down from a 2022 peak of more than 8%, but has remained above the BoC’s 2% target since March 2021.The central bank’s next interest rate announcement is on Jan. 24, when it is expected to keep its key policy rate on hold. Money markets and economists expect it to start cutting rates in the first half of 2024. “Firms’ pricing behavior is slowly returning to normal,” the survey said. “Still, wage growth on average is expected to be higher than normal over the next 12 months, often related to cost-of-living adjustments.”In December, the average hourly wage growth for permanent employees accelerated at its fastest year-on-year pace in almost three years.ABOVE-TARGET INFLATION Fifty-four percent of businesses expect inflation to run higher than 3% over the next two years, and 42% see it below 3%. Twenty-seven percent predict it will take longer than four years for inflation to return to 2%, up from 18% in the previous quarter.The Bank of Canada had previously forecast inflation should hit 2% by the end of 2025, but Governor Tiff Macklem – making his last public appearance of 2023 – told reporters it should be closer to the target by the end of this year.”Short-term inflation expectations are slowly trending downward,” the survey said. However, businesses still expect inflation to remain elevated because of wage growth and the prices of commodities, food and housing.A separate BoC survey showed that consumers do not expect further interest rate increases over the next year. Consumer expectations for future inflation eased, as did their perception of current inflation.”Consumers perceive inflation to have decreased, and their expectations for price growth for some key goods such as food and gas have moderated,” the consumer survey said. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.“Davos Man” and “Davos Woman” do not strut quite so confidently these days. The conference-attending tribe were identified by the political scientist Samuel Huntington in 2004 as a global elite who “have little need for national loyalty, view national boundaries as obstacles that thankfully are vanishing, and see national governments as residues from the past”. How times have changed.As some 300 public figures and 1,600 business leaders gather for the World Economic Forum’s 54th annual alpine rendezvous this week, its globalist raison d’être is in retreat. National fealty is in vogue. Borders are no longer considered obstacles but protection — at least by some. The big state is no longer an anachronism. So what is the point of Davos now? Some will contend that the breakdown of the “Davos consensus” makes it even more important to bring together global political and business leaders. The threats to world stability are multiplying, with wars raging in Gaza and Ukraine and Donald Trump seeking a return to the White House.Yet Davos can often become an echo chamber. There is a risk that some delegates end up leaving the event with their beliefs reinforced. The forum can at times feel like a rant among like-minded individuals who are struggling to come to terms with a changing reality. Davos’s strength has never really been in its ability to proffer solutions to the world’s problems anyway. For every panel and speech that imparts insight, there is likely to be another with platitudes and experts talking vaguely about “megatrends” — as is true of many global conferences. Indeed, the forum’s lofty ambitions often distract from the true purpose of the event: its unmatched power as a giant networking opportunity.When Klaus Schwab founded the event in 1971, it was called the European Management Forum. The inaugural confab, with 450 participants from 31 countries, was aimed at sharing best management practices among business leaders. The turbulent decade that followed led the forum to take up economic, political and social matters too, and politicians were added to the invite lists. The official conference has now evolved into a somewhat unwieldy affair, discussing an ever-growing array of topics and attracting an ever growing number of people. This year’s programme has over 200 sessions, with a foggy theme of “rebuilding trust”. It has also become even more costly, with corporate attendance running well into five figures for tickets, flights and accommodation — and that does not include the prerequisite annual membership fees which reportedly start at over £50,000. And yet, despite the expense and sometimes rambling nature of the stage discussions, business leaders, politicians and those who want to mingle with them (including journalists) continue to show up. Fringe events, drinks and dinners allow organisations to capture the attention of many of those with the world’s deepest pockets. Off-the-record conversations in corridors and hotels are often more valuable than the rigid speaking briefs followed on stage. Various organisations and countries have tried to organise alternatives to Davos but never quite achieved the scale or ambition. On a global scale, the curious appeal of a snowy week of networking and partying, of garnering social kudos and hoping for a life-changing chance meeting, remains undimmed. Davos’s achievement is the perpetual motion effect: ongoing attendance is guaranteed in part by the simple fear of missing out. More