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    Marketmind: Dovish Fed view courses through markets

    (Reuters) – A look at the day ahead in Asian markets.Asian markets are poised to start the week on the front foot, emboldened by Wall Street’s late rally on Friday and plunge in U.S. rate expectations after Fed Chair Jerome Powell gave the clearest signal yet that the Fed is done raising interest rates and could soon move to cut them. The S&P 500’s rise to its highest level this year, and continued loosening of financial conditions via the falling dollar and bond yields should pave the way for a positive open for Asian stocks and risk assets on Monday.The dollar shed 3% in November, its biggest monthly fall in a year, and last week fell for a third week in a row. The two-year U.S. Treasury yield slumped 40 basis points last week – its steepest fall since March – and the implied rate on December 2024 ‘SOFR’ futures on Friday fell below 4% for the first time.That packs a powerful punch. Many will argue that the U.S. bond and rates markets have gotten far too carried away, and that the Fed will not ease so quickly and aggressively next year.But Fed policymakers are now in their ‘blackout period’ ahead of the December 12-13 policy meeting. This means there will be no guidance from officials to take the wind out of investors’ sails, certainly not on Monday, when the economic calendar is also very light.There would appear to be room for Asian equities to bounce back – by some measures, the region’s underperformance has rarely been this bad in years.The regional calendar highlights on Monday are New Zealand trade data and Australian inventories and corporate profit data, all for the third quarter. Economists polled by Reuters expect New Zealand’s terms of trade to fall 1.9% on from the previous quarter, Australian inventories to fall 0.6%, and export volumes to slide 3.8%. The economic and policy calendar for the rest of the week has plenty more potential market-moving moments, including interest rate decisions from Australia and India, inflation figures from South Korea, the Philippines and Thailand, and GDP from Japan, Australia and South Korea.On the policy front, the Reserve Bank of Australia on Tuesday is expected to keep its cash rate on hold at a 12-year high of 4.35%, according to 28 of 30 analysts polled by Reuters. The other two are going for a 25 basis point hike.New Zealand’s central bank surprised markets last week with the hawkish rhetoric that accompanied its decision to leave rates on hold, and the RBA could echo a similar message.In stark contrast to the Fed, rates futures markets are barely pricing in any rate cuts from the RBA next year at all. Indeed, the chance of a hike in the coming months is greater than the chance of a cut, current pricing shows.Here are key developments that could provide more direction to markets on Monday:- New Zealand trade (Q3)- Australia inventories, corporate profits (Q3)- South Korea monetary base (November) (By Jamie McGeever; Editing by Diane Craft) More

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    RBA to hold rates on Dec. 5, Aussie home prices to rise 5% in 2024

    BENGALURU (Reuters) -The Reserve Bank of Australia will keep its key interest rate unchanged at 4.35% on Tuesday and a rate cut is now not expected to happen until the fourth quarter of next year due to a strong housing market, according to a Reuters poll.Even with rates at a 12-year high, Australian home prices have recovered all of their 2022 losses since finding a floor in January. They are expected to rise 8% this year and another 5% next year, a separate Reuters poll showed.”We expect there will be no change from the RBA next week, but we do think they will maintain a hawkish bias. So they’re going to talk up the prospect of rate hikes, but ultimately we don’t think they’re going to deliver,” said Ben Picton, senior strategist at Rabobank.The interest rate poll, conducted Nov. 29-Dec. 1, showed 28 of 30 economists, including those at Australia’s big four banks, expect the central bank will keep its official cash rate on hold on Dec. 5.Although consumer price inflation in October logged a slower annual pace of 4.9% growth compared with 5.6% in September, that was still well above the RBA’s 2-3% target range.Two economists, however, predicted a 25 basis point hike. Looking further ahead, 20 of 29 economists predicted the RBA will hold rates steady until end-March while the rest forecast a quarter percentage point hike by then.Poll medians showed rates on hold until end-September followed by a 25 basis points cut to 4.10% in the last quarter of 2024, one quarter later than predicted in a November survey and putting the RBA behind many of its peers.The Australian housing market, already one of the most expensive in the world, is expected to maintain steady growth as increasing demand outstrips supply.Expectations for average home prices in Australia this year have been revised up consistently – from a 9.1% fall in Reuters’ February poll to an 8.0% rise in the December poll, underscoring the market’s resilience in spite of higher interest rates.”Multiple consecutive interest rate rises earlier in the year were expected to considerably impact Australia’s current mortgage holders. However, distressed sales were relatively minimised due to increasing cash buyers propping up the residential market and the Australian economy continuing to hold full employment,” wrote Michelle Ciesielski at Knight Frank, who took part in the Nov. 16- Dec .1 survey of 11 property analysts.”Compared to the significantly higher migration, the current limited number of new homes being built or being started by developers points to inevitably higher house prices being achieved in 2024.”The poll, which asked about the outlook for home prices in Sydney, Melbourne, Brisbane, Adelaide, and Perth, showed expectations ranging between 3.5% and 7.0% growth for both 2024 and 2025.Asked about how the ratio of home ownership to renters will change over the coming five years, all nine analysts who responded to the question said it would decrease.”Affordability looks terrible right now because home prices are back to their record highs and interest rates are at their multi-year highs, which means you’re kind of getting hit from both sides,” said Diana Mousina, deputy chief economist at AMP (OTC:AMLTF).”Affordability could improve if prices fall a little bit and it will also improve marginally if the RBA cuts interest rates. But it’s not going to improve dramatically unless you see a very big fall in prices by 30%, if not more.”(Other stories from the Reuters quarterly housing market polls) More

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    Did US hiring accelerate in November? 

    Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Did US hiring accelerate in November? Both bonds and stocks notched big gains last month as investors grew increasingly confident that the Federal Reserve will cut interest rates next year.Friday’s jobs report will offer the latest indication of the strength of the US economy, and a further clue about the Fed’s next moves ahead of its final meeting of the year this month. Economists polled by Bloomberg forecast that 200,000 jobs were added in November, a reacceleration from the below-forecast figure of 150,000 in October, which helped spark the market rally of recent weeks. The unemployment rate is expected to be unchanged at 3.9 per cent. The labour market has remained strong in recent months, despite interest rates that stand at the highest level in decades. But although US employers have continued to add jobs, the unemployment rate has ticked up from a low of 3.4 per cent in April. This week, hawkish Fed governor Christopher Waller said that he believed that interest rates at current levels could in effect slow the economy and bring inflation to target. Minutes from the Fed’s November meeting also showed officials felt little urgency about raising interest rates again. In the futures market, traders are not betting on any more increases from the Fed, but instead are expecting interest rate cuts as soon as May.While a pick-up in hiring is unlikely to push the Fed to tighten policy when it next meets in December, a strong figure could give investors betting on a series of rate cuts next year pause for thought. Kate DuguidWill consumer spending rebound in the eurozone?Retail sales in the eurozone have fallen for three months in a row, but that trend could be broken in October when the latest data is published on Wednesday.Consumer confidence in the 20-country single currency bloc has steadily improved this year as inflation has eased, even though it remains below the historic average, reflecting the impact of high interest rates, falling house prices and continued economic stagnation. National data published in the past week gave a mixed picture for consumer spending in Europe. There was much faster growth in German retail sales of 1.1 per cent in October from the previous month, however this contrasted with bigger than forecast monthly falls of 0.9 per cent in France and 0.2 per cent in Spain.Economists have forecast a mild rebound in the eurozone economy next year will be partly driven by growth in consumer spending as continued growth in wages overtakes slowing inflation, boosting the spending power of households. However, there are also signs of rising job losses in the bloc, pushing unemployment up in Germany and Italy in October, which is likely to make households even more cautious in their pre-Christmas spending.“This dynamic, if sustained, could dent households’ confidence despite the likely increase in real disposable income that we expect as wage growth picks up and inflation falls,” said Mariano Cena, an economist at Barclays. Martin ArnoldIs Chinese trade recovering?Investor attention in Asia will be focused on China’s trade figures on Thursday, which will reveal whether a tentative recovery in both domestic and external demand was derailed last month.A median forecast from economists surveyed by Bloomberg points to a fall of 1.5 per cent for Chinese exports, while imports are tipped to rise 4 per cent — both heavily influenced by base effects from conditions a year ago. Those trade flows are expected to shake out to a trade balance of $48.7bn. But a mixed batch of leading indicators suggest that readings in the coming week could yet surprise markets.New export orders reported by Chinese manufacturers fell in November, while purchasing managers’ indices for many of China’s major trading partners including the US, EU and Japan revealed ongoing contraction.“It’s true, there is downward pressure from foreign demand as most major economies are starting to slow,” said David Chao, global market strategist for Asia ex-Japan at Invesco, although he added that “domestic demand in China has held pretty steady.”However, analysts at Citigroup have forecast export growth of 1 per cent, largely on the back of base effects. They also point to growth in shipping costs in China and a rise for the Baltic Dry index, a proxy for global shipping activity that recently touched an 18-month high, “suggesting improvement in global trade momentum.” Hudson Lockett More

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    Russian army snaps up Chinese off-road buggies popular in US

    Russia’s military has bought hundreds of Chinese all-terrain vehicles popular in the US, in a move that risks heightening tensions between the west and Beijing over President Xi Jinping’s tacit backing for Moscow’s invasion of Ukraine.Russia’s purchases open up the buggy manufacturer Shandong Odes Industry to retaliation from authorities in the US, where the vehicles are popular among farmers and powersports enthusiasts.China has insisted it is not selling military equipment to Russia, but Ukraine’s allies are concerned about sales of non-lethal goods useful for defence industries or on the battlefield.Russian President Vladimir Putin inspected the Desertcross 1000-3 utility terrain vehicle earlier this month alongside defence minister Sergei Shoigu, who said the Chinese-made buggy “was extremely in demand”. Social media footage has shown Russian soldiers using them in the field.The Russian military was already fielding 537 “basic” versions of Shandong Odes’s Desertcross 1000-3 and planned to buy another 1,500 with “additional options”, state newswire Tass reported, citing a panel the defence ministry put up next to the vehicle seen by Putin.In a clear warning last month, US Treasury secretary Janet Yellen said Russia was “dependent on willing third-country individuals and entities to resupply its military and perpetuate its heinous war against Ukraine”.“We will not hesitate in holding them accountable,” Yellen said.Russia’s use of the vehicles comes as Putin’s military increasingly turns to Chinese suppliers for equipment needed to maintain its invasion of Ukraine, and highlights the dilemma facing Chinese companies whose sales to Russia could expose them to retaliation from Washington. Shandong Odes would be particularly vulnerable to such retaliation because of its high volume of US sales.Experts said the use of the vehicles also reflected Russia’s limited military manufacturing capacity as it deploys the non-armoured buggies in the field.A Desertcross 1000-3 utility terrain vehicle More

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    ‘Way too early’ to declare victory over inflation, says ECB’s Nagel

    Euro zone inflation eased to 2.4% in November from 2.9% in October, well below expectations for a third straight month and fuelling market speculation that European Central Bank (ECB) rates could come down quicker than the bank now guides.”We have not yet won the fight against inflation,” said Nagel, who visited Cyprus last week. He described inflation as a ‘stubborn, greedy beast’ and said the next phase of wrestling it down would be more difficult.”Add in a scenario where an escalation of geopolitical tensions could imply higher inflation and it becomes clear that it would be way too early to declare victory over high inflation rates,” said Nagel, an influential voice on the ECB’s rate setting Governing Council.”I can’t tell whether interest rates have already reached their peak. On the ECB Governing Council we decide on interest rates on a meeting by meeting basis following our data-dependent approach.”Nagel added that the outlook for inflation was tempered by a weakening of dampening base effects and the phasing out of measures to cap high energy prices in many European countries. He also pointed to an expected continuation of strong wage growth.”All in all, I expect inflation to carry on declining, but at a slower pace and with possible bumps along the way,” Nagel said. More

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    Why Doctors and Pharmacists Are in Revolt

    Dr. John Wust does not come off as a labor agitator. A longtime obstetrician-gynecologist from Louisiana with a penchant for bow ties, Dr. Wust spent the first 15 years of his career as a partner in a small business — that is, running his own practice with colleagues.Long after he took a position at Allina Health, a large nonprofit health care system based in Minnesota, in 2009, he did not see himself as the kind of employee who might benefit from collective bargaining.But that changed in the months leading up to March, when his group of more than 100 doctors at an Allina hospital near Minneapolis voted to unionize. Dr. Wust, who has spoken with colleagues about the potential benefits of a union, said doctors were at a loss on how to ease their unsustainable workload because they had less input at the hospital than ever before.“The way the system is going, I didn’t see any other solution legally available to us,” Dr. Wust said.At the time he and his colleagues voted to unionize, they were one of the largest groups of private-sector doctors ever to do so. But by October, that distinction went to a group that included about 400 primary-care physicians employed in clinics that are also owned by Allina. The union that represents them, the Doctors Council of the Service Employees International Union, says doctors from dozens of facilities around the country have inquired about organizing over the past few years.And doctors are not the only health professionals who are unionizing or protesting in greater numbers. Health care workers, many of them nurses, held eight major work stoppages last year — the most in a decade — and are on pace to match or exceed that number this year. This fall, dozens of nonunion pharmacists at CVS and Walgreens stores called in sick or walked off the job to protest understaffing, many for a full day or more.The reasons for the recent labor actions appear straightforward. Doctors, nurses and pharmacists said they were being asked to do more as staffing dwindles, leading to exhaustion and anxiety about putting patients at risk. Many said that they were stretched to the limit after the pandemic began, and that their work demands never fully subsided.“We’re seen as cogs in the wheel,” Dr. Alia Sharif said, “You can be a physician or a factory worker and you’re treated exactly the same way by these large corporations.”Jenn Ackerman for The New York TimesBut in each case, the explanation runs deeper: A longer-term consolidation of health care companies has left workers feeling powerless in big bureaucracies. They say the trend has left them with little room to exercise their professional judgment.“People do feel put upon — that’s real,” said John August, an expert on health care labor relations at the Scheinman Institute at Cornell University. “The corporate structures in health care are not evil, but they have not evolved to the point of understanding how to engage” with health workers.Allina said that it had made progress on reducing doctors’ workloads and that it was partnering with health care workers to address outstanding issues. CVS said it was making “targeted investments” in pharmacies to improve staffing in response to employees’ feedback, while Walgreens said it was committed to ensuring that workers had the support they needed. Walgreens added that it had invested more than $400 million over two years to recruit and retain staff members.Professionals in a variety of fields have protested similar developments in recent years. Schoolteachers, college instructors and journalists have gone on strike or unionized amid declining budgets and the rise of performance metrics that they feel are more suited to sales representatives than to guardians of certain norms and best practices.But the trend is particularly pronounced in health care, whose practitioners once enjoyed platinum-level social status at high school reunions and Thanksgiving dinners.For years, many doctors and pharmacists believed they stood largely outside the traditional management-labor hierarchy. Now, they feel smothered by it. The result is a growing worker consciousness among people who haven’t always exhibited one — a sense that they are subordinates constantly at odds with their overseers.“I realized at end of the day that all of us are workers, no matter how elite we’re perceived to be,” said Dr. Alia Sharif, a colleague of Dr. Wust’s at Allina who was heavily involved in the union campaign. “We’re seen as cogs in the wheel. You can be a physician or a factory worker, and you’re treated exactly the same way by these large corporations.”‘We were all partners.’ Then came the metrics.Pharmacists at Walgreens and CVS have complained of understaffing and overly aggressive performance targets. Spencer Platt/Getty ImagesThe details vary across health care fields, but the trend lines are similar: A before-times in which health care professionals say they had the leeway and resources to do their jobs properly, followed by what they see as a descent into the ranks of the micromanaged.As a pharmacy intern and pharmacist at CVS in Massachusetts beginning in the late 1990s, Dr. Ed Smith found the stores consistently well staffed. He said pharmacists had time to develop relationships with patients.Around 2004, he became a district manager in the Boston area, overseeing roughly 20 locations for the company. Dr. Smith said CVS executives were attentive to input from pharmacists — raising pay for technicians if there was a shortage, or upgrading clunky software. “Every decision was based on something that we said we needed,” he recalled.Dr. Wust looked back on his days in an independent practice of about 25 doctors with a similar wistfulness. “We were all partners,” he said. “It was relative workplace democracy. Everybody got a vote. Everybody’s concerns were heard.”Over time, however, consolidation and the rise of ever-larger health care corporations left workers with less influence.As so-called pharmacy benefit managers, which negotiate discounts with pharmacies on behalf of insurers and employers, bought up rivals, retail giants like Walgreens and CVS made acquisitions as well, to avoid losing market power.The chains closed many of their newly owned locations, driving more customers to existing stores. They sought to cut costs, especially labor costs, as the benefit managers reined in drug prices.Around 2015, Dr. Smith stepped down from his role as a district manager and became a frontline pharmacist again, reluctant to supervise co-workers under conditions he considered subpar. “I couldn’t ask my pharmacists to do what I couldn’t accomplish,” he said.Among his frustrations, he said, was the need to strictly limit the number of workers each pharmacy could schedule. “Every week that you’re over your labor budget, you get a call, regardless of prescription volume, from your district manager,” Dr. Smith said. “If your budget for tech hours is 100 and you used 110, you get a phone call. It’s not much money — maybe $180 — but you’re getting a call.”Asked how labor budgets were applied, CVS said managers were “provided guidance” based on expected volume and other factors, with adjustments made to ensure adequate staffing.Dr. Smith and other current and former CVS and Walgreens pharmacists said their stores’ allotment of hours for pharmacists and pharmacy technicians had dropped most years in the decade before the pandemic.The pharmacists also described being held to increasingly strict performance metrics, such as how quickly they answered the phone, the portion of prescriptions that are filled for 90 days rather than 30 or 60 days (longer prescriptions mean more money up front) and calls made urging people to fill or pick up prescriptions.For years, Walgreens and CVS pharmacists could largely ignore these narrower metrics so long as overall profits and customer satisfaction stayed high. But in the early to mid-2010s, both companies elevated the importance of these indicators, several pharmacists said.At Walgreens, many pharmacy managers began reporting to a districtwide retail supervisor rather than a supervisor trained as a pharmacist. “It coincided with more pushing of the metrics,” said Dr. Sarah Knolhoff, a Walgreens pharmacist from 2009 to 2022.“Never having been a pharmacist, they would push the pharmacy the same way they would push the front end,” Dr. Knolhoff added, alluding to the rest of the store.CVS said that performance metrics were needed to ensure safety and efficiency for patients but that in recent years it had reduced the number of metrics it tracked. Walgreens announced last year that it would no longer rely on “task-based metrics” in performance reviews for pharmacy staff members, though it still used them to track store-level performance.‘Corporate tells you how to manage your patient.’At health systems like Allina, doctors have incentives to talk to patients about conditions that may not be relevant to their immediate care. Health experts say it can help ensure that high-risk conditions are attended to.Jenn Ackerman for The New York TimesThe transition for doctors and nurses came around the same time. As independent medical practices found they had lost leverage in negotiating reimbursement rates with insurers, many doctors went in house at larger health systems, which could use their size to secure better deals.The passing of the Affordable Care Act in 2010, along with federal rule-making efforts, rewarded bigness by tying reimbursement to certain health outcomes, like the portion of patients who must be readmitted. Getting bigger helped a hospital system diversify its patient population, the way an insurer does, so that certain groups of high-risk patients weren’t financially ruinous.Administrators increasingly evaluated their medical staff according to similar metrics tied to patients’ health and put a variety of incentives and mandates in place.Doctors and nurses chafed at the changes. “Corporate tells you how to manage your patient,” said Dr. Frances Quee, president of the Doctors Council, which represents about 3,000 doctors, most of them at public hospitals. “You know that’s not how you’re supposed to manage your patient, but you can’t say anything because you’re scared you’re going to be fired.”At Allina, primary care doctors are given incentives to talk to patients about their high-risk or chronic medical conditions, even if those conditions are well managed and aren’t relevant to a visit.“Is that a valuable use of our 25 minutes together?” said Dr. Matt Hoffman, a primary care doctor at an Allina clinic that unionized in October. “No, but it means Allina gets more money from Medicare.”Dr. Wust said hospital administrators increasingly relied on management theories borrowed from other industries, like manufacturing, that sought to minimize excess capacity.For example, he said, obstetricians at Allina had one or two hold spots a day of 15 minutes each, in case of a patient emergency, when he began working at the system. Several years ago, Allina took away these buffers, instructing obstetricians to double book instead.Asked about the hold spots, Allina said, “We’re always looking at how we’re using our resources to deliver high-quality care.” It said the incentives tied to high-risk conditions could still be achieved if a doctor stated that the problem was no longer relevant. Dr. Josh Scheck, another Allina primary care doctor, said he found the nudge helpful and not very time consuming to address. He said the health system had allowed his clinic to experiment with ways to make its work flow more efficient.Other health workers complained that some of the metrics they’re evaluated on, like patient satisfaction, made them feel like retail clerks or dining employees rather than medical professionals.Adam Higman, an expert on hospital operations at the consulting firm Press Ganey, said consolidation and the increased use of metrics had arisen in response to a need to lower U.S. health care costs, long the world’s highest per capita, and ensure that the spending actually benefits patients.He pointed to data showing that more empathetic and communicative doctors and nurses — factors that affect patients’ experience — lead to healthier patients.But Mr. Higman acknowledged that many health systems had increased tensions with doctors and nurses by failing to involve them more in developing and putting in place the system of metrics on which they are judged. “The progressive, smart health systems and medical groups are listening to physicians, looking at their experience and turnover and creating venues to have discussions,” he said. “If not, that’s one of the contributing factors to organizing.”‘I would not have put unions and physicians in the same mind.’Nurses went on strike for three days in January at Mount Sinai Hospital in New York to protest understaffing.Gregg Vigliotti for The New York TimesThe pandemic magnified these strains.As retail chains rolled out Covid-19 vaccines, pharmacists complained of being overworked to the point of skipping bathroom breaks and said they worried constantly about making mistakes that could harm patients. (CVS said it began closing most pharmacies for 30 minutes each afternoon last year to give pharmacists a consistent break. Walgreens said “dedicated pharmacist meal breaks” began in all stores in 2020.)Doctors and nurses found that their already backed-up inboxes were suddenly bursting, as frightened patients clamored for medical advice. Administrators sought to squeeze more patients into overloaded hospitals and clinics.The breaking point came when the height of the pandemic passed, but conditions barely improved, according to many workers. Although health systems had promised to add staffing, many found themselves running deficits amid inflation and a shortage of doctors and nurses.Professionals who had never considered themselves candidates for union membership began to organize. When she started at Allina in 2009, Dr. Sharif said, “I would not have put unions and physicians in the same mind — it would have been a totally alien concept.” She reached out to the Doctors Council last year for help unionizing her colleagues.Dr. Quee, the union president, said that inquiries from doctors were up more than threefold since the second group of Allina doctors unionized last month — and that as a result, the Doctors Council was hiring more organizers. (Allina is appealing the outcome of the union vote at the hospital but not at its clinics.) Even pharmacists are reaching out. “Two days ago, pharmacists called me from Florida,” she said. “We’ve never done pharmacists before.”In September, Dr. Smith, who long ago shifted from CVS district manager to frontline pharmacist, took on an additional role: labor organizer. After CVS fired a district manager who had refused to close some stores on weekends to address understaffing, Dr. Smith helped organize a series of coordinated sick days and walkouts in the Kansas City, Mo., area, where he has worked for the company in recent years.The walkouts affected roughly 20 locations and drew the company’s chief pharmacy officer and a top human resources official to town for a meeting with the renegades. A few weeks later, CVS said it would rein in vaccination appointments and add work hours for pharmacy technicians, though it had not increased their pay.CVS said several Kansas City-area pharmacists had called in sick on certain days in September, “resulting in about 10 unexpected pharmacy closures” on one day and part of another. In response, it said, executives met with pharmacists to listen to and address their concerns.During an interview in October, while Dr. Smith and his colleagues were still awaiting the company’s response, he made clear that his patience had run out. “I’ve been asking and asking and asking for improvements for years,” he said. “Now we’re not asking any more — we’re demanding it.” More