Economy

The spike in illness in the country where COVID emerged in late 2019 attracted the spotlight when the World Health Organization sought information last week, citing a report on clusters of undiagnosed pneumonia in children.Chinese authorities will open more paediatric outpatient clinics, seek to ensure more elderly people and children receive flu vaccines and encourage people to wear masks and wash their hands, Mi Feng, an official with China’s National Health Commission, told a press conference.Doctors in China and experts abroad have not expressed alarm about China’s outbreaks, given that many other countries saw similar increases in respiratory diseases after easing pandemic measures, which China did at the end of last year. More

(Reuters) – Governments and investors are pouring billions of dollars into emerging technologies to combat global warming in long-shot bets that entrepreneurship can help lead the way to a climate-friendly world.As officials from nearly 200 countries seek to forge agreements at the U.N. COP28 climate summit in Dubai this month, they will also be considering deployment of the nascent technologies. The amount invested worldwide by venture capital and private equity into climate technology startups – in projects ranging from carbon capture and green hydrogen, to food waste reduction and cleaning up heavy industry – totaled $490 billion this year, according to a report by accounting firm PwC.While that’s down 40% from 2022 as economic uncertainty, stubborn inflation and high interest rates bite, it marks a relatively healthy showing given the investments across all business sectors dropped 50% over the same period, PwC said.Here are some of the investment trends: CARBON REMOVALThe world emits around 37 billion metric tons of planet-warming carbon dioxide from fossil fuel and industry each year. One family of technologies, called carbon capture and storage, would tackle that by trapping those emissions before they reach the atmosphere, and storing them underground or using them to make products.A big question, though, is whether it can work given the costs and the amount of energy required. The International Energy Agency, the West’s energy watchdog, said in November that the oil and gas industry is relying excessively on carbon capture, and called the approach an implausible “illusion”.Even so, carbon removal is attracting loads of money.The United States this year, for example, announced it would grant more than $1 billion to two carbon removal projects, in Texas and Louisiana, that would suck more than 2 million metric tons of carbon emissions per year from the sky using a carbon removal technique called direct air capture. FUSIONFusion, can generate massive amounts of zero-emissions power by harnessing the energy produced from pushing atoms together, instead of splitting them apart. But the reaction is hard to produce, and harness any energy it generates to the grid. Investments in fusion slipped this year, part of the broader trend in declining venture investment. International fusion companies raised about $1.4 billion in mostly private money according to the Fusion Industry Association, down from about $2.83 billion in new investment last year.On the hopeful side for fusion, the number of companies getting investments rose to 43 from 33, spanning a dozen countries, according to the FIA, including the U.S. which has about 25 companies. Other countries pursuing fusion include Australia, China, Germany, Japan, and the UK.John Kerry, President Joe Biden’s climate envoy, is expected to announce at COP28 a global strategy in nuclear fusion. GREEN HYDROGENHydrogen is a fuel that can be made by electrolyzing water, and which burns clean. If it is produced using renewables like wind or solar power, as opposed to fossil fuel generated power, it is called green hydrogen. If it is produced with nuclear power, its called “pink” or “purple” hydrogen. The U.S. is trying to kickstart clean hydrogen, and in October announced $7 billion in grants to seven “hydrogen hub” projects across the country. The U.S. Inflation Reduction Act also provides tax credits for hydrogen production. Governments and companies think green hydrogen could be a way to clean up hard-to-decarbonize industries like steel and cement-making and other industrial manufacturing. But like carbon removal, it is expensive and energy intense, meaning it is unclear if it is doable at scale.PwC said technologies like green hydrogen and reducing food waste have relatively high emissions reduction potential, but are receiving a small share of start-up investment. In 2023, green hydrogen got 3.9% of global climate-tech venture funding, while food waste got 0.7%, it said.OTHERSThere are scores of other technologies in development that promise to be game-changers for the climate – if they survive. They include everything from lab-grown meat, to advanced batteries, to insects as a food source. Among them, lab-grown meat has made some advancements this year. In June, U.S. regulators cleared the first sales of chicken grown from cells in a vat. The meat was served in small portions at high-end restaurants.The industry says that if it manages to overcome high costs, challenges to scaling up production, and the ‘ick-factor’, it could revolutionize agriculture and eliminate the considerable emissions related to raising livestock.ASIA, AFRICA ON THE RISE Companies in the U.S. still get the most climate tech investment at around 49% of the global total, according to Deloitte, a professional services network. But other countries have been eating into that share. Funding in China, for example, was 22% from 2020 to 2023, up from 2% in 2010 to 2014, while it has also increased in France, the UK and India and in other countries in Asia and Africa. David Schatsky, a managing director at Deloitte, said investments in biofuels development has risen in Asia, while electric bike and motorcycle companies are doing well in Africa. “Entrepreneurship taking hold outside of the developed world has the potential to help attract more capital to these regions if an ecosystem around climate-related technologies can arise,” Schatsky said.___For daily comprehensive coverage on COP28 in your inbox, sign up for the Reuters Sustainable Switch (NYSE:SWCH) newsletter here. More

NEW YORK(Reuters) – As U.S. stocks sit on hefty gains at the close of a rollercoaster year, investors are eyeing factors that could sway equities in the remaining weeks of 2023, including tax loss selling and the so-called Santa Claus rally. The key catalyst for stocks will likely continue to be the expected trajectory of the Federal Reserve’s monetary policy. Evidence of cooling economic growth has fueled bets that the U.S. central bank could begin cutting rates as early as the first half of 2024, sparking a rally that has boosted the S&P 500 19.6% year-to-date and taken the index to a fresh closing high for the year on Friday. At the same time, seasonal trends have been particularly strong this year. In September, historically the weakest month for stocks, the S&P 500 fell nearly 5%. Stocks swung wildly in October, a month noted for its volatility. The S&P 500 gained nearly 9% gain in November, historically a strong month for the index.”We’ve had a solid year, but history shows that December can sometimes move to its own beat,” said Sam Stovall, chief investment strategist at CFRA Research in New York. Investors next week will be watching U.S. employment data, due out on Dec. 8, to see whether economic growth is continuing to level off.Overall, December has been the second-best month for the S&P 500, with the index up an average of 1.54% for the month since 1945, according to CFRA. It is also the month most likely to post a gain, with the index rising 77% of the time, the firm’s data showed.Research from LPL Financial (NASDAQ:LPLA) showed that the second half of December tends to outshine the first part of the month. The S&P 500 has gained an average of 1.4% in the second half of December in so-called Santa Claus rallies, compared with a 0.1% gain in the first half, according to LPL’s analysis of market moves going back to 1950.Stocks that have not performed well, however, may face additional pressure in December from tax loss selling, as investors get rid of losers to lock in write-offs before year-end. If history is any guide, some of those shares may rebound later in the month and into January as investors return to undervalued names, analysts said. Since 1986, stocks that were down 10% or more between January and the end of October have beaten the S&P 500 by an average of 1.9% over the next three months, according to BofA Global Research. PayPal (NASDAQ:PYPL) Holdings, CVS Health (NYSE:CVS), and Kraft Heinz (NASDAQ:KHC) Co are among the stocks the bank recommends buying for a tax-related bounce, BofA noted in a late October report.”The market advance has been extraordinarily narrow this year, and there’s reason to believe that some sectors and stocks will really take it on the chin until they get some relief in January,” said Sameer Samana, senior global market strategist at the Wells Fargo Investment Institute. Despite the market’s hefty year-to-date rise, investment portfolios are likely to have plenty of underperforming stocks. Nearly 72% of the S&P 500’s gain has been driven by a cluster of megacap stocks such as Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) and Nvidia (NASDAQ:NVDA), which have an outsized weighting in the index, data from S&P Dow Jones Indices showed.Many other names have languished: The equal-weighted S&P 500, whose performance is not skewed by big tech and growth stocks, is up around 6% in 2023.Some worry that investor over-exuberance may have already set in after November’s big rally, which spurred huge moves in some of the market’s more speculative names.Streaming service company Roku (NASDAQ:ROKU) soared 75% in November, for instance, while cryptocurrency firm Coinbase (NASDAQ:COIN) Global climbed 62% and Cathie Wood’s ARK Innovation Fund was up 31%, its best performance of any month in the last five years.Michael Hartnett, chief investment strategist at BofA Global Research, said in a Friday note that the firm’s contrarian Bull & Bear indicator – which assesses factors such as hedge fund positioning, equity flows and bond flows – had moved out of the “buy” zone for the first time since mid-October. “If you caught it, no need to chase it,” he wrote of the rally. More

(Reuters) -Amazon on Friday said it booked three Falcon 9 launches with Elon Musk’s SpaceX to help deploy the ecommerce giant’s Project Kuiper satellite network, tapping a rival in the satellite internet business for its multi-billion dollar launch campaign.Amazon (NASDAQ:AMZN) aims to build Kuiper as a constellation of 3,236 satellites in low Earth orbit to beam broadband internet globally and compete with SpaceX’s Starlink network, which already has some 5,000 satellites providing nearly global coverage.Amazon, which vowed in 2019 to invest $10 billion into the project, will put an unspecified number of Kuiper satellites on three Falcon 9 rockets from SpaceX beginning in mid-2025, the company said Friday.The Falcon 9 missions add to 83 rocket launches it had already procured from Jeff Bezos’ space company Blue Origin, the Boeing-Lockheed joint venture United Launch Alliance and Europe’s Arianespace in a multi-billion dollar launch deal.Amazon was sued by a shareholder in August for not adequately considering SpaceX as a launch provider when it was selecting most of the 83 other rides to space in late 2021 and 2022. The company said the lawsuit’s claims “are completely without merit.”Cleveland Bakers and Teamsters Pension Fund, a fund that lodged the suit in a Delaware court, said in its complaint the launch contracts were the second-largest capital expenditure in Amazon’s history at the time.Amazon’s largest acquisition is its $13.7 billion deal to buy Whole Foods in 2017.Amazon’s announcement that it added SpaceX rockets to its launch campaign comes just three days before its deadline to lodge a substantive defense against the shareholder lawsuit, according to a court scheduling order.Amazon in September filed a motion to dismiss the lawsuit, saying it would detail its defense in a later briefing. On Friday, the same day as Amazon’s SpaceX announcement, the court set a deadline of Dec. 4 for Amazon to outline its motion to dismiss.SpaceX’s partially reusable Falcon 9 rockets have been a crucial advantage over rivals in its rapid deployment of Starlink, a fast-growing internet network that made the Musk-owned company the world’s largest satellite operator.Eutelsat’s OneWeb, another satellite internet rival, relied on Russia’s Soyuz rocket for deploying the bulk of its network. But OneWeb turned to SpaceX when Russia invaded Ukraine and seized $50 million worth of the company’s satellites.U.S. regulators require Amazon to deploy half of the Kuiper network by 2026. The company launched its first two prototype satellites in orbit in October and announced successful tests last month.Amazon expects to deploy enough satellites for “early customer pilots” in the second half of 2024. It plans to use United Launch Alliance’s Atlas (NYSE:ATCO) 5 and the yet-to-launch Vulcan rocket for the first few batches of satellites. More

(Reuters) – Exchange-traded funds (ETFs) had a bumper month in the United States in November, with assets climbing to a record $7.65 trillion, State Street (NYSE:STT) Global Advisors said on Friday. ETF investors aggressively bought “risk on” assets in November as “the switch flipped,” said Matthew Bartolini, head of SPDR Americas Research at State Street, citing lower interest rates and renewed confidence in the economic outlook.Signs of cooling inflation have fueled bets that the Federal Reserve will begin unwinding its restrictive monetary policy earlier than expected, driving the S&P 500 to its biggest monthly gain for more than a year in November. The U.S. benchmark 10-year Treasury yield, which moves inversely to price, registered its steepest decline in more than a decade in November.Investors’ rekindled risk appetite could be seen in the popularity of high-yield bonds, with a record $11 billion in inflows, Bartolini said.Investors also rediscovered sector funds, directing some $7.5 billion into these ETFs in November. That reversed about half of the outflows in the previous 10 months, Bartolini said.Treasury bond ETFs were about the only segment with significant outflows in November, according to data in a monthly report published Friday by team of strategists at Citi Research, a division of Citigroup.The iShares 3-7 Year Treasury Bond ETF had outflows of $920 million, while the iShares 1-3 Year Treasury Bond ETF lost $1.1 billion, the Citi report showed.Still in terms of price, “everything rallied, including bonds, which had their best returns since 1980, and bond ETFs,” Bartolini noted.By far the lion’s share of November’s outflows was in the ultra-short end of the fixed income spectrum, analysts and market participants reported. These ETFs, tied to Treasury bills and other fixed income securities expiring in only three to six months, “saw a quick turn in sentiment in November,” said Bartolini.In the first 10 months of 2023, ETFs in this group had attracted $50 billion of assets, only to lose $7.1 billion in outflows in November, he added.Another 61 ETFs made their debut in November, bringing the year-to-date total to 452 and putting ETF launches firmly on track to setting a new record in 2023, Bartolini and other analysts said. In 2021, the industry rolled out 475 ETFs, the previous record.”We’re likely to see new funds arrive throughout December,” said Todd Rosenbush, ETF analyst at VettaFi. More

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The Biden administration issued new rules to prevent Chinese firms from supplying parts for electric cars set to receive billions of dollars in tax credits.The Biden administration proposed new rules on Friday aimed at shifting more production of electric vehicle batteries and the materials that power them to the United States, in an attempt to build up a strategic industry now dominated by China.The rules are meant to limit the role that firms in China can play in supplying materials for electric vehicles that qualify for federal tax credits. They will also discourage companies that seek federal funding to build battery factories in the United States from sourcing materials from China or Russia.The rules could encourage shifts in automotive supply chains, which continue to rely heavily on China for materials and components of electric vehicles. Automakers are also facing intense cost pressures as they try to modify their factories to make electric cars, and China offers some of the most advanced and lowest-priced battery technology in the world.The Biden administration is trying to use billions of dollars in new federal funding to change that dynamic and create a U.S. supply chain for electric vehicles.The climate law that President Biden signed in 2022 includes up to $7,500 in tax credits to consumers who buy electric vehicles made in the United States using largely domestic materials. The law also included a general ban on Chinese products. Lawmakers mandated that firms in China, Russia, North Korea and Iran be prohibited from providing certain materials to cars that received those tax breaks.But the law left open several questions, including what constitutes a Chinese or Russian company. Administration officials said those definitions included any entity that was incorporated or had headquarters in China or Russia, as well as any firm in which 25 percent of the board seats or equity interest was held by Chinese or Russian governments.Chinese companies that set up operations outside China appear to be able to benefit from the rules as long as the Chinese government is not a significant shareholder. That provision came as a relief to some automakers, which feared that the Biden administration might bar them from contracting with Chinese-owned mines or factories in the United States or other parts of the world.Lithium hydroxide is processed at a facility in Bessemer City, N.C. American companies are investing in factories and technologies aimed at developing the materials needed for electric vehicle.Travis Dove for The New York TimesThe law also requires battery makers that strike contracts or licensing agreements with Chinese firms to ensure that they are retaining certain rights over their projects. That provision is intended to make sure a Chinese firm is not effectively in control of such a project.Some conservative lawmakers had challenged Ford Motor’s plans to license technology from the Chinese battery giant known as CATL for a plant in Marshall, Mich., arguing that such a partnership should not be eligible for federal tax credits. Some Republican lawmakers suggested on Friday that the Treasury Department’s guidance did not go far enough to lessen the country’s dependence on China.“At a time when China is using massive subsidies to undercut U.S. manufacturers and throttle the global market for battery components, Treasury’s naïve new regulations would open the floodgates for American tax dollars to flow to Chinese companies complicit in trade violations and forced labor abuses,” said Representative Mike Gallagher of Wisconsin, chairman of the House Select Committee on the Chinese Communist Party. The rules kick in for battery components in 2024, and in 2025 for critical minerals like lithium, cobalt and nickel. They could be adjusted depending on industry comment.The rules could have a profound impact on the U.S. electric vehicle market, which is rapidly growing — battery-powered vehicles made up about 8 percent of new cars sold in the third quarter. Car and battery makers said Friday that they were still reviewing the rules, and that it would take time to determine how many models would qualify for tax credits.Tesla said on Friday that the two least expensive versions of its Model 3 sedan would qualify for only half the $7,500 credit starting in January. The Model Y sport utility vehicle also might not qualify for the full credit after Dec. 31, Tesla said. The Model Y and Model 3 are the top two electric vehicles by sales in the United States. Tesla buys some batteries from CATL.John Bozzella, the chief executive of Alliance for Automotive Innovation, wrote in a blog post Friday that the rules struck “a pragmatic balance,” including by exempting trace materials. If the administration had banned all minor Chinese parts from the supply chain, no car models might have qualified for tax credits next year, he said.Many cars have already been disqualified from purchase credits by other rules, like a requirement that vehicles be assembled in North America. Only about 20 vehicles currently qualify for the program out of more than 100 electric vehicles sold in the United States.The rules also raised new questions about whether stricter requirements for supply chains could continue a trend of driving more shoppers to lease, rather than buy, vehicles.The prohibition on sourcing from China applies only to vehicles that are sold, not to those that are leased. Consumers can receive tax credits for electric vehicles they lease from auto dealers, and that has led to a boom in E.V. leasing.Jack Fitzgerald, chairman of Fitzgerald Auto Malls, which operates dealerships in Florida, Maryland and Pennsylvania, said he had seen a spike in customers leasing electric vehicles. But he said concern about electric vehicle range and the availability of chargers, more than price, was holding back electric vehicle sales.“That’s the principal thing,” Mr. Fitzgerald said.Auto industry lobbyists have warned that extremely strict rules could stifle electric vehicle sales, and they have urged the administration to strike more trade deals to secure supplies of scarce battery minerals. But Paul Jacobson, the chief financial officer of General Motors, said the company had structured its electric vehicle operations to be successful regardless of the federal rules.“We’re not anchoring the business on saying this has to happen” with regard to regulations, Mr. Jacobson told reporters on Thursday. If regulations change, he added, “it’s not a backbreaking thing for us.”While the rules may create headaches for automakers, they are likely to benefit companies planning to supply batteries from factories in the United States.“It’s actually good news for us,” said Siyu Huang, chief executive of Factorial, a Massachusetts company that is developing next-generation electric vehicle batteries with support from Mercedes-Benz, Hyundai and Stellantis, the owner of Dodge, Jeep and Ram.Acquiring large amounts of lithium, an essential ingredient in batteries, could be difficult because most of the metal is processed in China, Ms. Huang said. But the rules will encourage investment in U.S.-based refineries, she continued. “Its definitely going to be another incentive to build more domestic supply,” Ms. Huang said.John DeMaio, chief executive of Graphex Technologies, which is building a factory in Michigan to process graphite for batteries, said the rules might temporarily slow electric vehicle sales by making it harder to qualify for the tax credit. But in the long run, he added, they will encourage investment in domestic suppliers.“It might be a hiccup,” he said, “but in general it provides certainty and clarity to get people off the fence.”Wally Adeyemo, the deputy secretary of the Treasury Department, said in a briefing with reporters that the rules would help advance the administration’s goals of building up an American clean energy supply chain while also cutting emissions in the transportation sector.“These changes take time, but companies are making the investments and Americans are buying these cars,” he said.Over the past year, companies have invested $213 billion in the manufacturing and deployment of clean energy, clean vehicles, building electrification and carbon management technology in the United States, according to tracking by the Rhodium Group and the Center for Energy and Environmental Policy Research at the Massachusetts Institute of Technology. That is a 37 percent increase from a year earlier..A lithium mine in northern Quebec. A majority of the world’s lithium and cobalt is processed in China.Brendan George Ko for The New York TimesStill, the global electric vehicle industry remains heavily anchored in China, which is the world’s largest producer and exporter of electric vehicles. China produces about two-thirds of the world’s battery cells, and refines most of the minerals that are key to powering an electric vehicle.The rules also restrict automakers from sourcing nickel used in their batteries from Russia, which is one of the world’s largest nickel producers.One of the challenges for automakers will be developing systems to track all the components of their battery through a long, and often opaque, supply chain.Vehicles that are reported incorrectly will be subtracted from an automaker’s eligibility for tax credits, Treasury said, and automakers that commit fraud or intentionally disregard the rules could be declared ineligible for the credit in the future. More

(Reuters) – A searing late-year rally has brought the S&P 500 to a fresh 2023 closing high, as investors bet the Federal Reserve is done raising interest rates and the U.S. economy will remain resilient in the face of tighter monetary policy. The benchmark index closed at 4,594.63, nearly 6 points above its previous closing high for 2023 set in late July. The index gained 0.6% on Friday after bullish investors grew more confident the rate cycle had peaked following comments from Fed Chair Jerome Powell.Signs that inflation is cooling after reaching a four-decade high last year have made investors more confident that the Fed will start cutting rates sooner than expected. At the same time, the Fed’s aggressive rate increases so far appear to have done little damage to the U.S. economy, despite fears that tighter monetary policy would hurt growth. The S&P 500 is up over 19% year-to-date after posting its biggest monthly rise in over a year in November. The index stood about 4% below its all-time closing high from January 2022.Stocks have faced down several crises this year, starting with the implosion of Silicon Valley Bank in March that sparked worries over the health of the broader banking system. A legislative showdown over raising the U.S. debt ceiling became a key concern for investors months later, with equities gaining support once a deal was reached. The S&P 500 reached its previous 2023 closing high on July 31, also spurred in part by excitement over developments in artificial intelligence technology.A steady rise in Treasury yields – which dulled the allure of stocks compared to bonds and other investments – began eroding those gains, resulting in a sell-off that eventually erased more than half of the index’s year-to-date advance. However, many investors came away from the Fed’s Nov. 1 meeting more confident that the central bank was close to wrapping up its rate increases. Data on Nov. 14 showed that consumer prices were unchanged on a monthly basis for October, the first such reading in more than a year, sparking a sizable stock rally. Federal funds futures, a widely used security for hedging short-term interest rate risk, imply a Fed funds rate of 4.54% by the end of July, versus 5.12% expected three months ago for that period, according to LSEG data.Cooling inflation has been accompanied by little of the economic damage that many expected to come with the Fed’s rate hikes – giving rise to hopes of a so-called Goldilocks scenario where the central bank is able to staunch the growth in consumer prices without badly hurting growth. The economy appears to have avoided a recession this year that was widely forecast at the beginning of 2023, though growth in key areas such as employment has slowed. The Citigroup Economic Surprise Index, which measures how economic data performs versus expectations, has been positive for virtually all of 2023.Of course, some investors worry that the cumulative effects of the Fed’s 525 basis points of tightening are only starting to manifest and will eventually cool growth far more than currently expected. A cadre of massive stocks has been the key engine of most of the S&P 500’s 2023 gains thanks to their outsized weightings in the index. The so-called “Magnificent Seven” — Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Nvidia (NASDAQ:NVDA), Meta Platforms (NASDAQ:META) and Tesla (NASDAQ:TSLA) — have seen stock gains of between about 47% and 220% so far this year. The companies perceived safety as investments given their size and competitive advantages has benefited the stocks, while a number of them have also been fueled by enthusiasm about the profit potential of artificial intelligence. The megacaps’ outperformance has increased their combined weight to well over one-fourth of the entire S&P 500, meaning the stocks’ moves have outsized influence on the benchmark index.To be sure, the S&P 500’s rapid rise has also made it richly valued compared to its historic levels, which could be an obstacle for the rally. The S&P 500 currently trades at roughly 19 times forward earnings estimates, compared to a historical average of 15.6 times. More