Economy

NEW DELHI (Reuters) – Indian economy is likely to continue its strong growth in the quarter to end of September, helped by a solid urban consumption and government spending, outpacing a slowing global economy squeezed by elevated interest rates and higher energy prices.Asia’s third-largest economy is expected to grow at 6.8% in the July-September quarter compared with a year earlier, according to a Reuters poll. India will release the quarterly gross domestic product figures at 1200 GMT on Thursday.India’s is seen as the bright spot globally as some Western countries are flirting with the possibility of recession, while China, the world’s second-largest economy, has slowed down. The poll’s consensus forecast is higher than Reserve Bank of India’s projection of 6.5% for the quarter, but lower than the 7.8% growth India’s economy saw in the previous quarter, helped by the comparison with a low base the previous year.”Domestic demand remains the key economic driver of activity, as external demand continues to remain weak,” Barclays economist Rahul Bajoria said, adding that services and construction sectors have shown robust growth.Private consumption accounts for nearly 60% of the Indian economy. During the quarter, urban consumption indicators such as passenger vehicle sales rose over 38% and domestic passenger aviation traffic growth exceeded 20% through the three months.Record online sales of e-commerce players such as Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT) owned Flipkart during the country’s festival season was another evidence of strong consumption in urban centres.On Wednesday, India’s Economic Affairs Secretary Ajay Seth told reporters Indian economy showed good momentum and he expected “good numbers” for the September quarter.The Indian government spent 49% of its capital expenditure budget of 10 trillion rupees ($120.01 billion) between April and September, compared with over 45% of 7.5 trillion rupees in the same period last year.”We had expected government capex spending and the real estate sector to drive growth and, indeed, both factors have crucially underpinned a construction cycle which has been a key ingredient of growth this year,” JP Morgan’s Sajjid Z Chinoy said in a note.Rural demand, especially across the farm sector hit by weather vagaries that delayed sowing activity, remained a key concern, economists said.They noted how two-wheeler sales, a good indicator of rural buying power, rose 13% during the July-September quarter, far less than passenger vehicle sales.”Some anticipated spending in rural areas that happens due to harvesting may be delayed this time because of uneven monsoons impacting consumption,” said Sunil Kumar Sinha, an economist at India Ratings.($1 = 83.3231 Indian rupees) More

The United Automobile Workers’ effort, with a long-elusive goal, follows its success in securing big raises in contracts with the Detroit automakers.The United Automobile Workers union announced Wednesday that it was undertaking an ambitious drive to organize plants owned by more than a dozen nonunion automakers, including Tesla and several foreign companies — a goal that has long eluded it.The move comes weeks after the U.A.W. won new contracts from General Motors, Ford Motor and Stellantis that included wage increases of 25 percent or more over four and a half years for its 146,000 members employed there.In addition to Tesla, the targets of the drive are two other electric vehicle start-ups, Lucid and Rivian, and 10 foreign-owned automakers: Toyota, Honda, Hyundai, Nissan, BMW, Mercedes-Benz, Subaru, Volkswagen, Mazda and Volvo.The U.S. plants owned by those companies employ nearly 150,000 workers in 13 states, the union said.If the organizing drive gains momentum, it could become one of the largest by the U.A.W. since its infancy in the 1930s. The union’s past efforts to organize even single plants owned by the foreign automakers, concentrated in the South, came to nought. A foothold among those companies would signal a big shift in the American auto industry, where nonunion manufacturers have long had a significant cost advantage over the Detroit automakers.The union said the organizing drive had been prompted by inquiries from several thousand workers at nonunion plants.“Workers across the country, from the West to the Midwest and especially in the South, are reaching out to join our movement and to join the U.A.W.,” the union’s president, Shawn Fain, said in a video posted on Facebook. “The money is there. The time is right.”A Honda statement cited the automaker’s “competitive wages and benefits,” adding, “We do not believe an outside party would enhance the excellent employment experience of our associates.” Subaru did not comment directly on the union drive but referred to a series of wage increases and a comprehensive benefits package.At the DealBook conference sponsored by The New York Times on Wednesday, Elon Musk, Tesla’s chief executive, said, “If Tesla gets unionized, it will be because we deserve it and we failed in some way.” He reiterated his opposition to unions, saying that “it’s not good to have an adversarial relationship” between groups within a company.Rivian and Volkswagen said they had no comment. The other companies did not immediately respond to requests for comment.On Wednesday, the U.A.W. activated websites where workers can electronically sign cards that serve as an official certification of their desire to have union representation. Earlier, at a handful of plants, the U.A.W. had already received signed cards from more than 30 percent of the work force, the threshold required under federal law for the union to move forward with a vote on unionization, a person familiar with the matter said.The union is now working to send organizers to areas around these nonunion plants to collaborate with workers at those factories, this person said.After the U.A.W. reached agreements with the Detroit automakers to raise wages, Toyota, Honda and Hyundai announced that they, too, would increase workers’ pay.Toyota has told workers that it will raise hourly rates 9 percent in January. Honda will lift wages 11 percent and Hyundai 14 percent next year. Hyundai plans to increase wages 25 percent by 2028.The U.A.W. said Wednesday that it was making a concerted effort to organize a large Toyota plant in Georgetown, Ky., that employs about 7,800 workers and produces the Camry sedan and RAV4 sport utility vehicle.U.A.W. members have long earned more than nonunion workers. At plants in the South, wages tend to start below $20 an hour and top out at less than $30. The top U.A.W. hourly wage, previously $32, climbed to more than $40 in the contracts the union signed with the three Detroit manufacturers.The U.A.W. has fallen short twice in the past decade — by narrow margins, in 2014 and 2019 — in unionization votes at a Volkswagen factory in Chattanooga, Tenn. The U.A.W. lost by a substantial margin at a Nissan plant in Canton, Miss., in 2017. Organizing efforts at other companies’ plants have petered out before coming to a vote.But after Mr. Fain became the union’s president this year, the union promised a more aggressive approach to its contract talks with the Big Three and vowed to renew efforts to widen its reach in the industry.In addition to wage gains at the Detroit companies, the U.A.W. won agreements to preserve jobs and to keep open a Stellantis plant in Illinois that had been slated to close.Arthur Wheaton, director of labor studies at Cornell University School of Industrial and Labor Relations, said the U.A.W.’s wage gains created a stronger case for joining the union.“It shows collective bargaining works and shows the U.A.W. was successful,” he said. “They can say: ‘We saved this plant. Look at what we got. You can have this, too.’”Past organizing drives were hurt because the U.A.W. had a tarnished image, Mr. Wheaton added: Many unionized plants had closed, its members had been required to accept wage and benefit cuts to help the Detroit manufacturers survive the 2009 financial crisis, and federal corruption investigations had implicated senior union officials.“A lot of the negative things about the union — a lot of that stuff has gone away now,” Mr. Wheaton said.Santul Nerkar More

(Reuters) – Billionaire Elon Musk told advertisers that have fled his social media platform X over antisemitic content to “Go fuck yourself” in a fiery Wednesday interview.His profanity-laced remarks followed a moment of contrition in a New York Times DealBook Summit interview. Musk said repeatedly he was sorry for publishing a tweet on Nov. 15 that agreed with an anti-Jewish post.Musk has faced a torrent of criticism ever since he agreed with a user who falsely claimed Jewish people were stoking hatred against white people. Musk in his post said the user, who referenced the “Great Replacement” conspiracy theory, was speaking “the actual truth.” On Wednesday Musk said he had “handed a loaded gun” to both detractors and antisemitic people, describing his post as possibly the worst he had made during a history of messages that included many “foolish” ones.The Tesla (NASDAQ:TSLA) CEO bristled at the idea that he was antisemitic and said that advertisers who left X, formerly known as Twitter, should not think they could blackmail him.”If somebody’s gonna try to blackmail me with advertising, blackmail me with money? Go fuck yourself,” he said.”Go. Fuck. Yourself. Is that clear? I hope it is. Hey, Bob, if you’re in the audience,” he added, in an apparent reference to Robert Iger, chief executive of Walt Disney (NYSE:DIS), which pulled ads on X. Iger spoke earlier at the event and said that Disney felt the association with X following Musk’s move “was not a positive one for us”. A spokesperson from Disney did not immediately respond to a request for comment.”What I care about is the reality of goodness, not the perception of it. And what I see all over the place is people who care about looking good while doing evil. Fuck them,” Musk said.Musk’s expletives against advertisers is the “closing chapter” for brands doing business with X, said Lou Paskalis, founder of marketing consultancy AJL Advisory and the former head of global media at Bank of America. “They’re not going to forget that,” he said.Customers who did not like him should consider the products his company make based on their quality, Musk said, pointing to electric cars from Tesla and SpaceX rockets. “I will certainly not pander,” he said.Musk added that he himself arguably had done more for the environment, at Tesla, than anyone in the world, based on Tesla’s massive sales of electric vehicles.”It would be fair to say, therefore, as a leader of the company, I’ve done more for the environment than everyone — any single human on Earth.”Musk’s comments came on the same day that U.S. Senate Majority Leader Chuck Schumer warned that the rise in antisemitism since the start of the Israel-Hamas war has reached a crisis point, saying it threatens the safety of Jews worldwide and the future of Israel. “To us, the Jewish people, the rise in antisemitism is a crisis. A five-alarm fire that must be extinguished,” Schumer said in an emotional, 40-minute Senate speech. Musk’s post drew condemnation from the White House for what it called an “abhorrent promotion of antisemitic and racist hate.”The “Great Replacement” theory falsely claims that Jewish people and leftists are engineering the ethnic and cultural replacement of white populations with non-white immigrants that will lead to a “white genocide.”Following the post, major U.S. companies including Walt Disney, Warner Bros Discovery (NASDAQ:WBD) and NBCUniversal parent Comcast (NASDAQ:CMCSA) suspended their ads on X. A report from liberal watchdog group Media Matters precipitated the advertiser exit, which said it found ads next to posts that supported Nazism. The platform filed a lawsuit last week against Media Matters for defamation.Musk’s comments have put pressure on X overall, including Chief Executive Linda Yaccarino. An executive told Reuters that she would remain at the company.Musk himself appeared resolved that X could fail financially and blamed advertisers.”If the company fails because of advertiser boycott, it will fail because of an advertiser boycott. And that will be what bankrupt the company and that’s what everybody on earth will know,” he said.In the wake of the condemnation around his post, Musk traveled to Israel and toured the site of Hamas’ assault in the country on Oct. 7. On Monday, he spoke with Israeli Prime Minister Benjamin Netanyahu in a live-streamed conversation on X.Musk on Wednesday said the trip had been planned before his message and was “independent” of the issue. Musk in Israel said he is against antisemitism and anything that “promotes hate and conflict” and stated that X would not promote hate speech. While there, he received a symbolic dog-tag from the father of an Israeli hostage taken captive by Hamas, which he promised to wear until all the hostages were free. He wore the dog-tag on stage on Wednesday.”The fact that you came here speaks volumes of your commitment to try to secure a better future,” Netanyahu told Musk during the conversation in Israel. Musk’s wide-ranging interview on Wednesday included discussions from freedom of speech to the environment to U.S. presidential politics. Musk said he thought he would not vote to re-elect President Joe Biden but did not say he would vote for his likely challenger, Donald Trump. More

If the Fed meets market expectations and starts cutting aggressively in 2024 it likely will be against a backdrop of a sharply slowing economy and rising unemployment.
Market pricing has grown even more aggressive on Fed policy easing, with fed funds futures now pointing to five quarter-percentage-point rate cuts next year.
“The market keeps trying to front-run these rate cuts, only to be disappointed,” said Kathy Jones, chief fixed income strategist at Charles Schwab.

The Marriner S. Eccles Federal Reserve building during a renovation in Washington, DC, US, on Tuesday, Oct. 24, 2023.
Valerie Plesch | Bloomberg | Getty Images

Interest rate cuts don’t happen during good times, something important for markets to remember amid hotly anticipated easing next year from the Federal Reserve.
If the Fed meets market expectations and starts cutting aggressively in 2024, it likely will be against a backdrop of a sharply slowing economy and rising unemployment, which in turn would bring lower inflation.

Central bank policymakers, however, won’t cut for the sake of cutting. There will have to be a compelling reason to start easing, and even then rate decreases are likely to come slowly — unless something breaks, and the Fed is forced into more aggressive action.
“The market keeps trying to front-run these rate cuts, only to be disappointed,” said Kathy Jones, chief fixed income strategist at Charles Schwab. “In a different cycle, when inflation hadn’t spiked so much, I think the Fed would have been cutting rates already. This is a very different cycle. There is going to be much more caution on their part.”
The latest market rumble over the prospect of rate cuts came Tuesday morning, when Fed Governor Christopher Waller said he could envision easing policy if inflation data cooperates over the next three to five months.
Never mind that fellow Governor Michelle Bowman, just minutes later, said she still expects rate hikes will be necessary. The market instead chose to hear Waller more clearly, perhaps because he has been one of the more hawkish Fed officials when it comes to monetary policy, while Bowman was merely reiterating an oft-stated position.

Five rate cuts anticipated

“If the economy moderates at all, you could be talking about a real disinflation story, and I think that’s what Waller would be getting at,” said Joseph LaVorgna, chief economist at SMBC Nikko Securities America. “If the real fed funds rate continues to go higher, as I expect it will, then you’d want to offset that through rate cuts. And the amount of rate cuts I think they’re going to have to do is a relatively large amount.”

LaVorgna, the chief economist at the National Economic Council under former President Donald Trump, said he thinks the Fed could have to cut by as much as 200 basis points next year, or 2 percentage points.
Market pricing has grown more aggressive on Fed policy easing, with fed funds futures now pointing to five quarter-percentage-point rate cuts next year, one more than before the latest speeches, according to the CME Group. Stocks have rallied since as investors prepare for lower rates.

It could be a risky bet if inflation doesn’t cooperate.
“The Fed doesn’t want to take its foot off the brake too early. I don’t see them cutting just to reach some theoretical neutral rate,” said Chris Marangi, co-chief investment officer for value at Gabelli Funds. “We expect some economic softness next year, so that won’t be a surprise. But a significant cut in rates needs to be preceded by significant economic weakness, and that’s not discounted in stock prices today.”
Fed officials at their meeting in two weeks will update their economic projections over the next several years, a process that includes revisions to the so-called “dot plot” of individual members’ expectations for interest rates.
During the last update, in September, Federal Open Market Committee members penciled in the equivalent of two quarter-point cuts next year. However, that was predicated on another rate increase in 2023 that almost certainly is not happening, judging both by recent Fed commentary and market expectations.
If the Fed were to go on a cutting spree next year, then, it would almost have to be accompanied by pronounced economic weakness. Virtually all previous Fed cutting cycles have happened during or around recessions.

Fears of a hard landing

Hedge fund titan Bill Ackman said Tuesday that unless the Fed starts cutting, it will in fact be the cause of a sharp downturn that it then would have to address.
“We’re betting that the Federal Reserve is going to have to cut rates more quickly than people expect,” Ackman said in an upcoming episode of “The David Rubenstein Show: Peer-to-Peer Conversations,” which is aired by Bloomberg. “That’s the current macro bet that we have on.”
“I think there’s a real risk of a hard landing if the Fed doesn’t start cutting rates pretty soon,” the head of Pershing Square Capital Management added.
However, even some of the historically more dovish Fed officials aren’t showing their hands on when they think cuts will come.
Atlanta Federal Reserve President Raphael Bostic, an FOMC voter next year, wrote Wednesday that he sees pronounced downward trends in economic activity and inflation. Richmond President Thomas Barkin said he also sees slowing but added that he remains “skeptical” that inflation will come down to the Fed’s 2% target quickly and said policymakers need to keep potential rate hikes on the table.

“The Fed is trying to slow the economy down, and if they don’t succeed with slowing consumption down … that would then imply that maybe the market should be pricing that rates are going to be higher for longer than what futures are pricing at the moment,” Tosten Slok, chief economist at Apollo Global Management, told CNBC on Tuesday. “Maybe we need to get all the way into Q3 before the Fed will begin cutting.”
Indeed, Gary Cohn, former director of the NEC under Trump and former chief operating officer at Goldman Sachs, said the kind of economic weakness that would precipitate rate cuts is unlikely, at least in the first part of 2024. Consequently, the Fed could lag its global counterparts when it comes to relaxing the fight against inflation and not start cutting until “maybe” the third quarter, he said.
“You don’t want to be early to leave when you’re the last one to come to the party,” Cohn told CNBC’s Dan Murphy on Wednesday at the Abu Dhabi Finance Week conference. “You have to be the last one to leave the party, so the Fed is going to be the last one to leave this party.” More

The Treasury Department said in a statement that virtual currency mixer Sinbad, which was hit with sanctions on Wednesday, processed millions of dollars worth of virtual currency from heists carried out by the North Korea-linked Lazarus Group, including the Axie Infinity and Horizon Bridge heists of hundreds of millions of dollars.Lazarus, which has been sanctioned by the U.S., has been accused of carrying out some of the largest virtual currency heists to date. In March 2022, for example, it allegedly stole about $620 million in virtual currency from a blockchain project linked to the online game Axie Infinity.The Federal Bureau of Investigation said in January that Lazarus was responsible for the theft of $100 million from U.S. crypto firm Harmony’s Horizon bridge.”Mixing services that enable criminal actors, such as the Lazarus Group, to launder stolen assets will face serious consequences,” Deputy Treasury Secretary Wally Adeyemo said in the statement on Wednesday.”The Treasury Department and its U.S. government partners stand ready to deploy all tools at their disposal to prevent virtual currency mixers, like Sinbad, from facilitating illicit activities.”Sinbad did not immediately respond to an emailed request for comment. Its website displays a message that the service has been seized as part of a coordinated law-enforcement action between the FBI and agencies in Finland and the Netherlands.North Korea’s mission to the United Nations did not immediately respond to a request for comment.A virtual currency mixer is a software tool that pools and scrambles cryptocurrencies from thousands of addresses.Sinbad is believed by some experts in the industry to be a successor to the Blender mixer, which the U.S. hit with sanctions last year over accusations it was being used by North Korea.The Treasury said Sinbad is also used by cybercriminals to obscure transactions linked to activities such as sanctions evasion, drug trafficking and the purchase of child sexual abuse materials, among other malign activities.The action on Wednesday freezes any U.S. assets of Sinbad and generally bars Americans from dealing with it. Those that engage in certain transactions with the mixer also risk being hit with sanctions. More

(Reuters) -U.S. central bankers are preparing for their last policy-setting meeting of the year by diving deep into inflation data for signals on whether they have pushed interest rates high enough. The evidence, to many of them, is that they probably have.”Monetary policy is in a good place for policymakers to assess incoming information on the economy and financial conditions,” Cleveland Fed President Loretta Mester said on Wednesday. One of the Fed’s more reliably hawkish voices, Mester has said for months she feels one more rate hike would likely be needed by year end to get inflation on track for the Fed’s 2% target. Notably, Wednesday’s speech did not contain that line.The Fed has kept its policy rate unchanged in the 5.25%-5.50% range since July, and after the last meeting over Oct. 31-Nov. 1, Fed Chair Jerome Powell said he is not yet confident policy is restrictive enough.Fed Governor Christopher Waller, a policy hawk like Mester, on Tuesday delivered a similar assessment. “I am increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2%,” he said. One reason for their confidence: wage pressures have eased, with average hourly earnings growing just 3.2% in recent months. That moderation, from 4.1% previously, should help slow inflation in the labor-intensive service industries, Waller said Tuesday. Another reason: falling rents are expected to drive down housing services inflation. Indeed, Waller said, if the inflation decline continues for several more months, rate cuts could be in order to keep policy from becoming overly tight. That said, neither Waller nor Mester say they feel the verdict on inflation is fully in. Both say they’ll be watching the data closely and that rates may yet need to rise. And some of their colleagues are more skeptical. “I’m still in the ‘looking to be convinced’ category, rather than the ‘convinced’ category,” Richmond Fed President Thomas Barkin said on Wednesday, on whether inflation is on a firmly downward path, adding that he wants to retain the option of doing more on rates if inflation flares back up. Strong economic growth will continue to encourage businesses to try to raise prices, Barkin said at a CNBC CFO Council event. Polled after his talk, a majority of the audience said that’s exactly what they planned to do next year; none said they planned to cut prices. On Wednesday the Fed’s Beige Book, a compendium of survey-based regional data meant to give policymakers a close-to-the-ground look at economic conditions ahead of each rate-setting meeting, offered a slightly different take. “Some firms noted that pricing power was reduced by weakening demand and competition,” reported the Cleveland Fed, which said the regional economy had contracted slightly in recent weeks. The Dallas Fed, one of the few Fed banks reporting its regional economy expanded since last month, noted that price pressures were above average in the service sector, but modest in other sectors, adding that “outlooks worsened…with numerous contacts citing geopolitical instability and high interest rates as headwinds.” Policymakers will get a fresh read on inflation on Thursday, with the publication of the October personal consumption expenditures price index. Economists polled by Reuters estimate it rose 3% from a year earlier, down from 3.4% reported in September. Inflation peaked at 7.1% in June 2022.Atlanta Fed President Raphael Bostic, who has for months said the Fed policy rate at 5.25%-5.50% is high enough, said Wednesday he feels data backing that view is getting clearer. “There’s no question the rate of inflation has slowed materially over the past year-plus, and thus far we have avoided a disruptive surge in unemployment that often accompanies a steep slowdown in price increases,” he said. “At the same time, I don’t think we’ve seen the full effects of restrictive policy, another reason I think we’ll see further cooling of economic activity and inflation.” More

Economic activity slowed since the previous report, with retail sales declining, on average, as “consumers showed more price sensitivity,” the Fed said in its Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through Nov. 17. “The economic outlook for the next six to twelve months diminished over the reporting period,” it added.The more sombre economic outlook comes as the demand for labor continued to ease, with wage growth remaining modest to “moderate in most Districts,” according the report, though there continued to be “difficulty attracting and retaining high performers and workers with specialized skills.”The pace of inflation “largely moderated” across districts, though prices remained elevated, the report showed, with a notable rise in utilities and insurance costs across most districts. Most districts, however, expect moderate price increases to continue into next year, the report added.  The update comes just a day ahead of fresh inflation data expected to show an ongoing easing in price pressures that has boosted bets of rate cuts in the first half of next year.Data on Wednesday, however, showed the economy grew faster than initially expected in Q3, potentially muddying the optimism over rate cuts as the Fed has repeatedly called for below-trend growth to help with inflation fight. “The Fed is buying itself time … the rate cuts are dependent on a cooling economy and cooling inflation, but I don’t see it yet. “We need to see the economic data in Q4,” Scott Acheychek, Chief Executive Officer of REX Shares, told Investing.com’s Yasin Ebrahim in an interview on Wednesday.  “I wouldn’t be surprised if we just stay in this higher for longer camp as the Fed just really wants to buy some time and see some form of a cooling economy,” Acheychek added. More

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