Economy

SAN FRANCISCO (Reuters) -U.S. Treasury Secretary Janet Yellen began two days of meetings with Chinese Vice Premier He Lifeng on Thursday in a bid to limit the economic fallout from tensions between Washington and Beijing and keep the lines of communication open.U.S. Treasury officials have sought to downplay expectations for any breakthroughs from the meetings in San Francisco, where U.S. President Joe Biden next week will host a summit of Asia-Pacific Economic Cooperation (APEC) country leaders, including Chinese President Xi Jinping.Biden and Xi are expected to steal the spotlight with a planned meeting on the summit sidelines. Yellen first met with He during a visit to Beijing in July that was among a series of cabinet-level engagements that paved the way for Biden and Xi to meet.In opening remarks, Yellen said she wanted “an open and substantive discussion” on the U.S.-China economic relationship, Beijing’s subsidy practices and global challenges such as climate change and debt relief, among other issues.”The United States has no desire to decouple from China: A full separation of our economies would be economically disastrous for both our countries, and for the world,” she told He.Flanked by more than a dozen staff on each side facing each other across a swath of marigold flowers, Yellen sought to reassure China that the U.S. wants a healthy economic relationship based on a level playing field. She added she would discuss and explain the reasons behind continued U.S. national security restrictions.CHINA’S CONCERNSHe, China’s new economic czar, who faces flagging growth at home, said through an interpreter that his engagements with Yellen so far have been “constructive.” But he added that the two sides needed to bring their relationship “back to a healthy and stable development.”He said he would communicate China’s “key concerns on the economy,” including improving the investment and business environment and “to also take effective measures to bring our economic and trade relations back on track” – references to longstanding Chinese objections to U.S. tariffs on its exports and restrictions on U.S. investment in China.The San Francisco meetings mark the first in-person gatherings of new U.S.-China economic and financial forums involving staff-level officials from both sides after their launch in October.But in announcing the consultations on Monday, Yellen said this would not be a recreation of the Obama administration’s U.S.-China Strategic and Economic Dialogue, a broad forum that was widely criticized for its lack of substance.A U.S. Treasury official said that a key goal for the meetings was deepening communications with China, gaining a better understanding of the relationship, and avoiding any misunderstandings about U.S. policy decisions. ‘FRACTURED’ RELATIONSHIPKelly Ann Shaw, a former White House trade adviser to former President Donald Trump, said it was important for Yellen to re-engage with China, but that the meeting would do little to change the overall trajectory of U.S.-China relations.”This relationship is fundamentally fractured. And I think it’s going to stay that way for the foreseeable future,” said Shaw, a partner at law firm Hogan Lovells.”So it’s about figuring out, what do we want this relationship to look like knowing that? And just because you don’t like each other doesn’t mean you can’t get along where your interests align.”Yellen also said that she would discuss cooperation with China on global challenges, including climate change and debt relief for low-income countries, where the U.S. and China “have an obligation to lead.”Deputy U.S. Treasury Secretary Wally Adeyemo told Reuters NEXT on Thursday that Yellen also will make it clear that China should “not provide material support for Russia in their war against Ukraine,” as firms that do so will incur U.S. sanctions.”We think that having those direct conversations means that they understand us and we understand them,” Adeyemo said, adding that new sanctions were coming soon against parties aiding funding of the Hamas militant group in Gaza. More

LIMA (Reuters) – Peru’s central bank again lowered its benchmark interest rate by 25 basis points to 7.00% on Thursday, as the monetary authority in the Andean nation continues to ease borrowing costs in an effort to help claw its way out of a recession.The bank’s third consecutive cut comes as the rate of rising consumer prices has been coming down.But the latest decision to cut rates does not necessarily imply a cycle of successive rate reductions, the monetary authority said in a statement.It added that future adjustments to the key lending rate “will be conditioned on new information on inflation and its determinants.”In October, annual inflation in Peru’s mining-dependent economy decelerated to 4.34% to reach its lowest level in over two years, according to official data.But the world’s No. 2 copper producer had already slid in to a technical recession earlier this year due to the adverse impacts of the weather phenomenon known as El Nino, lower private investment and lingering effects from earlier social conflicts.The statement noted that inflation’s downward trend is expected to continue, with the average rate of consumer prices expected to reach the central bank’s target of 2%, plus or minus 1 percentage point, early next year. The downward trend is driven by a moderation of prices internationally, according to the statement.Earlier on Thursday, Peru’s government announced a package of measures aimed at boosting investments in the country’s critical mining sector.Economy Minister Alex Contreras, who has said he expects a fourth-quarter recovery, said the measures should lead to a surge in funding for public and private projects of up to $8 billion in 2024, from $2.3 billion this year. More

The trip, including a meeting with the president of the United Automobile Workers, offered the president a chance to celebrate a landmark labor deal.President Biden pulled a red United Automobile Workers T-shirt over his button-down on Thursday and celebrated a landmark labor deal that kept a Stellantis manufacturing plant in business, using an appearance in Illinois to shore up crucial union support.“I’ve worn this shirt a lot, man,” Mr. Biden told a man in the crowd, one month after he walked a picket line to support autoworkers in their strike for higher wages. “I’ve been involved in the U.A.W. longer than you’ve been alive,” the 80-year-old president said.The speech before the boisterous crowd was a victory lap for Mr. Biden after the union reached an agreement with Ford, General Motors and Stellantis late last month on a contract that included pay increases and reopened the plant in Belvidere, Ill.Mr. Biden made the case for clean energy even as many workers fear the president’s climate change agenda could endanger their jobs. He also drew a contrast with his likely Republican opponent in the 2024 presidential race, former President Donald J. Trump.“When my predecessor was in office, six factories closed across the country. Tens of thousands of auto jobs were lost nationwide, and on top of that he was willing to cede the future of electric vehicles to China,” Mr. Biden said. He added that Mr. Trump has insisted that electric vehicles will lead to the loss of thousands of manufacturing jobs.“Well, like almost everything else he said, he’s wrong,” Mr. Biden added. “And you have proved him wrong. Instead of lower wages, you won record gains. Instead of fewer jobs, you won a commitment for thousands of more jobs.”During Mr. Trump’s four years in office, the National Labor Relations Board often took pro-corporate stances and was actively hostile to unions. While Mr. Biden in September became the first president to appear on a picket line, Mr. Trump visited a nonunion plant in Michigan and said union members “were being sold down the river by their leadership.”The Biden administration has proposed the nation’s most ambitious climate regulations yet, which would ensure that two-thirds of new passenger cars are all-electric by 2032 — up from just 5.8 percent today. The rules, if enacted, could sharply lower planet-warming greenhouse gas emissions from vehicle tailpipes, the nation’s largest source of greenhouse emissions.But they also come with costs for autoworkers, because it takes fewer than half the laborers to assemble an all-electric vehicle as it does to build a gasoline-powered car. Union leaders also fear that many of the new manufacturing plants for electric vehicle batteries and other parts are being built in states that are hostile to unions.On Thursday, Mr. Biden showered praise on union leaders, particularly Shawn Fain, the president of the U.A.W., saying the strike that Mr. Fain led saved the automobile industry. “You’ve done a hell of a job, pal,” Mr. Biden told him.Mr. Fain did not offer Mr. Biden the endorsement of his powerful union with about 400,000 active members, including a major presence in the swing state of Michigan. In the past, the union boss has been vocally critical of some administration decisions around its push for electric vehicles, writing in a memo to union members in May that “the E.V. transition is at serious risk of becoming a race to the bottom.” He wrote that the union wanted to see “national leadership have our back on this” before making a decision on an endorsement.“His view was: We’re two guys from working-class backgrounds,” Gene Sperling, Mr. Biden’s liaison to the U.A.W., said of the president’s view shortly before he invited Mr. Fain to the Oval Office in July. The two have spoken on the phone several times since, including once when Mr. Biden called Mr. Fain to wish him a happy birthday.Administration officials said the tenor of the relationship changed when Mr. Biden joined striking autoworkers in Michigan in September. When word came down that the union had struck a deal with the automakers, Mr. Biden stepped away during a state dinner welcoming the Australian prime minister and called Mr. Fain, a senior administration official said.David Popp, a professor of public administration at Syracuse University, noted that while new factories will be needed to build electric vehicle batteries, the vehicles will require fewer suppliers producing parts. Many assembly workers will also need to be retrained.“We may also need fewer workers,” Mr. Popp said in an email. But, he said, “there doesn’t seem to be a consensus yet on whether that is the case.”Kristine Lynn, who spent 17 years on the assembly line at the Belvidere manufacturing plant before it shuttered eight months ago, said she had “mixed emotions” about the transition to clean energy and electric vehicles.Ms. Lynn, 49, said she was unsure what job she was returning to, but knew she would face changes in the long run. Her last position involved putting gas tanks into automobiles.“That job isn’t going to exist anymore,” she said. More

NEW YORK (Reuters) – U.S. Deputy Secretary Wally Adeyemo on Thursday said the Group of Seven-led coalition that imposed a price cap on Russian oil last December was shifting its focus from reducing Russian revenues to raising Moscow’s cost of shipping its oil.Adeyemo told the Reuters NEXT conference in New York that Russia’s investment in a shadow fleet of tankers to carry its oil and the accompanying insurance was cutting into Moscow’s profits and reducing its ability to fund its war in Ukraine.”We want to make sure that Russia has as little income as possible that they can use to fund their illegitimate war in Ukraine,” he said, citing outside estimates that the price cap had added up to $35 per barrel to Russia’s costs in addition to reducing its revenues by 40% to 50%.”From my standpoint, them buying these tankers and spending money on tankers was far better than spending money on tanks,” he said. “So now Russia owns a series of inadequate tankers that are on the ocean, trying to move their oil with their insurance, and our goal is going from just being focused on their revenue – which was the $60 price cap – to being focused on their costs.”Reuters reported last month that Russian crude oil producers are enjoying the cheapest costs to ship to refiners in China and India in almost a year thanks to a growing number of vessels plying the routes.The arrival of new shippers working outside the purview of Western governments allows Russian firms to earn more than the $60 per barrel cap that the U.S. and its allies had aimed to impose on Russia through sanctions. It also means that enforcing the price cap will have limited impact on Russian revenues.G7 countries and Australia imposed sanctions in December 2022 that prohibit shippers or insurers domiciled in member countries from offering services to facilitate Russian oil exports when the price is above $60 a barrel. The sanctions do not apply to shipping companies or insurers from other countries, regardless of the price.Adeyemo said the price cap had driven Russia’s costs up significantly because it now had to ship oil over longer distances, and had been forced to build up its own ecosystem that did not benefit from economies of scale enjoyed by Western countries.”What we’re focused on now is making sure that we enforce the price cap as it exists, but also that we take additional steps to increase costs to Russia in order to make sure that they have less income to fund their illegitimate war,” he said.He gave no further details on what steps could be taken to increase Russia’s costs. More

NEW YORK (Reuters) – One year after the debut of ChatGPT created a global sensation, leaders of business, government and civil society said at the Reuters NEXT conference in New York that generative AI technology is still mostly in an experimental stage, with limited exceptions.While ChatGPT has enchanted consumers with its ability to generate everything from Shakespeare-style sonnets to student term papers, its propensity to “hallucinate” erroneous information has kept it from revolutionizing most areas of industry so far, they said.”What’s been a lesson, I think, is the gap between being able to do something somewhat and being able to do it well enough for a particular purpose,” said Anthony Aguirre, founder and executive director of the Future of Life Institute, a nonprofit aimed at reducing catastrophic risks from advanced artificial intelligence.Aguirre cited self-driving cars as an example of a technology struggling to make the transition to full deployment. The cars “work at some level right now, but they’re not reliable enough to replace humans. That has turned out to be much, much harder than anticipated.”Sherry Marcus, director of applied science at Amazon (NASDAQ:AMZN)’s AWS, said customers were at different stages of progress. “I’ve observed many generative AI applications that are in production while other customers are just beginning their journey.”One way generative AI was already being deployed widely, highlighted by speakers across industries, was to write computer code.On Microsoft (NASDAQ:MSFT)’s Github, an online platform for storing code, about half of the programming was written using assistance from an AI tool called Copilot that automatically suggests lines of code, said Microsoft Corporate Vice President Lili Cheng.“When we talk to developers, they really feel they’re more productive” with Copilot, said Cheng. “I think it’s a great example of using a generative model, together with data that’s inside of GitHub, to make people feel more effective and make programming more accessible to more people.”She cited AI-generated summaries of meeting transcripts as another example of how the technology was proving its utility.Financiers likewise told Reuters they were actively deploying AI models in their businesses for tasks like coding, generating documentation and deploying capital more efficiently, although they said they were moving cautiously because of the regulated nature of financial services.Gary Marcus, a professor at New York University, said generative AI was error-prone in coding just like in other areas, but that the problem was less of a hindrance in the tech sector because programmers knew how to troubleshoot it.”The place that it really is revolutionizing is coding, it’s just going fastest, and that’s because coders know how to fix the errors these systems make,” said Marcus. “But if you have almost any other kind of business, the hallucinations are a serious problem.”Companies should move slowly and deliberately when integrating the technology into uses where accuracy matters, executives emphasized.Cisco (NASDAQ:CSCO)’s Vijoy Pandey said he believed AI had proven its utility for “the low-hanging fruit,” uses for which “the cost of being wrong has been pretty low.” The challenge now, he said, was to move the technology into a new phase for more sensitive “business-critical use cases,” like legal and security.”We should just assume people will be doing stupid things” and focus in the coming years on building technology, guidelines and frameworks “to protect everybody against stupid actions,” said Pandey.To view the live broadcast of the World Stage go to the Reuters NEXT news page: More

(Reuters) -Media conglomerate News Corp (NASDAQ:NWSA) beat Wall Street targets for first-quarter revenue and profit on Thursday and said it was in advanced talks to strike deals on the use of its content for generative artificial intelligence(AI).The company’s Chief Executive Robert Thomson has been a vocal proponent of having generative AI companies pay for using its content to train their large language models. He has also touted the technology’s potential to help reduce costs.”We are actively working to make the most of our premium content for AI and are engaged in advanced discussions that we expect to bring significant revenue to the company,” Thomson said in a statement.These efforts add to the company’s push to improve profitability and grow key assets such as Dow Jones. Thomson said that News Corp, which is a part of media baron Rupert Murdoch’s empire and includes the Wall Street Journal and Sunday Times, is “assiduously” reviewing the company structure.The company faces renewed activist investor pressure to restructure itself, including a push to spin off some of its assets, following Murdoch’s retirement from News Corp and Fox Corp boards in September.Murdoch is the majority shareholder of a Reno, Nevada-based family trust that owns 39% of News Corp’s voting shares.”Investors clearly do not like (the company structure) as the stock has an estimated 35%-40% conglomerate discount embedded in the current stock price,” said Craig Huber, analyst at Huber Research Partners.Revenue in the quarter ending Sept. 30 was $2.50 billion, compared with estimates of $2.49 billion, according to Visible Alpha. Adjusted profit per share was 16 cents, above estimates of 12 cents.Revenue at the Dow Jones business grew 4% to $537 million, boosted by a 14% rise in professional data services, while revenue at its Digital Real Estate Services unit, which operates Realtor.com, fell about 4%. More

OTTAWA (Reuters) -The Bank of Canada on Thursday said the era of super-low interest rates was likely over and warned businesses and households to plan for higher borrowing costs than they have been used to in recent years.During the years of the pandemic, the central bank’s policy rate was just 0.25% most of the time and never topped 1.75%. It is now at a 22-year high of 5.0%.At a time of higher government debt and geopolitical risks including wars in Ukraine and Israel, long-term market rates have also moved higher.”It’s not hard to see a world where interest rates are persistently higher than what people have grown used to,” Senior Deputy Governor Carolyn Rogers (NYSE:ROG) told Advocis Vancouver, an association of financial advisers on the West Coast. Rogers said she wanted “to stress the importance of adjusting proactively to a future where interest rates may be higher than they’ve been over the past 15 years.”The bank increased rates 10 times between March 2022 and July 2023 to tame inflation that peaked at more than 8% last year. It left rates on hold last month, but said it could hike again if needed.The bank forecasts inflation will come down slowly and reach its 2% target only at the end of 2025.”We do expect the central bank to be lowering interest rates in 2024, assuming that there’s more progress towards taming excess inflationary pressures,” said Royce Mendes, head of macro strategy at Desjardins Group.”That will help limit the possibility of undue stress in the financial system,” he said.Some households already are finding it harder to deal with existing debt, with delinquency rates on credit cards, car loans and unsecured lines of credit having returned to or slightly surpassed pre-pandemic levels, Rogers said.While delinquency rates on mortgages are still lower than before the pandemic, the 60% of fixed-rate mortgage holders who must renew their mortgages by end-2026 “may face significantly higher payments,” she said.Some members of the Bank of Canada’s policy-setting governing council saw the likely need for further interest-rate hikes when they left borrowing costs on hold on Oct. 25, minutes published on Wednesday showed.However, economists expect the central bank to start easing interest rates as soon as April, and money markets see them coming down around mid-year.”We are not yet talking about reducing rates,” Rogers said in response to a question from the audience. “We need to see inflation well on its way back to its target.” More

LONDON (Reuters) – Regulators should keep on open mind when writing rules for the world’s $239 trillion “non-bank” financial sector to avoid one-size fits all approaches, the EU’s top securities watchdog said.Non-banks, a sector which includes hedge funds, real estate funds, insurers and private investments and now account for about half of the world’s financial sector, are firmly in the regulatory limelight.This follows redemption-related stresses among money market funds (MMFs) during a “dash for cash” when economies went into pandemic lockdowns in March 2020, and last year with liability-driven investment (LDI) funds in Britain.European Securities and Markets Authority (ESMA) chair Verena Ross said regulators are closely examining non-banks’ leverage, liquidity and their connectivity with banks.”We must not equate non-banks with investment funds, it’s important to keep an open mind,” Ross told Reuters on Thursday, adding: “Each sector must be looked at quite specifically.”Pressure for action rose after the U.S. Federal Reserve had to inject liquidity into markets to help MMFs in March 2020. The Bank of England then had to intervene after LDI funds struggled to meet collateral calls in 2022.The U.S. Financial Stability Oversight Council(FSOC) this month published a framework for analysing risks in non-banks.Meanwhile, the BoE has called for tougher liquidity rules for MMFs, but sterling-denominated funds are listed in European Union countries such as Ireland and Luxembourg, where the rules are written by the 27-member bloc.MMFs come under UCITS or AIFMD rules, recently updated to bolster resilience, Ross said.There are also separate bespoke EU rules for the sector”MMFs have been identified as one area there is clearly a need to act, but that need to wait for the next Commission. We still believe it’s important to pick that up, ” Ross said.Although ESMA has already recommended changes to MMFs to bolster their resilience in stressed markets, a new European Commission will not be in place until next autumn, meaning reform is unlikely before 2025. More