Economy

Your browser does not support playing this file but you can still More

(Reuters) -Rivian Automotive raised its production forecast for the full year by 2,000 vehicles to 54,000 units on the back of sustained demand for its trucks and SUVs on Tuesday, sending its shares up 4% in volatile after-hours trading.Rivian (NASDAQ:RIVN)’s upbeat forecast is a small positive for an industry reeling from the double whammy of high inflation that has dulled buyer appetite and price cuts at market leader Tesla (NASDAQ:TSLA) to stimulate demand.Last month, Tesla CEO Elon Musk said he was concerned about the impact of high interest rates on car buyers, echoing caution from General Motors (NYSE:GM) and Ford (NYSE:F) amid fears of a slowdown in demand.Smaller rival Lucid (NASDAQ:LCID) cut its production forecast on Tuesday “to prudently align with deliveries,” sending its shares down 4%. It now expects to produce 8,000–8,500 vehicles this year, down from an earlier projection of more than 10,000.”I’m actually surprised to be honest at how much we’ve seen others pull back,” Rivian Chief Executive RJ Scaringe said in an interview with Reuters. “I think it’s going to create, unfortunately, somewhat of a vacuum of products in the market.”He said that “shifts in buying behavior beyond the tail end of 2023″ were not influencing Rivian’s investment strategy for cheaper R2 vehicles that the company expects to launch in 2026.After multiple quarters of supply chain problems, Rivian may be starting to turn a corner, some analysts have said. But the company shocked investors with an earlier-than-expected bond issuance last month that sent shares crashing. On Tuesday, it trimmed its capital expenses and loss forecasts for the year. The company was cutting costs through negotiations with suppliers and updates to components and systems, Scaringe said.Rivian will also stop production for a week this quarter to update its assembly line – which Scaringe said partly kept him from raising the annual production outlook even more – ahead of a bigger shutdown next year.”Rivian showed resilience,” said Alec Lucas, analyst at Global X. “Rivian appears to be benefiting from a more favorable commodity pricing environment, order book realization and progress toward scale.”He said Lucid’s 2023 results “were reflective of efforts to scale production as well as an ongoing restructuring initiative.”Car prices at both Lucid, which is backed by Saudi Arabia’s Public Investment Fund, and Amazon (NASDAQ:AMZN).com-backed Rivian start at more than $70,000. That is similar to Tesla’s Model S luxury sedan, but much higher than the cheapest Tesla model at around $38,000.Rivian has stayed away from cutting prices and has instead taken to making its Enduro powertrains in-house to reduce dependency on suppliers and slash costs.The company previously said sales of its higher-priced SUVs have been strongly outpacing sales of its pickup truck R1T, improving the average selling price of its vehicles.Last month, it reported third-quarter deliveries above market expectations.Rivian also said on Tuesday it will end its exclusivity deal to largest shareholder Amazon for its electric delivery van, opening the door for more customers around the world, but reiterated its commitment to fulfilling the order of 100,000 vans to Amazon by 2030.Rivian said was speaking with other customers that are interested in the Rivian Commercial Vehicle platform, which underpins its electric delivery vans, but declined to reveal any names. Rivian’s third-quarter revenue of $1.34 billion was largely in line with Wall Street estimates, while its quarterly loss narrowed from a year earlier. Cash as of end-September was $7.94 billion, down from $9.26 billion three months prior.Lucid’s quarterly losses narrowed as well, but its revenue fell short of estimates. Production fell nearly 30% to 1,550 vehicles. More

BENGALURU (Reuters) – The dollar’s recent weakness will linger for the rest of the year, according to a majority of FX strategists in a Reuters poll, who also said economic data will be the primary influencer of major currencies for the rest of 2023.A stronger-than-expected U.S. economy and rising Treasury yields as the Federal Reserve hiked interest rates to curb high inflation provided the dollar with an unassailable edge over its peers.But renewed expectations the Fed is done with its rate hikes have put the dollar at a disadvantage, with the currency losing almost 2.0% from last month’s peak, leaving the dollar index up around 2% for the year.Suggesting the current dollar weakening trend has further to go, a near two-thirds majority of analysts, 28 of 45, who answered a separate question said the dollar is likely to trade lower than current levels against major currencies by year-end.They also expect it to slip against the euro and other G10 currencies over the next 12 months, a position analysts have held all year but have been proven wrong each time. Some are sounding more confident this time they will be right.”The dollar and U.S. yields have had a strong bullish trend over the (past) two to three months … but it looks like we’ve reached a point where yields and the dollar have peaked out,” said Lee Hardman, senior currency analyst at MUFG.”It’s going to be harder for yields to hit fresh highs this year because markets are now more confident that the Fed is done hiking, speculation has already started to intensify again that next year we could see a policy reversal from the Fed with speculation building over more aggressive Fed rate cuts next year.”When asked what will be the primary influencer of major currencies for the rest of the year, a slim majority of analysts, 26 of 49, said economic data. Another 20 said interest rate differentials, and three said safe-haven demand. Recent employment data suggest cracks are finally appearing in the world’s largest economy’s surprising resilience to rate hikes over the past year and a half. But the U.S. economy is still performing better than all of its peers.The latest data from the Commodity Futures Trading Commission showed currency speculators were still overwhelmingly net-long on the U.S dollar, suggesting there was still plenty of support for the greenback.”At the moment, we’re still tactically long dollar and we think this will have further to run into year-end, primarily against currencies where they continue to show weak fundamentals. EUR/USD would be the primary case of that,” said Simon Harvey, head of FX analysis at Monex Europe.The euro zone economy shrank 0.1% last quarter and is expected to flat-line in this one, barely skirting a recession. The euro, after clawing back all of its losses for the year, is predicted to gain around 4.0% over the coming 12-months.Median predictions from 72 foreign exchange strategists showed the common currency trading at $1.07, $1.08 and $1.11 in the next three, six and 12 months. Those estimates are broadly unchanged from an October survey.The Japanese yen, the worst-performing major currency for the year, is expected to remain under pressure in the near-term.Asked what is the weakest level the yen will trade against the dollar by year-end, 20 analysts who answered a separate question returned a median of 152/dollar. However the currency, which has lost about a third of its value since 2021 including 13% this year alone, is expected to recoup most of its 2023 losses over the next 12-months.The yen is expected to gain over 10% to change hands at 136/dollar in a year, the poll showed.Sterling, already up around 1.5% in 2023, is forecast to gain 3.5% to $1.27 in a year.Emerging market currencies are expected to take well into next year to post noticeable gains against a retreating U.S. dollar.(For other stories from the November Reuters foreign exchange poll:) More

TOKYO (Reuters) – Japanese manufacturers’ business confidence improved for the first time since August while service-sector mood rose for a second month, according to the Reuters Tankan poll, which also highlighted a challenging outlook amid a patchy economic recovery.The monthly poll mirrored a similar improvement seen in the third quarter in the Bank of Japan’s (BOJ) closely-watched quarterly tankan survey.The latest Reuters Tankan, however, pointed to a tough quarter ahead even as confidence perked up in November with manufacturers’ mood expected to hold steady over the coming three months while service-sector morale was seen deteriorating.In the Reuters poll of 502 large- and mid-sized companies, in which half of them responded on condition of anonymity, many firms complained about higher import costs of raw materials and deterioration of Japan’s key markets such as China.The weak Japanese yen has been a major driver of cost-of-living pressures as it boosts the price of imported goods, while the broader economy has also been hampered by slow global growth, sharply higher rates abroad and geopolitical tensions pushing up the price of commodities.The sentiment index for manufacturers stood at plus 6, up two points from the previous month, led by automobiles and food processors, according to the survey conducted Oct. 24 to Nov. 2.The index is expected to stay flat in February.The service-sector index grew to plus 27 from plus 24 in the previous month, led by retailers, information and communications, and other services. The index is expected to fall to plus 21 over the coming three months, boding ill for domestic consumption which has failed to fire up despite the end of COVID curbs earlier this year.Data on Tuesday showed consumer spending fell for the seventh month in a row in September, suggesting a recovery in household consumption is some time away. Analysts expect Japan’s economy, the world’s third-biggest, to have shrunk in the third quarter, the first contraction in four quarters, according to a Reuters poll. The Reuters Tankan indexes are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. A positive figure means optimists outnumber pessimists. More

(Reuters) -Robinhood Markets missed Wall Street estimates for third-quarter revenue on Tuesday, weighed by a slowdown in trading activity, sending shares of the online brokerage down more than 9% in extended trading.Robinhood (NASDAQ:HOOD) was at the center of the 2021 retail trading frenzy, driven by mom-and-pop investors who used the company’s commission-free platform to pump money into so-called “meme stocks” during the pandemic-era lockdowns.The boost has since faded as Americans grappling with a cost-of-living crisis, high interest rates and elevated levels of inflation put trading on the back foot.Robinhood’s transaction-based revenue decreased 11% year-over-year to $185 million amid a 13% decline in equities and a 55% decrease in cryptocurrencies. Monthly active users dropped 16% to 10.3 million from a year earlier.According to company executives, Robinhood often sees lower trading volumes around the holidays in November and December. The company also expects its interest revenue to decline in the current quarter on a sequential basis.”If the current levels of securities lending and free credit balances continue, we anticipate Q4 net interest revenue will be roughly $20 million lower than Q3 levels,” said CFO Jason Warnick in a call with analysts.Robinhood’s net interest revenue, however, nearly doubled to $251 million in the quarter as it charged customers a higher interest on their loans against the backdrop of the U.S. Federal Reserve’s rapid monetary policy tightening.It allows eligible customers to borrow money to purchase securities and charges an interest on the debt. The feature, known as “margin investing”, has provided sanctuary to the retail investor-focused firm in recent quarters amid a deceleration in trading.Robinhood’s net revenue rose 29% to $467 million in the three months ended Sept. 30, but missed analysts’ expectations of $478.4 million, as per LSEG data.Its loss per share narrowed to 9 cents versus 20 cents a year earlier. More

WASHINGTON (Reuters) – The U.S. Army needs Congress to approve $3.1 billion to buy 155 millimeter artillery rounds and expand production to quickly replace stocks depleted by shipments to Ukraine and now Israel, an Army official said on Tuesday.The U.S. and allies have sent more than 2 million rounds of 155 ammunition to Ukraine in support of its effort to repel Russia’s invasion more than 600 days ago. The U.S. has also sent the artillery to Israel as it fights Hamas. Doug Bush, the chief weapons buyer for the Army, told reporters that supplemental funding currently being considered by Congress as a apart of U.S. President Joe Biden’s $106 billion request would go to modernize or build 155 millimeter artillery production facilities across many states including Texas, Tennessee, Virginia and California.”The funding will expand production lines, strengthen the American economy and create new jobs,” Bush told reporters.Of the $3.1 billion specific to 155 artillery, about half would go to boosting industrial capacity with the remainder going to buying rounds, Bush said. Other parts of Biden’s $106 billion supplemental request, outside the $3.1 billion earmarked for 155 millimeter artillery, would go to funding expansion of other munitions, Bush said, including funds to boost the annual production rate of Patriot air defense interceptors to 650 from 550.Demand for 155 mm artillery rounds has soared in the wake of the invasion of Ukraine in February 2022. Allies’ supplies for their own defense have been run down as they have rushed shells to Kyiv, which fires thousands of rounds per day.The U.S. plans to increase its monthly production rate for 155 millimeter artillery shells to 100,000 in 2025.In its most recent earnings report General Dynamics (NYSE:GD) said it benefited from Pentagon spending to replace equipment sent to Ukraine, including 155 millimeter artillery. More

Federal Reserve Governor Michelle Bowman was among a slew of Fed members on Tuesday to remind market participants that bets on the Fed not lifting rates again were premature. “I remain willing to support raising the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or is insufficient to bring inflation to 2% in a timely way,” Bowman said Tuesday. Federal Reserve Bank of Chicago President Austan Goolsbee, meanwhile, acknowledged the recent progress on inflation, but said in an interview with CNBC on Tuesday that getting inflation down was” the No. 1 thing.”The slew of remarks revived some investor attention on the prospect of a further rate hike, but with many still holding onto bets that the Fed hiking cycle is over, Treasury yields struggled to shake off their blues following the Fed’s decision to keep rates unchanged last week as well as Powell’s dovish press conference on Nov.1.”Powell was dovish – downplaying recent strong U.S. data. This suggests that the bar for further hikes is quite high – and thus it is likely the end of the rate hikes, in our view,” Nomura said in a note, ahead of remarks from the Fed chairman on Wednesday and Thursday.The prospect of rate hike at the December and January meetings are slum at 10% and 15% respectively, according to Investing.com’s Fed Rate Monitor Tool.The overarching message from Fed speakers on whether higher Treasury yields will help them in their mission to curb inflation was to underscore that ‘the why’ rates have moved higher.If higher Treasury yields are mostly tied to expectations of what the Fed will do next, then this isn’t likely to filter into the Fed’s thinking on future policy.”The rise in longer-term rates that have moved up, can’t simply be a reflection of expected policy moves from us,” Powell said on Nov. 1. “if we didn’t follow through on them, then the rates would come back down,” he added. Yet this appears to be scenario that is playing out. Chair Powell’s dovish ‘careful’ act is “leading to lower US bond yields, thus reducing market concerns of a hard landing in the future,” Nomura said. The yield on 10-year Treasury fell 9 basis point to 4.569%, slipping further away from 5.021% cycle high seen last month, while the yield on the 10-year Treasury fell 10 basis point to 4.727%. The somewhat hawkish push back from Fed members this week comes as some fear that the loosening in financial conditions, if sustained, could muddy the Fed’s job to bring inflation down to target. Powell, however, will have opportunity, if he wishes, to “clarify anything that he said this past week when his remarks prompted an easing of financial conditions, then this would be an opportunity to do so,” Scotiabank Economics said in a Tuesday note.Powell is set to deliver opening remarks before the Federal Reserve Division of Research and Statistics Centennial Conference at 9:15 ET on Wednesday and will participate in a panel discussion at 2pm on Thursday.   More

Stay informed with free updatesSimply sign up to the More