Economy

BRASILIA (Reuters) – Brazil’s Finance Ministry is preparing a decree that nearly doubles the tax on the sale of firearms and ammunition, arguing that the measure is necessary to boost revenue and reduce crime, according to a draft document seen by Reuters.Prepared by the revenue service at the request of Finance Minister Fernando Haddad, the decree raises the industrial tax on revolvers, pistols, shotguns, carbines, pepper spray, and other equipment from 29.25% to 55%, in addition to also increasing the tax on ammunition.The proposal was sent by the revenue service to the ministry’s executive secretary, Dario Durigan, on Wednesday night. The revenue service declined to comment.Should the decree be signed by President Luiz Inacio Lula da Silva this month, its financial effects would start in March 2024, resulting in an increase in revenue of 342.5 million reais ($68.5 million) next year, 377.7 million reais in 2025, and 415.0 million reais in 2026, according to the draft. The move aligns with other actions by leftist Lula, who has consistently opposed policies that encourage the sale and use of firearms. Upon assuming office in January, Lula has been changing the federal gun control policy, which had been relaxed under his predecessor, Jair Bolsonaro.($1 = 4.9969 reais) More

“It’s important for currencies to move stably reflecting fundamentals,” Suzuki said. “Excessive currency volatility is undesirable.”Suzuki, while repeating his usual mantra on market moves, declined to comment further when asked whether there had been any recent currency intervention.The Japanese currency broke past 150 yen to the dollar this week to reach its weakest level since October last year when authorities intervened in the market to stem the weakness.The 150 yen line is perceived by investors as a danger zone that could trigger currency intervention by Japanese authorities. More

(Reuters) – U.S. Treasury Secretary Janet Yellen on Thursday said the sharp rise in long-term bond yields is reflective of confidence in the U.S. economy and expectations that interest rates will be higher for longer as a result.Yellen, in a televised interview with Bloomberg, said it was also possible that yields on longer-dated bonds will come down, but “no one knows for sure.” More

BRUSSELS (Reuters) -Hungarian Prime Minister Viktor Orban on Thursday opposed the European Union giving Ukraine 50 billion euros in aid, and his Slovak counterpart cited corruption in expressing reservations over extending new financial support to Kyiv. The two spoke at a summit of the EU’s 27 national leaders, who highlighted diverging priorities in a first debate on where to put money from their shared budget in the next four years. Orban drew criticism from some of his peers at the summit for having met Russian President Vladimir Putin in China this month as Moscow wages a war against Ukraine and the European Union is shunning the Kremlin. The EU is due to decide in December on a revision of its 2021-27 budget worth 1.1 trillion euros ($1.2 trln), which is already strained by emergency spending during the COVID pandemic and since Russia invaded Ukraine in 2022. The bloc’s executive proposed that member states chip in more to the shared coffers to provide 50 billion euros to Ukraine and spend another 15 billion euros on migration. Another proposal would allocate 20 billion euros in military aid for Ukraine.Budgetary decisions require unanimity and divisions were on display on Thursday. Orban said Hungary would not back more aid for Ukraine unless it saw “a very well-justified proposal”. “The one in front of us … that’s not going to work. So, for the time being, we will reject that as well and we will see where we get in December,” he said.Orban’s comments came as Budapest is trying to unlock billions in aid envisaged for Hungary in the EU budget but blocked by the executive European Commission over rule-of-law concerns.Slovakia’s Robert Fico – in Brussels a day after being appointed prime minister for the fourth time – said Bratislava would no longer support Ukraine militarily.”We will only concentrate on humanitarian aid,” Fico wrote on social media from Brussels. Fico cited endemic corruption in warning against providing new resources to Kyiv, according to two EU diplomats briefed on the leaders’ closed-door discussions.Other states in eastern Europe disagreed, with Lithuanian President Gitanas Nauseda saying the proposed 50 billion euros for Ukraine was not enough. Estonian Prime Minister Kaja Kallas said that – beyond supporting Ukraine – joint expenditure should grow for improving EU defence capabilities.CASH CALLBelgian Prime Minister Alexander De Croo backed continued support for Ukraine but also called on the Commission to make better use of the cash in its own coffers.”What is on the table today is unacceptable for us,” he said.”We ask the Commission and other institutions to look at their own funds and look at the funds that are not being fully used … instead of asking the member states for bigger contributions.”Summit chairman Charles Michel said after the talks some new spending might be financed through fresh contributions, and some could come from reshuffling resources in the budget. In the south, Greece pleaded for more money for migration as the bloc is pushing to tighten its external borders and reduce unauthorised arrivals from the Middle East and Africa.”Greece is a country of first reception and needs more European support to deal with the immigration problem,” said the Greek premier, Kyriakos Mitsotakis.Ireland’s Leo Varadkar added investments in EU competitiveness to the long list of conflicting priorities. “Where that money is found of course will be a matter of significant debate,” he said.($1 = 0.9467 euros) More

Yellen, in an interview with Bloomberg, said the administration has already taken a “large number” of steps to put sanctions against Hamas in place.Yellen also said she is not seeing much so far in the way of consequences to the global economy from the conflict between Israel and Hamas, but she is monitoring developments closely. More

(Reuters) -Amazon.com on Thursday said growth in its cloud business is stabilizing as it signed new deals, but warned that consumers remained wary about spending going into the holiday quarter.The company predicted a rise in revenue over the key holiday season that could still miss Wall Street expectations, as it reported strong third quarter results buoyed by a recent marketing blitz and faster delivery. Shares in the company ricocheted after hours, rising, falling and ultimately rising 5%.Facing an array of challenges to its business, Amazon (NASDAQ:AMZN) is trying to keep its mantle as the world’s biggest cloud provider and online retailer. The company has sought to bolster its cloud, answering rivals Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) with a deal to invest up to $4 billion in chatbot-maker Anthropic and touting an AI service drawing thousands of users.Amazon likewise has reorganized its delivery network to locate goods closer to shoppers, letting it fulfill orders faster than before, and more cheaply.At the same time, it has faced an array of challenges, among them tight household budgets, businesses scrutinizing their cloud spending and a September lawsuit by the U.S. Federal Trade Commission, which accuses Amazon of inflating prices and wielding monopoly power. The company is contesting the claims.Against this backdrop, the company forecast revenue in the range of $160 billion and $167 billion for the all-important holiday quarter ending Dec. 31. Analysts polled by LSEG were expecting sales of $166.62 billion, at the higher end of Amazon’s guidance.Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said Amazon’s ramp-up in seasonal hires boded well for consumer discretionary spending, to a point.”We could be looking at a final spending push before a substantial pull back in the new year. So, this is a risk that will need monitoring closely,” she said.Amazon’s fortunes are often tied to those of its cloud-computing division. Long a major source of profit, Amazon Web Services (AWS) saw growth slow down in earlier quarters. Rival Microsoft, the second-largest cloud provider by revenue after Amazon, meanwhile beat Wall Street estimates this week as its customers geared up for AI upgrades.On a call with reporters, Amazon’s Chief Financial Officer Brian Olsavsky said efforts to help customers fine-tune how much they were spending in the cloud were “starting to slow down.”CEO Andy Jassy added in a call with analysts that AWS was picking up the pace of signing and closing deals, among them large expansions with existing customers as well as first-time agreements. He said in a statement: “Our AWS growth continued to stabilize.”The company also is piquing customers’ interest through so-called generative AI, which, like the chatbot ChatGPT, can be prompted to conjure text, images and other content with human-like ability. Jassy said he expected generative AI to lead to tens of billions of dollars in revenue for AWS over the next several years.In total, AWS brought in revenue of $23.1 billion in the just-ended third quarter, compared with analysts’ expectations of $23.09 billion.’CAUTIOUS ABOUT PRICE’Amazon’s overall revenue in the third quarter rose 13% to $143.1 billion, beating Wall Street estimates of $141.41 billion, according to LSEG data. Net income rose to $9.9 billion in the third quarter from $2.87 billion a year earlier.CFO Olsavsky said the company in general saw strong demand in sales categories such as beauty and health, although discretionary spending was lower.”We still see customers remaining cautious about price, trading down where they can and seeking out deals,” he said.Abating inflation helped lower some of Amazon’s transportation spending, somewhat offset by fuel costs, he said.Several initiatives helped Amazon navigate the terrain. The company has said a third-quarter shopping blitz known as Prime Day notched its biggest sales day ever, while a follow-up promotion period was its largest October holiday kickoff to date.Amazon’s same-day delivery services have also helped its margins by spurring shoppers to place more frequent and bigger orders. The retailer invested heavily in recent years to make the service available in more places.Sales in Amazon’s North America segment increased 11% to nearly $88 billion in the third quarter, and the company reported a $4.3 billion operating profit in the business in that region compared with an operating loss a year earlier.Amazon has cut costs aggressively since that loss. After planning 27,000 layoffs, or what had been 9% of its roughly 300,000-person staff starting last year, it has since revealed more role reductions, at Amazon Fresh stores, for instance. More

A tentative agreement gives union members at the carmaker their best terms in decades but could complicate Ford’s electric vehicle plans.When autoworkers went on strike in September, executives of the large U.S. automakers warned that union demands could significantly undermine their ability to compete in a fast-changing industry. The chief executive of Ford Motor said that the company might have to scrap its investment in electric vehicles.The future doesn’t look quite that bleak now that Ford and the United Automobile Workers union have reached a tentative agreement that is likely to serve as a template for deals the union eventually reaches with General Motors and Stellantis, the maker of Ram, Jeep and Chrysler.Ford’s costs will rise under the terms of the new contract, which includes a 25 percent raise over four and a half years, improved retirement benefits and other provisions. The extra expense will weigh on profit and could hamper Ford’s ability to invest in new technology, John Lawler, the company’s chief financial officer, said Thursday.But some analysts said the increases should be manageable. What will matter more for the company’s prospects, they said, is how innovative and efficient the company is in designing and producing cars and technology that can compete with offerings from Tesla, which dominates electric vehicles, the auto industry’s fastest growing segment.“They haven’t agreed to anything that will kill their competitiveness,” said Joshua Murray, an associate professor at Vanderbilt University who is an author of a book that examined how U.S. automakers lost ground to Japanese and European rivals. He said the deal could even help Ford, in part because the four-year contract ensures there would be no labor strife during an intense phase of the transition to electric vehicles.“They won’t be engaged in labor conflict while they’re dealing with” the technology shift, Mr. Murray said.Ford said on Thursday that it earned $1.2 billion from July through September on revenue of $44 billion; the company lost $827 million in the third quarter of 2022. But the division that makes electric vehicles lost $1.3 billion because of investments in new technology and increasing competition that has pushed down prices.The roughly 17,000 Ford workers who had been on strike, out of a total of 57,000 U.A.W. employees at the company, are expected to begin returning to factories soon. At U.A.W. Local 900 in Wayne, Mich., across the street from a Ford plant that was one of the first three factories to be struck by the U.A.W., workers were disposing of signs, firewood and bottled water that had been stockpiled for picket lines.“This is the best contract I have seen in my 30 years with Ford,” said Robert Carter, who works with engineers to lay out work stations on the assembly line.Cydni Elledge for The New York Times“This is the best contract I have seen in my 30 years with Ford,” said Robert Carter, 49, who works with engineers to lay out work stations on the assembly line. He said younger workers who had been earning well below the top wage of $32 an hour would see the biggest impact with the new contract; their pay would rise to more than $40 an hour over the next four and a half years.“For some people, their pay is going to almost double,” he said. “How can you say that’s not huge?”The reaction on Wall Street suggested that investors did not regard the agreement as a catastrophe. The carmaker’s shares fell 1.7 percent during regular trading on Thursday.But Ford stock slumped almost 5 percent in after-hours trading after the company said that, because of the cost of the strike, it could no longer stand by an earlier estimate that profit before interest expenses and taxes would be $11 billion to $12 billion in 2023. Mr. Lawler also said that strike would cost the company $1.3 billion this year.Analysts at Barclays estimated the annual cost of pay raises, improved retirement benefits and other measures in the new union contract to be $1 billion to $2 billion annually by the end of the four-year contract period, or equivalent to about 1 percent of sales.Mr. Lawler said on a conference call that the contract would raise the company’s labor costs by an average of $850 to $900 per vehicle. He said Ford would try to “identify efficiencies and improve productivity to help us deliver on our targets” in light of those higher labor costs.Some analysts were critical of the deal with the U.A.W., saying the cost to Ford could put it at a significant disadvantage, perhaps prompting the company to move more production to Mexico.“It adds a constraint in a very competitive market,” said Jonathan Smoke, chief economist at Cox Automotive. “It’s definitely a compromise that, I think, down the road will either limit Ford’s performance or force them to consider alternatives.”During the contentious negotiations, Ford complained that a big raise for workers would put it even further behind Tesla in the electric vehicle market. Sales of Ford’s two main battery-powered models, the F-150 Lightning truck and the Mustang Mach-E sport-utility vehicle, have been disappointing this year, and the company recently scaled back plans to increase production of the Lightning.“There is tremendous downward pressure on E.V. pricing,” Mr. Lawler said.But Tesla and other automakers like Toyota, Hyundai, Nissan and Honda, whose factories in the United States do not have unions, may now face pressure to raise wages, eroding any cost advantage they might have had.Crystal Nush and Daniel Morales work for Ford in Chicago. Of contract negotiators, Mr. Morales said he was “trying to understand what they agreed upon.”Jamie Kelter Davis for The New York TimesThe U.A.W. has declared its intention to try to organize those factories. The pay agreement with Ford, by far the biggest boost in compensation that the union has won in decades, is likely to serve as a powerful advertisement for collective bargaining.“Elon Musk better be looking at this,” said Madeline Janis, executive director of Jobs to Move America, an advocacy group that has close ties to organized labor. “Hyundai and Toyota better be looking at this. This is a new era where workers are standing up.”Tesla, the company Mr. Musk runs, and other carmakers that don’t have union workers in the United States, like BMW, Mercedes-Benz and Volkswagen, may decide to pre-emptively hand out raises to keep labor organizers at bay.“One strategy to deter union organizing is to raise wages,” said Rebecca Kolins Givan, an associate professor of labor studies and employment relations at Rutgers University.The decisive factor in the electric vehicle market will be the ability of Ford, G.M. and Stellantis to produce innovative products, Ms. Givan and others said. That is the responsibility of management, not assembly line workers.“It’s clear that these companies have work to do in the electric vehicle market,” Ms. Givan said. “There is nothing in this contract that creates any constraints.”In addition to the 25 percent pay increase, the contract gives Ford’s hourly workers cost-of-living wage adjustments, major gains on pensions and job security, and the right to strike over plant closings. The union had initially asked for a 40 percent wage increase.Ford has not yet set dates for restarting plants idled by the strike. The company previously said it could take up to four weeks to reach full production. Ford also needs some 600 suppliers to resume production and to deliver parts.“Bringing a plant back up is much more difficult than taking it down,” Bryce Currie, vice president of Americas manufacturing at Ford, said this month.Workers at the Wayne plant, which makes the Ranger pickup and the Bronco sport-utility vehicle, had not received return-to-work orders on Thursday, but they expected to be back on the assembly line next week.Walter Robinson has worked at the Wayne plant for 34 years. Three of his children work for Ford and will see big benefits from the new terms.Cydni Elledge for The New York TimesWalter Robinson, 57, has worked at the Wayne plant for 34 years and expects to retire by the end of the new contract. But he said three of his children work for Ford and would see a big benefit from the new terms.“My daughter has only been here two years, and it was going to take years for her to get the top wage,” he said. “This is going to help her immensely. This is going to make all of their lives better.” More

Alphabet and Meta both reported better-than-expected results, but investors found concerning stories in each.
The Nasdaq has lost close to 3.5% over the past two days.
At Meta, “management’s conservative tone tempered enthusiasm for a strong result and guide,” wrote analysts from Guggenheim, in a report late Wednesday.

Sundar Pichai, CEO of Google
Anindito Mukherjee | Bloomberg | Getty Images

Alphabet’s earnings sailed past Wall Street estimates after the markets closed on Tuesday. Meta followed suit on Wednesday, solidly topping expectations.
It didn’t matter.

Following better-than-expected results on the top and bottom lines from two of the most valuable tech companies in the world, the Nasdaq responded by dropping roughly 3% over two days.
With Amazon’s third-quarter report on deck after Thursday’s close and Apple set to announce next week, tech investors are showing less interest in what’s happened over the past three months and are more concerned about what may be coming as the year wraps up.
In Alphabet’s earnings report, Wall Street fretted over the numbers out of the Google Cloud division, which is investing heavily to try and catch Amazon and Microsoft, particularly when it comes to managing hefty artificial intelligence workloads. The cloud group reported $8.41 billion in quarterly revenue, missing analysts’ estimates of $8.64 billion, according to LSEG, formerly known as Refinitiv.
Ruth Porat, Alphabet’s finance chief, told analysts that the numbers reflect “the impact of customer optimization efforts,” a phrase that generally refers to clients reeling in their spending.
The concern from Facebook parent Meta was sparked by comments that CFO Susan Li provided on the earnings call regarding the advertising market in the fourth quarter. Due to the escalating conflict in the Middle East and uncertainty about how it will affect ad spending, Meta provided a wider revenue guidance range than normal, Li said.

“We have observed softer ads in the beginning of the fourth quarter, correlating with the start of the conflict, which is captured in our Q4 revenue outlook,” Li said on the call. “It’s hard for us to attribute demand softness directly to any specific geopolitical event.”
Alphabet shares are down by about 12% over the past two days, while Meta has dropped roughly 7%. Amazon’s stock has dropped more than 6% over that stretch, heading into its report after the close.
Up to this point, 2023 has been a bounce-back year for mega-cap tech after a brutal 2022. Meta is the second-best performing stock in the S&P 500, behind only AI chipmaker Nvidia, up roughly 140% for the year, compared to the Nasdaq’s 21% gain. Alphabet has jumped 39% and Amazon has gained 42%.
All three internet companies instituted significant cost-cutting measures, starting late last year or early in 2023, slashing a record number of jobs and eliminating some experimental projects. Meta CEO Mark Zuckerberg said in February that this would be his company’s “year of efficiency,” and Alphabet CEO Sundar Pichai acknowledged in January that Google “hired for a different economic reality than the one we face today.”
While investors cheered the newfound focus on expenses, concern is mounting alongside broader economic uncertainty and the challenges presented by high interest rates.
The U.S. economy has been resilient so far. The Commerce Department said on Thursday that gross domestic product, rose at a seasonally adjusted 4.9% annualized pace in the quarter that ended September, up from an unrevised 2.1% pace in the second quarter.
But with war still raging in Ukraine and President Joe Biden promising that the U.S. will support Israel in its battle against Hamas, the global economy is on a shaky foundation.
In emphasizing the potential business impact of war in the Middle East on its business, Meta spelled out those concerns to shareholders.
“Management’s conservative tone tempered enthusiasm for a strong result and guide,” wrote analysts from Guggenheim, in a report late Wednesday, though they still recommend buying the stock.
Mark Avallone, president of Potomac Wealth Advisors, told CNBC’s “The Exchange” on Thursday that these latest earnings reports show the level of investor skittishness. Alphabet’s earnings were fine when looking at advertising and YouTube, its core businesses, he said, and the selloff tied to the cloud numbers indicates that “people are looking for problems where they may or may not exist.”
“You’ve got earnings reports that really aren’t that bad,” Avallone said. “We’re finding a wrinkle or two in what we don’t like about them and then we’re trashing America’s best companies and there really seems to be a bit of an overreaction.”
WATCH: There may be an overreaction to Amazon’s earnings if any doubt More