Economy

PARIS (Reuters) -Shares in Moncler rose sharply on Friday after French rival LVMH invested in the Italian outerwear specialist, fuelling speculation about the long-term intentions of the owner of Louis Vuitton and Moet & Chandon champagne.Analysts said the news would likely revive speculation of a potential takeover of Moncler in the long term, but focused on the near-term advantages of the deal for LVMH, which reinforced its dominance in the $400 billion luxury sector.Shares in Moncler, which had fallen 6.5% this year, jumped as much as 15% in early trade after it was announced late on Thursday that LVMH had purchased a 10% stake in Double R, the investment vehicle controlled by Moncler CEO Remo Ruffini’s Ruffini Partecipazioni Holding. Double R currently has a 15.8% stake in Moncler. The deal amounts to an around 1.6% stake for LVMH in Moncler with the potential to grow it to 4% over the next 18 months, analysts said.”LVMH is getting maybe the opportunity down the road to be in the first row if and when Moncler could be up for grabs,” said Luca Solca, analyst at Bernstein.Moncler shares were up 10% by 0944 GMT, while shares in LVMH, down 7.5% year-to-date amid a slowdown in the luxury sector, were 2% higher.Milan-based Moncler, famed for its upmarket puffer jackets and one of the industry’s biggest success stories in recent years, had been seen as a potential acquisition target or merger candidate for rival luxury groups seeking to expand.LUXURY SECTOR BOOSTWhile LVMH’s stake is currently small, and will likely remain small for a while, the agreement recalls the French group’s investment in Italian luxury shoemaker Tod’s, said JPMorgan. A longstanding shareholder in Tod’s, LVMH in 2021 raised its stake in the Italian group to 10% in a move that sources at the time described of “friendly support”. “While LVMH has a track record of driving consolidation in the sector, it has also proven that it can play as a minority shareholder and a partner for the long term too,” said JP Morgan.News of the deal came on the day that Reuters reported China planned further stimulus measures, which boosted luxury shares, spurring hopes it will revive spending on high end goods. Investors have grown jittery about a slowdown in the luxury sector, particularly weakness in the key Chinese market, hit by slowing economic growth and a property crisis.”From LVMH’s perspective, we view this deal as opportune given current weakness across the luxury sector,” said Piral Dadhania, analyst at RBC.Moncler’s ratio of 12-month forward enterprise value to EBITDA is 10.66, compared with 31 for Hermes, which is the best performing luxury stock in recent years.Dadhania said that minority investments into well-established groups were “the next best alternative use of excess cash” as LVMH avoids share buybacks due to potential new taxes on such transactions in France, and while there is a lack of sufficiently large and credible M&A targets.Before the pandemic, Moncler had been seen as a potential tie-up candidate for French fashion group Kering (EPA:PRTP). Kering has since purchased high end perfumer Creed and a stake in red carpet label Valentino, while focusing on reviving sales at its star label Gucci, which fell behind rivals in recent years.Announcing the Moncler deal on Thursday, LVMH stressed support for Ruffini’s vision for the outerwear giant.Ruffini has fuelled Moncler’s growth through buzzy collaborations with fashion designers and celebrity-packed events, as well as acquisitions, purchasing smaller outerwear label Stone Island in 2020. More

NEW YORK (Reuters) -Treasury yields and the dollar fell while the Dow registered a record closing high on Friday as a subdued U.S. inflation report lifted expectations of an outsized interest rate cut at the Federal Reserve’s November policy meeting.A global stock index also reached a record high, helped by China’s stimulus boost, and European shares posted an all-time high close. The yen firmed against the dollar after Japan’s former Defense Minister Shigeru Ishiba looked set to become the next prime minister.The personal consumption expenditures price index, the Fed’s favored inflation measure, rose 0.1% in August after an unrevised 0.2% gain in July. Economists had forecast PCE inflation rising 0.1%. In the 12 months through August, the PCE price index increased 2.2% after rising 2.5% in July.Markets are fully pricing in a cut of at least 25 basis points at the Fed’s November meeting, with expectations for another upsized 50 basis point cut now up to 56.7% after the data, according to CME’s FedWatch Tool, from 49.9% before the release.Other data showed U.S. consumer spending increased slightly less than expected in August.The Fed kicked off its latest easing cycle on Sept. 18 with a 50 basis point cut in interest rates.Ongoing conflict in the Middle East, with Israel’s attack in Lebanon, also pushed Treasury prices higher in a flight-to-quality bid, pressuring their yields, analysts said.The yield on benchmark U.S. 10-year notes fell 3.5 basis points to 3.754%, from 3.789% late on Thursday. Fed Chair Jerome Powell “can breathe a little sigh of relief,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.”After pushing for a 50 bps cut instead of a more conventional 25 bps cut – the personal income and spending data so far vindicates that decision,” Jacobsen added. U.S.-listed shares of Chinese companies jumped on the latest series of stimulus measures from Beijing to boost the domestic economy.The Dow Jones Industrial Average rose 137.89 points, or 0.33%, to 42,313.00, the S&P 500 fell 7.20 points, or 0.13%, to 5,738.17 and the Nasdaq Composite fell 70.70 points, or 0.39%, to 18,119.59.All three major U.S. stock indexes posted a third straight week of gains.MSCI’s gauge of stocks across the globe rose 2.15 points, or 0.25%, to 852.84 and hit an intraday record high. Europe’s benchmark STOXX 600 index closed at a record high, ending up 0.5% at 528.08.China’s blue chips jumped 4.5%, bringing their weekly rise to 15.7%, the most since November 2008. Hong Kong’s Hang Seng index also gained 3.6% and was up 13% for the week, its best performance since 1998.China’s central bank lowered interest rates and injected liquidity into the banking system, and more fiscal measures are expected to be announced before week-long Chinese holidays starting on Oct. 1.Ishiba won the leadership contest of Japan’s ruling Liberal Democratic Party in a narrow victory. Ishiba is a critic of past monetary stimulus and told Reuters the central bank was “on the right policy track” with rate hikes thus far. Markets had been largely expecting a win for hardline nationalist Sanae Takaichi, an opponent of further interest rate hikes, pricing in loose monetary and fiscal policies and a weaker yen over the past week.Against the Japanese yen, the dollar weakened 1.82% to 142.17.The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was down 0.17% at 100.43 after falling to 100.15, its lowest since July 20, 2023, with the euro off 0.14% at $1.116.Aluminum prices in London touched a 16-week high on fund buying triggered by the latest economic stimulus measures in top metals consumer China.Three-month aluminum on the London Metal Exchange was 0.4% higher at $2,623 per metric ton in official open-outcry trading after hitting $2,659, the highest since June 6.Oil prices rose on Friday but fell on the week as investors weighed expectations for higher global supply against fresh stimulus China.U.S. crude rose 51 cents to settle at $68.18 a barrel and Brent edged up 38 cents to $71.98 per barrel.Spot gold was down 1% at $2,643.88 per ounce by 1742 GMT. Gold prices were headed for their best quarter in more than eight years. More

WASHINGTON (Reuters) – Average premiums and benefits for Medicare’s prescription drug program and private Medicare plans are projected to remain stable in 2025 with premiums slightly declining, the Centers for Medicare and Medicaid Services said on Friday.WHY IT’S IMPORTANTThe premiums are of interest to consumers enrolled in Medicare Advantage plans run by private insurers who are then paid by the government, and the health plans themselves, who set premiums and benefits based on the reimbursement rates.The government has been trying bring down MA prices to the level of original Medicare, the government health plan for those age 65 and older. Private health insurers had argued cutting their rates would limit what benefits they offer, but the government’s projections on Friday showed they remain stable. Shares of health insurers had fallen between 6% and 12% in April when the rates were announced.CONTEXTMedicare is the U.S. government’s health insurance program for people over the age of 65 and the disabled.Medicare Advantage plans are offered by private insurers who are paid a set rate by the government to manage healthcare for Medicare beneficiaries who want extra benefits not offered in regular Medicare coverage.Medicare also contains an optional prescription drug coverage program known as Part D.The Centers for Medicare and Medicaid Services, which runs Medicare, announced in April its final 2025 rates for MA payments, which included a 0.2% cut.The cut is part of a three-year plan to decrease payments to MA plans as part of an effort the government says will bring them more in line with original Medicare.BY THE NUMBERSMedicare Advantage plan enrollment will grow to 35.7 million people in 2025, or 51% of all Medicare beneficiaries, up from 50% in 2024.Average MA monthly premiums are projected to fall by $1.23 from $18.23 in 2024 to $17 in 2025.Almost 60% of beneficiaries will have zero-dollar premiums in 2025 and 83% will have the same premiums or lower if they stay with their current plan, including 20% who will see premiums fall.Average Part D premiums are projected to fall by $7.45 in 2025 to $46.50, down from $53.95 in 2024. More

NEW YORK (Reuters) – Investor hopes for a soft landing for the U.S. economy will be put to the test next week, as the government releases closely watched labor market data following a series of disappointing jobs reports. Wall Street’s benchmark S&P 500 index is up 20% year-to-date near a record high. With the third quarter ending on Monday, the index is on track for its strongest January-September performance since 1997. Hopes for a soft landing in which the Federal Reserve tames inflation without badly hurting growth, have helped drive those gains, along with a 50 basis point rate cut the central bank delivered at its monetary policy meeting this month.Some worry that the rate cuts may not be enough to avert a downturn, and Wall Street views the monthly employment report as one of the more critical reads on the economy. The prior two monthly reports have shown weaker-than-expected job increases, raising the stakes for the Oct 4 data.”Stocks are priced for a Goldilocks/soft landing-type scenario,” said Wasif Latif, president and chief investment officer at Sarmaya Partners. “The jobs report could potentially either confirm that or derail that.”Some recent payrolls reports have roiled markets, particularly data showing an unexpected slowdown that helped spark a sharp, days-long selloff in the S&P 500 in early August. The index has since recovered those losses and gone on to make fresh highs. For the September report due out next week, nonfarm payrolls are expected to have increased by 140,000, according to Reuters data on Friday.The labor data could help solidify views on the Fed’s next move at its Nov 6-7 meeting. Futures tied to the fed funds rate currently show bets almost evenly split between a 25 basis point cut or another 50-basis-point reduction. “While the totality of the data will always be important, the burden will be on incoming labor market data to provide the Fed with greater confidence that the softening trend is stabilizing,” economists at Deutsche Bank said in a recent note.Investors will also watch an address from Fed Chairman Jerome Powell, set to speak on the economic outlook before the National Association for Business Economics on Monday. Hefty gains in U.S. stocks so far this year bode well for the rest of 2024, if history is any indication. Since 1950, the S&P 500 has gained at least 15% through September in 17 instances, according to Keith Lerner, co-chief investment officer at Truist Advisory Services. In the fourth quarter of those years, the index rose a median of 5.4% and posted a gain in all but three of them, Lerner found.Still, the state of U.S. growth is a focus for investors. A survey of fund managers earlier this month named a U.S. recession as the top “tail risk” for markets, according to BofA Global Research. Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions, said the recent strength in defensive sectors such as utilities and consumer staples reflect concerns over a looming downturn. Strong economic data, on the other hand, could provide a boost for economically sensitive groups such as industrials and financials, he said. The S&P 500 industrial sector has gained nearly 11% in the quarter, and the financial sector is up around 10%.”There’s still probably a case to be made that we’ve priced in too much recession risk at this point,” Melson said. “There’s plenty of scope for further upside into year-end.” More

The IMF said formal completion of the review by the fund’s Executive Board would give Ethiopia access to financing of about $345 million.Implementation of Ethiopia’s economic reform program, including the adoption of a floating exchange rate, is advancing well, the IMF said in a statement.”Successful implementation of reforms will help strengthen Ethiopia’s macroeconomic stability, improve foreign exchange availability, and support sustainable economic growth,” it said.Ethiopia, Africa’s second-most populous country, secured the $3.4 billion financing program from the IMF in July.The Horn-of-Africa nation, which is struggling with high inflation and chronic foreign currency shortages, became the third economy on the continent in as many years to default on its debt at the end of last year. More

(Reuters) – St. Louis Federal Reserve Bank President Alberto Musalem on Friday said the U.S. central bank should cut interest rates “gradually” after what he called the “strong and clear message” of a half-point interest-rate cut last week, which he said he supported.”For me, it’s about easing off the brake at this stage. It’s about making policy gradually less restrictive,” Musalem said an interview with the Financial Times. If the economy or the labor market weakens more than he expects, he said, “a faster pace of rate reductions might be appropriate.”  More

NEW YORK (Reuters) -The dollar fell on Friday after a reading of U.S. inflation signaled price pressures continue to ebb, while the yen strengthened against the greenback after Shigeru Ishiba, seen as an interest rate hawk, was set to become Japan’s next prime minister.The U.S. personal consumption expenditures (PCE) price index rose 0.1% in August, matching expectations of economists polled by Reuters, after an unrevised 0.2% gain in July. In the 12 months through August, the PCE price index increased 2.2% after rising 2.5% in July.In addition, consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.2% last month after an unrevised 0.5% gain in July. The data was slightly below the 0.3% estimate but indicated the economy still maintained some momentum in the third quarter. The Federal Reserve has recently signaled a shift in focus away from inflation and towards keeping the labor market healthy, but delivered a larger-than-usual interest rate cut of 50 basis points (bps) last week.”(Fed Chair) Powell can breathe a little sigh of relief,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin. “After pushing for a 50 bps cut instead of a more conventional 25 bps cut the personal income and spending data so far vindicates that decision.”The dollar index, which measures the greenback against a basket of currencies, including the yen and the euro, was down 0.17% at 100.43 after falling to 100.15, its lowest since July 20, 2023, with the euro off 0.14% at $1.116.The dollar is down about 0.2% for the week, on pace for its fourth straight weekly decline and ninth in the last 10. The euro was slightly lower for the week. Markets are fully pricing in a cut of at least 25 basis points at the Fed’s November meeting, with expectations for another upsized 50 basis point cut now up to 56.7% after the data, according to CME’s FedWatch Tool, from 49.9% before the release. The yen strengthened after Japan’s Ishiba won the leadership contest of the country’s ruling Liberal Democratic Party in a narrow victory. Ishiba, a former defense minister, is a critic of past monetary stimulus and told Reuters the central bank was “on the right policy track” with rate hikes thus far.Markets had been largely expecting a win for hardline nationalist Sanae Takaichi, a vocal opponent of further interest rate hikes, pricing in loose monetary and fiscal policies and a weaker yen over the past week.  The Japanese yen was 1.88% stronger at 142.12 per dollar after strengthening as far as 142.09, on track for its biggest daily percentage gain since Aug. 2. For the week, the dollar is down 1.25% against the yen., poised for its third weekly decline in four.The euro fell 1.95% to 158.67 against the Japanese currency. European data showed inflation in France and Spain rose less than expected, boosting expectations for an October rate cut from the European Central Bank to more than 90%.China, meanwhile, launched another round of stimulus measures on Friday, as the country’s central bank lowered interest rates and injected liquidity into the banking system as it attempts to bring economic growth back towards this year’s target of about 5%. The dollar strengthened 0.11% to 6.979 versus the offshore Chinese yuan.Sterling declined 0.3% to $1.3375 and is up more than about 0.4% on the week, poised for a second straight weekly advance. More

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