Economy

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Conducted among 134 enterprise financial software buyers, the survey provides insights into organizational investment focus, key pain points, and anticipated structural changes within the financial sector. The findings suggest that while ML and Gen AI adoption is lagging in financial departments compared to front-office functions, these technologies are emerging as essential tools for improving operational efficiency, strategic forecasting, and compliance within the financial ecosystem.The survey indicates that one of the largest obstacles within the finance departments, particularly in the office of the CFO, is “data gravity,” which refers to the difficulty of managing and integrating fragmented data across systems. This fragmentation hampers efficient decision-making and the effective deployment of AI technologies. Addressing this challenge by unifying data systems is seen as critical for financial teams aiming to harness AI capabilities for enhanced analytics and forecasting. The analysts flag that ML and Gen AI hold the potential to simplify complex data environments, improve productivity, and support initiatives, yet require cohesive data infrastructures to be fully effective.In terms of budget priorities, enterprise financial buyers are increasingly directing resources towards analytics, business intelligence, and continuous planning tools, which are anticipated to benefit from integrated AI functionalities. The survey reveals that 51% of respondents identified business process automation as a top investment area, while 42% prioritized strategic solutions such as analytics and reporting, planning, and ML-driven corporate performance management. These trends suggest a sustained demand for tools that offer immediate, strategic insights, particularly in today’s volatile economic environment.Interestingly, organizations are willing to allocate additional funds for Gen AI and ML functionalities. On average, financial software buyers are prepared to pay nearly 6% more for subscription services that incorporate these technologies, signaling an acknowledgement of their added value. However, generative AI and ML are expected to take longer to become mainstream in the financial sector than in other enterprise functions due to the complex integration and compliance needs of financial systems. This slower adoption rate underscores a growing recognition of the medium-term potential of AI technologies within finance, with nearly half of surveyed organizations planning implementation within the next year. More

KARACHI (Reuters) – Pakistan will reduce electricity tariffs during winter in a bid to boost consumption and cut the use of natural gas for heating, its power minister told Reuters on Saturday. The move is expected to provide relief to businesses and citizens, who have suffered from steep and sudden increases in electricity tariffs following energy sector reforms suggested by the International Monetary Fund (IMF).Utilities in Pakistan, many of which have had to curtail or even completely cease operations in winter months due to demand dropping by up to 60% from peak summer levels, will also benefit from the move.”Reducing prices will increase demand, especially in winter when people use inefficient gas resources,” Power Minister Awais Leghari told Reuters in a telephone interview.Pakistan will pilot the plan starting this winter, and the lower tariffs will apply between December 2024 to February 2025, he said.The IMF, which approved a $7 billion, 37-month loan for Pakistan in September, did not immediately respond to a request for comment.Pakistan relies heavily on expensive natural gas and burning wood for heating during winter.Power consumption in Pakistan has declined 8-10% year on year over the past three quarters, Leghari said. But he said he hopes that an economic recovery will cover up for lost ground and will help boost demand by a net average 2.8% annually over the next ten years.Leghari expects the move to slash winter tariffs to help industries reduce electricity costs by 7-8% at an optimal level, while stimulating industrial growth in the process.Leghari also said the government is working to rationalize power tariffs, re-profile power sector debt and adjust tax structures within electricity bills.”The government is in talks with development partners to reduce taxes to spur growth of electric vehicles and combating the emergent problem of air pollution, promoting a shift away from combustion-based transportation towards clean energy,” he said. More

These adjustments, expected to lower the policy rate from 1.00% to 0.50%, come in response to persistently low inflation, which has dropped below 1% and is expected to remain under this threshold into 2025.UBS notes that keeping the policy rate at its current level would create a restrictive stance.“In our view, such a monetary policy stance would not be warranted in an environment where inflation is expected to settle at the lower end of the target range and the economic outlook remain uncertain,” strategists led by Maxime Botteron said in a note.The team emphasizes that “maintaining the policy rate unchanged in the current global economic environment where most central banks are lowering their policy rates could excessively raise appreciation pressures on the Swiss franc.”This would result in tighter monetary conditions, severely reducing inflation and hindering growth.Although foreign exchange interventions remain a potential tool for the SNB, UBS suggests that the bank may not need to rely on such actions extensively.The bank suggests that while sporadic currency purchases could occur if the franc appreciates sharply, “persistent foreign currency purchases” are unlikely, as current rate cuts offer adequate maneuverability for the SNB.Looking forward, UBS’s forecast hinges on balanced risks. A growth uptick, potentially spurred by China’s fiscal support, could diminish the need for a dovish stance.Conversely, if Germany’s economic stagnation persists, UBS warns of a greater likelihood for the SNB to edge its policy rate closer to zero.In a severe scenario involving recessionary or deflationary pressures, UBS sees potential for the SNB to adopt a negative rate and more frequent currency interventions.On the currency front, UBS expects the Swiss franc to strengthen modestly against both the euro and the US dollar, with the latter likely to face further depreciation due to US fiscal and trade deficits.UBS’s 12-month forecast sets USD/CHF at 0.80, citing a convergence in interest rate differentials as an additional supportive factor for the franc. Against the euro, the bank sees limited upside, maintaining its EUR/CHF outlook at 0.93 due to the franc’s existing overvaluation relative to the euro.Meanwhile, UBS anticipates a relatively stable yield environment, particularly for the 10-year Swiss government bonds, with yields expected to hover around 0.5% over the next year.This stability reflects market pricing of a continued SNB easing stance and international policy trends, as rate cuts from the US Federal Reserve and the European Central Bank are likely to keep long-term yields in check. More

As per Paul Donovan, Chief Economist at UBS, inflation can indeed be controlled in the long term, but it depends heavily on societal willingness to bear the costs associated with stabilizing prices. These costs are influenced by structural forces that, while they may increase inflation pressures, are often countered by equally powerful disinflationary forces.Donovan identifies five key areas that could impact long-term inflation: global trade, aging populations, technological advancement, government debt, and decarbonization efforts. Each of these factors can drive prices up or down, depending on how economies adapt to them. For instance, while deglobalization can lead to higher costs by disrupting efficient supply chains, localization and technological advancements in production could offset these inflationary pressures by enhancing efficiency and reducing waste.Aging populations present a nuanced picture. The belief that an older population increases inflation by reducing the labor force does not hold up well in practice, according to Donovan. Many people continue to work past traditional retirement age, contributing to the economy and mitigating inflationary risks. Furthermore, as older demographics typically favor low inflation to protect their savings, they may support policies that maintain price stability, fostering a deflationary environment over time​.Technological progress, while generally disinflationary due to increased efficiency, can cause fluctuations within certain sectors. For example, new technology may drive up demand for specific resources or labor skills, creating temporary price increases in those areas. However, the broader impact of technology, such as automation, tends to reduce costs across industries, making inflation control more manageable in the long run​.Regarding government debt, Donovan argues that inflation is not an effective tool for reducing long-term debt. While some may think inflation erodes debt by increasing nominal GDP, this effect is usually negated by the bond market demanding higher interest rates in response to inflationary expectations. Consequently, rather than easing debt burdens, inflation often increases the cost of debt servicing, further straining public finances.Decarbonization, while initially raising energy costs as economies transition from fossil fuels to renewable sources, ultimately supports a deflationary trend. Renewable energy sources, once established, are typically low-cost and can reduce inflationary pressures in the long term. The impact of this shift will largely depend on how governments handle the capital costs of transitioning to green energy, with subsidies and regulatory policies playing a crucial role in determining the inflationary outcome. More

(Reuters) – Firefighters started gaining control on Friday over a stubborn wildfire near Los Angeles that destroyed at least 132 buildings and damaged 88 others, as many of the more than 10,000 people forced to evacuate were able to return home.Some 2,400 firefighters were aided by more favorable winds coming from the Pacific Ocean after previously hot and dry winds coming from the desert fanned the so-called Mountain Fire, which broke out on Wednesday about 50 miles (80 km) northwest of Los Angeles.The fire had consumed 20,630 acres (8,350 hectares) by Friday, virtually unchanged from 24 hours earlier, and was 14% contained, up from 7%, Cal Fire officials told a press conference.”We had no external or lateral movement today. That is fantastic,” Ventura County Fire Chief Dustin Gardner told a news briefing.Residents of 3,500 homes were able to return home but another 2,000 homes remained under evacuation orders, Ventura County Sheriff Jim Fryhoff said.Fueled by dry brush and steep, rugged terrain, the fire remained a threat to critical infrastructure and islands would continue to burn within its footprint.Among those who lost a home was Dennis Gottlieb of Ventura County. He counted himself lucky to be alive as he waited early on Friday morning at a shelter at Padre Serra Parish Catholic Church in Camarillo, California. He said he lost all his possessions except his truck.”It was windy, real windy, but that’s all, so I just started my regular day until I saw the smoke and then the fire,” he said. Gottlieb said he grabbed some garden hoses and thought he could keep the blaze away from the house.”Suddenly the smoke got real heavy and embers were falling all around,” he said. “It was hot, real hot, like 150 degrees (65 C). So I grabbed the keys to my truck,” he said. He and his wife, Linda Fellerman, barely made it out. One road was blocked by a fallen tree until a neighbor with a chainsaw cut it away.He went back on Thursday to see if he could salvage any keepsakes but said, “Everything is gone. All gone. Burned up.”A red flag warning for the area was lifted as winds were expected to calm to less than 15 miles per hour (24 kph) and humidity was due to climb, the National Weather Service said.The dry Santa Ana winds that fanned the flames at first with gusts of 80 mph to 100 mph earlier this week are expected to stay calm over the weekend, topping out at 20-to-25 mph, said Ariel Cohen, a meteorologist with the NWS office in Oxnard, California.”The rain chances are low to none,” he said. “But while the winds are calmer now, they’re going to pick up again by Tuesday.”Officials braced people for a difficult recovery.”The only thing left standing of our house is the two chimneys,” Darren Kettle told the Los Angeles Times. “My heart dropped to my stomach. It’s just shocking, traumatic.”Climate scientists say warming temperatures have created wet winters that allowed California’s coastal chaparral – areas dominated by small trees, shrubs and bushes – to thrive. Record-high temperatures this summer dried out hillsides, priming them for wildfire.The United States is experiencing a strong wildfire year with 8.1 million acres (3.3 million hectares) burned to date, compared with an annual, full-year average of around 7 million acres over the last decade, according to National Interagency Fire Center data.So far this year, California wildfires have burned more than three times as much land as last year at this time, according to Cal Fire data. More

NEW YORK (Reuters) – Investors are increasingly factoring what potential Republican control of government could mean for stocks, bonds and currencies, even as the first feverish market reactions to Donald Trump’s presidential victory begin to settle.A so-called red sweep scenario, in which Republicans control the White House and both houses of Congress, could clear the way for Trump to implement his economic proposals with a freer hand. Many, such as tax cuts, are seen as being growth-friendly but also driving up inflation risks. Republicans held a narrow edge on Friday as election officials tallied the final votes that will determine control of the U.S. House of Representatives, though Democrats succeeded in flipping a pair of New York state seats.”With many of Trump’s policies geared to support stocks, particularly small caps, markets are likely to respond well to a red sweep,” said JJ Kinahan, CEO of IG North America and president of online broker Tastytrade.Expectations that such policies will be pushed through under Trump to some degree have helped lift corners of the stock market higher, boost the dollar and weigh on Treasuries, as investors recalibrated their portfolios for stronger growth, looser regulations and the possibility that inflation worries could keep the Federal Reserve from cutting rates too deeply next year.One notable move has been in small cap stocks, with the Russell 2000 index up about 8% this week. While some of those moves have lost steam in recent days, investors are still gaming out how Trump’s policies could affect markets and the economy over the long-term, especially under a red sweep scenario.Trump has promised to slash federal regulations that he says limit job creation. He has pledged to keep in place a 2017 tax cut he signed while in office, and Trump’s economic team has discussed a further round of individual and corporate tax cuts beyond those enacted in his first term. Strategists at Goldman Sachs said their earnings per share estimates for the S&P 500 would rise by about 4% if Trump reduced the statutory domestic corporate tax from 21% to 15%. Deutsche Bank (ETR:DBKGn) analysts said they would upgrade their 2025 U.S. growth forecast to 2.5-2.75% from 2.2% in the event of a red sweep. However, they expect to reduce their 2026 growth forecast in anticipation of economic uncertainty associated with an intensifying trade war.Republican control of government could also provide a longer-term boost for the dollar, which has already risen to its highest level in four months against a basket of its peers following a post-election surge this week.Strategists at JP Morgan see the euro sinking to $1.00-$1.02, down about 6% from its current level, if there is a sweep, as opposed to a drop to $1.05 in the case of a split Congress. History may also be on the side of continued strong stock performance if a red sweep comes to pass. The S&P 500 rose an average of 9.1% in years of such unified control against a 6.7% average annual return for divided government, in which the opposing party holds at least one of the Senate or House of Representatives, according to an analysis by Evercore ISI of data since 1928. The index is up 26% this year and hit 6,000 points for the first time ever on Friday.To be sure, even with the Republican Congressional majority, some investors believe the narrow margins faced in both the House and Senate may still present challenges to implementing fiscal and regulatory changes.”We may not get everything that has been promised. The discussion on the campaign trail is always very different than the legislation that gets passed,” said Paul Nolte, senior wealth advisor and market strategist for Murphy & Sylvest. “I think a lot of that is already in the pricing for stocks today.” More