Economy

MILAN (Reuters) -The European Central Bank can proceed “with the due caution” in tightening its monetary policy given that short-term inflation expectations dropped sharply and longer-term ones remain under control, a top policymaker said on Saturday.ECB Governing Council member Ignazio Visco, who is also the Bank of Italy’s governor, warned that an excessive tightening would have “serious implications” for economic activity and financial stability.He reiterated that he saw this as a risk that carried the same weight as the danger of a too gradual tightening.The ECB this week raised its key rate by 50 basis points to 2.5% and said it would replicate the move in March.”The policy tightening can now continue with the due caution, carefully assessing the implications for the economy and inflation prospects of the measures that have already been adopted,” Visco told the annual conference of Italy’s Assiom-Forex financial markets association.The ECB has kept its options open about subsequent steps after March, raising doubts among investors about its resolve to keep raising rates to tame inflation. Investors and economists have focused on a peak in the deposit rate of between 3.25% and 3.5%, which suggests just one or two moves after the March hike and an end by mid-year.In the text of his speech on Saturday, Visco said the bulk of corporate debts in Italy paid a floating interest rate, which exposed companies to the increase in borrowing costs.”Looking ahead, a significant increase in loan writedowns cannot be ruled out: … they could rise, in relation to total loans, from less than half a percentage point to nearly one point this year and in 2024,” he said, adding that was still half the peak reached in 2013-2014.For now, however, new inflows of impaired loans remained low at around 1% of total lending.Banking supervisors are monitoring specifically credit risks but also liquidity and refinancing risks, Visco said, adding there was a danger that higher rates fed into banks’ funding costs more rapidly than in the past. More

The flagship firm of Indian billionaire Gautam Adani’s empire had planned the public note issuance for January, working with Edelweiss Financial Services Ltd, AK Capital, JM Financial, and Trust Capital, but activity has now stopped, the report said, citing people familiar with the matter.Adani Enterprises called off its $2.5 billion share sale in a dramatic reversal on Wednesday this week, after a rout sparked by a U.S. short-seller’s criticisms wiped billions more off the value of the Indian tycoon’s stocks. The Indian markets regulator is already investigating the matter, including the crash in the company’s shares, any irregularities in the now-shelved share sale and any possible price manipulation, Reuters reported this week. A spokesperson for Adani Group did not immediately respond to Reuters request for comment. Edelweiss, AK Capital also did not respond to requests for comment, while JM Financial and Trust Capital could not be reached. A report by Hindenburg Research last week alleged improper use of offshore tax havens and stock manipulation by the Adani Group. It also raised concerns about high debt and the valuations of seven listed Adani companies.($1 = 82.2060 Indian rupees) More

NEW YORK (Reuters) – U.S. stock bulls are taking heart from a range of market signals pointing to an upbeat year for Wall Street, as equities sit on impressive gains despite worries that the Federal Reserve’s monetary policy tightening may plunge the economy into a recession. Among these are equities’ positive January performance, a “golden cross” chart pattern on the S&P 500 and more stocks making new highs rather than new lows.Such signals are far from the only indicators market participants use to make investment decisions, and they are not foolproof. Weak outlooks for corporate heavyweights such as Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) and a blowout employment number that heightened expectations for Fed hawkishness injected a fresh note of uncertainty into markets on Friday, though the S&P 500 remains up 7.7% year-to-date.However, steady improvements in gauges of momentum and sentiment in recent weeks reinforced the view among some investors that asset prices may be heading for a more benign period, after last year saw the S&P 500 lose 19.4% in its biggest annual percentage drop since 2008.“We think this is a healthy picture that is being painted here,” said Ryan Detrick, chief market strategist at the Carson Group, referring to signals such as January’s gains and the broad range of sectors participating in the rally.JANUARY JUMPThe S&P 500 rose 6.2% in January, driven in part by hopes that the Fed will be able to contain surging inflation without badly damaging the economy.When the S&P 500 has advanced in January, the market has gone on to rise in the subsequent February-December period 83% of the time, with an average 11-month gain of over 11%, according to an analysis of data going back to World War II by CFRA Research.An up January after a down year, however, was followed by a gain of 23.1% from February to December with a 92% success rate. Despite a recent rally that may have made stocks comparatively expensive, “the track record implies that maybe we do have some upside potential,” said Sam Stovall, chief investment strategist at CFRA Research.GOLDEN CROSS Meanwhile, chart watchers noted that the S&P 500’s 50-day moving average rose above its 200-day moving average on Thursday, a pattern known as a golden cross.Since 1950, the S&P 500 has produced an average 12-month return of 10.5% after a golden cross formed, while the overall average annual return since 1950 is 9.1%, according to Adam Turnquist, chief technical strategist at LPL Research.However, when a golden cross has appeared as the 200-day moving average is declining – as it is now – the average 12-month return for the S&P 500 jumps to 16.8%.”The recent golden cross adds to the growing technical evidence of a trend change for the S&P 500 and further raises the probabilities of the bear market low being set in October,” Turnquist said in a post.IMPROVING INTERNALSWillie Delwiche, an investment strategist at All Star Charts, said all five indicators on his bull market checklist were fulfilled in January, including upside volume and risk appetite metrics, something that did not occur once in 2022.One of those indicators showed more stocks on the New York Stock Exchange and Nasdaq making new 52-week highs than lows — — a sign that the rally is being led by a broad range of stocks, rather than a cluster of heavyweights. That happened as many times in January as it did during all of 2022, Delwiche said. However, some investors believe stocks may have gotten ahead of themselves.Friday’s data showing U.S. employment growth accelerating sharply in January renewed the inflation concerns that hammered stocks last year and ignited bets on a more hawkish Fed. “The January employment report was unambiguously strong and should be the start of a series of data points showing stronger activity and inflation in early 2023,” analysts at Citi wrote. “We expect this emerging trend should push back on too-dovish market pricing.” More

NHS workers in Wales have called off a strike on Monday after the Cardiff government raised its pay offer, increasing pressure on prime minister Rishi Sunak to follow suit ahead of the biggest-ever week of walkouts by staff in England.The GMB union and the Royal College of Nursing said on Friday that they had suspended the planned industrial action following a revised pay deal from the Welsh government. The new offer consists of an extra 3 per cent, of which 1.5 per cent will be consolidated and the rest a non-consolidated, one-off payment. It will be backdated to April 2022 and comes on top of a £1,400 increase already awarded to health workers in line with pay review body recommendations. The Welsh government’s move will add to pressure on Sunak to boost NHS pay in England, ahead of what is set to be the largest week of strike action in the history of the health service.Five unions have called or are organising walkouts expected to involve thousands of ambulance staff, nurses and physiotherapists.Professor Sir Stephen Powis, NHS England medical director, said on Saturday that next week was likely to be the most disruptive week of strikes to date. “While local services have worked hard to minimise impact for patients, the scale of action means increased disruption is inevitable,” he added. Meanwhile, Matthew Taylor, head of the NHS Confederation, which represents health groups across the country, said the service faced “a hugely disruptive week for patients” and urged ministers “to take the first step and find a resolution to this deadlock with the unions”.Although earlier this month Sunak did not rule out one-off payments for NHS workers in England, he has repeatedly argued against raising public sector pay. He has said that any increase risks worsening inflation, which in December stood at 10.5%. Health secretary Steve Barclay last month signalled to unions that he would examine the case for backdating this year’s pay rise. But in recent days the UK government has reiterated its commitment to focusing on pay talks for the forthcoming 2023-24 financial year, rather than reopening or altering the agreed recommendations for 2022-23. In an interview with Piers Morgan on Talk TV on Thursday, Sunak said: “I would love to give nurses a massive pay rise. Who wouldn’t? Certainly that would make my life easier, wouldn’t it?”“It’s about choices. So right now, money going into the NHS [is the] biggest it’s ever been, but we have to put that in lots of different places. We need to hire more doctors, more nurses. We need more scanning equipment so we can detect cancers.”Thanking the unions for “constructive” talks, Wales’s health minister Eluned Morgan said she hoped the pay award would go “some way to recognise their hard work”. But she added: “Without additional funding from the UK government, there are inevitably limits to how far we can go in Wales.”RCN general secretary Pat Cullen said Cardiff’s decision left Sunak with “no place to hide”, adding: “If the other governments can negotiate and find more money for this year, the prime minister can do the same.” Nathan Holman, GMB Welsh NHS lead, described the outcome of the “intense negotiations” as “a lesson for those in charge on the other side of the Severn Bridge”.The strike, which was announced in January, by the GMB and RCN in Wales would have involved about 1,500 ambulance workers and seen nurses walk out for 12 hours. Unite the union said its ambulance members in Wales would go ahead with strikes on February 6 because talks were “continuing”. “It would be wholly premature for Unite to talk about any deals being done in relation to the Welsh ambulance dispute,” said general secretary Sharon Graham. “Unite will be available all weekend in the hope that a satisfactory offer can be put together to avert strikes next week.” More

Consumer prices are seen rising by an annual rate of 97.6% in 2023, according to the analyst poll commissioned by the Argentine monetary authority (BCRA), compared to last year’s rate of 94.8%.The bank’s latest REM survey compares to a December forecast of a 98.4% inflation rate by the end of this year.The government of embattled President Alberto Fernandez sees creeping annual inflation for 2023 significantly lower, at just 60%, according to a budget projection.The survey’s inflation forecast sees some relief by 2024, however, with prices rising by 79.6%, but up from its previous estimate of 75%.Suffering through a prolonged economic crisis marked by a massive debt load, chronic deficit spending and the steady erosion of the local peso currency, Argentines live with one of the world’s highest inflation rates, second only to Venezuela in Latin America.Earlier this week, the BCRA announced it will roll out a new 2,000-peso bill, double the face value of its largest current bank note.The analysts surveyed expect January’s inflation rate to come in at 5.6%. The monthly rise in prices last December stood at 5.1%, according to the official IPC price index.Expectations of economic growth this year remain unchanged at 0.5%, according to the survey, while the official exchange rate is seen ending the year at 327.75 per U.S. dollar.That would mark a 74% weakening of the tightly controlled official exchange rate, compared to its current value of about 188 pesos per greenback.The REM survey interviewed 40 experts from Jan. 27-31, including consultants, financial institutions and research centers. More

The Federal Reserve is tracking incoming labor figures as it decides how high interest rates need to go and how long they should stay elevated.WASHINGTON — Federal Reserve officials have said they are looking for the labor market to cool as they assess how much more they need to do to slow the economy, and the job report on Friday underscored that policymakers may still have a ways to go.Employers hired ravenously in January, adding 517,000 workers. The jobless rate dipped to a level not seen since 1969, and revisions to last year’s data showed that job growth was even stronger in 2021 and 2022 than previously understood — all signs that the demand for labor is booming.Yet at the same time, wage growth continued to moderate. Average hourly earnings climbed 4.4 percent over the year, more than forecast in a Bloomberg survey of economists but less than the 4.8 percent year-over-year increase in December. Pay growth has been decelerating for months, though it remains faster than is typical and notably quicker than the pace that Fed officials have at times suggested would be consistent with their 2 percent inflation goal.For central bankers who are trying to bring down the fastest inflation in decades, the report offered both encouraging and worrying news. On one hand, the continued slowdown in pay increases was a welcome sign that, if it persists, could pave the way for slower price increases down the road. But Fed policymakers who spoke on Friday focused more intently on the fresh evidence that demand for workers remains intense despite their efforts, suggesting that they have more work to do before they will be able to feel confident that rapid inflation will fade fully.“The biggest surprise — and the thing to take the most signal from — is the combination of the job gains over the past month and the restatement over the past year,” Thomas Barkin, the president of the Federal Reserve Bank of Richmond, said in an interview with The New York Times. “We still have more to do. Inflation is the guidepost.”Fed officials have already lifted rates from near zero a year ago to more than 4.5 percent, ushering in a quarter-point move just this week. While they have signaled more to come, investors and economists had been betting that they might stop moving after their next meeting, in March.The strong job numbers upended that expectation. Investors on Friday penciled in another rate move in May, and stocks fell in response to the jobs data as Wall Street braced for a more aggressive central bank. Higher rates weigh on demand by making it more expensive to borrow to buy a house or expand a business.The State of Jobs in the United StatesEconomists have been surprised by recent strength in the labor market, as the Federal Reserve tries to engineer a slowdown and tame inflation.Job Trends: The Labor Department reported that the nation’s demand for labor only got stronger in December, as job openings rose to 11 million.Burrito Season: Chipotle Mexican Grill, the fast-casual food chain, said that it planned to hire 15,000 workers ahead of its busiest time of year, from March to May.Retail Industry: With consumers worried about inflation in the prices of day-to-day necessities like food, retailers are playing defense and reducing their work forces.Tech Layoffs: The industry’s recent job cuts have been an awakening for a generation of workers who have never experienced a cyclical crash.Fed officials themselves underlined that further rate adjustments are coming.“The number today on the jobs report was a ‘wow’ number,” Mary C. Daly, president of the Federal Reserve Bank of San Francisco, said on Fox Business. She added that it did not change the economic narrative: It was just additional confirmation that the labor market is strong.She said the Fed’s December forecast — which called for two more quarter-point rate increases, pushing rates just above 5 percent — remained “a good indicator of where policy is at least headed,” adding that she is “prepared to do more than that if more is needed.”Wage growth is slowing along with inflationYear-over-year percentage change in earnings vs. inflation More

PHILADELPHIA — President Biden on Friday seized on what he called “strikingly good news” about the economy, hailing the addition of a half-million jobs and capping a week of presidential swagger about the direction of the country.Just days before he delivers his second assessment of the State of the Union in an address before Congress next week, Mr. Biden has all but dropped the “I feel your pain” message he frequently delivered last year as inflation soared.Instead, Mr. Biden traveled around the country this week, pointing to the real-world impact of legislation he championed to spend billions of dollars on the nation’s crumbling infrastructure and unabashedly taking credit for what he is betting will be a lasting turnaround as the Covid-19 pandemic wanes.In Philadelphia, Mr. Biden boasted about the new bridges that will be built and rusty lead pipes that will be replaced because of his efforts. And he praised the country’s businesses for creating 12 million jobs since he took office.“There’s now 12 million more Americans who can look at their kid and say: ‘It’s going to be OK,’” he told a group of workers at a water treatment plant. “And what it’s done mostly is to provide dignity for those families.”But looking on the bright side has its risks, especially since the red-hot job growth in January has the potential to trigger more aggressive interest rate hikes from the Federal Reserve as it tries to keep a lid on high inflation. Prices have still risen at a rate of 6.5 percent, down from last year but well above the average for the last several decades.And economic uncertainty is far from gone as Republicans threaten not to raise the debt limit later this year, a move that economists say would shatter global financial confidence and plunge the nation into recession.The Biden PresidencyHere’s where the president stands as the third year of his term begins.State of the Union: President Biden will deliver his second State of the Union speech on Feb. 7, at a time when he faces an aggressive House controlled by Republicans and a special counsel investigation into the possible mishandling of classified information.Chief of Staff: Mr. Biden named Jeffrey D. Zients, his former coronavirus response coordinator, as his next chief of staff. Mr. Zients replaces Ron Klain, who has run the White House since the president took office.Economic Aide Steps Down: Brian Deese, who played a pivotal role in negotiating economic legislation Mr. Biden signed in his first two years in office, is leaving his position as the president’s top economic adviser.Eyeing 2024: Mr. Biden has been assailing House Republicans over their tax and spending plans, including potential changes to Social Security and Medicare, as he ramps up for what is likely to be a run for re-election.Previous presidents who have been too rosy about the economy have been punished by voters who see them as out-of-touch with their real-life issues. President George Bush lost his re-election bid in 1992 after seeming to dismiss the impact of an inflation-driven recession on middle-class workers.“This is the hardest thing to do in politics,” said James Carville, the Democratic strategist who helped Bill Clinton defeat Mr. Bush that year. “In a recovery, when can you say there’s a recovery and things are good? When people don’t think it’s good and you say it’s good, they get angry with you.”That same dynamic hurt Mr. Clinton politically in 1994, Mr. Carville recalled.“Although the economy was doing better, if we said it, the blowback was: ‘The guy is out of touch,’” he said. “That’s the most difficult and vexing problem that any incumbent has.”The White House has also been anxious over a worker shortage as Mr. Biden focuses on the implementation of his infrastructure, economic and climate legislation this year to galvanize voters. The labor market has remained tight; data released this week showed that the number of posted jobs per available unemployed worker rose again in December.But Mr. Biden and his team appear to have decided that it is not a time to hold back.The United States added 517,000 jobs in January alone, the Labor Department said on Friday, and the unemployment rate fell to 3.4 percent, the lowest rate of joblessness since before the first moon landing in the summer of 1969.The 12 million jobs added since Mr. Biden took office amount to “the strongest two years of job growth in history — by a long shot,” Mr. Biden crowed in remarks at the White House, adding that the new jobs report proves that a “chorus of critics” were just plain wrong about his approach to the economy..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.Those critics often note that the dramatic job growth during Mr. Biden’s term is the result of needed rebuilding after the loss of about 10 million jobs in the country because of pandemic-related shutdowns.Just moments after Friday’s jobs report came out, members of Mr. Biden’s team took to social media. Shalanda Young, the president’s budget director, noted the unemployment rate, saying “@POTUS’s economic plan is delivering.” Ian Sams, the spokesman for the White House Counsel’s Office, criticized Republicans for “political stunt” investigations.“House Rs could instead join @POTUS to focus on issues affecting people’s lives like jobs & work together on this historic progress,” he wrote alongside a chart showing the decline in the unemployment rate since Mr. Biden took office.The president and his team are unlikely to get that kind of cooperation from his adversaries, especially after an announcement on his likely re-election bid, a move expected in the coming weeks or months.Despite his administration’s accomplishments, Mr. Biden remains in a politically perilous situation with voters after two years in office. A recent public opinion survey by NBC News indicated that a plurality of voters do not think he is “honest and trustworthy,” has the “ability to handle a crisis,” is “competent and effective,” or is “uniting the country.”In the survey, 54 percent said Mr. Biden does not have the “necessary mental and physical health to be president.” Only 28 percent said he does.Still, the president’s aides are betting that voters will be more focused on how they experience the economy: Do they have jobs? Can they afford to buy groceries and gas? Do they have the resources to take a vacation or buy a car?A year ago, with gas prices soaring, Mr. Biden went out of his way to make sure Americans knew he felt their financial frustration with the situation, saying “I get it,” and adding: “I know how much it hurts.”On Friday, that sentiment was largely replaced by an unrestrained enthusiasm in the wake of one of the biggest employment increases in months.Mr. Biden has for months pointed to job growth as evidence that his agenda has rebuilt the economy after the coronavirus pandemic shuttered much of the United States. On Friday, he amplified that narrative to draw a contrast between what he says are policies that produced steady growth and the tax and spending plans of some House Republicans.Throughout his time in office, rising consumer prices have been one of the more glaring political vulnerabilities for Mr. Biden. The Fed on Wednesday raised interest rates for an eighth consecutive time in a year in an effort to cool rapid inflation.Republicans have accused the White House of worsening inflation by injecting too much money into the economy and have called for major spending cuts.Asked after his remarks whether he takes responsibility for inflation that remains high, Mr. Biden said he does not.“Because it was already there,” he said. “When I got here, man. Remember what the economy was like? Jobs were hemorrhaging. Inflation was rising? We weren’t manufacturing a damn thing here. We were in real economic difficulty.”“That’s why I don’t,” he said. More