Economy

The sharp reversal of fortune was triggered by a slump in the consumer electronics market due to decades-high inflation, rising interest rates and COVID-19 lockdowns in China. Here are the top companies that have cut their investments:Company New target Old estimate Commentary Intel Corp (NASDAQ:INTC) $25 billion $27 billion “We are planning for the economic uncertainty to persist into 2023,” said CEO Pat Gelsinger on a post-earnings call. TSMC Cuts 2022 investment “We expect probably in 2023 the semiconductor industry budget by at least 10% will likely decline,” CEO C.C. Wei told a media call. Micron Technology (NASDAQ:MU) Expects fiscal 2023 Implies “What has been surprising is the extent of the sharp capex to be around $8 investment in decline (in demand),” said Sumit Sadana, Micron’s chief billion 2023 will be business officer, in an interview. down 30% year-over-year United Microelectronics $3 billion $3.6 billion “There’s no tangible sign of recovery in the near term,” Corp (UMC) (2303.TW) co-president Jason Wang said. SK Hynix Says investment in 2023 Implies “We are hoping that the market will stabilise to some will be cut by more investment in extent by second half of next year, but we are not ruling than 50%. 2023 could out the possibility of a longer downturn,” Kevin Noh, Investment in 2022 fall below 10 Chief Marketing Officer at SK Hynix, told analysts. expected to be at the trillion won. “upper range of 10-20 trillion won ($7-14 billion) Western Digital Corp (NASDAQ:WDC) For fiscal year 2023, Gross capital “We’re taking the actions around capital investment to gross capital expenditure of slow down our bit supply in the market to try and get the expenditure is expected about $3.2 market balance,” said CEO David Goeckeler on the earnings to be $2.7 billion. billion call. “I think everybody is doing that.” Aiming to reduce cash capital expenditure by 20%. More

The Treasury said it would continue to meet with a variety of market participants to assess the costs and benefits of buybacks, and that it expects to share findings as part of future quarterly refunding announcements.Liquidity in the world’s largest bond market has deteriorated this year, partly because of rising volatility as the Federal Reserve rapidly raises interest rates to bring down inflation.The Treasury last month, as part of its regular survey of dealers before each of its quarterly refunding announcements, asked dealers about the specifics of how buybacks could work.These included questions on how much it would need to buy so-called off-the-run Treasuries, which are older and less liquid issues, to improve liquidity in those securities.On Wednesday, the Treasury said it was studying potential buybacks and that it would provide ample notice on any decision. More

Companies added 239,000 positions in October, ahead of the Dow Jones estimate of 195,000 and up slightly from the previous month, ADP reported Wednesday.
Most of the gains came from the leisure and hospitality industry, which added 210,000 positions while wages rose 11.2% for the sector.
Wages overall rose 7.7% from a year ago, down just slightly from the September pace.

Private payroll growth held strong in October while worker pay rose as well, particularly in the leisure and hospitality industry, according to a report Wednesday from payroll processing firm ADP.
Companies added 239,000 positions for the month, ahead of the Dow Jones estimate of 195,000 and better than the downwardly revised 192,000 in September. Wages increased 7.7% on an annual basis, down 0.1 percentage point from the previous month.

Job gains were especially strong in the pivotal leisure and hospitality sector, which added 210,000 positions while wage growth accelerated 11.2%. The industry, which includes hotels, restaurants, bars and related businesses, is seen as a bellwether as it took the hardest Covid and is still below pre-pandemic levels.
All the job growth came from services-related industries, which added 247,000 jobs, while goods-producing sectors lost 8,000 jobs, due largely to a loss of 20,000 manufacturing positions. Trade, transportation and utilities rose by 84,000.
“This is a really strong number given the maturity of the economic recovery but the hiring was not broad-based,” ADP’s chief economist, Nela Richardson, said. “Goods producers, which are sensitive to interest rates, are pulling back, and job changers are commanding smaller pay gains. While we’re seeing early signs of Fed-driven demand destruction, it’s affecting only certain sectors of the labor market.”
The Federal Reserve has been raising interest rates in an effort to cool inflation running near its highest level in more than 40 years. One primary aim is the historically tight labor market, where job openings outnumber available workers by a nearly 2-to-1 margin.
While the headline ADP number was strong, the details looked weaker.

Along with the decline in construction jobs, information (-17,000), professional and business services (-14,000) and financial activities (-10,000) also showed losses.
By business size, companies with between 50 and 249 employees had virtually all the gains, adding 241,000.
The ADP report comes two days before the more closely watched nonfarm payrolls count from the Bureau of Labor Statistics. That report is expected to show growth of 205,000, from September’s 263,000.

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WASHINGTON (Reuters) – The Federal Reserve is expected to raise interest rates by three-quarters of a percentage point for the fourth straight time on Wednesday, but open the door to a future slowdown in its policy tightening as it balances the risk of stubbornly high inflation against the economic strains of tighter credit.The U.S. central bank will announce its latest policy decision at 2 p.m. EDT (1800 GMT), with Fed Chair Jerome Powell scheduled to elaborate on policymakers’ thinking in a news conference half an hour later.The Fed will not release new quarterly economic projections, leaving Powell to finesse what may be a particularly tricky update about the Federal Open Market Committee’s expectations for the economy, inflation and interest rates.Rising prices are a top-of-mind concern cited in public opinion polls and among investors, and have been a centerpiece of Republican criticism of the Biden administration ahead of next week’s congressional elections. Data since the Fed’s Sept. 20-21 policy meeting has given little sense that inflation, which has been running at 40-year highs, is easing in a decisive way. The job market remains strong.Yet some Fed policymakers have begun to worry more openly that lifting borrowing costs too aggressively could drive the economy into a needless recession, noting that some survey and private data show price pressures beginning to ease.If Powell does set the stage for smaller rate hikes in the future, it will be with language that tries to avoid any commitment and leans heavily on how the economy and inflation behave in coming weeks.The release on Tuesday of a report showing an unexpected jump in job openings in September “is another example of data ‘not cooperating’ with the Fed’s desire to slow the pace of rate hikes,” Citi analysts wrote. “Resilient data raises further the risk that any slowdown is paired with hawkish communication that policy rates could rise for longer and to higher terminal rates.” LITTLE CLARITYThe rate hike the Fed is expected to deliver on Wednesday will move the target federal funds rate 75 basis points higher to a level between 3.75% and 4.00%. The policy rate has not been that high since early 2008, and the pace of the Fed’s moves this year – 375 basis points of tightening after the expected move on Wednesday – is unmatched since the far stiffer rate increases former Fed Chair Paul Volcker resorted to in the 1980s. GRAPHIC – Federal Funds pace of rate hikes Ahead of the release of Wednesday’s policy statement, traders in contracts tied to the federal funds rate were split on whether the Fed would be able to slow the pace of upcoming hikes, or would approve yet another “unusually large” three-quarters-of-a-percentage-point increase at the December meeting.Data since the September meeting has given the central bank little clarity. Separate reports showed consumer prices rising 8.2% in the 12 months through September, and a different index preferred by the Fed still more than triple the central bank’s 2% target.Yet some surveys and private data have showed price pressures at least on the cusp of easing, a fact that Fed officials may rely on to set the stage for more modest rate hikes to come.Outside critics, including some members of Congress with oversight of the Fed, have also cautioned against pushing rate hikes too far – with the sharp rise in rates on 30-year fixed mortgages cited as a prime example of central bank policy hitting consumers in a meaningful way. More

NEW YORK (Reuters) – The International Monetary Fund will continue to be supportive of progressive tax reforms in Latin America and the Caribbean while fiscal and monetary policies that have worked should be kept in place to give economies support, a top IMF official said on Wednesday.For most of the region “the story there is actually they have pretty good fiscal and monetary frameworks,” said Nigel Chalk, acting director of the Western Hemisphere Department at the IMF. “So it’s more a question of letting the frameworks work and do their job as they were designed.”Chalk, speaking ahead of the release of the fund’s regional economic outlook for Latam and the Caribbean, said the focus on lowering debt and zeroing in on containing inflation have been very supportive of the region’s economies.”With inflation yet to abate and most economies still operating at or near potential, monetary policy should avoid easing prematurely and must stay the course,” said the fund in the regional report.The fund said last month tightening global financial conditions and high inflation clouded the outlook for Latam and Caribbean economies. While it lifted its output growth forecast for 2022 in the region to 3.5% from a previous 3% estimate, it lowered the 2023 view by 0.3 percentage point to 1.7%.According to the IMF “a sharp fall in commodity prices and social unrest are important risks,” for Latam and the Caribbean – where street clashes were beginning to pop up even before the pandemic.With the specter of higher interest rates in the developed world and the expected siphoning of cash out of emerging markets, the fund has given support to reform measures that look to raise more cash but in a progressive way.”A tax reform that generates more revenue, and puts more money in social systems, in supporting lower income families, supporting the middle class, that’s definitely a more progressive system,” Chalk said, pointing out the fund was “very supportive of the goals of the Chilean tax reform.”Carbon taxes, which have been discussed across the region, are also on the IMF menu for increasing revenues.”But we know they’re inherently regressive because the poor spend more of their income on energy,” said Chalk.”You have to take the money and you have to give that back through social assistance programs in order to make the combined effect on spending and revenue socially equitable.” GRAPHIC – LatAm & Caribbean GDP growth, projections More

Private employment increased by 239,000 jobs last month, the ADP National Employment report showed on Wednesday. Data for September was revised down to show 192,000 jobs created instead of 208,000 as previously reported. Economists polled by Reuters had forecast an increase of 195,000 private jobs.The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of the Labor Department’s Bureau of Labor Statistics’ more comprehensive and closely watched employment report for October on Friday. According to a Reuters survey of economists, private payrolls likely rose by 200,000 jobs last month after rising by 288,000. With no job gains expected in the government sector, overall nonfarm payrolls are also forecast to have increased by 200,000. The economy created 263,000 jobs in September.Though the Fed’s aggressive rate hikes are cooling demand, employers continue to seek workers.The government reported on Tuesday that there were 10.7 million job openings at the end of September, with roughly 1.9 openings for every unemployed person.The U.S. central bank is expected to deliver a fourth three-quarters of a percentage point interest rate hike on Wednesday as it fights to bring inflation down to its 2% target. The Fed has raised its benchmark overnight interest rate from near zero in March to the current range of 3.00% to 3.25%, the swiftest pace of policy tightening in a generation or more. More

Grain shipments from Ukraine will resume on Wednesday after Russiaagreed to rejoin a UN-backed initiative to allow exports via the Black Sea, ending a stand-off that threatened to reignite a global food crisis.Turkey’s president Recep Tayyip Erdoğan said Sergei Shoigu, the Russian defence minister, had phoned his Turkish counterpart to say Moscow was back on board.Erdoğan, who has maintained close ties with Vladimir Putin since Moscow launched its invasion of Ukraine and helped broker the original grain deal in July, said the Russian president told him he would like to see “the poorest countries of Africa” benefit first. The next shipments of grains will head to Somalia, Djibouti and Sudan, countries particularly vulnerable without Ukrainian agricultural imports, the Turkish president added.Russia quit the pact on Saturday, accusing Kyiv of targeting its naval fleet in the Black Sea following claims of a Ukrainian drone attack on its warships.Moscow’s withdrawal threatened a rare example of wartime co-operation that has allowed more than 9mn tonnes of Ukrainian agricultural products to reach international markets, helping forestall a global food crisis.Igor Konashenkov, Russia’s defence ministry spokesman, said Kyiv had offered written guarantees it would not use Ukraine’s grain-exporting ports or the export corridor “to conduct combat operations against Russia”.Konashenkov said Ukraine had agreed to abide by rules set under the UN and Turkey’s mediation, which he said was “sufficient” to return to the deal.Ukraine did not immediately comment on what guarantees it had given Russia. Kyiv has complained that Russia is continuing to use its Black Sea fleet to launch air strikes on Ukraine, including a series of crippling attacks on energy infrastructure in recent weeks — and has repeatedly denied using the grain corridor to conduct its own strikes.Amir Abdulla, UN co-ordinator for the grain agreement, said in a post on Twitter that he was “grateful for the Turkish facilitation” and that he “welcomed the return of the Russian Federation to the implementation of the Black Sea Grain Initiative to facilitate exports of food and fertiliser from Ukraine”. After Turkey’s announcement, wheat futures fell 6.4 per cent at $8.45 a bushel, while corn was down 2.4 per cent at $6.81 a bushel.“The best way to understand the meaning of Black Sea Grain Initiative is to look at the market reaction after [the deal’s] stabilisation,” said Oleksandr Kubrakov, Ukraine’s infrastructure minister, in a tweet. Turkey’s foreign minister Mevlüt Çavuşoğlu said previously on Wednesday that Russia had made “security demands” after the weekend attack but did not elaborate.Çavuşoğlu was quoted as telling a panel that Moscow also wanted to export more of its own agricultural products that were part of the agreement.“Russian fertiliser and grains are not on the list of sanctions but ships that will carry these are unable to dock, [insurance] payments are not being made. The ships of many countries are hesitant about transporting these cargos,” Çavuşoğlu said.The original grain agreement was brokered in July by the UN and Ankara to end Russia’s blockade of grain, food and fertiliser exports via Ukraine’s ports after Moscow’s full-scale invasion of its neighbour in February.Ukraine is also seeking to lift Russia’s blockade on other commodities including steel, another key source of hard currency for Kyiv.Ukraine is one of the world’s leading suppliers of grain and other agricultural products. Food security experts have warned that shortages triggered by the war will have serious consequences for poor countries already facing a crisis caused by the impact of climate change and the Covid-19 pandemic.Additional reporting by Emiko Terazono in London More

Renewed COVID lockdowns are weighing heavily on China’s business activity, consumer confidence and financial markets, adding to a sharp downdraft on the global economy from surging inflation and rising interest rates.In the latest fallout, electric vehicle maker NIO said it suspended production in the eastern city of Hefei amid rising COVID-19 cases and Yum China, operator of the KFC and Pizza Hut chains, said it was temporarily closing or reducing services at over 1,000 of its restaurants in China. Luxury goods companies Estee Lauder (NYSE:EL) Cos Inc and Canada Goose Holdings (NYSE:GOOS) Inc also cut their full-year forecasts, blaming a hit from persistent COVID-19-related lockdowns and store closures in China.Xi secured a third term as general secretary at the ruling Communist Party’s twice-a-decade congress last month, when he urged the party to brace for hardship and strengthen national security, and renewed his support for the zero-COVID policy, despite the fragile economy.In pre-recorded interviews for the Global Financial Leaders’ Investment Summit in Hong Kong, senior officials from China’s central bank, securities and banking regulators assured their audience via a video link that China would keep its currency and property markets stable, and remained committed to a pro-growth economic strategy.”International investors should read more carefully about the work report that President Xi delivered” at the congress, said Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC).”There, he re-emphasized the centrality of economic growth in the entire work of the Party and the country, and that’s very significant,” showing China is fully focused on growth, he said. Fang also criticised international media coverage, saying that a lot of reports “really don’t understand China very well” and had a short-term focus. As foreign funds head for the exits, Chinese investors have been snapping up cheapened shares of mainland firms, betting that outside views of China have been excessively negative.OPEN-DOOR POLICYYi Gang, governor of the People’s Bank of China (PBOC), said China will continue to deregulate its markets.”Reform and open-door policy will continue,” Yi said.Apparently seeking to ease worries over the impact of COVID lockdowns and a property market crisis, Yi said “the Chinese economy has remained broadly on track despite some challenges and downward pressure.””I expect China’s potential growth rate to remain in a reasonable range,” Yi said, citing the country’s “super large” market, a rising middle-class, technological innovation and a high-quality infrastructure network. Separately, in a book entitled “A Supplementary Reading of the 20th Communist Party Congress Report” and cited in local media on Wednesday, Yi said China is in a position to maintain “normal” monetary policy and “positive” interest rates. Global interest rate hikes have pressured yuan assets, and it is impossible for China to keep cutting interest rates in the long run, Wang Jun, director at China Chief Economist Forum, told Reuters.While other countries have been tightening policy to battle rising prices, China has implemented an accommodative monetary policy to shore up sputtering growth, raising concerns about capital flight. The yuan has weakened roughly 13% against the dollar this year.But Yi said the yuan has appreciated against other major currencies, “maintaining its purchasing power and keeping its value stable.” CRISESNoting China’s property crisis, and the sector’s links to other many other industries, Yi said, “We hope‌‌ the housing market‌‌ can achieve a soft landing‌‌.”With China’s zero-COVID policy expected to remain in place through at least the winter, or longer, its near-term growth outlook is bleak.Fears of renewed disruptions to global supply chains are resurfacing.On Wednesday, a Chinese industrial park that hosts an iPhone factory belonging to Foxconn announced a fresh lockdown.”We expect Beijing to maintain its zero-Covid strategy at least until March 2023,” according to Nomura. After surprisingly high gross domestic product growth of 3.9% in the third quarter, Nomura expects growth to drop again, with zero or even negative sequential growth from the previous quarter. “We maintain our GDP growth forecast of 2.8% year-on-year for the fourth quarter with a corresponding sequential growth forecast at 0.0%.” More