Economy

HUDSON, N.Y. (Reuters) – Finding workers remains a challenge in the U.S. economy, New York Federal Reserve President John Williams said on Friday. “In the current environment, filling jobs can be a challenge,” Williams said in prepared remarks for a speech in Hudson (NYSE:HUD), New York. “Many are struggling to hire people, especially at the entry level in construction, nursing, and manufacturing,” he said, adding that “the skills gap is a big obstacle.” Williams, who serves as the vice chair of the rate-setting Federal Open Market Committee, did not comment on the monetary policy outlook in his prepared remarks. More

Investing.com — The Federal Reserve is set to raise its key interest rates by 75 basis points for the fourth meeting in a row in November, according to The Wall Street Journal.Citing sources familiar with the Fed’s thinking, the WSJ said that the pace of further rate hikes after that will be less clear.The Fed has raised the target range for fed funds to 3.25% this year, its highest since the Great Financial Crisis of 2008, in an effort to bring down inflation that has hit a sequence of 40-year highs. However, in recent days, there have been the first signs that at least some members of the Federal Open Market Committee want to slow the pace of monetary tightening, fearing an overshoot.Kansas City Fed President Esther George and her Chicago counterpart Charles Evans have both warned of the risks of overshooting this week, although they both supported keeping policy restrictive in the near term.Such concerns are likely to be reflected in the Fed’s guidance at the next meeting, but the WSJ concluded that for the time being, the majority is still in favor of keeping with the current pace of rate hikes until there is a visible improvement in inflation.Fed Governor Lisa Cook had said on Thursday that: “Policy must be based on whether we see inflation actually falling in the data, rather than just in forecasts,” a comment that raised eyebrows among economists who argued that monthly data are often a lagging indicator of underlying trends. More

(Reuters) -American Express Co on Friday forecast its full-year profit to be higher than initially expected, but built bigger provisions to prepare for potential defaults as an economic downturn looms, sending its shares down 5% in premarket trading.Big U.S. banks have said consumers’ financial health has remained strong despite aggressive rate hikes to curb soaring inflation that could tip the economy into a recession, but some believe the tightening could lead to a surge in defaults.”There is perceived fear around credit quality moving forward,” said Thomas Hayes, chairman and managing member at New York-based investment firm Great Hill Capital.To better prepare for defaults, AmEx built provisions of $778 million in the third quarter, compared with analysts’ estimate of $604.1 million.”We are mindful of the mixed signals in the broader economy and have plans in place to pivot should the operating environment change dramatically,” AmEx Chief Executive Stephen Squeri said.Still, the company expects to report full-year profit above its prior forecast of $9.25 to $9.65 per share.Demand for leisure travel has stayed resilient as customers shrug off rising airfare to make up for two years of postponed trips, while businesses move away from Zoom calls and resume travel to strengthen client relationships.The blending of work and leisure travel has also caught up, executives in the travel industry have said in recent months.Strong growth in travel and entertainment in its international markets helped AmEx beat September-quarter profit estimates. Spending volumes in the segment surpassed pre-pandemic levels for the first time this quarter. Net income rose 3% to $1.88 billion, or $2.47 a share, beating Street estimate of $2.41, according to Refinitiv IBES data.Revenue rose 24% to $13.6 billion, while expenses climbed 19% as AmEx had to spend heavily on customer rewards, compensation and marketing. More

ROME (Reuters) -Rightist leader Giorgia Meloni is on Friday afternoon expected to be asked to form Italy’s new government and become the country’s first woman prime minister, after she was summoned for talks by the president.Meloni, whose Brothers of Italy party won an election last month at the head of a coalition including Silvio Berlusconi’s Forza Italia and Matteo Salvini’s League, is due at the Quirinale palace in Rome at 1430 GMT, President Sergio Mattarella’s office said in a statement.”We are ready to form a government as quickly as possible,” Meloni said earlier on Friday after an initial meeting between the coalition partners and Mattarella.The new government could be sworn in over the weekend and will be Italy’s most right-wing administration since World War Two.It will also be Italy’s 68th government since 1946 and faces daunting challenges, including a looming recession and rising energy bills, as well as presenting a united front in its response to the war in Ukraine.It will replace a national unity government led by former European Central Bank head Mario Draghi, who attended a European Union summit in Brussels on Friday in one of his last acts as prime minister.Although the process of putting together a new administration has been rapid by Italian standards, it has exposed tensions in the coalition, with Berlusconi repeatedly appearing to try to undermine Meloni’s authority.CABINET POSTSBerlusconi, in a note he left in public view in parliament last week, wrote that he found her “overbearing… domineering… arrogant… offensive”.The 86-year-old set off a fresh political firestorm this week when he told Forza Italia lawmakers that he blamed Ukraine for the war and said he had exchanged gifts and “sweet letters” with Russian President Vladimir Putin.Meloni subsequently issued a statement saying her administration would be firmly pro-NATO and pro-European. “Anyone who does not agree with this cornerstone cannot be part of the government,” she said.Berlusconi’s right-hand man in Forza Italia, Antonio Tajani, is expected to be the next foreign minister. He flew to Brussels on Thursday for talks with EU allies and assured them his party condemned Russia’s “unacceptable” invasion of Ukraine.The crucial economy ministry post is expected to go to Giancarlo Giorgetti, the deputy head of the League and industry minister in Draghi’s outgoing unity government.Meloni will make her first set-piece speech to parliament next week and must win votes of confidence in both chambers before the formalities are complete and she can begin to govern. More

MOSCOW (Reuters) -The rouble strengthened past 61 to the dollar on Friday to a two-week high, supported by a favourable month-end tax period as geopolitics continued to hold sway over Russian markets. By 1221 GMT, the rouble was 0.8% stronger against the dollar at 60.92, its strongest point since Oct. 7.It had gained 1.8% to trade at 59.50 versus the euro, earlier clipping a two-week high, and firmed 1.5% against the yuan to 8.30, its strongest mark since Oct. 5.The rouble is the world’s best-performing currency this year, supported by capital controls and slumping imports after Western governments imposed hefty sanctions on Russia over its actions in Ukraine, while scores of foreign companies paused operations in the country.”The Russian currency continues to consolidate on the back of the tax period,” Veles Capital said in a note. The rouble is buttressed by a month-end tax period that usually sees export-focused firms convert foreign exchange revenues into roubles to pay domestic tax liabilities.The ever-present threat of more Western sanctions over Moscow’s actions in Ukraine continues to hang over Russian markets, which remain susceptible to wild bouts of volatility.Investors are also looking ahead to next week’s central bank rate decision. “Since the September meeting, both new proinflationary and disinflationary factors have emerged,” said Igor Rapokhin, chief debt market strategist at SberCIB Investment Research, expecting the Bank of Russia to hold its key rate at 7.5% on Oct. 28. Brent crude oil, a global benchmark for Russia’s main export, was up 0.1% at $92.5 a barrel. “The Russian stock market is still dominated by sentiment trading,” said BCS Global Markets. “Since late September, the iMOEX has entered a consolidation phase, and seesawing may continue in the short term.”Russian stock indexes opened lower on Friday, but managed to claw their way back into positive territory.The dollar-denominated RTS index was up 0.6% to 1,048.0 points, earlier reaching its highest point since Oct. 6. The rouble-based MOEX Russian index was 0.1% higher at 2,026.7 points. More

Tesla founder and CEO Elon Musk said in a tweet he thinks the global economic decline can last until the spring of 2024.
Musk becomes the latest corporate titan to express reservations about the economy, joining Goldman Sachs CEO David Solomon, JPMorgan Chase CEO Jamie Dimon and Amazon founder Jeff Bezos.

Tesla Inc CEO Elon Musk attends the World Artificial Intelligence Conference (WAIC) in Shanghai, China August 29, 2019.
Aly Song | Reuters

Tesla founder and CEO Elon Musk thinks the global economic decline can last for another year and a half.
In a Twitter exchange early Friday morning Eastern time, the mercurial electric car executive and world’s richest man said a recession could continue “until spring of ’24.”

The remarks came in response to a tweet from Shibetoshi Nakamoto, the online name for Dogecoin co-creator Billy Markus, who noted that current coronavirus numbers “are actually pretty low. i [sic] guess all we have to worry about now is the impending global recession and nuclear apocalypse.”
“It sure would be nice to have one year without a horrible global event,” Musk replied.
Tesla Owners Silicon Valley, a Twitter account with nearly 600,000 followers, then asked Musk how long he thought the recession would last, to which he replied, “Just guessing, but probably until spring of ’24.”
Global GDP grew 6% in 2021 but is expected to decelerate to 3.2% this year and 2.7% in 2023, according to the International Monetary Fund. That would mark the weakest pace of growth since 2021 outside of the financial crisis in 2008 and the brief plunge in the early days of the Covid pandemic. The Federal Reserve projects GDP in the U.S. to grow just 0.2% this year and 1.2% in 2023.
Musk becomes the latest corporate titan to express reservations about the economy.

In a tweet Wednesday, Amazon founder Jeff Bezos said it’s time to “batten down the hatches” in preparation for rough economic waters ahead. That tweet accompanied a video of Goldman Sachs CEO David Solomon, who said in a CNBC interview that he thinks there’s a “good chance” of a recession in the U.S.
JPMorgan Chase CEO Jamie Dimon also has been warning of economic turmoil ahead.
Musk’s comment also came amid a rough week for Tesla stock as the automaker missed revenue estimates and cautioned about a potential delivery shortfall this year.
During the analyst call, he expressed more confidence in the U.S. economy than other parts of the world. He did note the impact that interest rate increases are having on the economy.
“The U.S. actually is in – North America’s in pretty good health,” he said. “A little bit of that is raising interest rates more than they should, but I think they’ll eventually realize that and bring back down, I think.”
However, he said China is in “quite a burst of a recession of sorts” driven by the real estate market, while Europe “has a recession of sorts, driven by energy.”

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LONDON (Reuters) -Boris Johnson and his former finance minister Rishi Sunak were leading potential contenders to replace British Prime Minister Liz Truss on Friday, with candidates canvassing support to become Conservative Party leader in a fast-tracked contest.Truss quit on Thursday after six weeks in power. Those who want to replace her must secure 100 votes from Conservative lawmakers by Monday to run in a contest which the party hopes will reset its ailing fortunes.With opinion polls suggesting the Conservatives would be all but wiped out if a national election were held now, the race is on to become the fifth British premier in six years. The winner will be announced on Monday or next Friday. In what would be an extraordinary comeback, Johnson, who was ousted by his lawmakers in July but remains popular with party members, was being touted alongside Sunak as a likely candidate. “He can turn it around again. And I’m sure my colleagues hear that message loud and clear,” Conservative lawmaker Paul Bristow told LBC radio. “Boris Johnson can win the next general election.”But Johnson, who left office comparing himself to a Roman dictator twice brought into power to fight crises, might not reach the 100 vote threshold after his three-year premiership was blighted by scandals and allegations of misconduct.The Financial Times said a Boris comeback would be “farcical”.One of his former advisers, who no longer speaks to Johnson and requested not to be identified, said he was unlikely to reach the target, having alienated dozens of Conservative lawmakers.Will Walden, who also once worked for Johnson, said the former leader was returning from holiday and taking soundings. Business minister Jacob Rees-Mogg tweeted his support, using the hashtag “#Borisorbust”. Sunak, the former Goldman Sachs (NYSE:GS) analyst who became finance minister just as the COVID-19 pandemic arrived in Europe and was runner-up to Truss in the summer’s leadership contest, is the favourite with bookmakers, followed by Johnson. Third-placed is Penny Mordaunt, a former defence minister popular with party members who came third last time. None have formally declared their candidacy.TRUSS QUITSBritain’s shortest-lived prime minister, Truss quit after her economic plans were rejected by investors, hitting the pound and pushing up borrowing costs, forcing a U-turn under a new finance minister after she sacked her closest political ally. The sight on Thursday of yet another unpopular prime minister making a resignation speech in Downing Street – and the start of a new leadership race – underscored how volatile British politics has become since the 2016 Brexit vote.The Conservative Party has a big majority in parliament and need not call a nationwide election for another two years, but opposition parties, some newspapers and even a few of its own lawmakers have said voters should now be given a say.”The Tories (Conservatives) cannot respond to their latest shambles by yet again simply clicking their fingers and shuffling the people at the top without the consent of the British people,” Labour Party leader Keir Starmer said.”They do not have a mandate to put the country through yet another experiment.” Some Conservative lawmakers have urged colleagues to coalesce around one candidate to minimise the bruising.Sunak, who had warned that Truss’s fiscal plan threatened the economy, remains unpopular with some party members after he helped to trigger the rebellion against Johnson.Mordaunt is seen as a fresh face, largely untainted by earlier administrations. But she is also untested and is so far lagging Sunak and Johnson in finding backers.After being sent by Truss on Monday to defend the government in parliament, she was praised by some of her colleagues as showing the necessary mettle to be a strong prime minister. The next leader will inherit an economy heading for recession, with rising interest rates and inflation over 10% leaving millions facing a cost-of-living squeeze. Surveys on Friday showed British shoppers reined in their spending sharply and put their confidence levels near record lows, while worse-than-expected public borrowing figures underscored the economic challenges ahead. Truss’s spokeswoman said work was continuing on a fiscal plan due to be set out on Oct. 31 but that it would be for her successor to decide whether to proceed with it.Whoever takes over also has a mountain to climb to restore the party’s own reputation.”Whether or not a change of leader is going to be sufficient to make the Conservatives actually electorally credible is certainly highly debatable,” political scientist John Curtice told LBC. More

SINGAPORE/LONDON (Reuters) – U.S. Treasury yields held near multiyear highs on Friday, with markets seeing no end to tightening from the Federal Reserve, causing shares to slip and the dollar to strengthen, particularly on the yen, against which it hit a new 32 year top. The benchmark U.S. 10-year yield edged up as high as 4.291%, its highest level since June 2008, having risen nearly 10 basis points overnight. [US/] This dragged on shares, with Europe’s STOXX index falling 1.3%, U.S. S&P500 futures sliding 0.6% and MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.92%, languishing near the two-and-a-half year intraday low it touched the day before.”It’s all so tenuous… The problem is the macro environment still remains difficult,” said Shane Oliver, chief economist at AMP (OTC:AMLTF) Capital, adding that the market is in a tug of war between investors who see opportunities and those who are focused on the difficult backdrop.Global markets have been extremely volatile as investors worry that hefty rate hikes will push major economies into recessions before inflation is tamed, while the resulting stronger dollar could wreak havoc in emerging markets.Philadelphia Federal Reserve President Patrick Harker on Thursday suggested the central bank will “keep raising rates for a while,” while U.S. economic data showed persistent labour market tightness.Third-quarter corporate earnings have offered little help to equities. On Friday Adidas (OTC:ADDYY) shares dropped 10% as the German sporting goods maker cut its full-year outlook, citing weaker demand. European retail shares were down 3.8%, also hurt by Friday data showing British shoppers reined in their spending more sharply than expected in September. (EU) Chinese blue chips slid 0.3%, with China watchers waiting for Sunday when members of the ruling Communist Party’s elite Politburo Standing Committee are set to be unveiled at the conclusion of its twice-a-decade congress. Xi Jinping is set to clinch a third five-year term as China’s leader. (CN) YEN KEEPS WEAKENINGHigher U.S. yields were also being felt in currency markets, where the dollar climbed nearly 1% to a fresh 32-year peak on the yen of 151.59 “This rate environment continues to (cast) doubts (on) the sustainability of any rally in equities, and chances that the dollar will receive more safe-haven flows are elevated,” said Francesco Pesole foreign exchange strategist at ING in a note to clients.The Japanese currency, which was heading for its 13th straight session of declines, is particularly sensitive to moves in U.S. yields as the Bank of Japan has a policy of keeping benchmark Japanese government bond yields near zero.Fresh threats of intervention to support the yen made by Japanese policymakers have kept investors on alert, although there has been no official announcement of further action since the Ministry of Finance’s dollar-selling, yen-buying intervention last month.Sterling was also under pressure, down 1% against the dollar, as Conservative lawmakers jostled to replace Liz Truss, after initially rising when she announced that she was stepping down as prime minister. “The field seems to be narrowing to: (Rishi) Sunak, (Penny) Mordaunt, and (Boris) Johnson. Mordaunt and Johnson are the risk-off/cable-off/gilts-off candidates, while Sunak is probably the opposite,” said BMO Capital Markets analysts in a note. Cable is the sterling/dollar currency pair, gilts are British government bonds. European bond yields are also rising and Germany’s benchmark bond yield hit a new 11-year high of 2.512%. [GBD/EUR] Brent crude was last up 0.37% at $92.69 per barrel, while spot gold was down 0.25% and set for its second weekly decline. [O/R] [GOL/] More