Economy

LONDON (Reuters) – Mining and oil firms led an 11% jump in dividend payouts to a first-quarter record of $302.5 billion, according to a closely-watched global report, though it warned companies face a growing number of challenges in the months ahead. The war in Ukraine, geopolitical tensions, high energy and commodity prices, rapid inflation and rising interest rates are all likely to impact companies’ dividend prospects, according to British asset management group Janus Henderson. “These challenges also mean greater uncertainty that is likely to affect corporate decision making. The impact on dividends is likely to show up beyond 2022, but it is important to remember that dividends are much less volatile than profits,” said Jane Shoemake, a client portfolio manager for global equity income at Janus Henderson.Payouts to shareholders have rebounded after falling during the pandemic.All business sectors in Janus Henderson’s index saw higher dividends year-on-year in the first quarter, with mining and oil companies recording the fastest growth, both up almost a third. BHP topped the list of the world’s biggest dividend payers in the quarter, followed by Swiss pharmaceuticals group Novartis.Danish shipping group Maersk was the third largest, having also recorded the biggest single dividend increase as the company benefitted from the disruption in global supply chains, according to the report. Overall 94% of companies in the index increased or maintained dividend levels, and every region saw double-digit growth.Janus Henderson expects global dividends for 2022 to reach $1.54 trillion, up 4.6% from the $1.47 trillion paid out in 2021, and over a fifth higher than in 2020. Payouts have more than doubled since 2009, when its global dividend index began. More

“Fed policymakers have emphasized a commitment to act expeditiously to restore price stability, and I expect that further rate increases could put the federal funds rate in the neighborhood of 2% by August, a significant pace of change in policy settings” George said in remarks prepared for delivery to an agricultural symposium put on by the Kansas City Fed. “Evidence that inflation is clearly decelerating will inform judgments about further tightening.” The Fed has been raising interest rates to rein in inflation that is at a 40-year high, lifting short-term borrowing costs from near zero to a range of 0.75%-1% so far this year. Fed Chair Jerome Powell has signaled that the central bank will raise rates by a total of another full percentage point over the next two Fed meetings, in June and July. The central bank’s action after that has become a key point of debate among its policymakers. George used much of her prepared remarks to outline the cross currents affecting the U.S. economy that make a judgment of what will happen with inflation so difficult: Russia’s war and China’s COVID-19 lockdowns could, for instance, hit global growth and reduce inflation pressure, or they could disrupt world productive capacity further and add to inflation pressures. “The central bank’s job is to prevent persistent imbalances from feeding into inflation and unmooring inflation expectations,” George said.The Fed’s interest rate hikes can only reduce demand and cannot influence supply factors that are also heavily impacting inflation, she said. “The evolution of its efforts alongside other factors will affect the course of monetary policy, requiring continuous and careful monitoring.” More

Arkansas will also hold nomination contests while Texas will hold run-off elections for races that were unresolved in that state’s March 1 primaries. Here are seven races to watch:HERSCHEL WALKER’S U.S. SENATE BIDIn Georgia, Trump-backed Herschel Walker, a former professional football player with scant political experience, is expected to come in first in the contest against five other Republican hopefuls. But if he falls short of 50%, he will face the second-place Republican in a June 21 run-off. The eventual winner will likely face Democratic Senator Raphael Warnock. The November contest is widely seen as a toss-up. DAVID PERDUE VS BRIAN KEMPTrump-backed former U.S. Senator David Perdue has heavily trailed incumbent Republican Governor of Georgia Brian Kemp in polls. Perdue might not even force a run-off with Kemp, who sparked Trump’s ire by declining to help the former president’s effort to overthrow Trump’s loss in the state during the 2020 presidential election. The winner will take on Stacey Abrams, the lone Democrat seeking her party’s nomination, in what is expected to be a close contest.MORE REVENGE: HICE VS RAFFENSPERGERLike the race against Kemp, Trump also backed a challenger to Georgia’s Republican Secretary of State Brad Raffensperger on grounds that he did too little to bolster his false allegations that the 2020 presidential election was stolen from him. Trump-endorsed U.S. Representative Jody Hice, who has been close to Raffensperger in recent polls, could be Trump’s best chance at unseating an incumbent in Georgia.DEMOCRATIC DUEL: BOURDEAUX VS MCBATHGeorgia’s newly-drawn 7th congressional district pits two Democratic U.S. Representatives – Carolyn Bourdeaux and Lucy McBath – against one another. Bourdeaux was the only Democrat to flip a Republican House seat in the November 2020 elections, while McBath was a gun control advocate before winning a congressional seat in 2018. The 7th congressional district is heavily Democratic.MO BROOKS HOLDS ONU.S. Representative Mo Brooks, a Republican firebrand from Alabama, has shown a recent recovery in the polls ahead of his attempt to return to the U.S. Senate. He was an early supporter of Trump, but the former president in March withdrew his endorsement of Brooks’ then-struggling campaign after Brooks told Alabama voters it was time to move on from Trump’s false claims of a stolen election. Katie Britt, a former chief of staff to retiring U.S. Senator Richard Shelby, is still the favorite, but Brooks has made it a race.MODERATE DEMOCRAT VS PROGRESSIVE CHALLENGERU.S. Representative Henry Cuellar of Texas, a moderate Democrat, will again face progressive challenger Jessica Cisneros in party nomination contest after neither garnered 50% in their March 1st primary election. The winner will compete in one of Texas’ few competitive House races in November. Cuellar is the House of Representatives’ sole Democrat who opposes abortion rights, which Cisneros has attacked along with his opposition to legislation making it easier for workers to get union representation.WILL PAXTON SURVIVE?Texas Attorney General Ken Paxton has already won one re-election campaign since his indictment in 2015 on state securities fraud charges. This time around, he will face state Land Commissioner George P. Bush in a runoff after neither won 50% in a March 1st primary contest. Bush is the grandson of former President George H. W. Bush.(This story refiles to fix typos in third and seventh paragraphs) More

(Reuters) – San Francisco Federal Reserve Bank President Mary Daly on Monday said the U.S. economy has a lot of momentum, and said the central bank can raise interest rates to where they are no longer stimulating economic growth without starting a recession.”We really have a strong economy,” Daly said in an interview on Fox News. “I think that we can weather this storm, get the interest rate up…price stability restored and still leave Americans with jobs aplentiful and with growth expanding as we expect it to.” More

The economy ministry’s tax cut, which covers approximately 87% of the country’s tariff goods, was approved after a meeting of the Brazilian Foreign Trade Chamber is effective between June 1 this year and Dec. 31, 2023.A source had previously confirmed the information to Reuters.”Today’s measure, added to the 10% reduction already made last year, brings the Brazilian tariff level closer to the international average and, in particular, to the countries of the Organization for Economic Cooperation and Development (OECD),” the Secretary of Foreign Trade, Lucas Ferraz, said in a note to the press.The waiver resulting from the tax cuts, according to the ministry, is estimated at 3.7 billion reais ($768.45 million).The decision to reduce the tariffs, without approval of trade bloc Mercosur, was made under the protection of an article of the Montevideo Treaty.Ferraz said Brazil will keep negotiating with bloc members to try to consolidate and make the import tax cuts permanent.”Our expectation is that this year we will be able to make the 20% tax cut a measure of the entire Mercosur,” he said.Among products that will remain outside the measure are textiles, footwear, toys, dairy products and some automotive items.The government had already unilaterally reduced the common external tariff (TEC) rates by 10%, without approval of all Mercosur members, saying it was urgent to deal with rising prices.In April, the government showed its intention to promote a new 10% cut in import tariffs.The economy ministry backs a gradual opening of the economy and recently implemented cuts in the industrial tax (IPI) to make Brazilian industry more competitive and enable the new reduction of the import tax.An initial reduction of 25% in IPI was increased to 35%, preserving products from the Manaus Free Trade Zone. The measure was taken to court and currently is partially suspended.($1 = 4.8149 reais) More

Sixteen months into the Biden presidency, U.S. officials are still divided over what to do about a trade legacy left by President Donald J. Trump.WASHINGTON — President Biden’s decision on Monday to try to align with Asian partners to form an economic bloc against China comes at a moment of frustration over his administration’s economic approach to Beijing, with some White House advisers pushing the president to move away from the Trump-era policies he criticized and others arguing that Mr. Biden risks being seen as weak on China if he relents.Some officials have grown frustrated that U.S. trade relations with China are still defined by policies set by President Donald J. Trump, including tariffs imposed on more than $360 billion of products and trade commitments made during a deal the United States and China signed in early 2020.Concerns about the United States’ economic approach to China have taken on new urgency amid rapid inflation. Treasury Secretary Janet L. Yellen and other officials have argued that the full suite of tariffs served little strategic purpose and could be at least partly lifted to ease the financial burden on companies and consumers.But those ideas have met pushback from other senior administration officials, such as some top White House aides, the U.S. trade representative and labor groups. They argue that removing the tariffs — which were put in place to punish China over its economic practices — would constitute unilateral disarmament given that Beijing has yet to address many of the policies that prompted the measures. With the midterm elections looming, some administration officials are worried that removing tariffs would make Democrats vulnerable to political attacks, according to interviews with more than a dozen current and former officials.The business community is also losing patience with the absence of a clear trade strategy nearly a year and a half into Mr. Biden’s presidency. Executives have complained about a lack of clarity, which they say has made it difficult to determine whether to continue investing in China, a critical market.The challenges in figuring out how to confront Chinese trade practices have become harder amid Russia’s invasion of Ukraine. The United States was originally moving toward making changes to its trade relationship with China in early 2022, a senior administration official said, but with Beijing aligning with Moscow, Mr. Biden felt it was prudent to see how events unfolded in Ukraine with respect to the global economy and U.S. allies.Biden administration officials are conflicted over whether to remove tariffs on Chinese goods.Doug Mills/The New York TimesSome elements of the administration’s trade strategy are becoming clearer this week. Mr. Biden announced in Japan on Monday that the United States would begin talks with 12 countries to develop a new economic framework for the Indo-Pacific region. The countries would aim to form a bloc that would provide an early warning system for supply chain issues, encourage industries to decarbonize and offer U.S. businesses reliable Asian partners outside China.The framework would not contain the binding commitments for market access that are typical of most trade deals, which have proved to be a hard sell for many Democrats after the United States withdrew from the Trans-Pacific Partnership, President Barack Obama’s signature trade agreement.U.S. officials say their goals for the framework will be ambitious and include raising labor and environmental standards and creating new guidelines for how data flows between countries. But some analysts have questioned whether the framework can encourage those changes without offering Asian countries the U.S. market access that is typically the incentive in trade pacts. And U.S. labor groups are already wary that some commitments could lead to further outsourcing for American industries.The framework also does not try to directly shape trade with China. Many Biden administration officials have concluded that talks with China have proved largely fruitless, as have negotiations at the World Trade Organization. Instead, they have said they would try to confront China by changing the environment around it by rebuilding alliances and investing more in the United States, including through a $1 trillion infrastructure spending bill.Senior U.S. officials hold a similar view as their counterparts in the Trump administration that the world’s dependence on the Chinese economy has given Beijing enormous strategic leverage. A classified China strategy that was largely finished last fall argues that it is important for U.S. security to delink some industries and diversify supply chains, people familiar with the strategy say.The administration was supposed to offer a glimpse of the classified strategy in a major speech laying out economic and security goals for China, which Washington officials and China experts expected to occur last fall. The White House first considered having Mr. Biden deliver the speech but settled on Secretary of State Antony J. Blinken.Yet the speech — which revolves around the slogan “Invest, Align and Compete,” according to those familiar with it — has been delayed for several reasons, including the war in Ukraine and Mr. Blinken’s contracting Covid-19 this month. Some China experts in Washington have interpreted the delays as another sign of uncertainty on China policy, but U.S. officials insist that is not true.Katherine Tai, the U.S. trade representative, and other officials have argued against dropping the tariffs.Pete Marovich for The New York TimesMr. Blinken is expected to give the China speech shortly after he and Mr. Biden return from Japan, people familiar with the planning said.The speech avoids explicitly addressing how the administration will deal with Mr. Trump’s tariffs, they say. Businesses have long complained that they hurt U.S. companies and their consumers rather than China. That concern has been heightened by the fact that prices are rising at their fastest rate in 40 years, creating a political problem for the White House, which has struggled to explain how it can alleviate soaring costs other than relying on the Federal Reserve.But Republicans and Democrats who want more aggressive policies toward China — and toward some American companies that do business there — would try to draw blood if Mr. Biden eased the tariffs.“We need to rebuild American industry, not reward companies that keep their supply chains in China,” Senator Marco Rubio, Republican of Florida, said this month after voting against a legislative amendment allowing carve-outs to the tariffs.At a news conference in Japan on Monday, Mr. Biden said he would meet with Ms. Yellen when he returned from his trip to discuss her call to remove some of the China tariffs.“I am considering it,” the president said. “We did not impose any of those tariffs; they were imposed by the previous administration, and they are under consideration.”Public rifts among Biden officials have been rare, but when it comes to tariffs, the debate has spilled into the open.“There are definitely different views in the administration, and they’re surfacing,” said Wendy Cutler, the vice president at the Asia Society Policy Institute and a former U.S. trade negotiator. “There are those who think that the tariffs didn’t work and are contributing to inflation. Then you have the trade negotiator side that says: ‘Why would we give them up now? They’re good leverage.’”The discussion over how and when to adjust these tariffs mirrors a bigger debate over whether globalized trade has done more to help or harm Americans, and how the Democratic Party should approach trade.Katherine Tai, the United States trade representative; Tom Vilsack, the agriculture secretary; Jake Sullivan, the national security adviser; and others have argued against dropping the tariffs. Ms. Yellen, Commerce Secretary Gina Raimondo and other officials have pointed out the benefits to companies and consumers from adjusting them, people familiar with the discussions said.Ms. Yellen has long been a voice of skepticism regarding the tariffs and has grown more frustrated with the pace of progress on trade developments, people familiar with her thinking said. She made the case last week for removing some of the tariffs as a way to offset rising prices.“Some relief could come from cutting some of them,” Ms. Yellen said, explaining that the tariffs were harming consumers and businesses. “There are a variety of opinions, and we really haven’t sorted out yet or come to agreement on where to be on tariffs.”Daleep Singh, a deputy national security adviser, was more blunt in an April 21 webinar. “We inherited these tariffs,” he said, “and while they may have created negotiating leverage, they serve no strategic purpose.”For products that do not strengthen critical supply chains or support national security, “there’s not much of a case for those tariffs being in place,” Mr. Singh said. “Why do we have tariffs on bicycles or apparel or underwear?”Treasury Secretary Janet L. Yellen has grown more frustrated with the pace of progress on trade developments, according to people familiar with her thinking.Sarahbeth Maney/The New York TimesBut labor leaders, progressive Democrats and some industry representatives have made various arguments for maintaining tough tariffs, with several pointing to data showing that imports from China are not the main drivers of inflation.“For a Democratic president to get rid of tariffs imposed by a Republican and basically give a free handout to the Chinese Communist Party is not something that’s really politically wise in any form,” said Scott N. Paul, the president of the Alliance for American Manufacturing, which represents steel companies and workers.Economists also believe the impact from removing the tariffs would be modest. Jason Furman, an economist at Harvard University and a former chairman of Mr. Obama’s Council of Economic Advisers, estimates that removing all the China tariffs would shave half a percentage point off the Consumer Price Index, which grew 8.3 percent in April from a year earlier.Still, Mr. Furman said, when it comes to lowering inflation “tariff reduction is the single biggest tool the administration has.”Progressive Democrats like Representative Tim Ryan, Democrat of Ohio, have argued for maintaining tough tariffs on China.Dustin Franz for The New York TimesThe Office of the United States Trade Representative started a statutory review of the tariffs this month and says its approach to analyzing them is on track. “We need to make sure that whatever we do right now, first of all, is effective and, second of all, doesn’t undermine the medium-term design and strategy that we know we need to pursue,” Ms. Tai said in an interview on May 2.Some Biden administration officials appear to favor an outcome that would lift certain tariffs while increasing other trade penalties on China, a process that would take at least several months. That could happen through a separate investigation under the so-called Section 301 process into China’s use of industrial subsidies. More

Annual inflation in the South American nation reached 58% in April, as many food and energy prices surged in the aftermath of Russia’s invasion of Ukraine, with some analysts predicting consumer prices will jump 70% later this year.Domestic Trade Minister Roberto Feletti announced his move in a post on Twitter (NYSE:TWTR) along with his resignation letter after serving a little more than seven months in the post and citing policy “discrepancies” but without going into detail.Last week, the ministry Feletti led was folded into the economy ministry, as internal tensions within the center-left ruling Peronists of President Alberto Fernandez have spilled out into public.In a statement issued later on Monday, Guillermo Hang, a central bank official, was named the new domestic trade minister. More

Joe Biden has pledged to use military force to defend Taiwan if China invades, in remarks made during his first visit to Japan as US president.Biden’s remark appeared to overturn the decades-old US policy of “strategic ambiguity” on whether it would defend Taiwan, but the White House insisted its policy on the democratic island had not changed.The president’s comments have reignited speculation about his stance on Taiwan. Some defence experts had urged Biden to make it clear that the US would defend Taiwan as a way to deter an increasingly powerful China.But there has been no sign of a formal policy shift apart from his comment in Tokyo and two similar remarks last year. On all three occasions, the White House immediately rolled back on the remarks.Speaking alongside Japan’s prime minister Fumio Kishida, Biden reaffirmed Washington’s “one China” policy, which recognises Beijing as the sole legitimate government of China and acknowledges its position that Taiwan is part of China. He added that if China were to take Taiwan by force, “it will dislocate the entire region and be another action similar to what happened in Ukraine”.Elsewhere on his trip to Asia, the US president has launched a new trade initiative with 12 Indo-Pacific countries — including Japan, Australia, New Zealand and South Korea — in his first serious effort to boost economic engagement in the region and help other nations resist Chinese pressure. India and seven south-east Asian nations — Singapore, Malaysia, Indonesia, Vietnam, the Philippines, Thailand and Brunei — will also join the Indo-Pacific Economic Framework, which includes nations that represent 40 per cent of the global economy.Over the weekend, Biden and South Korean president Yoon Suk-yeol committed to exploring “new and additional steps” to reinforce deterrence as North Korea continues to develop nuclear weapons.Thanks for reading FirstFT Asia. Here’s the rest of the day’s news — SophiaFive more stories in the news1. Didi investors vote to delist in US in bid to revive China business The Chinese ride-hailing group has notified the New York Stock Exchange that it will move to delist after shareholders overwhelmingly backed the plan designed to get the company’s services back on to Chinese app stores. The company has endured a months-long crisis after a botched $4.4bn IPO.2. Binance promoted terra as a ‘safe’ investment before $40bn collapse Just weeks before the stablecoin and its counterpart Luna collapsed, the world’s biggest crypto exchange advertised an investment scheme in which clients lend out their Terra to earn a yield of almost 20 per cent as a “safe and happy” opportunity, according to a message Binance sent on its official channel on the Telegram messaging app.3. Eurozone to end negative interest rates European Central Bank president Christine Lagarde has signalled that ECB’s eight-year experiment with negative rates will end, and that borrowing costs are on track to hit zero by the end of September. ECB officials estimate the neutral rate for the eurozone at between 1 per cent and 2 per cent, but economists are divided on whether it will raise rates above that level.4. Zelensky calls for global plan to rebuild Ukraine after war The Ukrainian president has urged the international community at Davos to help fund his country’s reconstruction after the war, which he estimates will cost $500bn. In addition to rebuilding war-torn areas, Zelensky has also proposed using frozen Russian assets to compensate victims. 5. Iran vows revenge after commander assassinated in broad daylight Colonel Hassan Sayyad Khodaei, a member of the Revolutionary Guards, was shot in front of his house in Tehran on Sunday afternoon. Iran’s president Ebrahim Raisi blamed “global tyranny” for the death of the commander, a phrase that is usually a reference to the US and Israel.The day aheadQuad leaders summit Japan’s prime minister Fumio Kishida will host US president Joe Biden, Australia’s newly elected prime minister Anthony Albanese and India’s prime minister Narendra Modi. The Indo-Pacific security grouping is aimed at addressing China’s assertiveness in the region.Elizabeth line opens in London The city’s £18.9bn east-west express rail link, the Elizabeth Line, is set to open, three-and-a-half years later than originally planned.Eurozone business activity data A key test will come today from S&P Global’s latest survey of purchasing managers, which European Central Bank policymakers will watch as they weigh how soon to stop buying more bonds and start raising interest rates.What else we’re readingHow the war in Ukraine convinced Germany to rebuild its army Three days after Russia invaded Ukraine, the German government said it would spend €100bn on modernising its army. Germany has previously promised. to spend 2 per cent of GDP on defence, but has never met that target. Now, some are left asking why it took so long — and whether it will be enough.US-China rift poses challenge for Hong Kong stock exchange chief At the first in-person World Economic Forum in two years, Nicolas Aguzin will attempt to persuade executives and officials that China is open for business. But the plan to reinforce HKEX’s role as the bridge between east and west has been “defeated for the time being” a person close to the HKEX said. The uncertain future of urban transit Cities as diverse as Paris, Auckland, and Ho Chi Minh City are pressing forward with building new urban metro systems. But these come as improved cycling infrastructure, disruptive technologies such as ride-hailing apps and new patterns of work are already changing travel patterns worldwide.

FT Executive Education Ranking 2022 France’s HEC Paris has topped the FT’s twin annual executive education rankings for open-enrolment programmes and custom courses for corporate clients for the first time, as leading academic institutions reported a surge in demand for non-degree courses. Read the full rankings and profiles of all the top schools.Vive la différence between work and play France’s attempt in 2017 to allow employees a “right to disconnect” is now being taken up across Europe. Italy and Spain are taking similar steps and Portugal forbids companies from contacting employees outside working hours. Meanwhile, the EU is drafting a directive to reduce work-related digital overload. More on work: Employers believe the impression of productivity is just as important, if not more so, than actual productivity. But leadership consultant Nels Abbey urges an end to the curse of presenteeism.How To Spend ItFrom Lake Como to Colombia, Bordeaux to the Bahamas, How To Spend It is full of ideas for getting away this summer in the special travel issue, with an opening letter from editor Jo Ellison.

The Vineyard House is a two-bedroom cottage on the Château Troplong Mondot estate in Bordeaux © Cécile Perrinet-Lhermitte More