Economy

The head of Stellantis has warned that carmakers will struggle to get hold of enough batteries in the next three to four years as they race to roll out electric vehicles, leaving some manufacturers by the wayside as supply bottlenecks pile up.Carlos Tavares told the Financial Times’ Future of the Car conference on Tuesday that car manufacturers may not be able to build their own battery plants fast enough to avoid shortages in the medium term.“We will have around 2025 or 2026 a short supply of batteries,” he said. “And if there is no short supply of batteries then there will be a significant dependence of the western world vis-à-vis Asia.”The battery shortages would add to other problems such as growing concerns over how and where raw materials were extracted, he added.Tavares said the battery supply challenges would feed into the bigger problem of keeping cars affordable in the switch to electric models, which would be an issue for manufacturers’ margins in a “Darwinian period for the industry”.“Those not able to transform will be in trouble,” he said.Volkswagen boss Herbert Diess said at the Future of the Car summit on Monday that his company was unlikely to be able to go faster in pushing out electric cars because of supply constraints on batteries and the slow roll out of charging stations. The German group plans to derive 50 to 60 per cent of car sales from electric models in 2030, from under a quarter now.“Could it happen faster? We could accelerate a bit more maybe but not a lot,” said Diess, who also called for a negotiated settlement in Ukraine during the summit.Stellantis, formed last year through the merger of Fiat Chrysler and Peugeot maker PSA, and other European manufacturers have been investing in battery production ventures in the region, but many are not fully up and running unlike those in markets such as South Korea. The carmaker has ambitious plans to become one of the leading producers of battery powered vehicles as it hopes to challenge Tesla and Elon Musk.Tavares wants Stellantis to sell 5mn battery powered vehicles by 2030, up from just under 400,000 last year, and is aiming for an all-electric approach in Europe by then.The sourcing of raw materials, including those needed to make lighter frames for cars weighed down by batteries, would create problems down the line too, said Tavares.“Everyone is going to pour EV vehicles on the market,” he said. “Where is the charging infrastructure? Where are the geopolitical risks of sourcing those raw materials? Who is looking at the full picture of this transformation?”Renault chief executive Luca de Meo also warned about the effect on jobs from new regulations on climate change and the electric shift at the FT’s car summit on Monday.He said European regulations could cost up to 70,000 jobs in France as the rules, which impose stricter limits on carbon dioxide and nitrogen oxide emissions from petrol and diesel cars, vans, trucks and buses, could make vehicles more expensive and hit demand. More

“Once we get in the range of the neutral rate, we can then determine whether inflation remains at a level that requires us to put the brakes on the economy or not,” Barkin said in prepared remarks to a local chamber of commerce in North East, Maryland, adding the central bank could avoid inducing a 1980s-style recession as its tries to drive down inflation.The central bank last week raised its benchmark overnight lending rate by half a percentage point and has pivoted in recent months to become more aggressive in tightening policy as it seeks to return inflation, which remains at a 40-year high, closer to its goal.”We will do what we need to do,” Barkin said, noting in his speech Fed Chair Jerome Powell’s recent comments that 50 basis point hikes are on the table for the Fed’s next two policy meetings in June and July.There are some tentative signs inflation has peaked, which would be welcomed by Fed policymakers as they seek to avoid having to become more aggressive with rate hikes to rebalance the economy.A U.S. government report on Wednesday is expected to show consumer price inflation slowed slightly in April. That said, the Fed’s preferred measure of inflation is still running more than three times above the central bank’s goal.But Russia’s invasion of Ukraine, which has driven up food and energy prices, and recent lockdowns in China to tamp down COVID cases remain a great source of uncertainty in assessing how long outsized inflation pressures will remain. More

The swaps exacerbated dollar liquidity tensions as U.S. yields rose rapidly and the yield gap between the world’s two largest economies effectively vanished.The sources with knowledge of the matter told Reuters that state banks were seen swapping yuan for dollars in the onshore forwards market, leaving one-year dollar/yuan swap points to a low of -51 points, the lowest level since March 2019.Buy-sell swaps help to reduce the supply of dollars that the market can access to short-sell the yuan.State banks usually trade on behalf of the central bank in China’s FX market but they can also trade on their own behalf or execute orders for their corporate clients.One of the sources noted that the cost of accessing dollar funding by overseas Chinese banks had been rising rapidly, and using FX swaps to obtain dollars had become rather “cost-effective”.State lenders used such tactics frequently in 2019 to support the Chinese currency, which faced mounting depreciation pressure due to heightened bilateral trade tensions with the United States.This time around, the yuan regained some downside pressure, with the onshore yuan losing about 5.5% of its value against the dollar this year to trade at an 18-month low as of Tuesday. More

According to government statistics agency IBGE, sales grew 1% in March from February, more than the 0.4% increase forecast in a Reuters poll of economists.Six of the eight activities surveyed recorded growth, with computer and communication office equipment and supplies gaining 13.9%.Sales were up 4% from the same month a year earlier, also higher than the 2.1% raise predicted by economists.That resulted in a 1.3% increase in the first quarter from the same period last year. The sector also posted 1.9% growth from the previous quarter, the agency said.Financial conditions in Brazil have tightened as the country’s central bank aggressively raises interest rates to curb inflation that reached 12% in mid-April.Research manager Cristiano Santos said the quarterly performance was “strong,” although not in all activities. Retail sales are now 2.6% above the pre-pandemic level of February 2020. But considering the expanded retail sector, which includes cars and building materials, six sectors are below pre-pandemic levels, while four are above, Santos said. On that wider basis, retail sales rose 0.7% in March from February. More

(Reuters) – Crypto assets bled nearly $800 billion in market value over the past month, touching a low of $1.4 trillion on Tuesday, according to data site CoinMarketCap, as the end of easy monetary policy diminishes appetite for risk assets.Bitcoin, which makes up for nearly 40% of the crypto market, hit a 10-month low earlier on Tuesday, before rebounding to $31,450, just six days after touching $40,000. It was more than 54% below its Nov. 10 all-time high of $69,000.Digital asset prices have slumped, mirroring a plunge in equities on fears of aggressive interest rate hikes across the globe to stave off decades-high inflation. The tech-heavy Nasdaq was down 28% from its November 2021 record high.Total crypto market value was at $2.2 trillion on April 2, well off of its all-time peak of $2.9 trillion in early November, as per CoinMarketCap. “Bitcoin remains highly correlated to the broader economic conditions, which suggest the road ahead may unfortunately be a rocky one, at least for the time being,” blockchain data provider Glassnode said in a note.Signs of weakness in stablecoins, typically a safer crypto currency, further spooked investors. TerraUSD, the world’s fourth-largest stablecoin, lost a third of its value on Tuesday as it lost its peg to the dollar.Despite bitcoin’s price slump, funds and products linked to it posted inflows of $45 million last week as investors took advantage of price weakness, according to digital asset manager Coinshares in a report released on Monday. “Enormous amount of liquidity that has inflated some of these cryptocurrencies,” said Sebastien Galy, senior macro strategist at Nordea Asset Management. He expects crypto, also correlated to high-growth stocks, to come under pressure as several central banks tighten their monetary policy. More

The Andean country’s central bank raised the benchmark rate to 8.25% in May from 7.0% previously. The hike of 125 basis points follows a series of raises by the Chilean central bank to tighten monetary policy since the middle of last year as the economy has bounced back strongly from the impact of the coronavirus pandemic.The interest rate is expected to drop to 7.5% in 11 months according to the poll of analysts. It also suggested that Chile faced an inflation rate of 0.9% in May.The Chilean peso, currently trading at about 864 pesos per dollar, is expected to trade at 850 pesos per dollar in two months, and 825 in 11 months. More

“When I think of a soft landing, it’s really a matter of, yes we could see growth below trend for a while and we definitely could see unemployment moving up somewhat but not in a huge way…I think that’s the challenge,” Williams said during a question and answer session following a speech to an economics conference organized by Germany’s central bank in Eltville am Rhein, Germany.Williams added that he would not define a soft landing as an economy in which the unemployment rate stayed at its current level of 3.6%, but one in which the labor market stayed broadly strong and healthy as inflation came down toward the central bank’s goal. More

Policymakers raised the benchmark interest rate by 75 basis points to 3.75%, the sixth consecutive hike since October, but Romanian rates still lag behind those of its central European peers, which have tightened aggressively.Unlike elsewhere in the region, Romania’s central bank must contend with high budget and current account deficits which limit how far it can raise rates. The bank also relies heavily on using firm money market liquidity controls as a means to tighten policy. On Tuesday, the bank raised its lending facility rate to 4.75% from 4.00% and its deposit rate to 2.75% from 2.00%.”The updated forecast shows a renewed considerable worsening of the outlook for inflation,” the bank said, “as the projected path of its annual dynamics has seen an additional significant upward revision across the entire horizon”.It said inflation, which rose to a 17-year high of 10.15% in March, will accelerate in the second quarter and only gradually decline over the next four quarters. While inflation will fall to single digits in the second half of 2023, it will remain above the bank’s 1.5-3.5% target at the end of the forecast horizon, it said. Policymakers are expected to release new inflation forecasts for this year and next on May 12. A majority of analysts polled by Reuters had expected a 50 basis points hike, while some saw a bigger 1 percentage point raise. “We think that the inflation outlook will prompt the NBR to continue to hike rates at its next few meetings to take the policy rate above 5.00% by the end of the year,” Capital Economics said in a research note. “We think it will remain there for a sustained period as the central bank guides inflation back down towards target.”The Romanian leu was flat against the euro, unmoved from levels before the decision. More