Economy

A look at the day ahead in Asian markets. The Trump trade carried Wall Street to fresh records on Monday but election-week momentum faded in holiday thinned markets that don’t leave Asia much to cue off aside from disappointment in China’s stimulus proposals.Except, perhaps, in the cryptosphere, where Donald Trump’s sweeping win over Democratic candidate Vice President Kamala Harris kept activity lively, thanks to the president-elect’s pre-election bitcoin cheerleading.The largest digital currency soared above $85,000 for the first time, carrying associated shares along with it. Treasury markets, being closed for the U.S. Veterans Day holiday, offered no signals.Fed funds futures however showed traders see a 65% chance that the Fed will follow last week’s quarter point cut with another at its Dec. 17-18 meeting, even as easing expectations for next year were dialed back.The three main U.S. indexes climbed further into uncharted territory in early trading, although the benchmark S&P 500 had difficulty holding above the 6,000 threshold that it first traded above on Friday.     The stock market loves the Trump proposals for tax cuts and deregulation, especially the Russell 2000 small cap index, which rose about 1.5% to within 1% of the record high from November 2021. Bonds have been less enamored of Trump’s promise to impose import tariffs that many economists see as likely to raise inflation and kick off retaliation from trade partners.The 30-year Treasury yield hit its highest since the end of May last week after the election, while the yield on the 10-year note rose to its highest since early July and the two-year hit its highest since late July. The dollar was still buoyed by higher yields, rising against the yuan to its highest since early August at 7.2332 yuan. Dollar/yen rose 0.7% to 153.78.Several stocks that gained following the election continued their upward trajectory. Tesla (NASDAQ:TSLA) jumped almost 8% after touching $1 trillion in market value on Friday for the first time since 2022. Elon Musk, Tesla’s billionaire CEO, has close ties to Trump and his companies look positioned to benefit under the new administration. U.S. listed cryptocurrency stocks surged, with crypto exchange Coinbase Global (NASDAQ:COIN) jumping more than 20% and iShares Bitcoin Trust up more than 13%. Crypto miner Riot Platforms (NASDAQ:RIOT) surged 17%, while MicroStrategy, one of bitcoin’s biggest corporate backers, gained 28%.Beijing’s proposed 10 trillion yuan ($1.4 trillion) package to shore up local government financing, announced late on Friday, did not offer a direct boost to its flagging economy. Thus investor disappointment overshadowed the record run Wall Street closed out with last week. MSCI’s broadest index of Asia-Pacific shares outside Japan closed down 1% on Monday after Hong Kong’s Hang Seng sank 1.45%. Chinese blue chips rose 0.66% higher after an early fall and Tokyo’s Nikkei ended 0.08% higher.Here are key developments that could provide more direction to markets on Tuesday:- India CPI (Oct)- India Industrial output (Sept)- South Korea Unemployment (Oct) More

(Reuters) -Chipotle Mexican Grill on Monday named interim boss Scott Boatwright as permanent CEO of the burrito chain in a widely expected move, months after Brian Niccol exited the role to take the top job at Starbucks (NASDAQ:SBUX).Boatwright, who has been at Chipotle (NYSE:CMG) since 2017, takes the helm as restaurants across the United States battle weak consumer demand in the face of higher menu prices.In a surprise announcement in August, Starbucks named Niccol as its new CEO, leaving Chipotle under Boatwright, who has vowed to push the burrito chain to be a “global lifestyle brand” and expand to 7,000 restaurants in North America.A veteran in the restaurant industry, Boatwright spent 18 years with Arby’s Restaurant Group (LON:RTN) before joining Chipotle in 2017.He was named CEO following “a thorough and rigorous external search process,” Chipotle said in a statement on Monday.Boatwright worked closely with Niccol to also steer the company out of a crisis following a severe E. coli and salmonella outbreak in 2015.”Boatwright was by far the most logical choice given his instrumental role in leading Chipotle’s efforts to improve operations, integrate new technology, reduce employee turnover, and bolster customer satisfaction,” said Sharon Zackfia, analyst at William Blair.His appointment as CEO comes amid a slew of changes to the top brass at Chipotle following Niccol’s exit. In August, Chipotle also accelerated the appointment of Adam Rymer as its chief financial officer, and named Rymer’s predecessor Jack Hartung as chief strategy officer.Hartung was originally set to retire in March next year after a little over two decades as the company’s CFO. Rymer has been at Chipotle for 15 years, last serving as vice president of finance. “Boatwright as CEO should build confidence among investors in Chipotle’s management,” said Jim Sanderson, analyst at Northcoast Research. Chipotle’s stock lost $6 billion in market value immediately after Niccol’s departure. Since then, shares have risen about 14%. More

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TOKYO (Reuters) – Japan’s service-sector sentiment worsened and bankruptcy cases rose in October, data showed on Monday, casting doubt on the central bank’s view the country was on track to meet its 2% inflation target driven by robust domestic demand.The findings align with concerns voiced by some Bank of Japan (BOJ) board members at last month’s policy meeting that intensifying labour shortages could constrain growth, rather than lead to higher wages.”There’s a risk Japan’s economic growth will slow if labour supply constraints force firms to shrink operations by withdrawing from low-profit businesses,” one member was quoted as saying in a summary of opinions released on Monday.An index measuring sentiment among service-sector firms like taxi drivers and restaurants stood at 47.5 in October, down 0.3 point from the previous month to mark the second straight month of declines, the government’s “economy watchers” showed.A gauge of firms’ sentiment on the economic outlook also fell 1.4 points to 48.3, worsening for the second month and highlighting the fragility of Japan’s recovery.”Corporate sentiment remained strong for quite a long time but seems to be worsening somewhat, which is a concern,” said Nobuyasu Atago, chief economist at Rakuten Securities Economic Research Institute.”It raises some questions as to whether rising wages will boost consumption and lift service-sector sentiment, as the BOJ predicts,” he said.The “economy watchers” survey is closely watched by markets as a leading indicator of household spending and the broader economy, due to the polled firms’ proximity to consumers.Corporate bankruptcy cases are also creeping up as rising raw material costs and labour shortages squeeze profits particularly for small and medium-sized firms.The number of companies that went bankrupt hit 925 in October, the second largest this year following 1,016 cases in May and up 17.1% from year-before levels, a survey by private think tank Teikoku Databank showed on Monday.Of the total, a record 287 cases were caused by trouble hiring staff, the survey showed, a sign some firms were struggling to earn enough profits to pay higher wages.The BOJ exited a radical stimulus programme in March and raised its short-term policy rate to 0.25% in July.BOJ Governor Kazuo Ueda has said the central bank will continue to raise rates if robust domestic demand, backed by higher wages, keep inflation sustainably around its 2% target. More

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(Reuters) – By chiefly focusing on trying to salvage its industry champions, German policymakers may have overlooked the untapped growth potential of the country’s services sector. The German economy, once described as Europe’s growth engine, has underperformed euro zone peers since 2018 and faces further pain amid plans by car giant Volkswagen (ETR:VOWG_p) to shut factories at home.Adding to such woes, Germany’s governing coalition collapsed on Wednesday after Chancellor Olaf Scholz sacked his finance minister, capping months of wrangling over budget policy and the direction of the economy. While Scholz favoured putting a lid on energy costs and funding state-backed measures to save jobs in the ailing auto sector, pro-market minister Christian Lindner wanted spending cuts, lower taxes and less regulation to allow Germany to keep its “industrial heart.”Yet, Germany needs to start focusing on its services sector, which is smaller than in comparable European economies but growing faster than the country’s manufacturing segment, according to Reuters interviews with 12 executives, entrepreneurs and economists.”If you can do something to boost a bit the services sector, it could overcompensate for the shrinkage in manufacturing,” said Guntram Wolff, senior fellow at think tank Bruegel and professor of economics at the Université Libre de Bruxelles.Services, which range from hospitality to finance and IT and already make up the bulk of Germany’s economy, grew 1.6% in the first half of this year from a year ago, while manufacturing contracted by 2.8%, data from the German Economic Institute IW showed.The services sector represented 70% of Germany’s gross domestic product last year, against 78% in France, 72% in Italy and 75% in Spain, according to Eurostat data.  Business executives and company founders believe a suffocating bureaucracy and a culture of heavy regulation is stifling the creation of new companies and new jobs, particularly for small and mid-sized businesses that together account for 55% of Germany’s workforce.Leonard Benning, a serial entrepreneur and co-founder of fintech lending company Selina Finance, said opening up his company in Britain was painless as he could legally establish it online and get a tax identification number in a matter of days.However, when he launched a business for purchasing and running vending machines in Germany, called DAP GmbH, the same processes took him more than four months and endless paperwork involving authorities and tax accountants. It also cost thousands of euros against just 50 pounds ($64.57) for his UK firm, he told Reuters.While red tape is a problem across the whole economy, 56% of respondents to a services sector poll by the German Chamber of Commerce and Industry (DIHK) published on Oct. 29 listed regulation as their main concern. German industry sector respondents, on the other hand, listed risks to domestic demand as their main worry, along with energy prices, according to the same survey. Lengthy and costly certification and approval procedures prevent small and young companies from entering the German market, particularly in the financial or health sector, said Daniel Breitinger, an executive in charge of startups at Bitkom, the German association for the information technology sector.”The result is that innovation takes place in other countries,” said Breitinger, whose association represents 2,200 companies. BARRIERS REMAINOverregulation is also exacerbating a labour shortage, with 50% of companies active in Germany’s services sector saying they struggle to find workers, according to a 2023 report by DIHK.Many services sector professions, including lawyers, accountants and doctors, require specific legal standards and certificates to practice. But in Germany the requirements appear to be stricter and affecting a wider range of jobs. The country has 33% of the total workforce employed in regulated professions, well above an EU average of 21% and the highest proportion of any EU member, data from a 2021 European Commission report show.Marcel Krieb, managing director at Pretium Associates, said Germany’s strict employment qualifications make it difficult to find young new hires for his firm, a financial consultancy for mid-sized companies:”We are the country of titles,” he told Reuters. Only 1.4% of German-based auditors are under 30 due to the long training requirements, while 31% are between 50 and 59, according to a July report by the German Chamber of Public Accountants.Overcoming such barriers requires getting policymakers’ attention.But while manufacturers can count on the mighty business lobby BDI, which describes itself as ‘The Voice of German Industry’, the domestic services sector is extremely fragmented and represented by a myriad of small associations, Krieb and other executives lamented.Tellingly, Germany’s statistical office publishes more than 20 monthly datasets for the industrial sector, including very detailed figures for the automotive, chemical and pharmaceutical sub-segments. But monthly figures pertinent to services looks limited to retail sales, people employed in the sector and turnover in accommodation and food services.For Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, the scarcity of data is the best example of the scant attention paid by politicians to this crucial part of the German economy. “It is a demonstration of a biased view on the economy,” de la Rubia said.($1 = 0.7701 pounds)($1 = 0.7744 pounds) More

NEW YORK (Reuters) – Violence and crime absorb almost 3.5% of Latin America and the Caribbean’s (LAC) economic output, depleting funds that could be used in education and assisting the vulnerable, a report by the Inter-American Development Bank (IDB) showed.Beyond the human toll, the cost of crime amounts to almost 80% of the region’s public budgets for education, twice as much as what is spent on social assistance, and 12 times the budget for research and development, the study, using data from 2022 and published on Monday (NASDAQ:MNDY), showed.Crime “limits growth, drives inequality, and diverts private and public investment. We must join and redouble efforts to change that reality,” IDB President Ilan Goldfajn said in a statement.The study calculates the direct cost of crime in three areas: loss of human capital as productive time, spending on crime mitigation by businesses, and public spending on crime prevention and criminal justice. In 2022, security expenses by private businesses accounted for 47% of the total cost of crime, while state spending on crime prevention represented 31% and the loss of human capital made up 22%.For comparison, a set of data from Poland, Ireland, the Czech Republic, Portugal, Netherlands, and Sweden showed their costs are 42% lower than in LAC. If the region got to the levels of its European counterparts, it would have near 1% of GDP to invest in social welfare and other programs, according to the IDB.A parallel study from the International Monetary Fund cites Latin America as accounting for a third of homicides globally despite holding less than 10% of the world’s population, with organized crime being especially costly.”The presence of gangs and drug trafficking amplify the costs of doing business,” the IMF report said. “A novel analysis of Mexican firms suggests that the damage costs of crime are four times higher for firms that report gangs operating in their vicinity.”The fiscal cost for governments is also considerable, according to the IMF, which states that spending on public order and safety in the region averages around 1.9% of GDP and over 7% of overall spending.”While spending more on security and deploying more police seems to contribute to lowering crime, other factors are likely more important in LAC, with spending efficiency playing a critical role. For example, despite a high proportion of spending on the judiciary, the courts’ ability to punish crimes remains weak.”Among policy proposals the IMF says LAC should establish a “regional knowledge platform” to collect, exchange, and analyze data, alongside the dissemination of best practices on effective economic and security policy responses. More