Economy

The president-elect inaccurately said that Chinese soldiers operate the Panama Canal. But China’s strategic positions in shipping worry Washington officials.It was a Christmas message that no one saw coming.On Dec. 25, President-elect Donald J. Trump went on his social media platform, Truth Social, to wish a “Merry Christmas to all, including to the wonderful soldiers of China, who are lovingly, but illegally, operating the Panama Canal.”Mr. Trump’s claim is false. The Panama Canal is operated by an agency of the Panamanian government, not by Chinese soldiers. In a news conference, President José Raúl Mulino of Panama disputed Mr. Trump’s statements, saying that there were “no Chinese in the canal” beyond those in transiting ships or at the visitor center.“There is absolutely no Chinese interference or participation in anything that has to do with the Panama Canal,” Mr. Mulino said.While Mr. Trump’s claim was inaccurate, the growing influence of Chinese companies and the Chinese government over shipping and global ports, including the Panama Canal, has become a concern for U.S. officials.The Chinese government has invested heavily in building ports throughout the world. And given that China is the world’s biggest exporter, private Chinese companies now play a major role in shipping and port operations, giving them significant influence over the movement of global goods and strategic positions from which to monitor other countries’ activities.Brian Hughes, a spokesman for the Trump-Vance transition team, said in a statement that “Chinese control of the Panama Canal absolutely poses a national security threat to the U.S.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

LONDON/NEW YORK (Reuters) -Some of the world’s largest hedge funds finished 2024 with comfortable double-digit returns, benefiting from chaotic markets, central bank policy changes and a tight U.S. presidential election race. Hedge funds, which trade several different asset classes from stocks to commodities, navigated volatile markets with some degree of success. Macro (BCBA:BMAm) hedge fund Discovery (NASDAQ:WBD) Capital ended 2024 up 52%, after gains across equities, currencies, rates and credit, a source familiar with the performance said, with trades in both emerging and developed countries. In terms of sectors, the fund led by Rob Citrone, had profitable bets in financials and technology, media and telecom (TMT) for instance. British hedge fund Marshall Wace, which manages almost $71 billion, returned double-digit gains in several of its funds, a source close to the matter told Reuters on Thursday. Co-founded by British financier Paul Marshall, the firm returned around 14% in its Eureka fund, a source said. Hedge fund manager Bridgewater Associates’ flagship Pure Alpha 18% volatility fund gained just over 11% in 2024 through Dec. 27, a source familiar with the matter said on Thursday.Large U.S. multi-strategy firms also posted double-digit gains.Schonfeld’s flagship hedge fund Strategic Partners was up 19.7% in 2024.Citadel’s flagship fund Wellington posted a 15.1% gain, while Millennium Management returned 15% in 2024, according to people familiar with the results. Citadel offered clients the option to cash out Wellington’s profits. Very few clients took up the offer, with redemptions totaling only roughly $300 million out of billions in profit.Two of D.E. Shaw’s multi-strategy funds posted double-digit returns including its flagship Composite fund, which gained 18% in 2024 and its more macro-oriented fund Oculus, which posted a 36% return in the same period, its best-ever annual performance, said another person close to the matter. Millennium and D.E. Shaw’s results were first reported by the Financial Times and Bloomberg, respectively.Jon Caplis, CEO of hedge fund research firm PivotalPath, said there was “a resurgence of the multi-strat space across 2024,” and he expects to see more inflows to the strategy.Last year’s gains came as rate cuts from the likes of the U.S. Federal Reserve helped push stocks higher, while a decisive presidential election win for Donald Trump and Bank of Japan rate hikes were other catalysts for big market swings.Hedge funds in 2023 averaged a 5.7% return in the year through November, according to PivotalPath.TRACKING TRENDSQuantitative hedge funds, which use algorithms and coding to track markets, benefited from big moves in several markets including equities, currencies, grains and soft commodities such as cocoa and coffee, which both surged last year.For the $728-million Dunn Capital Management, these were all positive drivers for the Dunn WMA trading program, which returned 7.28% for the year despite negative drivers in energies, metals and European equities, said a source with knowledge of the matter. Hedge fund CFM (Capital Fund Management), also a quantitative investment manager, returned 12.01% in its Discus Fund and 14.22% in its Stratus Fund, another source with knowledge of the matter told Reuters. British fund Winton saw a roughly 10% return on investment in its multi-strategy systematic fund. Overall, the hedge fund manages around $13 billion. Transtrend’s Diversified Trend Program returned 5.90% for 2024. Fund name Percentage rise in 2024 Marshall Wace – Eureka 14.32* Marshall Wace – Market Neutral Tops 22.59* Marshall Wace – Alpha Plus 15.86* Winton – Multi-strategy systematic fund 10.3 Bridgewater Associates* – Pure Alpha 18% 11.2 vol Bridgewater Associates* – China Total (EPA:TTEF) 35 Return D.E. Shaw – Oculus 36.1 D.E. Shaw – Composite 18 Millennium Management 15 CFM Discus 12.01 CFM Stratus 14.22 CFM Systematic Global Macro 13.32 CFM Cumulus 14.12 CFM IS Trends 18.94 CFM IS Trends Equity Capped 12.42 DUNN WMA program 7.28 Transtrend 5.9 Citadel Wellington 15.1 Citadel Tactical 22.3 Citadel Equities 18 Citadel Global Fixed Income 9.7 Schonfeld Strategic Partners 19.7 Schonfeld Fundamental Equity 21.1 Discovery Capital 52 * result as of Dec. 27Sourcing: several people with knowledge of the matter. Firms declined to comment on the matter. More

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(Reuters) -OpenAI on Friday outlined plans to revamp its structure, saying it would create a public benefit corporation to make it easier to “raise more capital than we’d imagined,” and remove the restrictions imposed on the startup by its current nonprofit parent. The acknowledgement and detailed rationale behind its high-profile restructuring confirmed a Reuters report in September, which sparked debate among corporate watchdogs and tech moguls including Elon Musk. At issue were the implications such a move might have on whether OpenAI would allocate its assets to the nonprofit arm fairly, and how the company would strike a balance between making a profit and generating social and public good as it develops AI.Under the proposed plan, the ChatGPT maker’s existing for-profit arm would become a Delaware-based public benefit corporation (PBC) – a structure designed to consider the interests of society in addition to shareholder value.OpenAI has been looking to make changes to attract further investment, as the expensive pursuit of artificial general intelligence, or AI that surpasses human intelligence, heats up.Its latest $6.6 billion funding round at a valuation of $157 billion was contingent on whether the ChatGPT-maker could upend its corporate structure and remove a profit cap for investors within two years, Reuters reported in October. The nonprofit, meanwhile, will have a “significant interest” in the PBC in the form of shares as determined by independent financial advisers, OpenAI said in a blog post, adding that it would be one of the “best resourced nonprofits in history.” OpenAI started in 2015 as a research-focused nonprofit but created a for-profit unit four years later to secure funding for the high costs of AI development. Its unusual structure gave control of the for-profit unit to the nonprofit and was in focus last year when Sam Altman was fired as CEO only to return days later after employees rebelled. ‘CRITICAL STEP'”We once again need to raise more capital than we’d imagined. Investors want to back us but, at this scale of capital, need conventional equity and less structural bespokeness,” the Microsoft-backed startup said on Friday. “The hundreds of billions of dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission.”Its plans to create a PBC would align the startup with rivals such as Anthropic and the Musk-owned xAI, which use a similar structure and recently raised billions in funding. Anthropic garnered another $4 billion investment from existing investor Amazon.com (NASDAQ:AMZN) last month, while xAI raised around $6 billion in equity financing earlier in December.”The key to the announcement is that the for-profit side of OpenAI ‘will run and control OpenAI’s operations and business,'” DA Davidson & Co analyst Gil Luria said.”This is the critical step the company needs to make in order to continue fund raising,” Luria said, although he added that the move did “not necessitate OpenAI going public.”The startup could, however, face some hurdles in the plan.Musk, an OpenAI co-founder who later left and is now one of the startup’s most vocal critics, is trying to stop the plan and in August sued OpenAI and Altman. Musk alleges that OpenAI violated contract provisions by putting profit ahead of the public good in the push to advance AI.OpenAI earlier this month asked a federal judge to reject Musk’s request and published a trove of messages with Musk to argue that he initially backed for-profit status for OpenAI before walking away from the company after failing to gain a majority equity stake and full control.Meta Platforms (NASDAQ:META) is also urging California’s attorney general to block OpenAI’s conversion to a for-profit company, according to a copy of a letter seen by Reuters.Becoming a benefit corporation does not guarantee in and of itself that a company will put its stated mission above profit, as that status legally requires only that the company’s board “balance” its mission and profit-making concerns, said Ann Lipton, a corporate law professor at Tulane Law School.”The only reason to choose benefit form over any other corporate form is the declaration to the public,” she said. “It doesn’t actually have any real enforcement power behind it,” she said.In practice, it is the shareholders who own a controlling stake in the company who dictate how closely a public benefit company sticks to its mission, Lipton said. More

The Commerce Department requested that private companies comment on the implications of the rule by March. The final decision will fall to the Trump administration.The Biden administration said on Thursday that it was considering a new rule that could restrict or ban Chinese drones in the United States out of national security concerns.In a notice, the Commerce Department said the involvement of foreign adversaries — notably China and Russia — in the design, development, manufacture and supply of drones could pose “undue or unacceptable risk to U.S. national security.”The notice requested private companies to comment on the scope and implications of the rule by March 4. The decision of what restrictions to impose, if any, on Chinese and Russian drones will fall to the Trump administration.China and Russia have shown a willingness to compromise U.S. infrastructure and security through cyberespionage, the Commerce Department said, adding that the governments could leverage their laws and political situations to “co-opt private entities for national interests.”Beyond the use of drones by hobbyists, the devices are employed in a variety of U.S. industries. They help farmers monitor crops and spray for pests, inspect pipelines for the chemical industry, survey bridges and construction sites, and aid firefighters and other emergency responders.But drones have evolved over the past decade to include sophisticated cameras, receivers and artificial intelligence abilities, fueling concerns that they could be turned into a useful tool for an adversarial government.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

He put forth the so-called Easterlin paradox, finding that the richer you are doesn’t mean the more satisfied you’ll be with your life.Does getting a year-end bonus or raise make you happier? Does the lift it gives you tend to quickly fade, especially if others around you also won out in the annual compensation sweepstakes?If the answer is that a boost in income doesn’t greatly improve your sense of well-being, then you are a proof point of the Easterlin paradox, the economic theory that more money, over the long run, won’t buy more happiness.The paradox was put forth by Richard A. Easterlin, an economist, a demographer and a seminal figure in the field of academic research into happiness. The University of Southern California, where he was an emeritus professor, called him the “father of happiness economics” in announcing his death. He died at 98 on Dec. 16 at his home in Pasadena, Calif.Mr. Easterlin’s work challenged both conventional wisdom and a core economic tenet that economic growth in a society leads to a general improvement in feelings of well being.Economists, policymakers and ordinary citizens had long taken it as a given that increasing a nation’s gross domestic product — its total economic output — improves its people’s happiness.But in the 1970s, Mr. Easterlin, then at the University of Pennsylvania, published research showing that even though incomes in the United States had risen dramatically since World War II, Americans said in surveys that they were no happier.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

The average rate on the popular 30-year fixed-rate mortgage increased to 6.91%, the highest level since early July, from 6.85% last week, mortgage finance agency Freddie Mac (OTC:FMCC) said on Thursday. It averaged 6.62% during the same period a year ago.”Compared to this time last year, rates are elevated and the market’s affordability headwinds persist,” said Sam Khater, Freddie Mac’s Chief Economist.Mortgage rates have trended higher despite the Federal Reserve cutting interest rates three times since starting its monetary policy easing cycle in September. They have risen in tandem with U.S. Treasury yields amid a resilient economy and investor fears that President-elect Donald Trump’s proposed policies, including tax cuts, higher tariffs on imported goods and mass deportations, could reignite inflation. Mortgage rates track the 10-year Treasury note. Sales of previously owned homes surged to an eight-month high in November, mostly reflecting contracts signed in October and possibly September when mortgage rates were mostly lower. Sales could still rise in December after contracts increased to a 21-month high in November. Increased supply is pulling more buyers into the market, but rising mortgage rates could discourage some homeowners from putting their houses on the market, especially if they would need to buy another home.Many homeowners have mortgages below 5%. The so-called rate-lock effect could mean fewer homes being listed, reducing inventory and pushing up prices. This would combine with rising mortgage rates to reduce affordability for many prospective buyers. More

(Reuters) -Shares of SoFi Technologies (NASDAQ:SOFI) fell 6% on Thursday after KBW downgraded its stock on concerns over the fintech firm’s lofty valuation and ambitious financial targets, further cooling a months-long rally. Analysts at the brokerage firm rated the stock “underperform” and established a price target of $8 — nearly half of SoFi’s last closing price.The move reflects the challenges and higher expectations startups such as SoFi, a digital banking and brokerage app that offers loans, credit cards and investing services, face as they transition into mature financial services providers.A strong economy, lower interest rates and the company’s “success driving better scale and profitability… justifies shifting our investment thesis towards a more long-term view of what a mature SoFi looks like,” the brokerage said. “The stock’s valuation has become overstretched across a wide matrix of multiples.”Earnings per share forecasts for 2026 and the company’s long-term target for a 20%-30% return on tangible common equity (ROTCE) will be tough to achieve, the brokerage added.Shares were last trading at $14.53 and are heading towards a fourth consecutive session of losses, if current levels hold. As of last close, they had nearly doubled since October.The company trades at 69 times expected earnings for 2025, while the median for consumer digital lenders is 12.2 according to KBW.SoFi did not immediately respond to a request for comment. More