Economy

WASHINGTON (Reuters) -Federal Reserve Vice Chair for Supervision Michael Barr has sought legal advice to explore his options against any attempts by President-elect Donald Trump to remove him, sources said, the latest sign that a conflict might be looming between the incoming administration and the central bank. Barr, who was tapped to serve as the Fed’s top regulatory official by President Joe Biden, has in recent weeks sought advice from law firm Arnold & Porter in his personal capacity, two of the sources said.The sources said he has sought counsel in a personal capacity because typically individual officials, not their agencies, have legal standing to fight in court attempts to remove them. The Fed declined to comment via a spokesperson. Representatives for Arnold & Porter and the Trump transition did not respond to requests for comment. Barr did not respond to a call or email requesting comment.Barr, whose term overseeing bank supervision expires in July 2026, has told Congress that he intends to serve it out. Reuters could not learn further details about Barr’s discussions with lawyers, including whether he would fight his removal or not. The sources requested anonymity to speak about Barr’s plans.Barr’s move comes after reports in recent months that Trump’s advisers were looking for ways to increase the incoming White House’s sway over the Fed, alarming officials and investors who argue that the central bank’s independence is necessary for it to be able to properly set monetary policy. Fed Chair Jerome Powell — who was appointed to the role by Trump only to be subsequently criticized for his decisions on interest rates — was seen as a target of the incoming president. But Powell said after the November presidential election that Trump would not have the authority to remove him. Trump subsequently said he does not intend to remove Powell.The law establishing the Fed says the president is only allowed to fire Fed governors for cause, but it is silent on whether Trump would have the power to demote Barr from his role as Vice Chair for Supervision. Powell has previously said demoting Fed officials is not permitted under the law. Barr has earned powerful critics on Wall Street and elsewhere for his tough approach to financial regulation. Earlier this week, the Wall Street Journal’s conservative editorial page argued Trump should fire him for cause, citing the failures by bank supervisors to address problems ahead of Silicon Valley Bank’s abrupt failure in March 2023.Trump’s advisers and other Republicans have debated pursuing that approach with Barr, according to two of the sources, who were briefed on the matter. Barr’s decision to explore outside legal counsel underscores how seriously he is taking that threat. WALL STREET’S IRE Barr earned the ire of Republicans and the banking industry for his efforts to impose strict new capital rules on the industry via so-called “Basel III Endgame” and other projects.Barr said the sector needed more guardrails against future turmoil, but those efforts were met with intense pushback from banks, who argued they were unjustified and threatened to sue over what they claimed was improper procedure. Barr eventually agreed to pare back those efforts, but a rewritten proposal never advanced due to infighting among U.S. bank regulators.If Barr were to stay, he likely would not be able to advance tough new rules that would require buy-in from other agencies taken over by Trump appointees, but he could stand in the way of regulatory easing sought by big Wall Street banks. While Trump has said little on bank regulation, his campaign has promised to slash “burdensome” regulations. Barr also has a separate 14-year term as Fed governor that runs until 2032, but officials frequently step down from that post before serving the full allotment, particularly if they had previously served in a more senior role.There is no precedent for a president to try to remove a Fed official. But messy succession fights at regulatory agencies are not unfamiliar territory for Trump. In his first term, his administration was challenged in court over his attempts to name new leadership at the Consumer Financial Protection Bureau. There, the agency’s deputy, Leandra English, resisted efforts to install an outside Republican official as leader of the agency, going so far as to challenge the move in court on a personal basis. She eventually dropped that suit and resigned. More

NEW YORK (Reuters) – The messy process of trying to avert a U.S. government shutdown offers investors a glimpse into challenges the incoming Trump administration will face in implementing its agenda, adding a market concern for the coming year.While the showdown has so far not rattled markets, investors said it helped feed into the volatility unleashed by the Federal Reserve’s projection on Wednesday for fewer U.S. interest rate cuts next year.”Granted, Trump isn’t president yet, but he will interject ideas at the last minute and there’s no guarantee every member of the Republican Party in Congress is going to go along with his ideas,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin. “That is a formula for gridlock, uncertainty, and volatility.”The U.S. Congress was scrambling to avert a government shutdown on Friday, hours after more than three dozen Republicans joined Democrats to reject a demand by President-elect Donald Trump to use the spending bill to lift the nation’s debt ceiling.Republican hardliners who normally are ardent Trump supporters are resisting his push to raise the U.S. debt ceiling, sticking to their belief that government spending needs to be pruned and defying his warnings of revenge.A bipartisan deal negotiated with Democrats who now control the Senate and the White House collapsed on Wednesday after an online fusillade of criticism by Trump and Elon Musk. The failure to pass the bill offered investors a peek at how policy might take shape next year.   “This behavior … provides some insight into how Trump may approach governance. He is likely to lead with bold threats and leverage them to push negotiations in his favor,” said Joe Hoffman, CEO of Mesirow Currency Management.Prolonged government battles can upset equity investors, who have reaped the S&P 500’s roughly 25% gains for the year, its second straight year of 20% or more gains.The fighting may even hurt the so-called ‘Trump Trade’ which has lifted assets likely to benefit from Trump’s policies on tariffs and deregulation. Still, U.S. government shutdowns are fairly recurrent events that on average last nine days. The market generally takes them in stride, with stocks slipping more in the days ahead than during shutdowns, according to CFRA Research data.The S&P 500 has on average fallen 0.3% in the week before government shutdowns, compared with an average rise of 0.1%, for the duration the government remained shut, CFRA data showed.Indeed, on Friday, the S&P 500 was up 1.7%, as a cooler-than-expected inflation report eased some market concerns triggered by the Fed forecasting only two rate cuts for 2025.”Uncertainty surrounding whether a shutdown will occur is greater than when it actually occurs,” Sam Stovall, chief investment strategist at CFRA, said.That may be why markets may be largely shrugging off the Friday midnight deadline for Congress to get a deal done.”(Investors) think it’s more likely than not that it’ll be resolved today, but that a shutdown, if it were to come, would be short and relatively non-impactful,” said Helen Given, associate director of trading at Monex USA, in Washington DC.Still, the difficulty of getting a deal to avert government shutdown bodes ill for Trump’s agenda.”It’s possible to interpret the current impasse as a sign that Donald Trump will struggle to get a big fiscal stimulus through Congress in 2025, given the resistance of fiscal hawks in his own party who would like to see plans for more spending cuts in exchange for raising the debt limit or extending its suspension,” said John Higgins, Capital Economics’ chief markets economist, in a note. More

The LNG producer plans to list its Class A common shares under the symbol “VG” on NYSE, the company’s filing showed.In November, Reuters reported that the Arlington, Virginia-based company was planning to raise about $3 billion from its IPO in New York.Cold storage giant Lineage’s $4.44 billion New York IPO in July and Hyundai Motor (OTC:HYMTF) India’s $3.33 billion Mumbai IPO last month were two of the largest listings this year, LSEG data showed.The company plans to use part of the proceeds for general business purposes, including funding its operations.After the IPO, Venture’s founders and co-chairmans, Robert Pender and Michael Sabel, will continue to hold more than 50% of voting power through their entity Venture Global Partners (NYSE:GLP) II, LLC, the company said in its filing. Sabel is also the company’s CEO.It said Goldman Sachs & Co (NYSE:GS)., J.P. Morgan, BofA Securities, ING, RBC Capital Markets, Scotiabank (TSX:BNS) and Mizuho (NYSE:MFG) are among the underwriters for the IPO, according to the filing.Founded 11 years ago, Venture Global has already rocketed into the top ranks of U.S. natural gas exporters, competing against larger rivals Cheniere Energy (NYSE:LNG), Freeport LNG and Sempra.Venture Global has two operating plants in Louisiana, with its second facility at Plaquemines achieving its first LNG production just last week.The company reported revenues of $3.45 billion for the nine months ended Sep 30, compared with $6.27 billion, a year earlier. More

NEW YORK (Reuters) -Wall Street surged on Friday and the dollar softened as cooler-than-expected inflation data helped investors look past the possibility of a government shutdown and fresh tariff threats from U.S. President-elect Donald Trump.All three major U.S. stock indexes jumped more than 1%, gold surged and benchmark U.S. Treasury yields eased from multi-month highs.A report from the Commerce Department showed the PCE price index, the Federal Reserve’s preferred inflation yardstick, came in cooler than analysts expected, supporting the narrative that price growth remains on a path toward achieving the U.S. central bank’s 2% target.”The better-than-expected reading for PCE, which is the Fed’s favorite measure of inflation, allowed investors to breathe a sigh of relief because maybe inflation is not likely to be as much of a runaway situation as feared,” said Sam Stovall, chief investment strategist of CFRA Research in New York.Equity markets came under pressure throughout a busy week for central banks, led by the U.S. Federal Reserve, which signaled it would slow the pace of interest rates in the coming year. Republican leaders in the U.S. House of Representatives said they would vote to keep the federal government operating beyond a midnight deadline and avert a damaging shutdown that could disrupt the Christmas holiday.”The focus of the market over the last several days has been on the Fed’s announcement that while they were lowering interest rates by 25 basis points, that they were going to begin to rein (future rate cuts) in, and it certainly shook the markets,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York. “The potential government shutdown is the other big focus. Markets never like that.”The S&P 500, the Nasdaq and the Dow were all on course for weekly percentage declines.The Dow Jones Industrial Average rose 497.22 points, or 1.17%, to 42,839.46, the S&P 500 rose 63.93 points, or 1.09%, to 5,931.01 and the Nasdaq Composite rose 199.83 points, or 1.03%, to 19,572.60.European stocks registered their worst week in over three months as Trump’s comments about potential tariffs on the European Union spooked investors.MSCI’s gauge of stocks across the globe rose 8.20 points, or 0.98%, to 847.61.The STOXX 600 index fell 0.88%, while Europe’s broad FTSEurofirst 300 index fell 19.25 points, or 0.96%.Emerging-market stocks fell 7.38 points, or 0.68%, to 1,074.38. MSCI’s broadest index of Asia-Pacific shares outside Japan closed lower by 0.97%, to 567.00, while Japan’s Nikkei fell 111.68 points, or 0.29%, to 38,701.90.Treasury yields pulled back after cooler-than-expected inflation data bolstered expectations for two more rate cuts from the Federal Reserve in the coming year. The yield on benchmark U.S. 10-year notes fell 4.2 basis points to 4.528%, from 4.57% late on Thursday. The 30-year bond yield fell 2.2 basis points to 4.7194% from 4.741% late on Thursday.The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 0.4 basis points to 4.315%, from 4.319% late on Thursday.The two-year note yield, which typically moves in step with interest-rate expectations for the Federal Reserve, fell 1.1 basis points to 4.308%, from 4.319% late on Thursday.The dollar softened against a basket of world currencies, but remained on track for its third consecutive weekly advance. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.59% to 107.79, with the euro up 0.64% at $1.0428.Against the Japanese yen, the dollar weakened 0.69% to 156.35.Bitcoin reversed its losses in the wake of the inflation data.In cryptocurrencies, bitcoin fell 0.88% to $96,462.00. Ethereum rose 0.72% to $3,440.32.Oil prices edged higher as the dollar eased from two-year highs and as PCE data bolstered expectations for two additional interest rate cuts from the Fed in 2025. U.S. crude gained 0.12% to $69.46 per barrel, while Brent settled at $72.94 per barrel, up 0.08% on the day.Gold surged after the inflation report but still appeared set for a weekly loss.Spot gold rose 1.11% to $2,622.62 an ounce. U.S. gold futures rose 1.41% to $2,628.70 an ounce. More

WASHINGTON (Reuters) – The head of the Environmental Protection Agency plans to step down on Dec. 31 after overseeing widespread efforts by the administration of President Joe Biden to reduce greenhouse gas emissions and other pollutants.EPA Administrator Michael Regan told employees of his plans in an email on Friday, saying the agency had “confronted climate change with the urgency science demands. We set the strongest standards in history and put billions of dollars to work to spur clean energy development, create good-paying American jobs and lower costs for families.”This week, Regan approved a waiver to allow California to implement landmark clean car rules that seek to ban the sale of gasoline-only vehicles by 2035. Rules finalized by the EPA in March will cut vehicle emissions by 49% by 2032 and speed the deployment of EVs. They will reduce greenhouse gas emissions by 7.2 billion tons through 2055.Regan said Jane Nishida will serve as acting administrator through Jan. 20 and Dan Utech will serve as acting deputy administrator until then.Last month, the EPA finalized a methane fee for big oil and gas producers meant to slash emissions of the powerful greenhouse gas, but which is likely to be scrapped by the incoming presidency of Donald Trump.Trump said in November he was nominating Republican former Congressman Lee Zeldin, who often voted against legislation on green issues, to head the EPA.Trump plans to seek reversal of many Biden EPA rules on the burning of fossil fuels, including one curbing carbon emissions from power plants and another slashing such emissions from vehicles. Trump has said he plans to begin rescinding EPA and the Department of Transportation vehicle pollution rules on his first day in office and is considering paring back or eliminating EV tax breaks and other incentives.Trump also plans to rescind California’s ability to set its own vehicle emissions rules, as he did in 2019. More

MILAN (Reuters) -Italy’s data protection agency said on Friday it fined ChatGPT maker OpenAI 15 million euros ($15.58 million) after closing an investigation into use of personal data by the generative artificial intelligence application.The fine comes after the authority found OpenAI processed users’ personal data to “train ChatGPT without having an adequate legal basis and violated the principle of transparency and the related information obligations towards users”. OpenAI said the decision was “disproportionate” and that the company will file an appeal against it.The investigation, which started in 2023, also concluded that the U.S.-based company did not have an adequate age verification system in place to prevent children under the age of 13 from being exposed to inappropriate AI-generated content, the authority said.The Italian watchdog also ordered OpenAI to launch a six-month campaign on Italian media to raise public awareness about how ChatGPT works, particularly as regards to data collection of users and non-users to train algorithms.Italy’s authority, known as Garante, is one of the European Union’s most proactive regulators in assessing AI platform compliance with the bloc’s data privacy regime.Last year it briefly banned the use of ChatGPT in Italy over alleged breaches of EU privacy rules.The service was reactivated after Microsoft-backed OpenAI addressed issues concerning, among other things, the right of users to refuse consent for the use of personal data to train the algorithms.”They’ve since recognised our industry-leading approach to protecting privacy in AI, yet this fine is nearly twenty times the revenue we made in Italy during the relevant period,” OpenAI said, adding the Garante’s approach “undermines Italy’s AI ambitions”.The regulator said the size of its 15-million-euro fine was calculated taking into account OpenAI’s “cooperative stance”, suggesting the fine could have been even bigger.Under the EU’s General Data Protection Regulation (GDPR) introduced in 2018, any company found to have broken rules faces fines of up to 20 million euros or 4% of its global turnover.($1 = 0.9626 euros) More

WASHINGTON (Reuters) -U.S. consumer spending increased in November amid strong demand for a range of goods and services, underscoring the economy’s resilience, which saw the Federal Reserve this week projecting fewer interest rate cuts in 2025 than it had in September.There was also good news on inflation last month after a series of warmer readings. The report from the Commerce Department on Friday showed moderate monthly rises in prices, with a measure of underlying inflation posting its smallest gain in six months. Nonetheless, the annual increase in core inflation, excluding food and energy, remained stubbornly well above the U.S. central bank’s 2% target. There are also worries that plans by President-elect Donald Trump’s incoming administration to cut taxes, impose or raise tariffs on imports and deport millions of undocumented immigrants would stoke inflation.”The economy continues to grow from strong consumer demand as income growth and the wealth effect from higher portfolio values give consumers capacity to spend,” said Jeffrey Roach, chief economist at LPL Financial (NASDAQ:LPLA). “Inflation was more benign than expected but the stickiness of some categories supports the Fed’s hesitancy to materially lower rates next year.” Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.4% last month after a downwardly revised 0.3% gain in October, the Commerce Department’s Bureau of Economic Analysis said.Economists polled by Reuters had forecast consumer spending advancing 0.5% after a previously reported 0.4% rise in October.The nearly broad-based increase in spending was led by new motor vehicles, likely in part as households replaced vehicles damaged during Hurricanes Helene and Milton. That accounted for the bulk of the 0.8% rebound in goods outlays. Spending on recreational goods and vehicles also rose as did outlays on financial services and insurance, mostly charges, fees and commissions. There was also increased spending on recreation services, healthcare, clothing and footwear, furniture as well as housing and utilities. Spending at restaurants and bars as well as on hotel and motel stays also increased. Spending on services rose 0.2%. When adjusted for inflation, consumer spending rose 0.3% after edging up 0.1% in October. The so-called real consumer spending is running at an annualized rate of 3.1% in the first two months of the fourth quarter. “That will lay the foundation for another very solid GDP number for the fourth quarter,” said Lou Crandall, chief economist at Wrightson ICAP (LON:NXGN).Consumer spending surged at a 3.7% pace in the third quarter, the fastest in 1-1/2 years, helping to propel the economy to a 3.1% growth rate following a 3.0% pace of expansion in the April-June quarter.The Atlanta Fed is forecasting gross domestic product increasing at a 3.1% rate in the fourth quarter.Fed Chair Jerome Powell on Wednesday described the economy as having “just been remarkable,” adding “I feel very good about … the performance of the economy and we want to keep that going.” The central bank on Wednesday cut its benchmark overnight interest rate by 25 basis points to the 4.25%-4.50% range. It forecast only two rate reductions in 2025, in a nod to the economy’s continued resilience and still-high inflation.In September, Fed officials had forecast four quarter-point rate cuts next year. The shallower rate cut path in the latest projections also reflected uncertainty over policies from the incoming Trump administration. Stocks on Wall Street traded higher. The dollar slipped against a basket of currencies. U.S. Treasury yields fell.STRONG WAGE GAINSLabor market stamina, marked by low layoffs and strong wage growth, is underpinning consumer spending. Strong household balance sheets, reflecting high stock market and home prices are also driving spending. Household savings remain supportive. Economists, however, cautioned that it was mostly middle- and higher-income households that were benefiting from the wage gains and wealth effects, noting that lower-income consumers were under financial pressure.Personal income rose 0.3%, with wages shooting up 0.6%. Income at the disposal of households after accounting for inflation rose 0.2%, meaning some tapped their savings to fund purchases. The saving rate dipped to 4.4% from 4.5% in October.Economists did not believe that the moderation in inflation last month would have changed the tone of the Fed’s message on Wednesday. The personal consumption expenditures (PCE) price index rose 0.1% after an unrevised 0.2% gain in October.Goods prices were unchanged after three straight monthly decreases. Motor vehicle prices increased 0.7%, but the cost of recreational goods and vehicles fell for the fourth consecutive month. Services prices rose 0.2% after gaining 0.4% in October.Housing inflation increased at the slowest pace since April 2021, reflecting a moderation in rents. The cost of food and accommodation services rose by the most in 10 months. In the 12 months through November, the PCE price index advanced 2.4% after rising 2.3% in October. The increase in the annual inflation rate was partly due to last year’s low readings dropping out of the calculation.Excluding the volatile food and energy components, the PCE price index climbed 0.1%. That was the smallest rise since May, and followed an unrevised 0.3% gain in October. Core inflation was running at a 2.5% rate in the last three months.In the 12 months through November, core prices increased 2.8% after advancing by the same margin in October. The Fed tracks the PCE price measures for monetary policy. It hiked its policy rate by 5.25 percentage points between March 2022 and July 2023.”The general disinflation trend, in view of the much higher U.S. dollar, is intact for the next two months,” said Brian Bethune, an economics professor at Boston College. “However, if the incoming administration raises tariffs significantly, that will provoke retaliation and usher in a period of stagflation that will rival the stagflation of the 1970s.” More