Economy

The regulator faulted the automaker for not recalling cars with defective rearview cameras quickly enough and for providing incomplete and inaccurate information.Ford Motor will pay a fine of up to $165 million for not recalling cars with defective rearview cameras in a timely manner, the federal government’s main auto safety agency said on Thursday.The agency, the National Highway Traffic Safety Administration, said Ford also had failed to provide accurate and complete information about the defect and recall. If Ford is required to pay the full sum, it will be the second-largest fine ever issued by the regulator. The largest fine, a $200 million penalty in 2015, was levied against Takata, a Japanese company that made defective airbag inflaters that resulted in a huge, global recall.The safety agency said a defective rearview camera could increase the risk of a crash.“Timely and accurate recalls are critical to keeping everyone safe on our roads,” the agency’s deputy administrator, Sophie Shulman, said in a statement. “When manufacturers fail to prioritize the safety of the American public and meet their obligations under federal law, NHTSA will hold them accountable.”Under a consent decree between the agency and Ford, the automaker is required to pay $65 million. A second sum of $55 million will be deferred and can be partly or completely reversed if Ford makes changes to improve its ability to identify defects and alert the safety agency quickly.Ford also agreed to spend $45 million to improve its ability to analyze data, create a new means of sharing information and documents with the safety agency, and set up a base to test rearview camera components.“We appreciate the opportunity to resolve this matter with NHTSA and remain committed to continuously improving safety and compliance at Ford,” the automaker said in a statement. “Wide-ranging enhancements are already underway with more to come, including advanced data analytics, a new in-house testing facility, among other capabilities.”According to a summary of the safety agency’s investigation, the defect was related to a faulty circuit board that caused rearview cameras in certain models to stop working. The agency received 15 complaints about the defect but did not identify any injuries or fatalities caused by it.Ford first identified the defect in 2020 and issued a recall for more than 620,000 vehicles, largely from the 2020 model year, including F-Series pickups, Mustangs and several sport utility vehicles. A year later, the safety agency opened an investigation to determine if Ford had accurately identified and reported all of the vehicles that could have been affected by the camera defect.Ford expanded the recall in 2023 and again this year. Separately, Ford recalled a different set of rearview cameras in 2023 at a cost of $270 million. More

Wholesale prices nudged higher in October, though largely in line with expectations and mostly consistent with the Federal Reserve cutting interest rates again in December, the Bureau of Labor Statistics reported Thursday.
The producer price index, which measures what producers get for their products, increased a seasonally adjusted 0.2% for the month, up one-tenth of a percentage point from September though matching the Dow Jones consensus forecast. On a 12-month basis, headline wholesale inflation was at 2.4%.

Excluding food and energy, core PPI rose 0.3%, also one-tenth more than September and also matching expectations. The 12-month rate was at 3.1%.
Though the readings are above the Fed’s 2% inflation goal, the trend is showing that price increases are generally moderating and inflation is being pushed by isolated factors.
Services rose 0.3% on the month, accounting for most of the PPI increase, and was driven largely by a 3.6% surge in portfolio management prices. Food prices fell 0.2% on the month while energy was off by 0.3%. Goods prices nudged higher by 0.1% after falling the previous two months.
Markets reacted little to the news, with stock futures pointing to a mixed open while Treasury yields held higher.
Traders expect the Fed to follow up rate cuts in September and November with another quarter percentage point reduction at the Dec. 17-18 meeting. After that, market pricing points to the Fed skipping January and moving at a slower easing pace through 2025.

The market-implied probability for a December rate cut nudged down to 76.1% following the release, an area that still indicates a strong likelihood, according to the CME Group’s FedWatch gauge of futures prices.
In other economic news Thursday, the Labor Department reported that the pace of layoffs continued to moderate after a brief spike.
Initial filings for unemployment benefits totaled 217,000 for the week ended Nov. 9, down 4,000 from the previous period and slightly lower than the 220,000 estimate.
Continuing claims, which run a week behind, totaled 1.873 million, down 11,000 from the prior week.

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The ECB cut rates for the third time this year in October and made clear that further easing is coming given a weak economy and diminishing price pressures, even if the timing and size of policy moves remained open. “Acting now could provide insurance against downside risks that could lead to an undershooting of the target further ahead and would support a soft landing,” the ECB said, acknowledging that only limited new information was available.If these few indicators were a blip and misled expectations about weak inflation, the bank could then simply avoid a rate cut in December, the accounts suggested. “If the slowdown signalled by indicators of economic activity and the downside surprise to inflation proved to be temporary, a decision to cut rates now could, ex post, turn out as merely having brought forward a December cut,” the ECB added. However, the accounts also seemed to reveal disagreement over just how weak price pressures may be.Policymakers were in agreement that inflation would hit 2% earlier than previous projections for the end of 2025 but there were different views on what came after.One group seemed to argue that undershooting the target was not on the cards.”Such a scenario of undershooting probably required a combination of factors that were not yet present,” the accounts said. “These included disappointing economic growth that moved into recessionary territory, a weakening in the financial system, wage pressures fading away and a downward shift in inflation expectations.”But there was another group who thought the problem was deeper and the ECB was at risk of going below its target, an outcome the bank considers as undesirable as overshooting. “By contrast, it was also suggested that the change in the inflation outlook had been more significant,” the accounts said. They argued that downside inflation surprises and rapid changes in market expectations pointed to an increasing risk of undershooting the target, possibly in a sustained manner. “This could now be seen as a greater risk than overshooting the target,” they said. More

NEW YORK (Reuters) -Sotheby’s will pay $6.25 million and adopt reforms to settle New York Attorney General Letitia James’ lawsuit accusing the famed auction house of fraudulently helping clients avoid sales taxes on tens of millions of dollars of art purchases.Thursday’s settlement resolves claims that Sotheby’s let at least eight clients cheat New York state from 2010 to 2020 by using “resale certificates” that falsely portrayed them as art dealers entitled to tax exemptions, instead of art collectors.James said Sotheby’s accepted certificates from one client, a contemporary art enthusiast, who spent more than $27 million on works by artists like painter Jean-Michel Basquiat and sculptor Anish Kapoor, despite knowing he was a collector.She said some employees even helped the unnamed client display works at his home, or admired them on the walls. The $6.25 million includes damages, penalties and legal costs.”Sotheby’s intentionally broke the law,” James said in a statement. “Every person and company in New York knows they are required to pay taxes, and when people break the rules, we all lose out.”The New York-based auction house did not admit or deny wrongdoing, and said it settled to avoid the time, expense and distraction of litigation.Sotheby’s reforms include a new policy on resale certificates and improved employee training to determine whether art purchasers are planning resales.James had sued Sotheby’s in November 2020, seeking damages and civil penalties for violating the state’s False Claims Act.The unnamed client’s company, Porsal Equities, had agreed in 2018 to pay $10.75 million to resolve related New York claims over its use of resale certificates. In a statement, Sotheby’s said it “remains committed to full compliance with all applicable law.” It also said it provided much of the evidence that led to the Porsal settlement. More

The deal would have brought six brands under one roof: Tapestry (NYSE:TPR)’s Coach , Kate Spade and Stuart Weitzman; and Capri’s Versace, Jimmy Choo and Michael Kors. But regulators sued to block the deal earlier this year, citing anti-competition concerns.Capri shares were down nearly 6% in premarket trading on Thursday. They have lost nearly half of their value since a U.S. judge blocked the deal late last month. Tapestry’s stock, on the other hand, was up 6%, as the company also announced a $2 billion share buy back.The merger was blocked last month after the U.S. Federal Trade Commission (FTC) argued that it would eliminate head-to-head competition between the top two handbag makers and create a massive company with the power to unfairly raise prices.The companies said on Thursday they mutually agreed that ending the merger agreement was in their best interest, as the outcome of the legal process was uncertain and unlikely to be resolved by Feb. 10, the deal deadline.”We have always had multiple paths to growth and our decision today clarifies the forward strategy,” Tapestry CEO Joanne Crevoiserat said.The company said it does not expect any acquisitions in the near term and has agreed to reimburse Capri’s expenses of about $45 million, incurred in connection with the merger.Tapestry, which halted its merger plans last week as it appealed the U.S. judge’s decision, has raised its 2025 profit forecast after posting strong quarterly results.Capri, on the other hand, has reported several straight quarters of sales decline since the deal was announced in August last year. More

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BENGALURU (Reuters) – The euro zone economy will be hit with tariffs from the incoming U.S. Trump administration early next year, according to a majority of economists polled by Reuters, all but ensuring a series of interest rate cuts from the European Central Bank. President-elect Donald Trump’s proposed across-the-board tariffs will have a significant effect on the euro zone economy over the coming two to three years, according to a strong majority of economists polled. They have also raised the risks of reflation in the U.S.”Many questions are unresolved, but for now the signs are for weaker growth, more likely disinflation and lower ECB policy rates,” said Greg Fuzesi, euro area economist at J.P. Morgan.”The threatened tariffs would be much bigger this time round and could come at any time,” he said. Nearly 85% of economists surveyed Nov. 8-14, 37 of 44, expected Trump’s proposed tariffs – a 10% universal levy on imports from all foreign countries and 60% on Chinese imports – to be implemented early next year.About the same proportion, 34 of 39, said the tariffs would significantly impact the euro zone economy in the coming years.Since Trump’s U.S. election victory last week, market pricing has swiftly changed towards fewer U.S. Federal Reserve rate cuts and more ECB reductions.Some ECB officials have shared similar concerns. Bundesbank President Joachim Nagel recently said the tariffs, if implemented, could cost Germany 1% in economic output and it “could even slip into negative territory.”Markets are now pricing around 150bps of ECB rate cuts between now and end-2025 against only around 75bps of Fed reductions, suggesting further challenges for the euro, which has dropped nearly 4% against the dollar since the election.Most economists in the Reuters poll predicted a total of at least 125bps in reductions from the ECB by end-2025, only a bit shallower than market pricing.Over 90% of economists, 69 of 75, forecast the ECB would lower its deposit rate by 25bps for the third consecutive meeting in December, with nearly 70%, 51, predicting two more cuts next quarter, bringing it to 2.50%.While many downgraded their 2025 forecast, poll medians still expect the economy will grow 1.2% in 2025 and 1.4% in 2026, unchanged from last month. That suggests there are further downside risks to those numbers. “There are a wide range of sub-scenarios which include a global rise in tariffs between the U.S., EU and China and a sharp increase in uncertainty around global protectionism is certainly significant,” said Henry Cook, senior economist at MUFG, who estimates a 0.4 percentage point hit to euro zone growth next year.Inflation, at the 2.0% ECB target last month, will average 2.2% this quarter but return to target next quarter. It is forecast to be around there through 2027.Nearly 70% of economists, 43 of 63, expected the deposit rate to be 2.00% or lower by the end of next year, a bigger majority than the 60% who said this in October. Among 44 common contributors in the two polls, 43% of economists, 19, downgraded their end-2025 rate forecasts.The ECB doesn’t have an estimate for the neutral rate, which neither restrains nor stimulates the economy, but a staff-published paper earlier this year showed a real rate of around zero – or about 2% in nominal terms – when adjusted for inflation.”Rather than the ECB policy rate returning to neutral in mid-2025 we now see the rate falling moderately below neutral by end-2025,” said Mark Wall, chief Europe economist at Deutsche Bank (ETR:DBKGn).”The rationale in part relates to the prospect of U.S. tariffs under a new Trump administration and in part a weaker underlying macro performance and the emerging threat of below-target inflation.”(Other stories from the Reuters global economic poll) More