Economy

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“What’s bugging me is that everyone is saying the same thing,” says FT markets columnist Katie Martin, wearied by the slew of 2025 outlook reports published by banks and investment houses in recent weeks. “And essentially it’s ‘American exceptionalism’,” — broadly, that despite Trump’s policies on international trade, tax and migration being inflationary, arguably even fiscally reckless, and despite US stocks being very highly priced, analysts still think the market is the only show in town when it comes to investment.“Personally, I find that a little bit worrying,” she says. “Because it opens up the possibility that if something goes wrong with this narrative then everyone runs to the other side of the ship all at the same time.”In a conference room perched at the top of the FT’s London headquarters, in the shadow of St Paul’s and over a sandwich lunch, the Money section held its annual investment roundtable this week. As usual, there was one item on the agenda: what do retail investors need to look out for next year? In answering that question, we discussed Trump’s tariffs; bubbly US stocks; the future of UK equities; and whether, in the week after bitcoin topped $100,000, we could say anything sensible about crypto — all presented here with the usual caveat that this should not be considered financial advice.Joining Martin on the panel were Alix Stewart, a fund manager on Schroders global unconstrained fixed income team; Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International; and FT Money columnists Simon Edelsten, also the chair of the investment committee at Goshawk Asset Management, and Stuart Kirk. Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International More

The world’s second-largest economy is expected to contribute close to 30% of global growth, Han Wenxiu told an economic conference.Han, who is also a senior official in the ruling Communist Party, said there was a need to boost consumption and view domestic demand expansion as a long-term strategic move that would become the main driving force for economic growth.China pledged on Thursday to issue more debt and loosen monetary policy to maintain a stable economic growth rate, bracing for more trade tensions with the U.S. as Donald Trump returns to the White House.Government advisers have recommended that Beijing keep its growth target of around 5% for next year, Reuters reported last month. But while the stock market anticipates a revival in China’s flagging consumption, bond investors are betting the economy will continue to struggle.Han said a more active fiscal policy and moderately loose monetary policy would help China respond better to unstable and uncertain factors in the economy, and provide strong support for achieving annual targets.China’s foreign exchange reserves likely remained above $3.2 trillion this year while employment and prices are expected to remain stable, Han said. More

The marketplace app, called “Epic Games Store”, will be pre-installed on all new compatible Android devices operating on the Telefonica (NYSE:TEF) network across regions including Spain, the UK, Germany, Mexico and Spanish-speaking Latin America. The companies said the move would allow players to more easily download game titles such as “Fortnite”, “Fall Guys” and “Rocket League Sideswipe” directly from Epic, rather than relying on conventional app marketplaces like Google’s Play or Samsung (KS:005930)’s Galaxy store. It marks the first time Epic’s Game Store will be pre-installed on Android devices.Users will also be able to download third-party games in the future, the companies said.Epic has been attempting to expand the distribution of its video games beyond smartphone companies’ official app stores. It has accused Alphabet (NASDAQ:GOOGL)’s Google and Samsung of stifling app store competition.In a statement, Google Play policy communications manager Danielle Cohen said developers like Epic had always been able to work directly with carriers to preinstall their apps or app stores.”All that has changed is that Epic understands it won’t receive a free ride on Play, so they’re finally pursuing the options that have been available to them all along,” she added. Epic earlier had a face-off with Google and iPhone maker Apple (NASDAQ:AAPL) over their rules of charging up to 30% commissions on app store payments. After getting banned for nearly four years, Fortnite returned to iPhones in the European Union and worldwide on Google’s Android devices in August. Cary, North Carolina-based Epic and Telefonica said they would expand the partnership over the next year and “bring more benefits to mobile players across the Telefonica network”, without elaborating. More

Central banks in the United States, Japan and Britain meet, while Germany holds a vote of no confidence in the government. Here’s all you need to know about the coming week in world markets from Lewis (JO:LEWJ) Krauskopf in New York, Kevin Buckland in Tokyo and Naomi Rovnick, Amanda Cooper and Dhara Ranasinghe in London.1/ CUT, THEN WHAT?The U.S. Federal Reserve is expected to continue monetary easing with a 25 basis point (bps) rate cut on Wednesday, in what would be its third straight reduction, with the latest consumer price index rising in line with economists’ estimates.Investors have curtailed expectations for how much the Fed will cut next year. Traders expect rates to fall to about 3.7% by end-2025 from the current 4.5%-4.75% range, roughly 90 basis points higher than what was priced in September.That puts the focus on the Fed’s own rate projections and on any insight from Chair Jerome Powell about his expectations for future easing. Powell has said the economy is stronger now than the Fed had anticipated in September, and appeared to signal his support for a slower pace of rate cuts ahead.2/ HIKE ON HOLD?The pendulum of BOJ policy expectations has swung widely in the last two weeks, tying traders in knots.But as the Dec. 19 decision looms, the signal is becoming clearer – even if the outcome is still uncertain.Reuters reported on Thursday that policymakers are leaning towards a pause, waiting for further data on wages and clarity on Donald Trump’s policies before raising rates for a third time.A day earlier, Bloomberg reported that BOJ officials see “little cost” from delaying additional tightening.No doubt the BOJ decision is live, meaning market volatility could be high. One mooted risk is that the Fed surprises by not cutting rates on Dec. 18, triggering a jump in dollar/yen.But analysts note it would be very rare for the Fed to go against the grain when market conviction for a cut is so strong.3/ VORSPRUNG DURCH TECHNICALITYGermany’s DAX index is this year’s best-performing European index, up 22%, hitting record high after record high. Defence, tech and construction stocks have more than made up for the performance of its out of favour auto sector. Corporate Germany appears to be weathering sluggish growth and political drama. A no-confidence vote in the government on Dec 16 should pave the way for a February snap election.But the devil is in the details. Goldman Sachs says just 18% of DAX sales come from Germany versus the 33% for companies on the mid-cap MDAX, which is down 1.1% this year. German corporate earnings shrank 5.4% on an annual basis in the third quarter, versus 8.2% growth for STOXX earnings, based on LSEG data. German equities may start aligning a little more closely with the underlying economic and political reality.4/ TIME FOR BOE SURPRISE? When it comes to rate cuts, the Bank of England has been driving in the slow lane. Traders expect the BoE to hold rates at 4.75% on Thursday, just 50 bps below a previous 16-year peak, and to resist a third 25 bp cut until February.Employer tax hikes in the Labour government’s October budget motivated big businesses to warn of price rises, fuelling inflation concerns and helping propel sterling to 2-1/2 year highs against the euro as the ECB eases policy more rapidly than the BoE.But bond markets are querying this divergence, with two-year gilt yields, which move on rate forecasts, dropping to about 4.38% from more than 4.5% a month ago. UK employment growth is slowing as tax rises deter hiring plans and consumer confidence is weak. Sterling bulls should watch out for the BoE shifting gears. 5/ SHAKIER GROUNDOnce-robust services sectors across big economies are faltering, bringing a divergence with sluggish manufacturing activity to an end. That was the takeaway from November PMIs. December numbers, out across the globe next week, should show if the slowdown is getting deeper. The November euro zone composite PMI, seen as a good gauge of overall economic health, sank to 48.3 from October’s 50.0. Britain’s all-sector PMI fell to its lowest in a year at 50.9 – just above the marker that separates contraction from expansion. Even U.S. services sector activity slowed.U.S. tariff worries, and French and German political ructions have the potential to hurt business activity. For some observers, the PMI data paints too pessimistic a picture of underlying activity, with falling interest rates helping to bolster sentiment. (Graphics by Prinz Magtulis, Pasit Kongkunakornkul, Vineet Sachdev ; Compiled by Dhara Ranasinghe, KIrsten Donovan) More

NEW YORK/LONDON (Reuters) -MSCI’s global equity gauge fell on Friday while bond yields climbed as investors waited for clues about the future path for interest rates from next week’s U.S. Federal Reserve meeting.In U.S. Treasuries, benchmark 10-year yields rose to a three-week high and were on track for their fifth-straight daily gain as investors bet that Fed Chair Jerome Powell will signal a pause in policy easing after a widely expected 25-basis-point rate cut next Wednesday. The U.S. central bank is grappling with inflation staying stubbornly above its 2% annual target. Data released on Thursday showed higher-than-expected U.S. producer prices in November. Friday’s data showed U.S. import prices barely rose in November as increases in food and fuel costs were partially offset by decreases elsewhere, thanks to a strong dollar.”The market is assuming that Powell cuts next week and then pauses. I think that’s the right assumption because we’re seeing a tension between the inflationary data and the labor-market data,” said Matt Rowe, head of portfolio management and cross-asset strategies at Nomura Capital Management.While bets on a December rate cut are almost unanimous, CME Group’s (NASDAQ:CME) Fedwatch tool implies just two cuts in 2025. “They have to take into account that in an economy where inflation is showing itself at this point to be sticky, and you’re very highly likely going to get further fiscal stimulus, deregulation, and some aspect of tariffs coming through, there’s just no way you can validate why you keep cutting in that instance,” said Tom Fitzpatrick, head of global market insights at R.J. O’Brien in New York. While a rally in chipmaker Broadcom (NASDAQ:AVGO) provided a big boost for Wall Street, only the Nasdaq managed a small gain.The Dow Jones Industrial Average fell 86.06 points, or 0.20%, to 43,828.06, the S&P 500 fell 0.16 point, or 0.00%, to 6,051.09 and the Nasdaq Composite rose 23.88 points, or 0.12%, to 19,926.72.Weekly results were also a mixed bag with the S&P 500 falling 0.64% and the Nasdaq rising 0.34% while the Dow fell 1.82%. MSCI’s gauge of stocks across the globe fell 2.27 points, or 0.26%, to 866.14. Europe’s STOXX 600 index closed down 0.53% earlier, breaking a three-week winning streak, as investors sought clarity on Europe’s rate policy amid concerns about economic growth and a potential trade war.The yield on benchmark U.S. 10-year notes rose 7.5 basis points to 4.399%, from 4.324% late on Thursday. The 30-year bond yield rose 5.7 basis points to 4.6052%.The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 5.9 basis points to 4.245%, from 4.186% late on Thursday.In currencies, the dollar index eyed its biggest weekly gain in a month on the prospect of slower U.S. rate cuts.On the day, the index, which measures the greenback against a basket of currencies, fell 0.02% to 106.94. The euro rose 0.32% to $1.0501, clawing back some recent losses in the wake of the European Central Bank’s rate cut on Thursday.Against the Japanese yen, the dollar strengthened 0.66% to 153.62, having risen all week as traders scaled back bets on a Bank of Japan rate hike next week. Sterling weakened 0.4% to $1.2619 after a surprise contraction in UK economic activity. In energy markets, oil prices settled at a three-week high on expectations more sanctions on Russia and Iran could tighten supplies and that lower U.S. and European interest rates could boost fuel demand.U.S. crude settled up 1.8%, or $1.27 at $71.29 a barrel and Brent settled at $74.49 per barrel, up 1.5% or $1.08 on the day.In precious metals, spot gold fell 1.2% to $2,649.04 an ounce. More

WASHINGTON (Reuters) – The Federal Aviation Administration said Friday it was moving to streamline a key commercial space launch and reentry license hurdle, declaring some flight safety analyses in California, Florida, and Virginia satisfy requirements.The FAA noted the commercial space industry often cites meeting flight safety analysis requirements as a challenge before launches. The FAA said the change reduces the amount of material applicants must submit, and improves FAA technical review efficiency. Companies like SpaceX have complained about delays getting FAA launch licenses.“This is a force multiplier in the production of quality flight safety analyses the FAA can readily accept,” said Associate Administrator for Commercial Space Transportation Kelvin Coleman.On Thursday, FAA Administrator Mike Whitaker said he would step down when President-elect Donald Trump takes office next month.SpaceX CEO Elon Musk, a close adviser to Trump, in September called for Whitaker’s resignation and harshly criticized the FAA’s decision to impose a $633,000 fine on SpaceX after the agency said the company violated launch license requirements.In recent months, the FAA has taken other steps to speed launch approvals.On Oct. 12, the FAA approved a license for the launch of SpaceX’s Starship 5 after earlier saying it did not expect to make a decision until late November.Also that month, the FAA quickly approved the return to flight of the SpaceX Falcon 9 vehicle after it accepted the SpaceX-led investigation findings and corrective actions for a Sept. 28 mishap.In late October, Senator Jerry Moran urged the FAA to speed license reviews for private rocket launches, saying its agency’s commercial space office “must rapidly improve its transparency, accountability, and pace of execution” in approving rocket launch licenses.The FAA Office of Commercial Space Transportation, which regulates private rocket launches to ensure they do not impact the public’s safety, has long argued for more funding to grow its licensing team. More

“Fed Chair Jerome Powell and his colleagues are expected to deliver another quarter-point rate cut at their Dec. 17-18 meeting, bringing the central bank’s key benchmark rate down to a range of 4.25% to 4.50%,” Bloomberg reported, citing its survey of 50 economists over the Dec. 6-11 period.The pace of rate cuts, however,, is expected to slow in 2025, with economists predicting just three reductions next year, down from previous expectations. This shift comes as progress on cooling inflation toward the Fed’s 2% target has been less robust than anticipated.The survey also revealed a change in economists’ risk outlook, with more now seeing upside risks to inflation compared to downside risks to unemployment or growth. This marks a dramatic shift from just a few months ago when concerns about a weakening labor market dominated.The incoming Trump administration’s policy proposals, including mass deportations, new tariffs, and tax cuts, are also expected to impact the Fed’s rate decisions. The majority of economists surveyed believe these policies will lead to fewer rate cuts in 2025 than previously thought. More