Economy

The Transportation Department ordered American, Delta, Southwest and United to share more information about their rewards practices to ensure they are fair to consumers and rivals.The Transportation Department announced on Thursday that it was investigating the rewards programs of the country’s four biggest airlines, part of the agency’s continuing efforts to bolster protections for air travelers.As part of the inquiry, Transportation Secretary Pete Buttigieg ordered the carriers — United Airlines, Delta Air Lines, American Airlines and Southwest Airlines — to furnish the agency with records and detailed information about their loyalty programs.The agency said its investigation was “focused on the ways consumers participating in airline rewards programs are impacted by the devaluation of earned rewards, hidden or dynamic pricing, extra fees, and reduced competition and choice.”Mr. Buttigieg said in a statement that such programs “are controlled by a company that can unilaterally change their value.”“Our goal is to ensure consumers are getting the value that was promised to them,” he added, “which means validating that these programs are transparent and fair.”Airlines’ policies have been in the Biden administration’s cross hairs for months as it has tried to clamp down on practices that it sees as unfavorable to consumers. In April, the Transportation Department issued new rules requiring airlines to offer refunds when flights are canceled or delayed and to reveal all fees before a ticket is purchased.Mr. Buttigieg expressed concerns about loyalty programs in May during a joint hearing of the Transportation Department and the Consumer Financial Protection Bureau on airline loyalty and credit card programs. He said the agency was examining whether the companies were being straightforward with customers about what they would receive and whether they were “getting the deal that they were promised.”The agency, he added at the time, was also looking into the impact of the programs on competition in the industry, and whether some were “being operated in a way that has the potential to block the entry or growth of smaller airline competitors, which could ultimately limit options for consumers.”In statements, Delta and Southwest defended their loyalty programs. American and United referred requests for comment to Airlines for America, a trade association that represents the country’s biggest airlines, which said in a statement that “U.S. carriers are transparent about these programs, and policymakers should ensure that consumers can continue to be offered these important benefits.”Last year, Delta prompted an outcry among travelers when it announced changes to its SkyMiles frequent flier program. The airline later adjusted its modifications. More

The U.S. IPO market is on a rebound with upcoming rate cuts expected to increase the pace of listings into 2025.The media network, which reaches more than 40 million Americans through its television, streaming, online and print platforms, is seeking to raise up to $75 million in the public offering, which is expected to take place later this year or in early 2025.Founded in 1998 by Christopher Ruddy, Newsmax is one of the more formidable challengers on the right to Rupert Murdoch’s Fox News.The company has also launched a private placement as it looks to raise capital before the proposed IPO.Boca Raton, Florida-based Newsmax is seeking to raise at least $150 million through the private placement by offering convertible preferred stock. The private placement, which could potentially raise up to $225 million, is open to investors for a limited time.Companies often file for IPOs confidentially to keep sensitive information under wraps for as long as possible.Newsmax expects to list on the New York Stock Exchange under the symbol “NMAX”.Digital Offering is the placement agent for the private placement and the proposed IPO. More

NEW YORK/LONDON (Reuters) – Global property markets, rattled by the steepest rise in interest rates in a generation, will get little relief from the gradual easing of borrowing costs, with scant hope of a return to the free money that fuelled a boom.The multi-trillion dollar industry, which thrived in the decade after the global financial crisis when the cost of money was cut to zero, has been one of the biggest casualties as central banks pushed up borrowing costs.Now central banks, from the European Central Bank and Bank of England to Switzerland and Sweden, are cutting rates, making it cheaper to borrow, with the U.S. Federal Reserve to follow.But industry executives and bankers see no quick fix for an industry built as rock bottom rates sent trillions flowing into property, money the sector is now haemorrhaging as bonds and ordinary savings accounts regain their appeal.”We’re not out of the woods yet,” said Andrew Angeli, global head of real estate research at Zurich Insurance, a Swiss investor, arguing the sector was unlikely to see a rapid recovery.The past two years of rate hikes have claimed scores of victims, including property group Signa, which owned trophy buildings in Germany, leaving behind a trail of half-built homes and empty skyscrapers.Property insolvencies in Germany have been rising since early 2022, according to consultants Falkensteg, to reach more than 1,100 in the first six months of this year. Britain’s construction sector has seen the most insolvencies of any industry for two years running, with roughly 4,300 over the 12 months to June 2024.The pain is acute for offices, hammered by rising borrowing costs and home working, but the impact is spilling over into the vast housing market, which has sunk in Germany and stuttered in Britain.”I’ve never worked so hard in my life and feel like I have nothing to show for it,” said Brian Walker, president of the Pittsburgh-based property company NAI Burns Scalo.”Some will say … we’re probably at the bottom of where the office market is, but I don’t know how you can say that,” said Walker. “You’re starting to see a lot of office buildings keys just go back to the bank.”Cornelius Riese, the CEO of DZ Bank, one of Germany’s biggest property lenders, said higher rates would take three years to work their way through the system. “We’re almost two thirds of the way into the phase in which surprises can crop up,” he said.An economic slowdown in many countries, including Germany and China, is adding to the jitters.  HIGH STAKESReal estate investment firm JLL estimates that a total $2.1 trillion worth of commercial real estate debt globally will need to be repaid this and next year. Borrowers secured refinancing deals to cover almost one third of that in the first six months of this year, but there could be a shortfall next year of up to $570 billion, JLL said. Many U.S. investors have handed back the keys to office blocks to lenders, as Brookfield Asset Management (TSX:BAM) did with New York’s Brill Building, a landmark made famous by singers such as Neil Diamond, who began their careers as songwriters there. Brookfield did not immediately return a request for comment.Some small banks, who went all in as property boomed, are now under threat.Rebel Cole, a professor of finance at Florida Atlantic University, has identified 62 smaller U.S. banks with outsized property loans. Cole identified a small number of lenders at risk of going bust as they have investments in the largely paralysed property sector, while relying on funding from big deposits that could be pulled at a moment’s notice. “There’s a vast amount of maturities … on loans going to come down the pike next year,” said David Aviram, co-founder of Maverick Real Estate Partners, a New York-based investor. That is pressuring banks to offload loans by trying to sell them but several, who were offered as little as 40% of the debt’s face value, shelved such deals, parking the soured credit on their books instead, said Aviram.Selling buildings is not easier. Earlier this year, a company liquidator knocked around 160 million pounds ($209.89 million), or 60%, off the previous purchase price of an office tower in London’s Canary Wharf, a source familiar with the matter said, but the sale foundered regardless.Some believe banks are in denial. European regulators suspect they may be masking the poor state of loans to the sector by ignoring price falls. Waiting, however, could make the problem worse. A widening chasm is opening between buildings in sought-after locations and those out of favour.In Los Angeles, the Century City commercial district surrounding Fox Studios is doing well, while large swathes of downtown are a “total train wreck”, with many buildings going bust and much space unoccupied, said Jeffrey Williams, a New York-based investor at Schroders (LON:SDR) Capital.In Sweden, one of the worst affected by the property rout, a rate cut is nonetheless giving hope.”It is nicer if you … believe that there will be low capital costs and property prices will possibly rise,” said Leiv Synnes, CEO of SBB, one of its largest troubled groups. “The mood … is completely different now.”   ($1 = 0.7623 pounds) (This story has been refiled to correct the spelling of ‘offer’ in the headline) More

PARIS (Reuters) -French President Emmanuel Macron appointed Michel Barnier, the European Union’s former Brexit negotiator, as his new prime minister on Thursday, in a bid to put an end to political paralysis following an inconclusive snap election.The discreet, conservative politician will quickly face a baptism of fire as time is running out to prepare France’s 2025 budget, which could trigger a vote of no confidence if parties in the bitterly divided parliament are not satisfied.The leftwing alliance that won June’s election accused Macron of ignoring the result by picking a conservative. It called for demonstrations against Barnier’s selection but does not have enough seats to block the choice on its own.The far-right National Rally (RN), parliament’s biggest single party, indicated it would not block Barnier for now, but could do so later if a range of demands were not met.At 73, Barnier is the oldest prime minister in France’s modern political history, taking over from Gabriel Attal, who was the youngest.”The election has been stolen,” hard-left leader Jean-Luc Melenchon said. Another hard-left lawmaker, Mathilde Panot, called it an “unacceptable democratic coup”.Macron had ruled out asking the left to form a government after other parties said they would immediately vote it down.RN leader Jordan Bardella said the party acknowledged Macron’s choice and would judge Barnier’s “general policy speech, his budgetary decisions and his actions on their own merit”.”We will plead for the major emergencies of the French — the cost of living, security, immigration – to finally be addressed, and we reserve all political means of action if this is not the case in the coming weeks.”Barnier is a staunch pro-European and a moderate career politician, but he toughened his discourse considerably during his failed 2021 bid to get his conservative party’s ticket for the presidential election, saying immigration was out of control.Barnier first became a lawmaker aged 27, and later held roles in several French governments, including foreign minister and agriculture minister. He is best known abroad for having led the EU’s talks with Britain over its exit from the bloc from 2016-2021.Macron had considered a string of potential prime ministers in recent weeks, none of whom mustered enough support to guarantee a stable government, which was his main goal. ‘OUT OF MOTHBALLS’French bank shares edged up after Barnier was appointed. Government borrowing costs fell slightly after the announcement, while the euro nudged higher, in positive signs from financial markets.Barnier’s political views are overall close to Macron’s, and it was crucial for the French president that his new prime minister not try to undo reforms pushed through over the past years, in particular pension changes that angered the left.It remains unclear if Barnier will fully try to implement Macron’s political agenda or bring in new proposals. He will need in any case to negotiate with other parties to get legislation adopted in parliament.As Macron’s hunt for a prime minister dragged on, public finances deteriorated and outgoing Finance Minister Bruno Le Maire has said that tens of billions of euros in budget cuts are needed to plug the hole.Macron’s gamble to call the snap parliamentary election in June backfired, with his centrist coalition losing dozens of seats and no party winning an absolute majority. Voters did, however, rally to deny the RN a victory.RN lawmaker Laurent Jacobelli said a condition for not voting Barnier down would be that parliament be dissolved as soon as possible – which would be early July next year. Barnier should also signal support for a change to proportional representation to replace France’s system of two-round voting for single constituencies, he said.He made clear the RN was not particularly enthusiastic about Barnier. “They are taking out of mothballs those who have governed France for 40 years,” Jacobelli told TF1. More

Nonfarm productivity, which measures hourly output per worker, increased at a 2.5% annualized rate last quarter, the Labor Department’s Bureau of Labor Statistics said on Thursday.That was an upward revision from the 2.3% pace estimated last month. The upward revision was in line with economists’ expectations. Productivity increased at a 0.4% rate in the first quarter. It advanced at an unrevised 2.7% pace from a year ago.Unit labor costs – the price of labor per single unit of output – rose at a 0.4% rate in the April-June quarter. That was revised down from the previously reported 0.9% pace. Labor costs increased at a 3.8% the January-March quarter and at a 0.3 % rate from a year ago.The Federal Reserve is expected to start cutting interest rates this month against the backdrop of cooling inflation and labor market conditions. Compensation rose at a 3.0% rate last quarter, revised down from the previously estimated 3.3% pace. It advanced at a 3.1% rate from a year ago. More

Barring fresh evidence as investigators examine the fuel system of a jet forced to return to Hong Kong on Monday, manufacturers had been leaning against recommending worldwide checks, sources told Reuters on Wednesday.”We will require a one-time fleet inspection, which may be applicable only to a portion of the A350 fleet, in order to identify and remove from service any potentially compromised high pressure fuel hoses,” the European Union Aviation Safety Agency (EASA) said in a statement. EASA will release an airworthiness directive with details of the inspection later on Thursday, it added. “We acknowledge the information provided by EASA and are working closely with (engine maker) Rolls-Royce (OTC:RYCEY) and the authorities on the implementation of this precautionary measure,” Airbus said. Rolls-Royce did not immediately respond to a request for comment.Airbus and Rolls-Royce briefed airlines on the fallout from the issue earlier on Thursday, sources familiar with the matter said. The A350-1000, the larger of two models in the Airbus A350 family, and its Rolls-Royce XWB-97 engines have been under the spotlight since a Zurich-bound jet was forced to return to Hong Kong after an engine problem, later traced to a fuel leak.Initial investigations have revealed that a flexible pipe feeding a fuel injection nozzle in the XWB-97 engine was pierced, the sources said. More

2,186 people voted in the poll, with the results showing that when asked if Friday’s jobs report will beat or miss the consensus of 164,000, 54% said they expect a miss, and 46% said they expect a beat.A miss could give the Federal Reserve cover to lower rates by 50 basis points instead of 25bps.According to data from the CME Group (NASDAQ:CME) 30-Day Fed Fund futures, the likelihood of a larger 50bps rate cut from the U.S. Federal Reserve in September has seen a notable increase in recent days.The latest Sevens Report said on Thursday that “for the first time in nearly three years, a ‘Too Cold’ jobs report poses the bigger risk to stocks as the growth implications of Friday’s jobs report are more important to investors than whether the jobs report makes the Fed cut 25 bps or 50 bps.””The market would prefer gradual but consistent rate cuts and stable economic growth over dramatic rate cuts and collapsing growth. Put differently, investors are worried the Fed is behind the curve on rate cuts and Friday’s jobs report will either 1) Calm or 2) Exacerbate those fears,” adds the firm.Meanwhile, BofA said in its preview note that it forecasts solid jobs growth in August, expecting nonfarm payrolls to rise by 200k after coming in at 114k in July.”Public sector hiring should rise 30k on the back of local employment. Hence, we see private payrolls rising by 170k. Education & healthcare hiring should remain robust,” they wrote.”We look for the unemployment rate and labor force participation rate to decline a tenth each, to 4.2% and 62.6%, respectively. We think average hourly earnings and average weekly hours will both rise by a tenth to 0.3% m/m and 34.3, respectively,” added the bank. More

Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 227,000 for the week ended Aug. 31, the Labor Department said on Thursday. Economists polled by Reuters had forecast 230,000 claims for the latest week.Claims had been bouncing around the 230,000 level since pulling back from an 11-month high in late July as seasonal distortions from the automobile industry and Hurricane Beryl faded. They continue to show no signs of labor market deterioration even as job openings dropped to a 3-1/2-year low in July. The Federal Reserve’s “Beige Book” report on Wednesday described employment levels as “generally flat to up slightly in recent weeks.” It noted that “a few (Fed) districts reported that firms reduced shifts and hours, left advertised positions unfilled, or reduced headcounts through attrition, though accounts of layoffs remained rare.” It added, however, that “candidates faced increasing difficulties and longer times to secure a job.” The labor market slowdown, marked by a big step-down in hiring, has put a 50-basis-point interest rate cut on the table at the U.S. central bank’s Sept. 17-18 meeting. Economists, however, believe the U.S. central bank will kick off its easing cycle with a quarter-percentage-point rate reduction because domestic demand remains solid. The number of people receiving benefits after an initial week of aid, a proxy for hiring, decreased 22,000 to a seasonally adjusted 1.838 million during the week ending Aug. 24, the claims report showed.The so-called continued claims are near levels last seen in late 2021, consistent with longer bouts of unemployment. The claims data has no bearing on the employment report for August, which is scheduled to be released on Friday, as it falls outside the survey period.Nonfarm payrolls likely increased by 160,000 jobs last month after rising by 114,000 in July, according to a Reuters survey of economists. The unemployment rate is forecast to slip to 4.2% from nearly a three-year high of 4.3% in July. More