Economy

(Reuters) – A look at the day ahead in Asian markets.The mood across Asian markets on Wednesday is likely to be one of caution, for two main reasons that should keep markets in relatively narrow ranges – lingering concern over the health of the U.S. economy, and Nvidia (NASDAQ:NVDA)’s earnings later in the day.U.S. and world stocks climbed higher on Tuesday but only slightly, while the dollar dipped again and Treasury yields were little-changed across the curve. None of that offers investors in Asia much to run with on Wednesday. Given the lack of obvious global catalysts, regional events may take on added weight on Wednesday.Bank of Japan Deputy Governor Ryozo Himino is scheduled to speak. This follows BOJ Governor Kazuo Ueda’s first public remarks last week since the central bank’s ‘hawkish hike’ in July. Ueda’s tone on Friday was also hawkish, indicating that current rates are still well below ‘neutral’. This strengthens the case for further tightening this year beyond the mere 7 basis points of hikes rates markets are currently discounting.The main economic indicator across the Asia/Pacific region on Wednesday will be Australian inflation. Economists polled by Reuters expect annual weighted consumer price inflation to have slowed to 3.4% in July from 3.8% in June.That would be the lowest since February and closer to getting inflation back in the central bank’s 2%-3% target range for the first time since 2021. The Reserve Bank of Australia has held its cash rate at 4.35% since November last year, and last cut rates nearly five years ago.The Aussie swaps market shows no rate cut is fully priced until December, with 100 bps of easing in total expected by the end of next year. Thailand’s deputy finance minister Julapun Amornvivat and central bank governor Sethaput Suthiwartnarueput, meanwhile, both speak at a business seminar on Wednesday. This comes amid continued friction between the government and central bank over the path for interest rates.The Bank of Thailand last week left rates on hold at 2.50% for a fifth meeting. But newly-sworn in Prime Minister Paetongtarn Shinawatra has called central bank independence an “obstacle” to economic growth, and her predecessor repeatedly called for rates to be cut.Despite being an extremely low-yielding currency, the Thai baht has rallied strongly in recent weeks, perhaps because of the central bank’s refusal to cut rates just yet. It is now the only one of seven key Asian currencies to be up against the U.S. dollar so far this year.Indeed, if there is one discernible global driver for investors in Asia on Wednesday it is the U.S. dollar’s persistent weakness, as the currency slipped to a fresh low for the year against a basket of major currencies. Here are key developments that could provide more direction to Asian markets on Wednesday:- Australia inflation (July)- BOJ Deputy Governor Ryozo Himino speaks- Bank of Thailand Governor Suthiwartnarueput speaks More

SAN FRANCISCO (Reuters) -California legislators are set to vote on a bill as soon as this week that would broadly regulate how artificial intelligence is developed and deployed in California even as a number of tech giants have voiced broad opposition.Here is background on the bill, known as SB 1047, and why it has faced backlash from Silicon Valley technologists and some lawmakers:WHAT DOES THE BILL DO?Advanced by State Senator Scott Wiener, a Democrat, the proposal would mandate safety testing for many of the most advanced AI models that cost more than $100 million to develop or those that require a defined amount of computing power. Developers of AI software operating in the state would also need to outline methods for turning off the AI models if they go awry, effectively a kill switch.The bill would also give the state attorney general the power to sue if developers are not compliant, particularly in the event of an ongoing threat, such as the AI taking over government systems like the power grid. As well, the bill would require developers to hire third-party auditors to assess their safety practices and provide additional protections to whistleblowers speaking out against AI abuses.WHAT HAVE LAWMAKERS SAID?SB 1047 has already passed the state Senate by a 32-1 vote. Earlier this month, it passed the state Assembly appropriations committee, setting up a vote by the full Assembly. If it passes by the end of the legislative session on Aug. 31, it would advance to Governor Gavin Newsom to sign or veto by Sept. 30.Wiener, who represents San Francisco, home to OpenAI and many of the startups developing the powerful software, has said legislation is necessary to protect the public before advances in AI become either unwieldy or uncontrollable.However, a group of California Congressional Democrats oppose the bill, including San Francisco’s Nancy Pelosi; Ro Khanna, whose congressional district covers much of Silicon Valley; and Zoe Lofgren, from San Jose. Pelosi has called SB 1047 ill-informed and said it may cause more harm than good. In an open letter last week, the Democrats said the bill could drive developers from the state and threaten so-called open-source AI models, which rely on code that is freely available for anyone to use or modify.WHAT DO TECH LEADERS SAY?Tech companies developing AI – which can respond to prompts with fully formed text, images or audio as well as run repetitive tasks with minimal intervention – have called for stronger guardrails for AI’s deployment. They have cited risks that the software could one day evade human intervention and cause cyberattacks, among other concerns. But they also largely balked at SB 1047.Wiener revised the bill to appease tech companies, relying in part on input from AI startup Anthropic – backed by Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL). Among other changes, he eliminated the creation of a government AI oversight committee.Wiener also took out criminal penalties for perjury, though civil suits may still be brought. The revised bill has won support from some tech firms and executives, including billionaire Elon Musk and Anthropic.The AI startup had last week said its concerns about the bill potentially hindering innovation had been “greatly reduced” and the benefits likely outweighed the costs. Still, it flagged that some aspects of the bill seemed concerning or ambiguous.Tesla (NASDAQ:TSLA) CEO Musk, who runs an AI firm called xAI, said he has been an advocate for AI regulation and that California should pass the bill.Other companies have opposed it.Alphabet’s Google and Meta have expressed concerns in letters to Wiener. Meta said the bill threatens to make the state unfavorable to AI development and deployment. The Facebook (NASDAQ:META) parent’s chief scientist, Yann LeCun, in a July X post called the bill potentially harmful to research efforts. OpenAI, whose ChatGPT is credited with accelerating the frenzy over AI since its broad release in late 2022, has said AI should be regulated by the federal government but that SB 1047 creates an uncertain legal environment.In a letter to Wiener, OpenAI said it opposes SB 1047 because it is a threat to AI’s growth and could cause entrepreneurs and engineers to leave the state.Of particular concern is the potential for the bill to apply to open-source AI models. Many technologists believe open-source models are important for creating less risky AI applications more quickly, but Meta and others have fretted that they could be held responsible for policing open-source models if the bill passes. Wiener has said he supports open-source models and one of the recent amendments to the bill raised the standard for which open-sourced models are covered under its provisions.The bill also has its backers in the technology sector. Geoffrey Hinton, widely credited as a “godfather of AI”, former OpenAI employee Daniel Kokotajlo and researcher Yoshua Bengio have said they support the bill. More

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WASHINGTON (Reuters) -A Chinese hacking group exploited a software bug to compromise several internet companies in the U.S. and abroad, a cybersecurity firm said on Tuesday.Researchers at the firm, Lumen Technologies, said in a blog post that the hackers took advantage of a previously unknown vulnerability in Versa Director – a software platform used to manage services for customers of Santa Clara, California-based Versa Networks. It said four U.S. victims and one Indian victim had been identified, although it declined to identify them.Versa Networks issued an advisory on Monday acknowledging that the vulnerability had been exploited “in at least one known instance” by an advanced group of hackers, and urged customers to update their software to fix the bug.Lumen’s blog post said that its researchers assessed with “moderate confidence” that the hacking campaign, which kicked off as early as June 12, was carried out by an alleged Chinese government-backed group nicknamed “Volt Typhoon.” Lumen researcher Ryan English said that the internet companies were targeted for the attackers to surveil their customers.”They very rarely go in through the front door,” he said.Doug Britton, an executive with Virginia-based RunSafe Security, said the research appeared sound and that the access described by Lumen would allow a group like Volt Typhoon “the ability to do broad, silent surveillance.”The Chinese Embassy in Washington did not respond to a request seeking comment, although Beijing routinely denies allegations of its involvement in cyberespionage. On Friday, the U.S. Cybersecurity and Infrastructure Security Agency added the Versa vulnerability to its list of “known exploited vulnerabilities.” Brandon Wales, the recently departed executive director of CISA, was quoted by the Washington Post on Tuesday saying that China’s hacking effort had “dramatically stepped up from where it used to be.”Volt Typhoon has emerged as a group of particular concern to U.S. cybersecurity officials. In April, FBI Director Christopher Wray said China was developing the “ability to physically wreak havoc” on U.S. critical infrastructure. More

Donald J. Trump, the Republican presidential nominee, has floated the idea of a 10 percent tariff on all U.S. imports, a plan that economists say could badly damage trade.Former President Donald J. Trump blames the global trading system for inflicting a long list of ills on the American economy including lost jobs, closed foreign markets and an overvalued dollar.The remedy, he insists, is simple: tariffs. Mr. Trump, the Republican nominee for president, has repeatedly said he would raise tariffs if elected. China, a geopolitical and economic rival, would face an additional 50 or 60 percent tariff on its exports to the United States. He has also floated the idea of a 10 to 20 percent surcharge on exports from the rest of the world.Although smaller than the percentage proposed for Chinese exports, an across-the-board tariff has the potential to deliver a much more devastating jolt to world trade, many economists warn.Such a surcharge would not distinguish between rivals and allies, critical necessities and nonessentials, ailing industries and superstars, or countries adhering to trade treaties and those violating them. (Democrats have also embraced tariffs as a policy tool, but Vice President Kamala Harris, the Democratic presidential nominee, has criticized Mr. Trump’s universal approach as inflationary.)Here is what you need to know about the idea of a universal tariff on all imports.In 1971, President Richard M. Nixon levied a 10 percent surcharge on all taxable imports.Associated PressWhat are the historical precedents?Mr. Trump’s broad-brush tariffs frequently evoke comparisons with the destructive global trade war that the United States helped to initiate in the 1930s with the Smoot-Hawley tariffs passed by Congress. The Senate Historical Office has called that law “among the most catastrophic acts in congressional history.”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

(Reuters) -Members of the boards of directors overseeing the Chicago and New York Federal Reserve banks voted in favor of lowering by a quarter percentage point the central bank’s discount rate during July, according to meeting minutes released on Tuesday. The Fed said in a press release that while 10 of the 12 regional Fed banks wanted to maintain the discount rate at 5.5% in votes taken last month, the Chicago and New York Fed directors wanted that borrowing rate to move down to 5.25%.The discount rate is what deposit-taking banks pay to borrow directly from the central bank. It is a rate that is generally set in relation to where the central bank’s interest rate target range is also set. At the month-ending July Federal Open Market Committee meeting, the Fed maintained its interest rate target range at between 5.25% and 5.5%, with the discount rate steady at 5.5%. The discount window meeting minutes offer an insight into the likely direction of monetary policy. With inflation pressures easing and risks around the job market rising, the Fed is almost certain to cut its rate target at the September policy meeting. Fed leader Jerome Powell said as much when he spoke on Friday at the Kansas City Fed’s annual research conference in Jackson Hole, Wyoming. Released last Wednesday, meeting minutes from the July FOMC noted the “vast majority” of policy makers are on board with a rate cut for next month. The discount rate meeting minutes said that as of last month the Fed’s Board of Governors expressed no view on the level of the rate. In the minutes, regional Fed directors “generally reported stable economic activity, with many directors noting moderating inflation.” The directors also said “labor market conditions reportedly continued to move into better balance, and wage growth stabilized or slowed in most districts.” The 12 regional Fed banks are overseen by directors drawn from the private sector. The minutes noted they were approved on July 22. More

Both Democrats and Republicans are expressing support for tariffs to protect American industry, reversing decades of trade thinking in Washington.When Donald J. Trump ran for president in 2016, there was not much love for tariffs in Washington. Many Republicans and Democrats believed that putting levies on imports created economic inefficiencies and that freer trade was the best recipe for growth.That view has largely fallen out of fashion in 2024. While Mr. Trump and Vice President Kamala Harris, the Democratic nominee, differ greatly in their campaign proposals, both of their parties are increasingly embracing tariffs as an essential tool in protecting American manufacturers from Chinese and other global competitors.It has been a sharp reversal from previous decades, when most politicians fought to lower tariffs rather than raise them. But the loss of American manufacturing jobs as a result of globalization and China’s focus on churning out cheap exports have created a bipartisan backlash against more open trade. Given that Mr. Trump’s 2016 win capitalized on such sentiments, Democrats have been striving to avoid losing voters opposed to free trade.“On economic policy and trade issues, you have both major parties moving in the same direction,” said Nick Iacovella, a senior vice president at the Coalition for a Prosperous America, which advocates tariffs and domestic investments in industry.Mr. Iacovella said that Mr. Trump would most likely go further on tariffs than Ms. Harris would, but that no matter who won the election “it’s still going to be a tariffs administration, and an industrial policy one.”Ms. Harris has sought to differentiate herself from Mr. Trump’s trade proposals, which include tariffs of 10 percent to 20 percent on most imports, as well as levies of more than 60 percent on China. Many economists say that level of tariffs would drive up prices for consumers, since companies would be likely to pass on higher import costs.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

WASHINGTON (Reuters) – U.S. consumer confidence rose to a six-month high in August amid optimism over the economic outlook, but Americans are becoming more anxious about the labor market after the unemployment rate jumped to near a three-year high of 4.3% last month.The better-than-expected reading in consumer confidence, reported by the Conference Board on Tuesday, reflected improved perceptions of business conditions over the next six months, and the survey suggested the odds of a recession had continued to decline. Consumers’ uneasiness over the labor market is mirrored by concerns at the Federal Reserve, with Fed Chair Jerome Powell last Friday signaling interest rate cuts were imminent.”This report supports a rate cut on both the decline in inflation expectations and a softening labor market, but is not so weak as to suggest a recession at this point,” said Conrad DeQuadros, senior economic adviser at Brean Capital.The Conference Board’s consumer confidence index increased to 103.3 this month, the highest level since February, from an upwardly revised 101.9 in July. Economists polled by Reuters had forecast the index would be little changed from the previously reported 100.3. Confidence was higher among consumers aged 35 years and older, and those with annual incomes above $100,000. The cutoff date for the survey was Aug. 21. The rise in confidence could have been influenced by President Joe Biden dropping out of the November presidential race and the nomination of Vice President Kamala Harris to head the Democratic Party ticket.The Conference Board made no mention of any political impact. The University of Michigan this month, however, attributed the rise in its consumer sentiment measure in August to increased optimism among Democrats compared with Republicans.Former President Donald Trump is the Republican Party candidate in the upcoming election.The Conference Board’s Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, improved to 82.5. That was the highest level since August 2023 and was up from 81.1 in July. It was the second straight monthly reading above 80. A reading below 80 usually signals a recession ahead.Consumers were less upbeat, however, about the labor market. The share of consumers who viewed jobs as “plentiful” slipped to 32.8% from 33.4% in July. Some 16.4% of consumers said jobs were “hard to get,” up from 16.3% last month.The survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, fell to 16.4, the narrowest since March 2021, from 17.1 in July. This measure correlates to the unemployment rate in the Labor Department’s monthly employment report. The unemployment rate has risen for four straight months.”While we wouldn’t necessarily use it to predict month-to-month changes in the unemployment rate, the fact that it keeps worsening is not a good development,” said Abiel Reinhart, an economist at J.P. Morgan, referring to the labor market differential. “The message here is that the July unemployment increase was not just a fluke.”Stocks on Wall Street were little changed. The dollar fell against a basket of currencies. U.S. Treasury yields rose.RATE CUTS COMINGConsumers’ 12-month inflation expectations dropped to 4.9%, the lowest level since March 2020, from 5.3% in July. Financial markets expect the U.S. central bank to kick off its easing cycle next month with a 25-basis-point rate reduction, though a half-percentage-point cut cannot be ruled out. The Fed has maintained its benchmark overnight interest rate in the current 5.25%-5.50% range for more than a year, having raised the policy rate by 525 basis points in 2022 and 2023. With job growth ebbing, consumers were more pessimistic on their income prospects over the next six months. The share of consumers expecting their incomes to increase fell to 16.9% from 17.2% in July. The proportion anticipating a decline rose to 12.7% from 11.6% last month.Rising worries about finances weighed on buying plans for the next six months. At face value that would suggest softer consumer spending in the months ahead, but there is not a strong correlation between confidence and spending.”Politically-driven shifts in sentiment tend to be poorly correlated with spending decisions,” said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.Buying plans for motor vehicles fell as did those for major household appliances. The share of consumers intending to purchase a house was the smallest since early 2013. Higher mortgage rates and home prices have pushed the dream of owning a home out of the reach of many Americans.But relief could be in sight as the reduced affordability has increased the supply of homes on the market, helping to curb house price inflation.A separate report from the Federal Housing Finance Agency on Tuesday showed single-family home prices dipped 0.1% on a month-on-month basis in June after being unchanged in May. They increased 5.1% in the 12 months through June, the smallest year-on-year rise since July 2023, after advancing 5.9% in May. New housing supply has surged to levels last seen in early 2008. The existing homes inventory has also risen to the highest level in nearly four years. An outright decline in house prices is unlikely, however, in the absence of significant labor market deterioration.”Annual home price growth is on track to slow to just above 3% by year end, and we expect it to stabilize around that pace,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. More