2024-09-13 21:14
NEW YORK, Sept 13 (Reuters) - The Federal Reserve is in focus next week, as uncertainty swirls over how much the U.S. central bank will cut interest rates at its monetary policy meeting and the pace at which it will reduce borrowing costs in coming months. The S&P 500 index (.SPX) , opens new tab is just 1% shy of its July record high despite weeks of market swings sparked by worries over the economy and seesawing bets on the size of the cut at the Fed's Sept. 17-18 meeting. After fluctuating sharply throughout the week, Fed funds futures on Friday showed traders pricing an almost equal chance of a 25 basis point cut and a 50 basis point reduction, according to CME Fedwatch. The shifting bets reflect one of the key questions facing markets today: whether the Fed will head off weakening in the labor market with aggressive cuts, rather than take a slower wait-and-see approach. "The market wants to see the Fed portray a level of confidence that growth is slowing but not falling off a cliff," said Anthony Saglimbene, chief market strategist at Ameriprise Financial. "They want to see ... that there's still this ability to gradually normalize monetary policy." Investors will focus on the Fed's fresh economic projections and interest rate outlook. Markets are pricing in 115 basis points of cuts by the end of 2024, according to LSEG data late on Friday. The Fed's June forecast, by comparison, penciled in one 25-basis point cut for the year. Walter Todd, chief investment officer at Greenwood Capital, said the central bank should opt for 50 basis points on Wednesday. He pointed to the gap between the 2-year Treasury yield , last around 3.6%, and the Fed funds rate of 5.25%-5.5%. That gap is "a signal that the Fed is really tight relative to where the market is," Todd said. "They are late in starting this cutting cycle and they need to catch up." Aggressive rate cut bets have helped fuel a Treasury rally, with the 10-year yield down some 80 basis points since the start of July to around 3.65%, near its lowest level since June 2023. But if the Fed continues to project significantly less easing than the market does for this year, bonds will have to reprice, pushing yields higher, said Mike Mullaney, director of global markets research at Boston Partners. Rising yields could pressure stock valuations, Mullaney said, which are already high relative to history. The S&P 500 (.SPX) , opens new tab was last trading at a forward price-to-earnings ratio of 21 times expected 12-month earnings, compared to its long-term average of 15.7, according to LSEG Datastream. "I find it implausible that you're going to get P/E multiple expansion between now and year-end in a rising (yield) environment," Mullaney said. With the S&P 500 up about 18% so far this year, it may not take much to disappoint investors with next week's Fed meeting. Focus has turned to the employment market as inflation has moderated, with job growth coming in less robust than expected in the past two monthly reports. The unemployment rate jumped to 4.2% in August, one month after the Fed projected it reaching that level only in 2025, said Oscar Munoz, chief US macro strategist at TD Securities. That indicates the central bank may need to show it will move aggressively to bring down rates to their "neutral" level, he added. "If the (forecast) disappoints, meaning they turn more conservative and they don't ease as much ... I think the market might not take it well," Munoz said. Sign up here. https://www.reuters.com/markets/us/wall-st-week-ahead-size-speed-rate-moves-focus-fed-poised-start-cuts-2024-09-13/
2024-09-13 20:38
WASHINGTON, Sept 13 (Reuters) - The U.S. Environmental Protection Agency has found that Archer-Daniels-Midland (ADM.N) , opens new tab violated federal safe drinking water rules and its underground injection permit with a leak at the first major U.S. underground carbon sequestration facility in Illinois, the agribusiness company confirmed on Friday. The Illinois Industrial Carbon Capture and Sequestration (CCS) Project is meant to demonstrate the ability of carbon dioxide to be stored safely underground. The Biden administration's Inflation Reduction Act expanded tax credits for CCS projects from $50 a tonne to $85, generating more interest in these projects. In an Aug. 14 letter to ADM, the EPA said a July inspection of the site found that carbon dioxide injected into the subsurface flowed into "unauthorized zones," and that the company failed to follow an emergency response and remediation plan and or to monitor the well in accordance with its permit. Leaks from fractures in the rock layers or from injection could contaminate both the soil and groundwater in the area surrounding the storage site. ADM responded to the EPA's notice on Aug. 22 and said that it had detected some corrosion in one of its two deep monitoring wells and subsequently plugged it and reported it to the agency, according to a copy of the letter seen by Reuters. "At no time was there any impact to the surface or groundwater sources or any threat to public health," ADM spokesperson Jackie Anderson said in a statement. "We continue to be confident in the safety, security and effectiveness of CCS as a greenhouse gas mitigation technology and its potential to bring new industries and economic opportunities to the entire state of Illinois." The trade group for the carbon capture industry said the incident showed that the monitoring system for CO2 injections was working. "We look forward to learning more about best practices that ADM and EPA identify from this incident," said Carbon Capture Coalition executive director Jessie Stolark. Food & Water Watch Policy Director Jim Walsh said the underscores concerns by local communities about the safety of the practice. Sign up here. https://www.reuters.com/business/environment/adm-violates-us-water-laws-permit-after-leak-carbon-capture-project-2024-09-13/
2024-09-13 20:17
Sept 13 (Reuters) - The jury that convicted Sam Bankman-Fried of stealing billions of dollars from customers of his FTX cryptocurrency exchange only saw "half the picture" because the judge did not allow in critical evidence, his lawyer argued in their appeal on Friday. In a 102-page brief filed with the 2nd U.S. Circuit Court of Appeals, Bankman-Fried's lawyer wrote that U.S. District Judge Lewis Kaplan erred in preventing the 32-year-old former billionaire from introducing evidence to back up his belief that FTX had enough funds to cover customer withdrawals. "The government thus presented a false narrative that FTX's customers, lenders, and investors had permanently lost their money," lawyer Alexandra Shapiro wrote in urging the appeals court to overturn Bankman-Fried's conviction and 25-year prison sentence. "The jury was only allowed to see half the picture." A representative of the U.S. Attorney's office in Manhattan, which brought the charges, declined to comment. Criminal defendants face a high bar in getting their convictions overturned, as they must show that trial judges made errors that were significant enough to have affected the verdict. FTX declared bankruptcy in November 2022 after a flurry of customer withdrawals, marking a swift fall from grace from Bankman-Fried, who had earned a reputation as an honest broker in the rough-and-tumble cryptocurrency industry and rose to prominence through lavish philanthropic and political donations. FTX has said its customers will receive 100% recovery on their claims against the company, based on the value of their accounts at the time it filed for bankruptcy. Cryptocurrency prices were lower then than they are now, leaving some customers feeling short-changed. In criminal charges brought in December 2022, prosecutors accused Bankman-Fried of stealing $8 billion in customer funds to plug losses at Alameda Research, his crypto-focused hedge fund. At his late 2023 trial, Bankman-Fried admitted to making mistakes running FTX but testified that he never stole funds. He placed much of the blame on other FTX executives. Jurors did not buy his explanation, and convicted him on the two counts of fraud and five counts of conspiracy he faced. In sentencing Bankman-Fried in March, Kaplan said Bankman-Fried knew his actions were wrong but "made a very bad bet about the likelihood of getting caught." Bankman-Fried is currently being held at the Metropolitan Detention Center in Brooklyn. Sign up here. https://www.reuters.com/legal/sam-bankman-frieds-jury-only-saw-half-picture-lawyer-says-appeal-2024-09-13/
2024-09-13 19:54
New Orleans, LOOP agricultural and oil export ports reopen A dozen liquefied natural gas tankers queue offshore Gulf of Mexico offshore oil output losses at 42% on Friday HOUSTON, Sept 13 (Reuters) - U.S. Gulf of Mexico energy firms on Friday were lumbering back from hurricane disruptions as offshore oil and gas producers ramped up output, ports reopened, and onshore terminals accepted oil and liquefied natural gas (LNG) tankers. Hurricane Francine shut in up to 42% of the region's offshore oil and 52% of its natural gas production. The storm traveled offshore along the Texas coast and slammed into Louisiana on Wednesday, causing flooding and power problems that affected onshore terminals and ports that withstood 100 mph (161 kph) winds. The port of New Orleans, an important agricultural and metals export port, and the deepwater Louisiana Offshore Oil Port (LOOP) were back in service without restrictions on Friday, the U.S. Coast Guard reported. Refineries that account for 20% of U.S. Gulf Coast motor fuel production were returning to normal operations after some curbed output as the hurricane passed through Louisiana. Two LNG vessels were at the Calcasieu Pass, Louisiana, anchorage waiting to load, part of a group of at least a dozen LNG tankers waiting outside Gulf Coast LNG terminals as navigation channels reopened. Offshore oil and gas workers had returned to 25 offshore platforms since Thursday. Daily production shut-ins totaled 732,300 barrels of oil and 973 million cubic feet of natural gas, U.S. offshore regulator Bureau of Safety and Environmental Enforcement said on Friday. SHELL RAMPING UP Shell (SHEL.L) , opens new tab on Friday was ramping up oil production at five offshore platforms while four others remained offline due to pipeline disruptions. Chevron (CVX.N) , opens new tab returned staff to three offshore platforms on Thursday and was restarting operations. Exxon Mobil (XOM.N) , opens new tab on Monday said it had shut-in its Hoover offshore oil platform, but on Friday did not have an immediate comment on the platform's status. It is part of the 153-mile (246-km) Hoover Offshore Oil Pipeline System that serves multiple oil fields closed during the storm. Texas and Louisiana ports, including Texas City and Lake Charles, that reopened earlier this week were on Friday servicing tankers, according to vessel monitoring data by LSEG. Post-tropical Francine has been moving northwest to the Mississippi River since Thursday night, hitting portions of the Mississippi Delta, Alabama, western Georgia and the Florida panhandle with heavy rainfall, the U.S. National Hurricane Center said. The risk of flooding is expected to continue across the Tennessee Valley through Saturday. Hong Kong-flagged fuel tanker SC Draco, Marshall Islands-flagged Owl 1 and Singapore-flagged Solar Claire and Hafnia Tiger were docked on Friday at terminals operated by Citgo Petroleum (PDVSAC.UL) and Westlake Chemical (WLKP.N) , opens new tab in Lake Charles on Friday, according to LSEG ship monitoring data. Lake Charles, Texas City and other U.S. Gulf ports service many refiners in the area for receiving crude imports and handling fuel exports. Meanwhile, French-flagged LNG Endeavour was arriving at the Cameron LNG terminal in Louisiana on Friday to load. Sign up here. https://www.reuters.com/markets/commodities/louisiana-ports-reopen-following-francine-vessels-dock-texas-terminals-2024-09-13/
2024-09-13 19:26
BRUSSELS, Sept 13 (Reuters) - Grieg Seafood, SalMar and other Norwegian salmon producers will challenge EU charges of taking part in a cartel and fixing prices at a hearing in Brussels next week, the companies and three people with direct knowledge of the matter said. The closed-door hearing in front of senior antitrust officials from the European Commission and national watchdogs and possibly third parties comes eight months after the companies were hit with a statement of objections or charge sheet under antitrust legislation. The EU executive, which acts as the EU competition enforcer, declined to comment. In its charge sheet, it said Mowi (MOWI.OL) , opens new tab, Mitsubishi Corp's (8058.T) , opens new tab Cermaq, Grieg Seafood (GSFG.OL) , opens new tab, Bremnes, Leroy (LSG.OL) , opens new tab, and SalMar (SALM.OL) , opens new tab exchanged commercially sensitive information such as sales prices and production volumes between 2011 and 2019. It said this only related to sales on the spot market of Norwegian farmed Atlantic salmon into the EU and not sales based on long-term contracts. The alleged conduct concerns sales of fresh, whole and gutted Atlantic salmon farmed in Norway, which accounts for nearly 80% of all farmed Atlantic salmon exported from Norway. The companies were raided by the EU watchdog in 2019. Norway accounts for over half of the production of farmed Atlantic salmon worldwide and the EU is its main importer. Salmar said it strongly disagreed with the Commission's preliminary assessment and would present its views on this at the hearing. Grieg Seafood confirmed it would attend the hearing and denied any antitrust infringements or anti-competitive behaviour by it or its subsidiaries. Mowi declined to comment. The other companies did not respond to requests for comment. They all risk fines as much as 10% of their global turnover for breaching EU antitrust rules. The six companies agreed to pay $85 million to resolve antitrust claims from salmon purchasers in 2022. Earlier this year, a group of UK retailers said they planned to seek damages. The U.S. Department of Justice closed its investigation in 2023 after sending subpoenas to Mowi, SalMar, Leroy, and Grieg in 2019, the companies have said. Sign up here. https://www.reuters.com/markets/commodities/salmon-producers-contest-cartel-charges-sept-15-18-hearing-sources-say-2024-09-13/
2024-09-13 19:01
BRASILIA, Sept 13 (Reuters) - Brazil's Finance Ministry raised its economic growth forecast on Friday to 3.2% for this year, projecting an acceleration compared with 2023, reflecting the resilience of Latin America’s largest economy. The ministry's economic policy secretariat calculation marks a sharp upward revision from the 2.5% estimate in July, incorporating both the positive surprise in second-quarter activity and expectations of stronger performance for the rest of the year, albeit at a slower pace. In 2023, Brazil's GDP grew by 2.9%. Speaking at a press conference, economic policy secretary Guilherme Mello said some key variables, including investment and industry, have performed better than expected. The Finance Ministry also adjusted its inflation forecast for the year to 4.25%, up from the previous 3.9%, approaching the upper limit of the official target of 3%, with a tolerance range of 1.5 percentage points. Mello argued that the adjustment for consumer prices is not tied to stronger activity or labor market pressures but rather to external factors, such as the severe droughts affecting much of the country. "This obviously impacts energy prices in particular, as well as the prices of certain foods," he said. "I don’t believe it’s possible to say that interest rates weren’t restrictive enough or that the upward inflation revision is related to elements from the real economy." The new GDP projection, which will serve as input for the government's bi-monthly revenue and expenditure report due next week, is more optimistic than private economists' 2.68% expansion forecast in the central bank's weekly survey. Earlier on Friday, a central bank index showed better-than-expected economic activity in July, continuing a series of robust indicators supported by a strong labor market. The scenario has strengthened bets that the central bank will begin a tightening cycle next week, hiking interest rates by 25 basis points after holding them at 10.5% for two consecutive policy meetings. For 2025, the ministry's economic policy secretariat slightly lowered its projected GDP growth to 2.5% from 2.6% and raised the expected inflation rate to 3.4%, up from the previous estimate of 3.3%. Sign up here. https://www.reuters.com/world/americas/brazil-sees-gdp-accelerating-2024-32-growth-2024-09-13/
