2024-08-22 21:36

WASHINGTON, Aug 22 (Reuters) - Brian Deese, an economic adviser for Vice President Kamala Harris' presidential campaign, called on Thursday for an economic program to loan allies money to buy U.S. green energy technologies as part of a wider strategy intended to fight climate change. Deese, who was an economic adviser under President Joe Biden and former President Barack Obama, billed it as a new version of the Marshall Plan, a mechanism of grants set up by President Harry Truman and Secretary of State George Marshall, to help Europe recover after World War Two. "It should be as generous to our allies as it is unapologetically pro-American in its interest," Deese told Reuters. While Deese is promoting the plan independently of his work as a Harris adviser, it could offer insight into potential policies of her presidency should she win on Nov. 5. The Harris campaign did not immediately comment. Deese helped shape the Inflation Reduction Act , opens new tab, Biden's landmark legislation that contains billions of dollars to help spur clean energy and fight climate change. He said the IRA and other legislation created one of the biggest opportunities to speed clean energy, but the effort needs a mechanism to bring technologies to allies. To support the plan, the U.S. should create a Clean Energy Finance Authority, with the ability to issue debt and equity for clean energy projects, Deese said in an article in Foreign Affairs published earlier this week. The plan could be part of a U.S. alternative to China's "Belt and Road" infrastructure initiative and assure U.S. leadership in a period of friction between global powers. The new U.S. agency could draw on expertise of the Department of Energy's Loan Programs Office in assessing the risks and benefits of emerging technologies like advanced nuclear energy, hydrogen power, carbon capture, and geothermal power, Deese said. The LPO issues loan guarantees and low-rate loans to companies with promising technologies that have difficulty getting financing from commercial banks. To support the plan, Deese also called for tools such as tariffs that favor imports from countries that cut emissions while making steel and other products, and the development of a strategic mineral reserve. Such reserves would be held by the U.S. and allies to protect against supply chain shortages for the materials key to clean technologies and the domination of critical minerals trade by China. After Russia's invasion of Ukraine in 2022, Deese helped set up a record sale of oil from the U.S. Strategic Petroleum Reserve to help moderate gasoline prices for U.S. drivers. That experience helped him see the importance of developing reserves for minerals, he said. "My hope is we were moving out of the idea stage and into the opportunity to experiment and then build," such reserves, Deese said. Energy Secretary Jennifer Granholm said in a Reuters interview in June that the U.S. has been having conversations with allies in the International Energy Agency about collective reserves for critical minerals. Sign up here. https://www.reuters.com/sustainability/climate-energy/harris-adviser-deese-calls-marshall-plan-clean-energy-2024-08-22/

2024-08-22 20:33

NEW YORK, Aug 22 (Reuters) - A series of refinery outages in the U.S. Midwest caused regional gasoline prices to spike to more than 20% above the national average from July 22 to Aug. 5 during the high-demand summer driving season, the U.S. Energy Information Administration (EIA) said on Thursday. WHY IT IS IMPORTANT The production of gasoline, diesel, and other refined petroleum products was hit hard by unplanned outages during a key demand period as motorists took to the road for summer vacations. Exxon Mobil (XOM.N) , opens new tab shut down its 251,800-barrel-per-day refinery at Joliet, Illinois, in mid-July due to a power outage after a storm. The refinery restarted earlier this month. In Ohio, Cenovus’ (CVE.TO) , opens new tab 183,000-bpd Lima and 150,800-bpd Toledo refineries both experienced operational issues in late July. Midwest refinery utilization fell 11% to 86% from the week ending July 12 to the week ending Aug. 9, according to the EIA. As these refineries restarted, utilization climbed back up 97% as of the week ending Aug. 16, the EIA said. CONTEXT Reduced refinery utilization resulted in significant draws in Midwest gasoline stocks. Retail gasoline prices in the Midwest, which typically are lower than the national average, stayed elevated for three weeks following the outages, the EIA said, marking the closest the regional average retail price had been to the national average since November 2022. BY THE NUMBERS In Chicago, average retail gasoline prices were more than 20% higher than the national average from July 22 to Aug. 5, according to EIA data. At the end July, Chicago retail prices were 23% higher than the U.S. average, the largest percentage price premium for the city in any week since 2015. Immediately after the Joliet refinery went offline, Midwest gasoline inventories drew down by 2 million barrels, falling below 2023 levels. As local refineries re-entered service, the Midwest saw a 1.3 million-barrel build in gasoline inventories in the week of Aug. 16. Sign up here. https://www.reuters.com/business/energy/us-midwest-refinery-outages-boosts-summer-gasoline-prices-eia-says-2024-08-22/

2024-08-22 20:24

Weekly jobless claims inline with expectations Treasury yields gain as recession worries wane Zoom gains on lifting FY revenue forecast Indexes down: Dow 0.43%, S&P 500 0.89%, Nasdaq 1.67% NEW YORK, Aug 22 (Reuters) - All three major U.S. stock indexes lost ground on Thursday, weighed by technology shares, as Treasury yields rose on easing recession fears and global central bank officials convened at the Jackson Hole Economic Symposium. The so-called Magnificent Seven megacap growth stocks weighed heaviest on the tech-laden Nasdaq. "There doesn't appear to be any kind of clear catalyst as to what's driving this sell-off," Scott Ladner, chief investment officer at Horizon Investments in Charlotte, North Carolina. "People may be trying to square positions a little bit ahead of Nvidia (earnings) next week, or risk-out ahead of (U.S. Federal Reserve Chair Jerome) Powell's Jackson Hole speech tomorrow." Central bank officials from around the world have gathered in Jackson Hole for the annual Economic Symposium. Investors will be laser focused on Powell's address on Friday for clues on the timing and extent of the Fed's policy easing cycle. Powell is expected to assure the markets that the Fed will cut rates in September, Ladner said. "He'll be coy with the question about whether it's going to be a 25 or 50 basis point cut, but will probably try to lead the market towards 25." "He will say he expects to start slow but will also emphasize that if they do see any further weakness in the labor market they can speed things up," Ladner added. News of increasing U.S. jobless claims, following Wednesday's sharply lower benchmark payrolls revision, appear to confirm the labor market is less robust than expected and is gradually softening. This soothed recession fears while bolstering the case for a 25 basis point rate cut at the Fed's upcoming September policy meeting. That sentiment was echoed in remarks on Thursday from Kansas City Fed President Frank Schmid, Boston Fed President Susan Collins, and Philadelphia Fed President Patrick Harker, all of whom indicated that a rate-cutting phase is shortly forthcoming. "What Fed officials are saying is a rate cut is definitely on the table, but there's still time between now and September and data can move things," Martin said. The Dow Jones Industrial Average (.DJI) , opens new tab fell 177.71 points, or 0.43%, to 40,712.78. The S&P 500 (.SPX) , opens new tab lost 50.21 points, or 0.89%, at 5,570.64 and the Nasdaq Composite (.IXIC) , opens new tab dropped 299.63 points, or 1.67%, to 17,619.35. The CBOE Volatility index (.VIX) , opens new tab, often viewed as a barometer of investor anxiety, breached 18, the highest intraday reading in a week, before settling at 17.56. Among the 11 major sectors of the S&P 500, technology (.SPLRCT) , opens new tab suffered the largest percentage loss, falling 2.1 %. Real estate stocks (.SPLRCR) , opens new tab led the gainers. Among individual stocks, Snowflake (SNOW.N) , opens new tab raised its forecast for full-year product revenue. Even so, the data cloud analytics firm's shares slid 14.7% as its margin forecast remained unchanged. Zoom Video Communications (ZM.O) , opens new tab jumped 13.0% after raising its annual revenue forecast. Advance Auto Parts (AAP.N) , opens new tab tumbled 17.5% after trimming its annual profit forecast. Declining issues outnumbered advancing ones on the NYSE by a 2.16-to-1 ratio; on Nasdaq, a 2.25-to-1 ratio favored decliners. The S&P 500 posted 58 new 52-week highs and one new low; the Nasdaq Composite recorded 83 new highs and 68 new lows. Volume on U.S. exchanges was 9.79 billion shares, compared with the 11.89 billion average for the full session over the last 20 trading days. Sign up here. https://www.reuters.com/markets/us/futures-edge-higher-prospect-sept-rate-cut-grows-2024-08-22/

2024-08-22 19:54

Regulators argue over new Basel Endgame draft amid industry pushback Outcome of US presidental election could impact finalization of bank rules and regulatory control Agencies expected to publish new draft in wake of Powell's comments last month WASHINGTON, Aug 22 (Reuters) - U.S. regulators will not be able to finalize contentious bank capital hikes before the November presidential election, casting doubt over whether those and other stiff draft rules for Wall Street banks will be completed at all, said five people familiar with the matter. The so-called Basel III Endgame rules would overhaul how banks with more than $100 billion in assets manage their capital, potentially crimping their lending and trading. Banks say extra capital is unnecessary and will hurt the economy, and have aggressively lobbied to kill Basel. Now, the outcome of that fight will depend on the Nov. 5 election. The Democratic candidate for president, Vice President Kamala Harris, has called for strengthening bank rules. But if Republican candidate Donald Trump wins, his administration is widely expected to rip up or dramatically weaken the new rules, the sources said. Trump has pledged to cut red tape. The two candidates are locked in a tight race although Harris is leading in some battleground states. Regulators have been arguing for months over whether to reissue the Basel draft and allow banks to feed back, Reuters reported in June. Industry executives widely expect the agencies will re-propose the rule after Federal Reserve Chair Jerome Powell told Congress last month it was "essential" to do so given there had been major changes. But it remains unclear how the Fed will persuade the other agencies, which want to finalize the rule before the election, to back that plan, the sources said. Even if the agencies reach an agreement next month at the earliest, they would likely give banks at least 60 days to provide feedback, which is typical for complex rules, the sources said. That would make it almost impossible for officials to absorb the comments and achieve a final draft before a new U.S. administration takes over in January 2025, the sources said. That previously unreported timeline endangers Basel and two other debt and liquidity rules for big banks which cannot be completed until the Basel draft is in good shape and the staff working on it are freed up, the people said. Combined, the rules could require banks to hold more than $200 billion in extra capital and debt, based on regulatory estimates, meaning substantial or indefinite delays could be extremely valuable to the industry. Some progressives who favor tougher rules fret that the Basel fight in which banks have spent millions of dollars on public campaigns will ultimately succeed in stymieing the sweeping regulatory overhaul they had hoped for under Democratic leadership, despite last year's bank failures exposing risks in the system. "They were overly optimistic about how easy it would be to get Basel III Endgame done. When it turned out that wouldn't be as easy, that just sucked up all the oxygen," said University of Michigan professor Jeremy Kress, referring to the agencies. Spokespeople for the Fed, Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC), which are jointly drafting the rules, declined to comment. Spokespeople for the Harris and Trump campaigns did not respond to requests for comment. Speaking to Congress in July, Powell said his goal was to get Basel right, "not do it quickly." 'MALPRACTICE' Several Fed officials share Powell's view that the new draft must be re-proposed, two of the sources said. Some believe that would reduce the risk that Wall Street banks will sue to kill the final rule on the grounds the agencies did not follow proper procedure, Reuters previously reported. While the OCC and FDIC are against re-proposing, it would be almost unprecedented for them to finalize the draft without the Fed. "It's too substantial of a proposal, it would be malpractice for them to finalize at this stage, in my opinion," said Michael Bright, CEO of the Structured Finance Association, an industry group pushing for some changes to the draft. "I don't think this is going to be done before the election." Trump could not remove Fed regulatory chief Michael Barr, but he could immediately replace Acting Comptroller Michael Hsu and tilt the FDIC board, which votes on rules, toward Republicans. Those changes would quickly hand control of the majority of the bank regulatory agenda to Trump appointees. Another major draft rule at risk directs large regional banks to issue up to $70 billion in new long-term debt to buffer potential losses. Proposed a year ago, that rule is delayed partly because the amount of debt banks will have to hold depends on how Basel measures their risks, two sources said. Work on that rule could proceed when there is "support" for the final Basel draft, Powell said in July. Also stuck behind Basel is a plan officials have flagged to impose new liquidity rules on banks, the sources said. Even if Harris wins, the expected appointment of FDIC chair nominee Christy Goldsmith Romero could delay the rules further, and if the Senate flips to Republicans, political pressure to weaken the rules could increase. "There are a whole lot of things up in the air," said Bright. Sign up here. https://www.reuters.com/markets/us/us-capital-hikes-other-wall-street-bank-rules-now-hinge-us-election-2024-08-22/

2024-08-22 19:32

Aug 22 (Reuters) - Brazil's central bank director of monetary policy Gabriel Galipolo disagrees with those who interpret his recent statements as suggesting the central bank is cornered into raising interest rates, he said on Thursday. Speaking at an event in Sao Paulo, he reiterated that policymakers are data-dependent and have all options on the table. Galipolo argued the market has realized that the Brazilian central bank has more freedom for its next monetary policy decision on Sept. 17 to 18, after policymakers dispelled a perception this month that raising interest rates might not be possible. "A difficult position for the central bank is not having to raise interest rates. The difficult position for the central bank is dealing with inflation outside the target," he said. "Inflation outside the target is an uncomfortable situation. Raising interest rates is a routine part of fulfilling the central bank's role." Galipolo said that his recent statements were unchanged from previous statements and were strictly aligned with what the central bank had already made public. His remarks echo recent communication efforts of the bank's rate-setting committee members to emphasize what was in the minutes of its latest rate decision, when borrowing costs were held steady at 10.5%, after Galipolo was initially seen as more hawkish. Earlier on Thursday, the bank's director of economic policy, Diogo Guillen, emphasized that the central bank's balance of risks should not be seen as guiding monetary policy. In the minutes, the central bank had said this month that its board now sees more upside than downside risks to inflation, though there was no consensus on whether the balance was "asymmetric". Speaking at an event in Rio de Janeiro, Guillen said there had been "an overemphasis on the balance of risks as a guidance tool," adding that it should not be interpreted that way. Galipolo, widely seen as the likely successor to Governor Roberto Campos Neto, whose term ends in December, stressed this month that he was among those who viewed the balance of risks as asymmetric. As this language is often seen as laying the groundwork for rate hikes, his comments fueled more hawkish bets on a monetary tightening cycle starting next month and going forward into early 2025. Galipolo reiterated on Thursday that it would be wrong to establish a correlation between an asymmetric risk balance and potential policy guidance. Campos Neto has refrained from disclosing which group he belonged to in the assessment of the balance of risks in recent comments, which tempered more hawkish bets that had been driving interest rate futures. Sign up here. https://www.reuters.com/world/americas/brazils-central-bank-is-not-cornered-into-raising-interest-rates-says-director-2024-08-22/

2024-08-22 19:16

OTTAWA, Aug 22 (Reuters) - Canada's two main freight rail companies locked out around 10,000 of their Canadian unionized workers early on Thursday, starting an unprecedented simultaneous work stoppage that will grind almost all railway freight movement in the country to a halt. HOW INTEGRATED ARE THE RAIL NETWORKS ACROSS NORTH AMERICA? Canadian National Railway Co (CNR.TO) , opens new tab and Canadian Pacific Kansas City (CP.TO) , opens new tab have said their rail networks south of the border will continue to operate, but industry groups fear that a work stoppage would have far-reaching effects on the movement of goods and commodities across North America. CN and CPKC's coast-to-coast rail networks in Canada connect south of the border and serve as important supply chain links to trade corridors and ports across North America. The networks intersect with those of U.S. rail operators such as BNSF Railway (BNISF.UL), Union Pacific (UNP.N) , opens new tab, Norfolk Southern (NSC.N) , opens new tab and CSX (CSX.O) , opens new tab, facilitating the movement of billions of dollars' worth of goods and commodities through ports and warehouses across the continent. CN's network stretches south to New Orleans. CPKC's network links to the U.S. ports of Corpus Christi, New Orleans and Gulfport, and it extends further south to the ports of Tampico and Lázaro Cárdenas on the east and west coasts of Mexico. HOW WOULD A CANADIAN RAIL STOPPAGE AFFECT THE UNITED STATES? Around a third of the traffic moved by the two Canadian rail companies crosses the border with the United States. Many U.S. companies and producers, especially those in the Midwest, use Canadian ports for imports and exports, as Montreal can be faster for shipments to and from Europe, while Vancouver can be faster for ocean service to and from Asia. Union Pacific, the No. 2 U.S. railroad operator, has warned that a simultaneous stoppage would have devastating consequences for the U.S. and Canadian economies. Ratings agency Moody's said the stoppage could cost over C$341 million ($251.14 million) per day. Dozens of groups representing miners, farmers, exporters, and fertilizer producers, among others, have warned that their sectors face crippling supply-chain delays, increased costs, cash-flow constraints and potential shutdowns in a protracted stoppage. HOW WOULD THE U.S. AND CANADIAN FARM SECTORS BE AFFECTED? A stoppage would hit the movement of everything from wheat to ethanol, potash fertilizer and meat. In particular, it would crimp shipments of U.S. spring wheat from Minnesota, North Dakota and South Dakota to the Pacific Northwest for export. A stoppage would also hit Canadian potash and grain exports. The U.S. exported $28.3 billion of agricultural products to Canada in 2023, making it the third-largest destination for U.S. agricultural exports behind China and Mexico. The U.S. imported $40.1 billion of Canadian agricultural products last year, making Canada the second-largest source of U.S. agricultural imports. Ethanol, potash, corn, cereals, food grains, cooking oils, and meat are among the agricultural products traded between the two nations. WILL TRADE WITH MEXICO BE AFFECTED TOO? Mexico is Canada's third-largest single-country merchandise trading partner behind the U.S. and China, while Canada was Mexico's fourth-largest merchandise trading partner in 2023. Mexico exports trucks, cars and vehicle parts to Canada, along with mangoes and avocados. Canada exports wheat, meat, aluminum, cars and parts to Mexico. Two-way trade between the two countries, much of which moves via the rails, was nearly C$55 billion in 2023. CAN THE TRUCKING INDUSTRY STEP INTO THE BREACH? Truckers say they are facing a surge in demand and that road freight rates are rising for shippers in Canada. However, industry insiders say that while the trucking sector can handle some of the demand, it cannot replace rail distribution. In some cases, the industry does not have the equipment, nor the capacity, to handle bulk commodity cargoes such as potash, food grains, or coal. ($1 = 1.3578 Canadian dollars) Sign up here. https://www.reuters.com/world/americas/why-canadian-freight-rail-halt-would-roil-north-american-supply-chains-2024-08-21/