THE ECONOMY

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Re: THE ECONOMY

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CNBC

"Lael Brainard slams food companies for ‘shrinkflation’ as White House attacks price gouging"


Rebecca Picciotto @BECCPICC

PUBLISHED TUE, FEB 13 2024

KEY POINTS

* Lael Brainard blamed higher consumer prices on “shrinkflation,” amplifying President Biden’s latest line of attack against corporate price gouging.

* Despite the White House touting a recovering economy, consumers have yet to feel the relief and have blamed Biden for it, which has weighed on the president’s 2024 reelection bid.

* Consumer brands like Coca-Cola, PepsiCo, Procter & Gamble and more have raised prices over the past year to help keep profits afloat.


National Economic Council Director Lael Brainard on Tuesday blamed higher consumer prices on “shrinkflation,” doubling down on the latest battlefront of President Joe Biden’s corporate pressure campaign.

“If you look at some of the staples, like eggs or milk, they have come down."

"But consumer brands, instead of actually lowering prices, they’ve shrunk packaging,” Brainard said on CNBC’s “Money Movers.”

“That’s the shrinkflation that the president is really calling attention to.”


Brainard’s comments came hours after the consumer price index showed inflation trending above expectations, coming in 0.3% higher in January.

In particular, food prices slid up 0.4% during the month.

Consumer brands like Coca-Cola, PepsiCo, Procter & Gamble and more have raised prices over the past year to keep profits afloat.

Shrinkflation, the practice of reducing product sizes while keeping prices the same, is Biden’s latest line of attack against corporations, which he debuted on Super Bowl Sunday.

Both the White House and Biden’s 2024 reelection campaign have touted inflation recovery as a key accomplishment of his economic agenda, dubbed Bidenomics.

But consumers have yet to feel the relief on their wallets and they blame Biden for it, according to recent polls.

Instead, Biden has pointed the finger at corporate price-gouging tactics, which he says are the real driver of sticky high prices.


“The president is going to continue emphasizing that input costs have come down, supply chains have healed,” Brainard said.

“He’s going to keep calling on corporations to pass those savings on to the American consumer.”

https://www.cnbc.com/2024/02/13/feds-la ... attle.html
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Re: THE ECONOMY

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The Financial Times

"Fed governor plays down inflation risks as ‘transitory surge’ - Lael Brainard says central bank should be ‘patient’ in pursuing loose monetary policy"


James Politi in Washington and Colby Smith in New York

MAY 11 2021

A senior Federal Reserve official has called on the US central bank to be “patient” in pursuing its ultra-loose monetary policy, dismissing inflation worries and highlighting “uneven” improvements in the labour market.

The comments by Lael Brainard, a Fed governor, suggest the US central bank is not ready to begin contemplating removing its support for the pandemic-hit US economy, even as growth picks up and consumer prices begin to rise.


They also indicate that senior Fed officials viewed last week’s weak jobs report for April as reinforcing their concerns that the acceleration in the US recovery this year remains uneven and fraught with uncertainty.

“The outlook is bright, but risks remain, and we are far from our goals."

"The latest employment report reminds us that realised outcomes can diverge from forward projections and underscores the value of patience,” Brainard said.

“Remaining patient through the transitory surge [in inflation] associated with reopening will help ensure that the underlying economic momentum that will be needed to reach our goals . . . is not curtailed by a premature tightening of financial conditions.”

The monetary policymaker’s comments come against the backdrop of higher energy prices and mounting evidence of supply-chain bottlenecks as economies globally begin to emerge from coronavirus-related lockdowns.

Investors have grown increasingly worried that the rise in consumer prices this year may be more pronounced than is at present expected, leading to more sustained inflation that may prompt the Fed to tighten monetary policy sooner than indicated by officials in their projections.

Brainard sought to quell those fears on Tuesday, highlighting that production-related issues would smooth out over time and that “supply-demand imbalances” in the in-person services sector would also be resolved within “a few quarters” as the vaccination campaign progressed and the economic reopening continued apace.


“To the extent that supply-chain congestion and other reopening frictions are transitory, they are unlikely to generate persistently higher inflation on their own,” she said.

“A persistent material increase in inflation would require not just that wages or prices increase for a period after reopening, but also a broad expectation that they will continue to increase at a persistently higher pace.”

The April jobs report, which showed the US economy adding 266,000 positions last month, sharply lower than its pace of 770,000 jobs in March, was far weaker than projected by most economists.

“[The data] reminds us that while there are good reasons to expect the number of jobs and the number of people wanting to work will make a full recovery, it is unlikely they will recover at the same pace,” she said.

While some economists, business groups and Republican lawmakers pointed to enduring federal unemployment benefits as a key reason why the demand for labour appeared to be outpacing the supply of labour from workers, Brainard pointed to “virus-related impediments” as the main reason why businesses were facing challenges hiring people.

She said these included health and safety concerns, gaps in childcare and public transport weaknesses.

“There is good reason to expect a strong rebound in employment over coming quarters, although the different forces affecting demand and supply may lead to uneven rates of progress,” said Brainard, a former Obama administration official and a Democrat.

“But today, by any measure, employment remains far from our goals.”

https://www.ft.com/content/98c211f4-f09 ... 3422b6a539
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Re: THE ECONOMY

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REUTERS

"US considering more than $10 billion in subsidies for Intel, Bloomberg reports"


Reuters

February 16, 2024

Feb 16 (Reuters) - The Biden administration is in talks to award more than $10 billion in subsidies to Intel Corp, Bloomberg News reported on Friday, citing people familiar with the matter.

Negotiations are underway, and Intel's award package will likely include both loans and direct grants, according to the report.

The U.S. Department of Commerce, which oversees the disbursement of CHIPS Act funds, and Intel declined to comment.

The department has already announced two smaller Chips Act grants and U.S. Commerce Secretary Gina Raimondo said earlier this month that her department planned to make several funding awards within two months from the government's $39 billion program to boost semiconductor manufacturing.

The semiconductor fund is intended to subsidize chip production and related supply chain investments, and the awards will help build factories and increase production.

Intel plans to spend tens of billions of dollars to fund chip factories at longtime sites in Arizona and New Mexico, along with a new site in Ohio that the Silicon Valley company says could become the world's largest chip plant.

But the Wall Street Journal reported earlier this month that Intel planned to delay completion of the Ohio site until 2026 due to a slowdown in the chip market and a slow rollout of federal dollars.

It remains unclear whether a wave of federal dollars this year would speed those plans back up, or the plans of Taiwan Semiconductor Manufacturing Co, which has also applied for U.S. funding and whose chip factory under construction in Arizona has been delayed.

Micron and Samsung Electronics are also constructing new chip factories in the U.S. and have applied to the program.

Reporting by Stephen Nellis in San Francisco and Mrinalika Roy in Bengaluru; Editing by Anil D'Silva and Rosalba O'Brien

https://www.reuters.com/technology/us-c ... 024-02-16/
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Re: THE ECONOMY

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REUTERS

"US awards $1.5 bln to GlobalFoundries for semiconductor production"


By Doina Chiacu and David Shepardson

February 19, 2024

WASHINGTON, Feb 19 (Reuters) - The U.S. government is awarding $1.5 billion to GlobalFoundries to subsidize semiconductor production, the first major award from a $39 billion fund approved by Congress in 2022 to bolster domestic chip production.

GlobalFoundries, the world's third-largest contract chipmaker, will build a new semiconductor production facility in Malta, New York, and expand existing operations there and in Burlington, Vermont, according to a preliminary agreement with the Commerce Department.

The department in January announced a $162 million planned award to Microchip Technology and $35 million to a BAE Systems facility in New Hampshire in December.

The $1.5 billion GlobalFoundries grant will be accompanied by $1.6 billion in available loans, with the funding expected to generate $12.5 billion in overall potential investment across the two states, the department said.

"The chips that GlobalFoundries will make in these new facilities are essential chips to our national security," Commerce Secretary Gina Raimondo told reporters Sunday.

Raimondo told Reuters this month the agency is in active talks with numerous applicants and expects to make several announcements by the end of March.

"We're in the process of really complicated, challenging negotiations with these companies," Raimondo told Reuters.

"These are highly complex, first-of-their-kind facilities."

"The kind of facilities that TSMC, Samsung, Intel, are proposing to do in the United States -- these are new-generation investments -- size, scale complexity that's never been done before in this country."

The GlobalFoundries chips are used in satellite and space communications and the defense industry along with blind spot detection and collision warnings in vehicles, along with Wi-Fi and cellular connections.

"As an industry, we now need to turn our attention to increasing the demand for U.S.-made chips, and to growing our talented U.S. semiconductor workforce," GlobalFoundries CEO Thomas Caulfield said in a statement.

GlobalFoundries opened a $4 billion semiconductor fabrication plant in Singapore in September, as part of a major global manufacturing expansion.

The Malta facility expansion will secure a stable supply of chips for auto suppliers and manufacturers, including General Motors, Raimondo added.

GlobalFoundries and GM on Feb. 9 announced a long-term deal for the automaker to secure U.S.-made processors that will help it avoid factory-halting chip shortages like ones during the COVID-19 pandemic.

"GlobalFoundries’ investment in New York both ensures a robust supply of semiconductors in the U.S. to help GM meet demand and supports U.S. leadership in automotive innovation," said General Motors President Mark Reuss.

The new facility in Malta will produce high-value chips that are not currently made anywhere in the United States, Raimondo added.

Reporting by Doina Chiacu and David Shepardson; Editing by Scott Malone, Chris Reese, Varun H K, Aurora Ellis and Nick Zieminski

https://www.reuters.com/technology/us-a ... 024-02-19/
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Re: THE ECONOMY

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THE CAPE CHARLES MIRROR FEBRUARY 19, 2024 AT 11:08 PM

Paul Plante says:

And talk about a “whole of government” approach to getting Joe Biden re-elected, notwithstanding that the Hatch Act, which Joe totally ignores, as if it, like every other law, does not apply to him, prohibits public officials from using their official authority or influence to interfere with or affect the results of an election or nomination, Joe has a “full court press” going, and here I am now talking about Lael Brainard, who Joe announced on February 14, 2023 as a key member of his economic team, with her serving as Director of Joe’s National Economic Council, with Joe telling us at that time that Lael was one of the country’s leading macroeconomists who was bringing Joe, who himself knows absolutely nothing about the subject, an extraordinary depth of domestic and international economic expertise, with her having previously served at CEA, NEC, the Treasury Department and the Federal Reserve, so that she is a trusted veteran across our economic institutions, which means she is politically reliable and can be trusted to say what needs to be said when it needs to be said, like now to get Joe re-elected, and according to Joe, who himself is totally clueless as to how everyday Americans live, unlike him, supposedly, Lael understands how the economy affects everyday people, which is horse****, plain and simple, because Lael is as clueless as is Joe Biden about how the economy affects everyday people, because like Joe, Lael Brainard, a Washington insider who began her political career in 1997, serving as deputy national economic advisor and deputy assistant to the president during the Clinton administration, where she helped build a new White House organization to address global economic challenges such as the Asian financial crisis and China’s accession to the World Trade Organization, doesn't have a clue as to how everyday people in America outside the Washington Beltway live.

Thereafter, having proved her political reliability, on March 23, 2009, Lael was nominated by Hussein Obama to serve as Under Secretary of the Treasury for International Affairs and after that, Hussein nominated her to the Federal Reserve Board of Governors in January 2014, being confirmed by the Senate by a vote of 61–31 on June 12, 2014, and beginning her term on June 16, 2014.

Then, on November 22, 2021, Joe Biden nominated Brainard to be the vice-chair of the Federal Reserve, with her initial nomination being returned to Joe on January 3, 2022, due to it expiring at the end of the year.

Undaunted, Joe simply renominated her the following day, so that on April 26, 2022, her nomination was confirmed by the Senate by a 52–43 vote, with all Democrats present and seven Republicans voting in favor of her confirmation.

And then, as was stated above, Lael was selected by Joe as Director of the National Economic Council, which was established in 1993 to advise the President on U.S. and global economic policy, it being part of the Executive Office of the President, and by Executive Order, the NEC has four key functions, those being to coordinate policy-making for domestic and international economic issues; to give economic policy advice to the President; to ensure that policy decisions and programs are consistent with the President’s economic goals; and to monitor implementation of the President’s economic policy agenda.

As to Lael’s lack of credibility, she was quoted in a Financial Times article titled “Fed governor plays down inflation risks as ‘transitory surge’ – Lael Brainard says central bank should be ‘patient’ in pursuing loose monetary policy” by James Politi in Washington and Colby Smith in New York on May 11, 2021, as follows:

A senior Federal Reserve official has called on the US central bank to be “patient” in pursuing its ultra-loose monetary policy, dismissing inflation worries and highlighting “uneven” improvements in the labour market.

end quotes

In the above article where I pondered whether it is truly necessary to be a loser and a fool to work in high levels of government in Washington, D.C., I was actually thinking of Lael Brainard at the time, based on those wrong-footed comments from her above, on inflation being transitory, who is now out there touting BIDE-O-NOMICS for Joe, as if we would believe a word she says after her telling us on May 11, 2021, six months before Joe nominated her to be the vice-chair of the Federal Reserve on November 22, 2021, that inflation was transitory when it was anything but.

And thereafter, in a July 19, 2021 speech, old Joe marked the first six months of his administration by celebrating the nation’s economy, which he hailed as experiencing “the fastest growth, I’m told, at this point in any administration’s history.”

Getting himself all puffed up with how great he and his administration are, Joe then got on a roll as follows:

“We also know that as our economy has come roaring back, we’ve seen some price increases,” Biden said.

“Some folks have raised worries that this could be a sign of persistent inflation.”

“But that is not our view.”

In a reference to Lael at that time, who is now out there on the campaign trail for Joe as his Director of the National Economic Council touting BIDE-O-NOMICS, Joe continued by saying, “Our experts believe, and the data shows, that most of the price increases we’ve seen are expected to be temporary.”

And two months later, in a Marketwatch article titled “Fed’s Brainard says spike in inflation this year is ‘transitory’” by Greg Robb on September 27, 2021, Lael was back reinforcing Joe Biden’s political message on inflation of July 19, 2021, as follows:

Federal Reserve Board Governor Lael Brainard on Monday laid out a strong case for the central bank to maintain low interest rates, saying that the spike seen in inflation this year was transitory and the labor market was far from healed.

“High inflation readings from the spring and early summer were disproportionately driven by a few sectors experiencing specific supply bottlenecks,” Brainard said.

“As those COVID related disruptions subside, most forecasters expect inflation to move back down towards our 2% long-run objective on its own.”

“That’s the sense in which currently high inflation is likely to be transitory,” Brainard said.

“I expect inflation to decelerate, and pre-COVID inflation dynamics to return when COVID disruptions dissipate,” Brainard said.

She said it is uncertain how fast inflation will slow down over the remainder of this year and next year.

end quotes

And how wrong she was!

Which got her promoted!

Welcome to the whacky world of American DICTATOR Joseph Robinette Biden, Junior, and boy, is it ever a doozy!

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Re: THE ECONOMY

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THE CAPE CHARLES MIRROR FEBRUARY 20, 2024 AT 7:28 PM

Paul Plante says:

Not being accountable to the American people, who in the grand Washingtonian scheme of things count for nothing in the BIG PICTURE, and not being held to account by Joe Biden himself, as he wants them out there telling us lies about Joe, while feeding us MISINFORMATION and DISINFORMATION about the economy, these public officials like Lael Brainard who are out there on the campaign trail for Joe, touting him and his
BIDE-O-NOMICS while blaming BIDENFLATION on corporate greed, this as that same alleged corporate greed helps fuel the Wall Street rally that the Biden campaign attributes to Joe’s BIDE-O-NOMICS, can feed us any bull**** they choose to feed us with impunity.

As to the Wall Street rally, which TEAM BIDEN is taking the credit for, as if BIDE-O-NOMICS is the cause of it, and Joe Biden the architect of it, we see that happening in a Fox News article titled “Lincoln Project adviser demands Democrats start calling Biden a ‘great president'” by Hanna Panreck on February 18, 2024, as follows:

Stuart Stevens, an adviser for the Lincoln Project, recently claimed Democrats need to start calling President Biden a “great president,” and not just a “better choice” than former President Trump.”

“A plea to my Democratic friends: It’s time to start calling Joe Biden a great president.”

“Not a good one.”

“Not a better choice than Donald Trump.”

“Joe Biden is a historically great president.”

“Say it with passion backed by the conviction that it’s true,” he wrote in an op-ed for the New Republic.

The president’s message has largely focused on Trump and making the election a choice between Biden and the former president, who they deem is a threat to democracy.

“Stop the nonsense that only a weak opponent gives Joe Biden a chance to win.”

“It’s more than wrong — it’s dangerous, completely misjudging Donald Trump’s strength,” Stevens wrote.

He cited strong unemployment numbers and the stock market hitting record highs, as well as student loan forgiveness for three million borrowers.

Stevens argued Biden “met the moment,” and told Democrats to “wake up and show some gratitude.”

end quotes

Show gratitude to Joe Biden?

NOT HARDLY!

In America, dude, we don’t do that groveling kind of bull****.

Joe Biden is beholden to we, the American people, not the other way around, as if this were the old Soviet Union and Joe Biden were instead the butcher Joe Stalin.

And why, pray tell, is the stock market up?

In an article titled “Wall Street ends higher, lifted by Uber, Lyft and Nvidia” by Noel Randewich and Johann M Cherian on February 14, 2024, this is what Reuters tells us:

Expectations the Fed will cut interest this year have fueled a rally on Wall Street in recent months that has sent the S&P 500 to record highs.

end quote

While in another Reuters article titled “Wall Street slides as hot producer price data crimps rate cut bets” by Carolina Mandl, Amruta Khandekar and Ankika Biswas on February 16, 2024, we are told as follows as to why there is a rally on Wall Street, to wit:

The S&P 500 closed above 5,000 for the fourth time this year thanks to robust corporate earnings and surging enthusiasm around artificial intelligence.

end quote

Robust corporate earnings?

How about OBSCENE PROFITS, people which takes us back to March 28, 2022, and a PRESS RELEASE by Bernie Sanders titled “NEWS: Senate Budget Committee Chairman Sanders Statement on President Biden’s Budget Proposal” where we have as follows on that same subject that is fueling Joe Biden’s stock market rally today, to wit:

WASHINGTON, March 28 – Chairman of the Senate Budget Committee, Sen. Bernie Sanders (I-Vt.), Monday issued the following statement after President Joe Biden released his fiscal year 2023 federal budget proposal:

I thank the President for submitting his budget proposal to Congress and I look forward to reviewing it closely.

At a time when corporations are making obscene profits by charging outrageously high prices for gas, food and rent, we need a budget that takes on the unprecedented corporate greed that is taking place in America today by enacting a windfall profits tax and preventing corporations from ripping off working families.

end quotes

HUH?

Preventing corporations from ripping off working families?

When is that supposed to happen, dude?

Which then takes us to Lael Brainard and her parroting Joe Biden’s claims of corporate greed fueling BIDENFLATION, as opposed to BIDE-O-NOMICS being the cause of BIDENFLATION, and here I am referring to a CNBC article titled “Lael Brainard slams food companies for ‘shrinkflation’ as White House attacks price gouging” by Rebecca Picciotto on February 13, 2024 to wit:

“If you look at some of the staples, like eggs or milk, they have come down.”

“But consumer brands, instead of actually lowering prices, they’ve shrunk packaging,” Brainard said on CNBC’s “Money Movers.”

“That’s the shrinkflation that the president is really calling attention to.”

Brainard’s comments came hours after the consumer price index showed inflation trending above expectations, coming in 0.3% higher in January.

In particular, food prices slid up 0.4% during the month.

Consumer brands like Coca-Cola, PepsiCo, Procter & Gamble and more have raised prices over the past year to keep profits afloat.

Shrinkflation, the practice of reducing product sizes while keeping prices the same, is Biden’s latest line of attack against corporations, which he debuted on Super Bowl Sunday.

Both the White House and Biden’s 2024 reelection campaign have touted inflation recovery as a key accomplishment of his economic agenda, dubbed Bidenomics.

But consumers have yet to feel the relief on their wallets and they blame Biden for it, according to recent polls.

Instead, Biden has pointed the finger at corporate price-gouging tactics, which he says are the real driver of sticky high prices.

“The president is going to continue emphasizing that input costs have come down, supply chains have healed,” Brainard said.

“He’s going to keep calling on corporations to pass those savings on to the American consumer.”

end quotes

Joe Biden is going to keep calling on corporations to pass those savings on to the American consumer?

At the expense of Joe’s Wall Street rally?

Don’t hold your breath, because it is not going to happen?

And now it is time to break for station identification. but don’t touch that dial, because we will be right back!

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Re: THE ECONOMY

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REUTERS

"US inflation data for January made Fed's job 'harder,' Barkin says"


By Howard Schneider

February 21, 2024

WASHINGTON, Feb 21 (Reuters) - Inflation data in January, with consumer and wholesale prices rising faster than anticipated, complicate upcoming U.S. central bank interest rate decisions, Richmond Federal Reserve President Thomas Barkin said on Wednesday.

The reports released last week "underline the challenge we have had in the recent data," with a slowdown of inflation dependent on falling goods prices, while shelter and services inflation has remained sticky, Barkin said in an interview with Sirius XM.

Though he said he was reluctant to put "too much weight" on January data, in particular because of seasonal measurement issues, "it definitely did not make things easier."

"It made things harder."

"You do worry that when the goods price deflation cycle ends you are going to be left with shelter and services higher than you like," Barkin said.

The pace of overall consumer price inflation eased in January, to a 3.1% year-over-year pace compared to 3.4% in December.

But an underlying "core" measure, stripped of volatile food and energy components, remained unchanged at 3.9%; producer price inflation was also stronger than anticipated over the month, as was job and wage growth.

Those numbers were released after the Fed's Jan. 30-31 meeting at which officials held the benchmark overnight interest rate steady in the 5.25%-5.50% range that was set in July, but also opened the door to rate cuts once they had gained "greater confidence" that inflation was "moving sustainably" back to their 2% target.

Minutes of that meeting, due to be released at 2 p.m. on Wednesday, will be read carefully for further details on what those phrases might mean, and how deeply policymakers may have been split among those ready to cut rates sooner rather than later.

Comments by Fed Chair Jerome Powell after last month's policy meeting all but ruled out a rate cut at the March 19-20 gathering.

If there was a constituency for an immediate rate reduction, the minutes of the January meeting would reflect that.

The detailed account of that meeting may also outline the start of a discussion about how and when to end the ongoing drawdown of Fed asset holdings that were increased during the depths of the coronavirus pandemic as a way to keep interest rates anchored at low levels.

Barkin, a voter on interest rate policy this year, did not offer details in his interview on how long he feels the current policy rate may need to remain in place.

While saying he found the last year of falling inflation and continued low unemployment a "remarkable" outcome, he said he also felt it was too early to say that a "soft landing" in which inflation falls without triggering a painful recession and large job losses was assured.

"We still have a ways to go," he said.

"We are not on the ground yet."

Reporting by Howard Schneider; Editing by Andrew Heavens and Paul Simao

https://www.reuters.com/markets/us/us-i ... 024-02-21/
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REUTERS

"Fed worried about cutting rates too soon, minutes of January meeting show"


By Howard Schneider and Lindsay Dunsmuir

February 21, 2024

WASHINGTON, Feb 21 (Reuters) - The bulk of policymakers at the Federal Reserve's last meeting were concerned about the risks of cutting interest rates too soon, with broad uncertainty about how long borrowing costs should remain at their current level, according to the minutes of the Jan. 30-31 session.

"Participants highlighted the uncertainty associated with how long a restrictive monetary policy stance would need to be maintained" to return inflation to the U.S. central bank's 2% target, said the minutes, which were released on Wednesday.

Whereas "most participants noted the risks of moving too quickly to ease the stance of policy," only "a couple ... pointed to downside risks to the economy associated with maintaining an overly restrictive stance for too long."

U.S. stocks were trading lower following the release of the minutes before recovering ground later in the session, while the U.S. dollar was little changed against a basket of currencies.

U.S. Treasury yields rose.

The minutes seemed to reinforce the recent message of Fed policymakers that they would be in no hurry to deliver on rate cuts that officials still expect to begin sometime this year.

In comments aired earlier on Wednesday on SiriusXM, Richmond Fed President Thomas Barkin cited concerns about persistent inflation for service industries and housing, and said data released since the central bank's last meeting, showing strong job growth and stronger inflation than anticipated, made any rate-cut call "harder."

"It definitely did not make things easier."

"It made things harder," Barkin said.

Top U.S. central bank officials, including Fed Vice Chair Philip Jefferson and Fed Governors Lisa Cook and Christopher Waller, may help further sketch out how the recent data may influence the discussion about possible rate cuts when they speak on Thursday.

"It is clear that the message from the minutes, coupled with Fed speakers out in force, is that they are concerned about moving too quickly, before they declare a final victory in quelling inflation."

"Given the uptick in prices, the Fed's concerns appear valid," said Quincy Krosby, chief global strategist at LPL Financial.

Data released last week showed underlying, or "core," consumer inflation remained unchanged at 3.9% annually, led by rising prices for housing.

'NOTABLE' RISKS

While Fed officials say they are confident the central bank's policy rate can be lowered later this year from the 5.25%-5.50% range maintained since July, the Jan. 31 policy statement was explicit about the need for "greater confidence" in falling inflation before rate cuts can commence.

The minutes cited concerns among "some" Fed officials that progress on inflation could outright stall if the economy continues to perform as strongly as it has, while Fed staff suggested some weak points in an economy policymakers like to characterize as unnaturally resilient - with growth above potential and an historically low 3.7% unemployment rate.

In presentations to policymakers, Fed staff took note of a variety of risks, from "notable" vulnerabilities in the U.S. financial system, including falling commercial real estate prices, to the possibility that "reducing inflation could take longer than expected," the minutes said.

That, in turn, might "slow the pace of real activity" more than expected.

After the publication of the minutes, investors in contracts tied to the Fed's benchmark overnight interest rate continued to see the central bank beginning to reduce borrowing costs in June.

The minutes also noted upcoming decisions on when and how to stop reducing the size of the Fed's balance sheet, with "many participants" suggesting a start to "in-depth" discussions on balance sheet policy at the March policy meeting.

The rapid easing in financial conditions during the fourth quarter, after the Fed began signaling that its rate hikes were likely over, had largely run its course by the time officials gathered at the end of January.

Since then, the picture has been mixed: Treasury yields have increased by more than a quarter of a percentage point, bringing an end for the time being to a decline in consumer and corporate borrowing costs, but stocks have continued to march to record highs.

Given what seemed to be falling inflation on the horizon, Ryan Sweet, chief U.S. economist at Oxford Economics, said the concern of Fed policymakers about cutting rates too soon "seems odd," and suggested that risks may be tilting towards overly tight policy beginning to weigh on the economy.

"If the central bank waits for clear signs that the labor market, or the broader economy, is deteriorating, they will be behind the curve," Sweet wrote.

"This could turn a 'soft landing' into a bumpier one."

Reporting by Howard Schneider; Editing by Paul Simao

https://www.reuters.com/markets/us/fed- ... 024-02-21/
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Re: THE ECONOMY

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REUTERS

"Global debt hits new record high at $313 trillion - IIF"


By Jorgelina Do Rosario

February 21, 2024

LONDON, Feb 21 (Reuters) - Global debt levels hit a new record high of $313 trillion in 2023, with developing economies scaling a fresh peak for the ratio of debt to their gross domestic product, a study showed.

The Institute of International Finance (IIF), a financial services trade group, said on Wednesday that global debt surged by over $15 trillion in the last quarter of 2023 year-on-year.

The figure stood at around $210 trillion almost a decade ago, according to the data.

"Around 55% of this rise originated from mature markets, mainly driven by the U.S., France, and Germany," said the IIF in its Global Debt Monitor, adding the global debt-to-GDP ratio declined by around 2 percentage points to nearly 330% in 2023.

While the reduction in this ratio was "particularly notable" in developed countries, some emerging markets saw fresh high in the reading that indicates a country's ability to pay back debts.

India, Argentina, China, Russia, Malaysia and South Africa registered the largest increases, signalling potential growing challenges in debt repayments.

"With Fed rate cuts on the horizon, uncertainty surrounding the trajectory of U.S. policy rates and the U.S. dollar could further increase market volatility and induce tighter funding conditions for countries with relatively high reliance on external borrowing," the report said.

The IIF added that global economy is proving "resilient" to the volatility in borrowing costs, leading to a rebound in investor sentiment.

The appetite for borrowing is growing particularly in emerging markets in 2024, as international sovereign bond issuance volumes have increased.

The start of the year - generally a busy time for debt sales of all sorts - has seen Saudi Arabia, Mexico, Hungary, Romania and a raft of others deliver some big ticket bond issuance, which hit an all-time record for January at $47 billion.

"If sustained, this upbeat sentiment should also reverse the ongoing deleveraging by European governments and non-financial corporates in mature markets, both of which are now less indebted than in the run-up to the pandemic."

The IIF, however, voiced its concern over a potential revival of inflationary pressures, which could result in higher borrowing costs.

Also, geopolitics had rapidly emerged as a "structural market risk", the IIF said, with deeper fragmentation raising concerns about fiscal discipline across the globe.

"Government budget deficits are still running well above pre-pandemic levels, and an acceleration in regional conflicts could trigger an abrupt surge in defense spending."

Reporting by Jorgelina do Rosario, editing by Karin Strohecker and Ros Russell

https://www.reuters.com/business/global ... 024-02-21/
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Re: THE ECONOMY

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REUTERS

"US smartphone sales slump in January on fewer device upgrades, Counterpoint finds"


Reuters

February 21, 2024

Feb 21 (Reuters) - U.S. smartphone sales plunged 10% in January on weak demand for cheaper Android devices and as customers delayed upgrades ahead of the launch of Samsung Electronics' Galaxy S24 series, according to data from Counterpoint Research.

The research firm said U.S. smartphone sales last month were nearly half of the record levels seen in the same period in 2017, underscoring fears that the market may have peaked.

"Tough times in the volume-driven low-end coupled with delayed upgrades in anticipation of new products drove the market lower," said Maurice Klaehne, senior analyst at Counterpoint Research.

Smartphone sales have waned after the pandemic-driven boom, as an uncertain economic outlook and lack of major new features led consumers to stick with their existing devices.

Samsung has tried to drum up interest for its new Galaxy smartphones, which went on sale on Jan. 17, by offering multiple artificial intelligence (AI) functions including a two-way voice translation in real-time.

Counterpoint said the S24 series has performed well in the U.S. market during the initial 1-2 weeks of launch, and that it could spark a rebound in smartphone sales in February.

Apple, meanwhile, continued to gain market share in the U.S. last month, thanks to promotional offers for its iPhone 15 series, and as cost-conscious consumers sought its older iPhone 11 and iPhone 12 devices, whose prices have come down.

"This combination is enabling Apple to maintain stability in a market experiencing double-digit declines," Counterpoint said.

Reporting by Harshita Mary Varghese in Bengaluru; Editing by Vijay Kishore and Devika Syamnath

https://www.reuters.com/technology/us-s ... 024-02-21/
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