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September 18, 2022 – Page 2 – rdspinvestments

September 18, 2022

U.S. bank regulators consider new rules for regional banks in times of crisis -WSJ

Stock Markets 1 hour ago (Sep 18, 2022 09:45AM ET)

U.S. bank regulators consider new rules for regional banks in times of crisis -WSJ© Reuters. FILE PHOTO: People walk wearing masks outside The Federal Reserve Bank of New York in New York City, U.S., March 18, 2020. REUTERS/Lucas Jackson/File Photo/File Photo

(Reuters) – A group of bank regulators appointed by U.S President Joe Biden is considering new rules which will require big regional banks to add financial cushions that can be used in times of crisis, the Wall Street Journal reported on Sunday.

The new steps include the regional banks raising long-term debt that will help absorb losses in cases of insolvency, the WSJ reported adding three people familiar with the matter.

The WSJ report comes over a week after U.S. Federal Reserve chief Michael Barr said that there soon may be tougher rules on large regional lenders after a ‘holistic’ review of bank capital requirements is concluded. (This story refiles to make clear WSJ attribution in headline)

Biden declares emergency for Puerto Rico due to Tropical Storm Fiona

Biden declares emergency for Puerto Rico due to Tropical Storm Fiona© Reuters. FILE PHOTO: A small boat tugs a small sailboat to safety as tropical storm Fiona approaches in Cabo Rojo, Puerto Rico September 17, 2022. REUTERS/Ricardo Arduengo

WASHINGTON (Reuters) – U.S. President Joe Biden on Sunday approved an emergency declaration for Puerto Rico as Tropical Storm Fiona headed toward the island at near hurricane strength.

The emergency declaration authorizes Federal Emergency Management Agency (FEMA) to coordinate disaster relief efforts and provide emergency protective measures, the White House said in a statement. https://

Fiona was nearing hurricane strength and torrential rains and mudslides were expected across Puerto Rico and the Dominican Republic, the National Hurricane Center said on Sunday.

Teva Pharm expects to start paying U.S. opioid settlement in 2023

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Stock Markets 1 hour ago (Sep 18, 2022 01:40PM ET)

Teva Pharm expects to start paying U.S. opioid settlement in 2023© Reuters. FILE PHOTO: The CEO of Teva Pharmaceutical Industries Kare Schultz speaks during a news conference to discuss the company’s 2019 outlooks in Tel Aviv, Israel February 19, 2019. REUTERS/Amir Cohen/File Photo

By Steven Scheer

TEL AVIV (Reuters) – Teva Pharmaceutical Industries (NYSE:) expects to finalise an opioid settlement in the United States by year-end and start paying in 2023, its chief executive said on Sunday, while confirming he was unlikely to renew his contract next year.

After years of negotiations, Israel-based Teva in July proposed a $4.35 billion nationwide settlement – mostly cash and partly medicines that will amount to $300 million to $400 million over 13 years – to resolve its opioid lawsuits.

U.S. states, cities and counties filed more than 3,000 lawsuits against opioid manufacturers, distributors and pharmacies, accusing them of playing down the risks of addiction and failing to stop pills from being diverted for illegal use.

CEO Kare Schultz said Teva was working on legal wording that should be wrapped up by the end of September. It then needs approval from states and subdivisions within states.

“When they opt in, once that is all done … then it goes into force and that means the first payments happen next year and go on for 13 years,” Schultz told a news conference. “So, by the end of the year, you should have this clarification that it all comes together and we will start paying next year.”

Teva has denied wrongdoing, saying it sold legal medication that was approved for treatment of pain.

The U.S. opioid crisis has caused more than 500,000 overdose deaths over the past two decades, including more than 80,000 in 2021 alone, according to government data.

Schultz, who took over as CEO in December 2017, confirmed he was unlikely to extend it his contract which expires on Nov. 1 2023, saying he will be 62. But he said he would like to stay on the company’s board.

He said Teva would cut costs further by closing some of its sites. Since 2017 it has reduced the number of manufacturing plants to 53 from 80 and it plans to close another 10 in the next few years.

Teva’s New York listed shares are up 10% so far in 2022 at $8.81 but well off a peak of $72 in 2015.

Questioning the low share price, Schultz noted that Teva has a price-earnings ratio of about 3.5, whereas a normal rate should be 10. “Teva has one of the lowest P/E ratios of any share I know, and the business is actually very stable, that will grow long term and generate cash – so it’s very good for long term investors,” Schultz said.

“Right now we are worth a third of what you will see the normal value if we didn’t have these risk factors.”

He suggested that the low share price largely stemmed from high debt, which has come down to $20 billion from $34 billion, and the opioid litigation.

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Hurricane Fiona swamps Puerto Rico, knocking out power to island

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Commodities 3 hours ago (Sep 19, 2022 04:22AM ET)

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Hurricane Fiona swamps Puerto Rico, knocking out power to island© Reuters. A small boat tugs a small sailboat to safety as tropical storm Fiona approaches in Cabo Rojo, Puerto Rico September 17, 2022. REUTERS/Ricardo Arduengo

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By Ivelisse Rivera and Ezequiel Abiu Lopez

SAN JUAN, Puerto Rico/SANTO DOMINGO, Dominican Republic (Reuters) -Hurricane Fiona left most of Puerto Rico without power on Sunday, causing catastrophic flooding and landslides on the island before barreling toward the Dominican Republic, a government agency said.

The storm, hitting Puerto Rico five years after Hurricane Maria devastated the island, ripped up asphalt from roads, swept away a major road bridge, closed airports, swamped cars and dumped rain in such quantities that some rivers were rising 20 feet in just hours, according to eyewitnesses.

“This has been catastrophic,” Puerto Rico Governor Pedro Pierluisi said at a news conference in the capital San Juan.

Carmen Yulín Cruz, the former mayor of San Juan, said on Twitter (NYSE:) that many believed the rainfall was worse than Hurricane Maria in 2017.

The center of the storm made landfall on the southwestern coast of Puerto Rico near Punta Tocon at 3:20 p.m. ET (1920 GMT) with maximum sustained winds of about 85 miles (140 kilometers) per hour, clearing the threshold for a Category 1 hurricane, the National Hurricane Center said.

Power had begun to be restored to some areas by Sunday night, officials said, but reconnecting the whole island would take days.

Electricity had been out completely across the island of 3.3 million people, said LUMA Energy, operator of the island’s grid, and the Puerto Rico power authority.

Puerto Rico’s grid remains fragile after Hurricane Maria in September 2017 caused the largest blackout in U.S. history. In that Category 5 storm, which killed more than 3,000 people, 1.5 million customers lost electricity with 80% of power lines knocked out. Thousands of Puerto Ricans still live under makeshift tarpaulin roofs.

At a news conference in the capital San Juan on Sunday night, LUMA spokesperson Abner Gomez said the entire electrical system had been shut down to protect its infrastructure. Some power was being restored, with priority given to hospitals and other critical community services, he said.

Several landslides had been reported, officials said. Roads were closed and a highway bridge in Utuado, a town in the center of the island, had been washed away by a flooding river. Puerto Rico’s ports were closed and flights out of the main airport canceled.

Torrential rains and mudslides were also forecast for the Dominican Republic as the storm progresses northwestward, with the Turks and Caicos Islands likely facing tropical storm conditions on Tuesday, the NHC said.

By Sunday night, aid agencies in the Dominican Republic began evacuating residents from high-risk areas in the east of the country. President Luis Abinader, the Dominican leader, postponed a trip to New York to participate in the United Nations General Assembly, while the start of the Dominican school year was pushed back to Wednesday from Monday.

U.S. President Joe Biden approved an emergency declaration for Puerto Rico on Sunday, authorizing the Federal Emergency Management Agency to coordinate disaster relief and provide emergency protective measures.

U.S. Energy Secretary Jennifer Granholm said agency officials deployed to Puerto Rico would assist with restoration efforts “as it becomes safe to do so.”

Denise Rios, who lives in the southwestern town of Hormigueros, said she was left without power following strong gusts of wind and rain that began around noon on Sunday.

“Since then it hasn’t stopped,” she said. “It is raining heavily and the wind is blowing hard. I’m calm, but alert.”

A wide swathe of Puerto Rico was forecast to get 12 to 16 inches (30 to 40 cm) of rain, while parts could be hit by up to 25 inches (63.5 cm), according to the NHC.

Authorities opened more than 100 shelters and closed beaches and casinos.

One death tied to Fiona has been reported so far, in the French Caribbean island of Guadeloupe. Authorities said a man was found dead on Saturday after his house was swept away by floods. France will recognize a state of natural disaster for Guadeloupe, President Emmanuel Macron said on Twitter on Sunday.

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Top U.S. general urges vigilance as Russia weighs Ukraine setbacks

Stock Markets 6 hours ago (Sep 18, 2022 03:50PM ET)

Top U.S. general urges vigilance as Russia weighs Ukraine setbacks© Reuters. FILE PHOTO: A Ukrainian serviceman stands at a Polish self-propelled howitzer Krab, amid Russia’s attack on Ukraine in Kharkiv region,Ukraine September 13, 2022. REUTERS/Gleb Garanich

By Phil Stewart

A MILITARY BASE IN POLAND (Reuters) -The top U.S. general cautioned on Sunday it remained unclear how Russia might react to the latest battlefield setbacks in Ukraine and called for increased vigilance among U.S. troops as he visited a base in Poland aiding Ukraine’s war effort.

The remarks by U.S. Army General Mark Milley, chairman of the Joint Chiefs of Staff, were a reminder of the risks of the conflict intensifying as the United States and its NATO allies aid Ukraine from a distance and Kyiv wages a so-far successful counter-offensive against Russian forces.

“The war is not going too well for Russia right now. So it’s incumbent upon all of us to maintain high states of readiness, alert,” Milley said in Warsaw after the base visit.

Milley reviewed the base’s air defenses, which include Patriot missile batteries that would be a last line of defense should Russia decide to attack the base – risking war with the U.S.-led NATO military alliance.

Milley said he was not suggesting U.S. troops in Europe were under any increased threat, but said they had to be ready.

“In the conduct of war, you just don’t know with a high degree of certainty what will happen next.”

Reporters traveling with Milley were asked not to publish the name of the base or describe its location.

Milley was also briefed on critical support being provided by U.S. forces at the base to Ukraine, including remote maintenance assistance via secure teleconferencing for the billions of dollars in U.S.-provided weaponry.

BEYOND REPAIR?

Some members of a roughly 50-member repair team showed reporters images of damaged U.S.-provided arms, including M777 howitzers, that in the West would have long been considered beyond the scope of repair. Not in Ukraine.

“They’re not willing to scrap it,” one soldier said, recalling artillery with shrapnel damage and sometimes completely worn out from firing round after round against Russian troops.

But Ukrainians are managing to bring these weapons back into battle, thanks to guidance from U.S. forces and manufacturing prowess by Kyiv allowing it to reverse-engineer spare parts.

Since the program began in June, more than a dozen teleconference channels have been set up with over 100 Ukrainian contacts. But priority support is being given to the M777s and to the high mobility artillery rocket systems (HIMARS), which have been central to Ukraine’s counter-offensive nearly seven months since Russian forces invaded.

“Combat power for Ukraine is staying at the level it is because of America’s investment in the sustainment,” the soldier said.

PUTIN’S OPTIONS

The rout of Russian President Vladimir Putin’s forces in northeastern Ukraine’s Kharkiv region a week ago has prompted unusually strong public criticism from Russian military commentators.

Putin has brushed off the counter-offensive but said on Friday that Moscow would respond more forcefully if its troops were put under further pressure.

Such repeated threats have raised concerns he could at some point turn to small nuclear weapons, chemical warfare, or perhaps mobilize Russia’s reserves, who number around 2 million men with military service within the past five years. Russian government officials have dismissed Western suggestions that Moscow would use tactical nuclear weapons in Ukraine.

Milley did not speculate on Putin’s next steps but cautioned the war was in a new phase in which Ukrainian forces have seized the strategic initiative.

“Because of that, we have to very closely watch what Russia’s reactions to that will be.”

Volkswagen targets 75 billion euro valuation in landmark Porsche IPO

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Stock Markets 2 hours ago (Sep 18, 2022 05:50PM ET)

Volkswagen targets 75 billion euro valuation in landmark Porsche IPO© Reuters. FILE PHOTO: An employee of German car manufacturer Porsche fixes a Porsche 911 Carrera 4S label at the Porsche factory in Stuttgart-Zuffenhausen, Germany, February 19, 2019. REUTERS/Ralph Orlowski/File Photo

By Jan Schwartz and Victoria Waldersee

HAMBURG/BERLIN (Reuters) -Volkswagen is targeting a valuation of up to 75 billion euros ($75.1 billion) for luxury sportscar maker Porsche, it said on Sunday, in what will be Germany’s second-largest initial public offering (IPO) in history.

Volkswagen (ETR:) will price preferred shares in the flotation of Porsche AG at 76.50 euros to 82.50 euros per share, the carmaker said, translating into a valuation of 70 billion to 75 billion euros.

At the upper end of the range, first reported by Reuters, it would become Europe’s third largest IPO on record, according to Refinitiv data. Trading will begin on the Frankfurt Stock Exchange on Sept. 29, Volkswagen said.

As part of the listing, 911 million Porsche AG shares will be divided into 455.5 million preferred shares and 455.5 million ordinary shares. Up to 113,875,000 preferred shares, carrying no voting rights, will be placed with investors over the course of the IPO.

The sovereign wealth funds of Qatar, Abu Dhabi and Norway as well as mutual fund company T. Rowe Price will subscribe up to 3.68 billion euros worth of preferred shares as cornerstone investors, at the upper end of the valuation, Volkswagen said.

“We are now in the home stretch with the IPO plans for Porsche and welcome the commitment of our cornerstone investors,” Volkswagen Chief Financial Officer and Chief Operating Officer Arno Antlitz said.

In line with Volkswagen’s agreement earlier in September with its largest shareholder Porsche SE , 25% plus one ordinary share in the sportscar brand, which do carry voting rights, will go to Porsche SE at the price of the preferred shares plus a 7.5% premium.

Porsche SE, the holding firm controlled by the Porsche and Piech families, will finance the acquisition of the ordinary shares with debt capital of up to 7.9 billion euros, it said in a separate statement.

Total proceeds from the sale will be 18.1 billion to 19.5 billion euros. If the IPO goes ahead, Volkswagen will call an extraordinary shareholder meeting in December where it will propose to pay 49% of total proceeds to shareholders in early 2023 as a special dividend.

A stock exchange prospectus is expected to be published on Monday, after which institutional and private investors can subscribe to Porsche shares.

($1 = 0.9985 euros)

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Frugal is the new cool for young Chinese as economy falters

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Stock Markets 1 hour ago (Sep 18, 2022 06:11PM ET)

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Frugal is the new cool for young Chinese as economy falters© Reuters. People rest on stone barricades on a street, following the coronavirus disease (COVID-19) outbreak, in Shanghai, China, September 9, 2022. REUTERS/Aly Song

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By Albee Zhang and Tony Munroe

BEIJING (Reuters) – Before the pandemic, Doris Fu imagined a different future for herself and her family: new car, bigger apartment, fine dining on weekends and holidays on tropical islands.

Instead, the 39-year old Shanghai marketing consultant is one of many Chinese in their 20s and 30s cutting spending and saving cash where they can, rattled by China’s coronavirus lockdowns, high youth unemployment and a faltering property market.

“I no longer have manicures, I don’t get my hair done anymore. I have gone to China-made for all my cosmetics,” Fu told Reuters.

This new frugality, amplified by social media influencers touting low-cost lifestyles and sharing money-saving tips, is a threat to the world’s second-largest economy, which narrowly avoided contraction in the second quarter. Consumer spending accounts for more than half of China’s GDP.  

“We’ve been mapping consumer behaviour here for 16 years and in all of that time this is the most concerned that I’ve seen young consumers,” said Benjamin Cavender, managing director of China Market Research Group (CMR).

China’s ‘zero-COVID’ policy – including stringent lockdowns, travel restrictions and mass testing – has taken a heavy toll on the country’s economy. The government’s crackdown on big technology companies has also had an outsized effect on the young workforce.

Unemployment among people aged 16 to 24 stands at almost 19%, after hitting a record 20% in July, according to government data. Some young people have been forced to take pay cuts, for example in the retail and e-commerce sectors, according to two industry surveys. The average salary in 38 major Chinese cities fell 1% in the first three months of this year, data collated by online recruitment firm Zhilian Zhaopin show.

As a result, some young people prefer to save than splurge.

“I used to go see two movies every month, but I haven’t stepped inside a cinema since the pandemic,” said Fu, an avid movie fan.

Retail sales in China rose just 2.7% year-on-year in July, recovering to 5.4% in August but still well below the mostly 7%-plus levels during 2019, before the pandemic.

Almost 60% of people are now inclined to save more, rather than consume or invest more, according to the most recent quarterly survey by the People’s Bank of China (PBOC), China’s central bank. That figure was 45% three years ago.

Chinese households overall added 10.8 trillion yuan ($1.54 trillion) in new bank savings in the first eight months of the year, up from 6.4 trillion yuan in the same period last year.

That is a problem for China’s economic policymakers, who have long relied on increased consumption to bolster growth.

China is the only leading economy that cut interest rates this year, in an effort to spur growth. China’s big state-owned banks cut personal deposit rates on Sept. 15, a move designed to discourage saving and boost consumption.

Addressing the rise in people’s inclination to save, a PBOC official said in July that when the pandemic eases, the willingness to invest and consume will “stabilize and rise.”

The PBOC did not respond to Reuters requests for comment; neither did China’s Ministry of Commerce.

’10 YUAN DINNER’

After years of increasingly ardent consumerism fuelled by rising wages, easy credit and online shopping, a move toward frugality brings young people in China closer to their more cautious parents, whose memories of lean years before the economy took off have made them more inclined to save.

“Amid the tough job market and strong downward economic pressure, young people’s feelings of insecurity and uncertainty are something they never experienced,” said Zhiwu Chen, chair professor of finance at Hong Kong University Business School.

Unlike their parents, some are making a show of their thriftiness online.

A woman in her 20s in the eastern city of Hangzhou, who uses the handle Lajiang, has gained hundreds of thousands of followers posting more than 100 videos on how to make 10 yuan ($1.45) dinners on lifestyle app Xiaohongshu and streaming site Bilibili (NASDAQ:).

In one minute-long video with nearly 400,000 views, she stir-fries a dish made from a 4-yuan basa fillet, 5 yuan of frozen shrimp, and 2 yuan of vegetables, using a pink chopping board and pink rice cooker.

Social media discussions have sprung up to share money-saving tips, such as the ‘Live off 1,600 yuan a month challenge,’ in Shanghai, one of China’s most expensive cities.

Yang Jun, who said she was deep in credit card debt before the pandemic, started a group called the Low Consumption Research Institute on networking site Douban in 2019. The group has attracted more than 150,000 members. Yang said she is cutting spending and is selling some of her belongings on second-hand sites to raise cash.

“COVID-19 makes people pessimistic,” the 28-year-old said. “You can’t just be like before, spend all the money you make, and make it back again next month.” She said she is now out of debt.

Yang said she has cut out her daily Starbucks coffee. Fu said she switched her makeup powder brand from Givenchy to a Chinese brand called Florasis, which is about 60% cheaper.

French luxury brands leader LVMH, which owns Givenchy, and coffee giant Starbucks Corp (NASDAQ:) both said sales fell sharply in China in the latest quarter.

China has given no signal on when or how it will exit from its zero-COVID policy. And while policymakers have taken various measures in hopes of boosting consumption, from subsidies for car buyers to shopping vouchers, far more money and attention has been directed towards infrastructure as a way of stimulating the economy.

Stability has been the key theme for China’s policymakers this year, experts say, as President Xi Jinping gears up for a third leadership term at next month’s congress of the ruling Communist Party.

“In the past, when you had economic slowdown, consumers were more likely to feel that government policy is going to fix this problem very quickly,” said Cavender at CMR. “I think right now the challenge is when you interview younger consumers they really don’t know what the future holds.”

Fu, the marketing professional, said she has deferred plans to sell her two small apartments to buy a bigger one in a better school district for her son, and has given up for now on upgrading from her Volkswagen (ETR:) Golf.

“Why do I dare not upgrade my house and my car, even if I have the money?” she said. “Everything is unknown.”

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Dow Futures Tick Higher After Indices Post Their Worst Week Since June

Stock Markets 12 hours ago (Sep 18, 2022 07:34PM ET)

Dow Futures Tick Higher After Indices Post Their Worst Week Since June© Reuters.

By Oliver Gray

Investing.com – U.S. stock futures were trading slightly higher during Sunday’s evening deals, after major benchmark indices posted their greatest weekly losses in 3 months, with investors remaining cautious amid persistent inflation fears ahead of Federal Reserve’s two-day meeting and rate decision later this week.

By 19:10 ET (23:10 GMT) and were up 0.2% apiece, while were flat at 11,862.7.

Ahead in the week, market participants will be closely focused on the Federal Reserve’s , following a hotter-than-expected reading that boosted expectations for a third consecutive 0.75% rate hike, lifting to a target range of 3% to 3.25%.

Investors will also be monitoring and , as well as the and on Thursday.

On the corporate earnings front, companies including Darden Restaurants Inc (NYSE:), Costco Wholesale Corp (NASDAQ:), General Mills Inc (NYSE:), and Lennar Corporation (NYSE:) are slated to release results.

During Friday’s trade, the fell 139.4 points or 0.5% to 30,822.4, the dipped 28 points or 0.7% to 3,873.3, and the lost 104 points or 0.9% to 11,448.4.

On the bond markets, yields were at 3.451%.

‘Temporary’ disappears as BOJ contemplates accelerating inflation

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Economy 49 minutes ago (Sep 18, 2022 07:46PM ET)

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'Temporary' disappears as BOJ contemplates accelerating inflation© Reuters. FILE PHOTO: A man wearing a protective mask walks past the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020.REUTERS/Kim Kyung-Hoon/File Photo/File Photo

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By Leika Kihara

TOKYO (Reuters) -Something has gone missing from Bank of Japan statements about elevated inflation: the word “temporary”.

No longer signalling that robust price rises will be short-lived, the central bank might soon go further by saying they will become faster than expected for the rest of this year, driven in part by the yen’s slide to 24-year lows, said three sources familiar with its thinking.

The Bank of Japan (BOJ) still expected inflation to slow next year, but maybe not as much as previously thought, they said.

The implication is that the country’s ultra-easy monetary policy, holding both short- and long-term interest rates near zero, may not last as long as forecasters believe, though the sources said that, with the economy weak, the stimulus would not be withdrawn soon.

Most of 36 economists surveyed by the think tank Japan Center for Economic Research this month expected monetary policy to remain unchanged until the end of next year.

But one of the sources, describing BOJ internal debates, said: “Companies are passing on rising costs to households at a faster-than-expected pace. Inflation may not slow much next year if consumption holds up.”

Consumers’ inflation expectations are also heightening, and price rises in the deflation-prone country have clearly spread to items not directly affected by rising fuel costs.

Until June, BOJ officials, making speeches and internally discussing policy, frequently described underlying rises in inflation as “temporary”. But they stopped doing so in July, according to transcripts and minutes of the policy meetings.

While the speeches were public, few people, if any, noticed the tweak.

“It was probably not the best language to describe what was happening in the global and domestic inflation landscape,” a second source said on the word “temporary.”

Other central banks, notably the U.S. Federal Reserve, European Central Bank and the Bank of England, last year similarly said rising inflation would be only temporary. Caught off guard, now they have raised interest rates much further than they expected.

PRICE PRESSURE

Among the latest evidence in Japan of rising price pressures, annual core consumer inflation, which excludes fresh food but includes fuel costs, hit a seven-and-a-half year high of 2.4% in July, exceeding the BOJ’s 2% target for a fourth straight month.

The BOJ currently forecasts the rate will fall below 2% next year.

Nearly 80% of Japan’s listed food companies have either raised prices this year or plan to do so, four times the ratio of last year, according to a survey by private research firm Teikoku Databank.

These rises affect more than 20,000 food items, which will go up by an average of 14%. One-third of the increase is scheduled to take effect in October, a sign that inflationary pressure could intensify later this year.

Most BOJ policymakers now expect core consumer inflation to reach 3% in October, with some projecting the upward pressure to persist well into next year, the sources said.

A consumer price index that excludes both fresh food and fuel costs – closely watched by the BOJ as a key barometer of domestic demand – was 1.2% higher in July than a year earlier, marking the fourth straight month of annual gains.

Some BOJ officials saw a chance of inflation as measured by that index reaching 2% in coming months, the sources said.

They predicted that the stronger price outlook would lead to an upward revision to the BOJ’s inflation forecasts when the board next revises its quarterly projections in October.

The key would be whether wages would start to rise in response to the increasing cost of living. Only when wages rose faster would Japan experience a demand-driven, sustained increase in inflation that the BOJ is seeking to achieve.

CURRENCY MOVES

The role of the weakening yen, which is down nearly 20% so far this year, is becoming a focus for the BOJ.

“Currency moves are among key factors that affect the economy and prices. For the BOJ, the impact on prices warrants particular attention,” a third source said, signalling that rising inflationary pressure from the weak yen would be a key topic in the bank’s public communications in coming months.

There are early signs Japan is finally losing its sticky deflationary mindset. In August, more than 90% of households expected prices to increase over the following 12 months, a government survey showed, with nearly 60% projecting a rise of 5% or more.

But there is also uncertainty about Japan’s growth outlook as the U.S., European and Chinese economies face headwinds.

“Cost-push pressure is heightening at a degree never seen before, prodding firms to raise prices. Some profitable firms are raising wages, too,” said former BOJ board member Goushi Kataoka.

“The problem is that the global economy may enter a slump before this positive cycle gains momentum.”

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Oil Prices Rise as China Reopening Helps Demand Outlook

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Commodities 9 hours ago (Sep 18, 2022 09:10PM ET)

Oil Prices Rise as China Reopening Helps Demand Outlook© Reuters.

By Ambar Warrick

Investing.com– Oil prices started the week on a strong note as the lifting of COVID lockdowns in a major Chinese city boosted optimism over an eventual demand recovery in the world’s largest crude importer.

The Chinese megacity Chengdu – which was the biggest city to face COVID lockdowns after Shanghai earlier this year – is set to begin . The move is expected to boost economic activity in the city, with the resumption of public and private transport likely helping fuel demand.

London-traded rose 1% to $92.50 a barrel, while rose 1.2% to $85.81 a barrel by 20:49 ET (00:49 GMT). Both contracts were recovering from three consecutive weeks of losses, amid concerns over a possible global recession.

Oil prices plummeted from highs hit earlier this year, as lockdowns in China, coupled with rising inflation and interest rates severely dented the outlook for demand this year. Chinese demand in particular suffered greatly as industrial production was suspended across several major hubs.

Supply gluts caused by a steady drawdown from the U.S. Strategic Petroleum Reserve, and supply increases by Russia, also pulled prices off annual highs.

Focus this week is on a , where the central bank is widely expected to raise rates by 75 basis points and signal more tightening to come. The move is also expected after U.S. inflation data read higher than expected in August, indicating that inflationary pressures in the country are yet to ease.

Both these factors are set to weigh heavily on economic growth, potentially hurting crude demand in the country. They are also expected to boost the dollar, making crude expensive for overseas importers.

Oil prices fell sharply last week after the U.S. inflation , while speculation over increased Russian supply also weighed.

Still, global oil demand is expected to benefit going into winter, with high natural gas prices pushing more countries to adopt oil for heating purposes.

U.S. gasoline demand has also shown resilience so far this year, and is expected to remain steady in the coming months.

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