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Trumpworld is going nuts over another indictment, but Joe Biden's just hanging out at the beach, hitting up a seafood joint, and going to the movies 2023-08-01 - Joe Biden looks like he's having a great vacation. Biden dined at a seafood restaurant on Tuesday evening before watching "Oppenheimer." Meanwhile on Tuesday, Trump was hit with another indictment and accused of trying to overturn the 2020 vote. Get the inside scoop on today’s biggest stories in business, from Wall Street to Silicon Valley — delivered daily. Loading Something is loading. Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy Policy While former President Donald Trump stares down the barrel of yet another indictment, President Joe Biden is chilling out and in full vacation mode in Delaware. On Tuesday evening, Biden and First Lady Jill Biden dined out at the seafood restaurant Matt's Fish Camp while news of Trump's third indictment broke, per Reuters. The Bidens then headed to a nearby movie theatre to catch Christopher Nolan's "Oppenheimer," according to Reuters White House correspondent Jeff Mason. The Bidens are currently vacationing at Rehoboth Beach in Delaware. The President was spotted reading at the beach on Sunday, per The Messenger. And on Monday, the Bidens were seen enjoying a bike ride, per the Associated Press. Biden's leisurely vacation is worlds apart from the turmoil his predecessor is currently facing. Trump was hit with his third indictment on Tuesday, in relation to the Capitol riot that took place on January 6, 2021. Trump now faces four federal charges and accusations that he and six other co-conspirators tried to overturn the 2020 election. Speaking to Reuters on Tuesday, Biden's re-election campaign declined to comment about Trump's legal woes. "We would refer you to the Justice Department, which conducts its criminal investigations independently," White House spokesperson Ian Sams told Reuters. Trump has been arraigned twice before, and faces a brimming docket of ongoing cases. In April, he was arrested and charged in connection with hush money payments made to the adult film actress, Stormy Daniels. And in June, he was arraigned in Florida, and accused of mishandling top-secret information and bringing classified documents to Mar-a-Lago. In the meantime, Trump's latest indictment has prompted an outpouring of support from his acolytes. Georgia Rep. Marjorie Taylor Greene took to Twitter to say that she will "still vote for Trump even if he's in jail." Fox News host Jesse Watters also went on air and called the indictment an example of "political war crimes" against Trump. And Trump's son, Donald Trump Jr., claimed that the indictment was an attempt to derail his father's re-election campaign. "Apparently it happened now, because Trump's polling is so strong the swamp & the deep state will do anything to prevent him from winning and taking their power!" Trump Jr. tweeted. A representative for the White House did not immediately respond to a request for comment from Insider sent outside regular business hours.
Fitch's downgrade of the US economy is 'strange' and 'bizarre,' top officials and analysts say 2023-08-01 - Fitch downgraded the US sovereign credit grade from the top-tier AAA rating to AA+. The agency said there's been "a steady deterioration in standards of governance over the last 20 years." Top economists and administration officials bashed Fitch's downgrade, calling it bizarre. Get the inside scoop on today’s biggest stories in business, from Wall Street to Silicon Valley — delivered daily. Loading Something is loading. Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy Policy Top economists and administration officials are slamming Fitch Ratings' downgrade of the US long-term credit rating on Tuesday, at a time when the economy appears to be looking up. Fitch downgraded the US sovereign credit grade from the top-tier AAA rating to AA+. The agency said there's been "a steady deterioration in standards of governance over the last 20 years" and that "The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management." Treasury Secretary Janet Yellen led the charge in bashing Fitch's attack saying on Tuesday Fitch based its downgrade on "arbitrary and based on outdated data" from 2018 to 2020 — but the indicators have improved since then. Even Nobel laureate and economist Paul Krugman was baffled about "that bizarre Fitch downgrade," as he posted on X. "The biggest economic news over the past year has been America's remarkable success at getting inflation down without a recession, suggesting that we won't have to go through a prolonged slump in output and hence revenue," he wrote, adding that the long-term economic prospects have improved thanks immigration and a probable rise in productivity due to artificial intelligence. Top economist Mohamed El-Erian was equally perplexed, saying that the downgrade was a "strange move." "I am very puzzled by many aspects of this announcement, as well as by the timing," wrote El-Erian, the chief economic adviser to German financial services giant Allianz. He was previously the CEO of US bond-fund giant Pimco. "This announcement is more likely to be dismissed than have a lasting disruptive impact on the US economy and markets," El-Erian added. Former Treasury Larry Summers slammed Fitch's downgrade on X, posting that the decision is "bizarre and inept" given that the American economy looks "stronger than expected." Fitch flagged the risk of a US credit rating downgrade in May citing political "brinksmanship" in negotiations over raising the debt ceiling. But the US managed to avoid a default after President Biden signed a bill on June 3 to lift the country's debt ceiling. US stock futures fell on Tuesday night after the downgrade. Dow Jones Industrial Average futures were down by 80 points, or 0.2% at 10.36 p.m. ET. S&P 500 and Nasdaq 100 futures dipped 0.3% and 0.4%, respectively. Fitch Ratings did not respond to a request for comment from Insider sent outside regular business hours.
Lamborghini could hit 10,000 sales this year, CEO says 2023-07-31 - By Giulio Piovaccari MILAN (Reuters) - Lamborghini could sell 10,000 cars this year for the first time, its CEO said, as the luxury sports carmaker reported a rise in profit and revenues for the first half. The Italian brand, a subsidiary of Germany's Volkswagen, sold 5,341 cars between January and June, up 4.9% on the same period last year. The United States was its largest single market, with 1,625 deliveries. Chairman and CEO Stephan Winkelmann said it was not easy to make forecasts due to market uncertainties, including with raw materials, but added that selling 10,000 cars this year was a "feasible goal". "It is not something we are obliged to achieve, but it's important to show what the health of the company is and how big (clients') willingness to buy our cars is," Winkelmann said. Supported by the success of its Urus SUV, which costs around 200,000 euros ($219,900) before tax, Lamborghini has in recent years expanded its output, relying on solid demand from wealthy car lovers. It delivered over 9,200 vehicles in 2022. Rival Ferrari, whose headquarters is less than 40 kms (25 miles) away, shipped more than 13,200 cars last year. In the first half, Lamborghini's revenues grew 6.7% to 1.42 billion euros and its operating income rose 7.2% to a record 456 million euros, the company said. Lamborghini is investing 1.9 billion euros to 2027 in its shift to hybrid and electric cars, but further investments are expected. The carmaker earlier this year presented its first plug-in hybrid model, the Revuelto, adding to the Huracan 10-cylinder sports car and the Urus in its current range. The line-up is set to become all hybrid next year with the new Urus and a new sports car replacing the Huracan. Lamborghini plans to launch its first fully-electric model in 2028 - three years after the first promised by Ferrari - followed by a battery version of Urus in 2029. "What matters is to be there at the right time, when we know we are at our best and the market is ready," Winkelmann said. Story continues He added the use of so called e-fuels was an option, but only for the brand's sports car models. But any decisions about possible e-fuel powered models for the next decade would depend on future regulation in different parts of the world, not only in Europe, Winkelmann said. ($1 = 0.9095 euros) (Reporting by Giulio Piovaccari; Editing by Mark Potter)
Europe's economy shows modest growth after months of stagnation as rate hikes weigh on businesses 2023-07-31 - Gas prices are displayed at a gas station in Frankfurt, Germany, Friday, July 28, 2023. At right the European Central Bank. The German economy is still failing to grow, figures showed Friday, as the country that should be the industrial powerhouse for all of Europe struggles with high energy prices, rising borrowing costs and a lagging rebound from key trading partner China. (AP Photo/Michael Probst) FRANKFURT, Germany (AP) — The European economy grew modestly in the most recent quarter, breaking out of a months of stagnation or contraction as higher interest rates designed to fight inflation make it more expensive for households and businesses to borrow, invest and spend. The 20 countries that use the euro currency and their 346 million people saw 0.3% growth in the April-to-June period, the EU statistics agency Eurostat reported Monday. That’s an improvement over zero growth in the first quarter of this year and a slight decline in fourth quarter of last year, but not by much. A revision raised figures for the first quarter from a decline of 0.1%, wiping out two straight quarters of declining output. Inflation in the eurozone, meanwhile, continued its gradual decline, falling to 5.3% in July from 5.5% in June. Europe's economic growth got a boost by 0.5% growth in France and 0.4% in Spain, where lower inflation has helped lift consumer spending power. The French figure, however, was increased by a one-off: the delivery of one very large manufactured item, a cruise ship. That statistical quirk flattered the French growth figure but does little to disguise weak demand for goods in the eurozone’s second-largest economy. The most growth was posted by Ireland at 3.3%. The country's growth figures often show large swings due to major international companies locating their headquarters there. Europe's largest economy, Germany, struggled in the second quarter, recording zero growth after two straight quarters of falling output as it grappled with high energy costs tied to Russia's war in Ukraine. Europe is still struggling with the aftershocks of Russia’s invasion of Ukraine, with Moscow cutting off most of its natural gas to the continent, sharply raising prices for the fuel and the electricity it generates. In Germany, Europe’s manufacturing powerhouse, Vice Chancellor and Economy Minister Robert Habeck has proposed capping energy prices for industry with government help. Story continues The worst of the price spike is over, but costs are still higher than before the war began. Energy has faded as a main driver of inflation, but price rises are hitting Europeans when they shop for groceries, clothes and more, and the rebound for services companies such as hotels and restaurants that suffered during the COVID-19 pandemic has mostly run its course. Rebounding travel, especially in the Mediterranean countries that heavily rely on tourism, is expected to support growth in the third quarter as people flock to the beach for their summer holidays in Greece, Spain and Italy, despite recent heat waves and wildfires. Other than that, prospects for the rest of the year are muted. Another drag on the economy is the rapid series of interest rate increases that the European Central Bank has unleashed to knock down inflation. The ECB made its ninth straight hike Thursday, bringing its key deposit rate from minus 0.5% to 3.75% in just one year, a record pace since the creation of the euro in 1999. The result has been higher mortgage rates and canceled construction plans due to expensive or unavailable credit. The central bank’s lending survey shows the lowest level of business loans and credit lines since the statistics started in 2003. Bank President Christine Lagarde left open whether the bank will keep hiking rates at its next meeting on Sept. 14, saying the decision will depend on incoming inflation data at the time. Since the rate hikes began, inflation has steadily fallen from a peak of 10.6% in October to 5.5% in June, still well above the ECB’s 2% target. Bank officials say tough action now will spare even more painful restriction of credit later if inflation gets completely out of control.
Analysis-Dwindling excess savings could scupper markets' soft-landing hopes 2023-07-31 - By Naomi Rovnick and Dhara Ranasinghe LONDON (Reuters) - Markets have high hopes for a soft landing for the economy, with bonds and equities rallying. Yet a sharp drawdown in the excess savings created by COVID-19 could be a curve ball that slams into bullish sentiment. The cash piles households built up during the lockdowns and government stimulus of 2020-2021 have long been touted by analysts and central bankers as a reason economies could avoid a deep recession. But sky-high inflation and rapidly rising interest rates in response are shrinking this savings cushion fast. U.S. excess savings have fallen to around $500 billion from around $2.1 trillion in August 2021, the San Francisco Federal Reserve estimates. In Europe, Deutsche Bank reckons excess savings in Sweden, struggling to contain a property slump, have dwindled. British households withdrew money from outright savings at a record pace in May, while the government's Office for Budget Responsibility forecasts a savings ratio of zero by year-end from almost 25% in 2020. The end of savings won't cause a recession with jobs markets tight. Still, a spending downturn may hasten a typical economic pain spiral of falling business investment then high unemployment. Government bonds will shine in a recession, investors said, while dwindling savings make consumer stocks and high-yield credit assets to avoid. "Domestic consumption is a huge part of the economies," in Britain, the United States and the euro zone, said Janus Henderson multi-asset portfolio manager Oliver Blackbourn. "As soon as that starts to fall apart these economies can become very, very fragile very quickly." RUNNING OUT Definitions for excess savings differ, but economists generally agree that this means savings that went beyond trend levels during the pandemic. Cardano chief economist Shweta Singh said U.S. pandemic excess savings are likely to be depleted by year-end. This comes just as the end of U.S. pandemic-era student loan repayment relief creates more pain for consumers. Story continues In Europe, excess savings have not been spent to the same degree. Euro zone consumers stashed away an extra 1 trillion euros ($1.10 trillion) during the pandemic but a strong savings culture would likely prevent them spending this on clothes or holidays, economists said. "Europe is a little bit further behind, but I suspect the same dynamic is playing out there and that has been about as good as it's going to get for discretional spending," said Zurich Insurance Group chief market strategist Guy Miller. CAUTION Business activity data suggests the recently-resilient services sector is weakening. European airline Ryanair warns of low demand for winter holidays and JPMorgan boss Jamie Dimon notes U.S. "consumers are slowly using up their cash buffers." Ben & Jerry's ice cream maker Unilever, in February flagged $1.5-$2 trillion in excess household savings in China that it believed could help boost sales. It now sees a "very cautious" Chinese consumer. Eren Osman, managing director of wealth management at Arbuthnot Latham, was cautious both on shares in the consumer discretionary sector - businesses such as car makers - and businesses selling consumer staples like cleaning products and food. "If we do see a continuation of consumer savings wearing down with that pinch on disposable incomes," he said, "that's going to have an impact" on consumer businesses' profit margins. Janus Henderson's Blackbourn said he was cautious on smaller stock indices more exposed to domestic consumers such as the U.S. Russell-2000 and London's FTSE-250. The Russell index tends to underperform the larger S&P 500 during downturns, according to Goldman Sachs. "The concern is the same," with the FTSE 250, said Blackbourn, noting this index was dominated by UK banks, consumer discretionary and industrial stocks. Zurich's Miller noted that U.S. and European high-yield credit indices have a 35% and 31% direct exposure to consumer cyclical and consumer non-cyclical names respectively. BUY GOVVIES Expecting the savings drain to hasten recessions, investors favour safe-haven government bonds. Legal & General fixed-income manager Simon Bell said dwindling consumer savings influenced his preference for government bonds of countries like Britain and Australia, where shorter mortgage terms made households rate sensitive. Higher housing costs plus weaker consumer spending could persuade central banks to "believe they've done enough" sooner rather than later, he said. Britain's savings are expected to run down just as fixed-rate mortgage costs jump, as households refinance loans taken out in low interest rate years with more expensive debt. The Bank of England forecasts mortgage repayment increases of at least 500 pounds ($641.25) for 1 million households by 2026. Investors trying to time recession are mostly focused on jobs markets, which remained hot in developed economies, said Aviva Investors multi-asset portfolio manager Guilluame Paillat. Still, weaker consumer spending may cool inflation. "So we do like duration," Paillat said, referring to taking interest rate risk on longer term bonds. ($1 = 0.7797 pounds) ($1 = 0.9127 euros) (Reporting by Naomi Rovnick and Dhara Ranasinghe; Editing by Sharon Singleton)
European Stocks Weighed Down by Earnings Hit; Heineken Slumps 2023-07-31 - (Bloomberg) -- European stocks were muted on Monday as the weakest corporate earnings season since 2020 outweighed optimism that interest rates were potentially peaking. Heineken NV slumped after cutting its profit forecast. Most Read from Bloomberg The Stoxx 600 was little changed at 8:39 a.m. in London. The food and beverage subindex was among the biggest decliners due to Heineken, while mining and health care stocks outperformed. Europe’s benchmark index is on track to post its third monthly gain in four as investors bet that central banks were close to pausing rate hikes. However, stocks are now entering a period of typically poor seasonal returns, with sentiment further dampened by glum economic data as well as weak earnings. Companies are on track to beat profit estimates by the lowest share since 2020, according to data compiled by Bloomberg Intelligence. Moreover, August and September are usually the worst time for European stocks, based on the average performance of the Stoxx 600 over the past 25 years. The benchmark has a history of sliding by about 3% over this period. “The optical richness of stocks does seem to suggest it will be increasingly hard for the market to rally on pure optimism,” said James Athey, investment director at Abrdn. “Obviously, a genuine pick up in earnings would be a more solid foundation on which to base a rally.” “Near-term upside therefore looks likely to come from names who manage to beat earnings forecasts without having to dampen expectations via cautious guidance and provided that the macro data continue to allow the soft-landing dream to live on,” Athey said. SECTORS IN FOCUS: Sectors exposed to China, such as autos and miners, after the Asian country’s top economic planning agency released a wide-ranging policy document Monday containing some recently announced consumption-related initiatives. Story continues For more on equity markets: Sanguine Equity Markets Enter High-Risk Season: Taking Stock M&A Watch Europe: Glencore, Frasers, Tofas, Dr Martens, BAT US Stock Futures Little Changed You want more news on this market? Click here for a curated First Word channel of actionable news from Bloomberg and select sources. It can be customized to your preferences by clicking into Actions on the toolbar or hitting the HELP key for assistance. To subscribe to a daily list of European analyst rating changes, click here. --With assistance from Michael Msika. Most Read from Bloomberg Businessweek ©2023 Bloomberg L.P.
Walmart Buys Tiger Global’s Flipkart Stake for $1.4 Billion 2023-07-31 - (Bloomberg) -- Walmart Inc. paid $1.4 billion to buy Tiger Global Management’s remaining stake in Flipkart, boosting its bet on the Indian retailer and helping the money manager provide distributions to investors at a time when accessing liquidity is tough. Most Read from Bloomberg The transaction, which took place in recent days, valued the Indian e-commerce giant at $35 billion, according to a letter sent by Tiger Global to investors that was obtained by Bloomberg News. That’s down from the nearly $38 billion valuation Flipkart commanded in its 2021 funding round. A spokeswoman for the investment firm declined to comment on the deal, which the Wall Street Journal reported on earlier Sunday. Separately, venture capital firm Accel also sold its 1% stake in Flipkart to Walmart, the Economic Times reported. The sale allows Tiger Global an opportunity to successfully exit its long-time investment in the Indian startup. The firm had initially put $8.6 million into Flipkart’s Series B round in 2009 at a valuation of $42 million, before subsequently adding $1.2 billion between 2010 and 2015, according to the letter. The investments were made via their venture Private Investment Partners funds five through nine, the hedge fund, and their long-only vehicle. In 2017, Tiger Global sold part of its Flipkart stake to SoftBank Group Corp, and a year later sold more to Walmart. In total, its investment in Flipkart has helped generate $3.5 billion in gains, the money manager said in the letter, adding that it will provide distribution details in the coming weeks. Read more: Tiger Global Is Said to Reap $3 Billion From Flipkart Investment Walmart, which first paid $16 billion in 2018 for a 77% stake in Flipkart, has been accelerating its push into India’s growing consumer market. Earlier this year, its local payments business launched an online retailing app that will host local stores and smaller merchants. Story continues Read more: Walmart Accelerates India Push as PhonePe Unit Enters Retail The acquisition of the stakes from Tiger Global and Accel means Walmart will hold about 77% of Flipkart, up from 72% previously, according to Economic Times. “We are grateful for our partnership with the Flipkart team and for the opportunity to invest in the company through early chapters in its growth,” Tiger Global said in the letter. Most Read from Bloomberg Businessweek ©2023 Bloomberg L.P.
Swiss National Bank posts $15 billion loss as rate hikes hit bond holdings 2023-07-31 - ZURICH, July 31 (Reuters) - The Swiss National Bank on Monday posted a second quarter loss of 13.20 billion Swiss francs ($15.14 billion) as interest rate hikes by other central banks dented the value of its massive bond holdings. The SNB lost 8.08 billion francs on its foreign currency positions of 742 billion francs as bond prices fell as investors feared more interest rate hikes by the U.S. Federal Reserve, European Central Bank and others. The Swiss central bank also lost 3.14 billion francs on its gold holdings in the three months to the end of June, as lower prices cut the value of the 1,040 tonnes of the precious metal it holds. The second quarter loss contrasts with a 26.9 billion franc profit in the first three months of 2023, reducing the SNB's half year profit to 13.7 billion francs. The half year figure was supported by profit of 900 million francs from interest payments mainly from emergency liquidity provided to Credit Suisse and UBS, the central bank said. The SNB lent 168 billion francs to the banks to first support Credit Suisse and then ease the fallen bank's takeover in a state-orchestrated takeover in March. Chairman of the Swiss National Bank (SNB) Thomas Jordan looks on during a general shareholders meeting of the Swiss central bank in Bern on April 28, 2023. (Photo by FABRICE COFFRINI/AFP via Getty Images) As of the end of June, the amount outstanding, which also includes a small amount of COVID-19 credits, was 66.7 billion francs. The SNB also made a 1.88 billion franc loss from its Swiss franc positions during the second quarter, largely reflecting the resumption of interest payments on sight deposits as part of its more restrictive monetary policy. It has also been paying interest via SNB bonds and repos as part of its operations to absorb liquidity and steer the market interest rate to its policy rate which it increased last month to 1.75%. (Reporting by John Revill, Editing by Rachel More, Kirsten Donovan)
Mega Millions drawing: A $1.05 billion jackpot is up for grabs Tuesday 2023-07-31 - CNN — One lucky winner could nab a massive $1.05 billion Mega Millions jackpot that’s up for grabs in Tuesday night’s drawing. If won, the mammoth jackpot would equal the fourth-largest prize in Mega Millions’ history, the lottery said in a news release Saturday. A grand prize winner could choose to spread it in annual payments over 29 years, or take a lump-sum option of an estimated $527.9 million,Mega Millions said. The jackpot soared past a billion dollars after no ticket matched all six numbers drawn Friday night. Tuesday’s drawing will be the 30th since the jackpot was last won in New York on April 18, according to Mega Millions. Although no one scored the jackpot Friday, there were still big winners. One ticket sold in Pennsylvania won $5 million by matching the first five numbers and activating the optional Megaplier, which is available in most states with an extra $1 purchase. Another four tickets sold in Arizona, California, New York and Pennsylvania matched the first five numbers to win $1 million. The top Mega Millions jackpot to date was $1.537 billion won in South Carolina in 2018. It’s followed by a $1.348 billion ticket that was sold in Maine in January and a $1.337 billion prize last July. In fourth place on Mega Millions’ list is a $1.05 billion prize won by a ticket sold in Michigan in 2021. Tuesday’s Mega Millions drawing for the massive prize comes after a Powerball ticket sold at a convenience store in Los Angeles matched all numbers to win a $1.08 billion prize – the third-largest Powerball jackpot.
China's State Council issues measures to expand consumption 2023-07-31 - BEIJING, July 31 (Reuters) - China's State Council on Monday issued measures to restore and expand consumption in the automobile, real estate and services sector, aiming to give full play to the "fundamental role" of consumption in economic development. The State Council said in a document the government will improve the infrastructure for charging to promote more purchases of new energy vehicles, support housing demand by expanding the supply of affordable rental housing and encourage tourism by asking local governments to cut admission fees at scenic areas or even make them free during low periods. In an interview with state broadcaster CCTV published on Monday, unnamed officials from the National Development and Reform Commission said it will take the summer, Mid-Autumn and National Day holidays as an opportunity to expand holiday consumption. Last week, policymakers at a Politburo meeting pledged to step up policy support for the economy amid a tortuous post-COVID recovery, focusing on boosting domestic demand, signalling more stimulus steps. The world's second-largest economy grew at a sluggish pace in the second quarter as demand weakened at home and abroad. Reporting by Liangping Gao and Ryan Woo; Editing by Jacqueline Wong and Christian Schmollinger Our Standards: The Thomson Reuters Trust Principles.
Oil on track for biggest monthly gains in over a year 2023-07-31 - This aerial photo shows the Enping 15-1 oil platform 200 km southwest of Shenzhen, south China, May 31, 2023. Oil prices hovered near three-month highs on Monday, set to post their biggest monthly gains in over a year on expectations that Saudi Arabia would extend voluntary output cuts into September and tighten global supply. Brent crude futures dipped 9 cents to $84.90 a barrel by 0005 GMT while U.S. West Texas Intermediate crude , or WTI, was at $80.41 a barrel, down 17 cents. The September Brent contract will expire later on Monday. The more active October contract was at $84.23 a barrel, down 18 cents. Brent and WTI settled on Friday at their highest levels since April, gaining for a fifth straight week, as tightening oil supplies globally and expectations of an end to U.S. interest rate hikes supported prices. Both are on track to close July with their biggest monthly gains since January 2022. Saudi Arabia is expected to extend a voluntary oil output cut of 1 million barrels per day, or bpd, for another month to include September, analysts said. "Oil prices are up 18% since mid-June as record high demand and Saudi supply cuts have brought back deficits, and as the market has abandoned its growth pessimism," Goldman Sachs analysts said in a July 30 note. "We still expect the extra 1 million bpd Saudi cut to last through September, and to be halved from October." The bank maintained its Brent forecast at $86 a barrel for December and expects prices to rise to $93 in the second quarter of 2024. Goldman Sachs estimated that global oil demand rose to a record 102.8 million bpd in July and it revised up 2023 demand by about 550,000 bpd on stronger economic growth estimates in India and the United States, offsetting a downgrade for China's consumption. "Firmer demand is driving a moderately larger deficit in H2 2023 than expected, averaging 1.8 million bpd, and a modest 0.6 million bpd deficit in 2024," it said. Exxon Mobil's CEO Darren Woods said the company expects record oil demand this year and next year, and that this may help boost energy prices in the second half of the year. In the U.S., energy firms in July cut the number of oil rigs for an eighth straight month by one to 529, Baker Hughes said in its weekly report on Friday.
West African nations threaten to use force if Niger’s president isn’t reinstated within a week 2023-07-31 - NIAMEY, Niger (AP) — West African nations have given Niger’s coup leaders one week to reinstate the country’s democratically elected president and have threatened to use force if the demands aren’t met. The announcement came at the end of an emergency meeting of West African countries Sunday in Nigeria, where the regional bloc, known as ECOWAS, convened to respond to last week’s military takeover. President Mohamed Bazoum remains under house arrest and has yet to resign. “In the event the authority’s demands are not met within one week, (the bloc will) take all measures necessary to restore constitutional order in the Republic of Niger. Such measures may include the use of force,” said the statement. The bloc also imposted strict sanctions, including suspending all commercial and financial transactions between ECOWAS member states and Niger and freezing of assets in regional central banks. Economic sanctions could have a deep impact on Nigeriens, who live in the third-poorest country in the world, according to the latest U.N. data. The country relies on imports from Nigeria for up to 90% of its power, according to the International Renewable Energy Agency. The sanctions could be disastrous and Niger needs to find a solution to avoid them, Prime Minister Ouhoumoudou Mahamadou told French media outlet Radio France Internationale on Sunday. “When people say there’s an embargo, land borders are closed, air borders are closed, it’s extremely difficult for people ... Niger is a country that relies heavily on the international community,” he said. The 15-nation ECOWAS bloc has unsuccessfully tried to restore democracies in nations where the military took power in recent years. Four nations are run by military governments in West and Central Africa, where there have been nine successful or attempted coups since 2020. In the 1990s, ECOWAS intervened in Liberia during its civil war. In 2017, it intervened in Gambia to prevent the new president’s predecessor, Yahya Jammeh, from disrupting the handover of power. Around 7,000 troops from Ghana, Nigeria, and Senegal entered, according to the Global Observatory, which provides analysis on peace and security issues. If the regional bloc uses force, it could trigger violence not only between Niger and ECOWAS forces but also civilians supporting the coup and those against it, Niger analysts say. “While this remains to be a threat and unlikely action, the consequences on civilians of such an approach if putschists chose confrontation would be catastrophic,” said Rida Lyammouri, senior fellow at the Policy Center for the New South, a Morocco-based think tank. “I believe economic sanctions are the ones to be imposed, but don’t see a military intervention happening because of the violence that could trigger,” he said. The military junta, which seized power on Wednesday when members of the presidential guard surrounded Bazoum’s house and detained him, is already cracking down on the government and civil liberties. On Sunday, junta spokesman Col. Maj. Amadou Abdramane said on state television that all government cars need to be returned by midday Monday and banned the use of social media to diffuse messages against state security. He also claimed that Bazoum’s government had authorized the French to carry out strikes to free Bazoum. The Associated Press can’t verify his allegations. In anticipation of the ECOWAS decision Sunday, thousands of pro-junta supporters took to the streets in the capital, Niamey, denouncing its former colonial ruler, France, waving Russian flags and telling the international community to stay away. Demonstrators in Niger are openly resentful of France, and Russia is seen by some as a powerful alternative. The nature of Moscow’s involvement in the rallies, if any, isn’t clear, but some protesters have carried Russian flags, along with signs reading “Down with France” and supporting Russian President Vladimir Putin. “The situation of this country is not good ... It’s time for change, and change has arrived,” said Moussa Seydou, a protester. “What we want from the putschists — all they have to do is improve social conditions so that Nigeriens can live better in this country and bring peace,” he said.
UK to grant hundreds of new oil and gas licenses, ignoring calls from environmentalists 2023-07-31 - LONDON (AP) — Britain said on Monday it will grant hundreds of new oil and gas licenses in the North Sea in a bid for energy independence, ignoring calls from the environmental campaigners and the United Nations to stop the development of new fossil fuel projects. The plans announced by Prime Minister Rishi Sunak include a pledge to invest 20 billion pounds ($26 billion) in carbon capture and storage projects as Sunak maintained the government’s commitment to eliminate net carbon emissions by 2050. Sunak, who is traveling to Scotland to formally unveil the package, said Britain will still need fossil fuels even after the country reaches its net zero target. He said it is better to produce oil and natural gas at home rather than rely on foreign leaders like Russian President Vladimir Putin, whose invasion of Ukraine sent global energy prices soaring around the globe. “We have all witnessed how Putin has manipulated and weaponized energy — disrupting supply and stalling growth in countries around the world,’’ Sunak said in a statement. “Now more than ever, it’s vital that we bolster our energy security and capitalize on that independence to deliver more affordable, clean energy to British homes and businesses.’’ The plan comes as Sunak faces pressure to roll back expensive environmental commitments as his Conservative Party scrambles to attract voters amid opinion polls showing that the party is likely toward a crushing defeat in the next general election. But U.N. scientists and environmental campaigners are calling on government’s around the world to accelerate the transition away from fossil fuels after a summer of record high temperatures, drought and floods linked to man-made climate change. Burning oil and gas to power vehicles, factories and electricity generating stations releases huge amounts of carbon dioxide, the main driver of global warming. U.N. Secretary-General Antonio Guterres has raised concerns that governments were backtracking on their commitments to cut greenhouse gas emissions at a time when they should accelerate their efforts. “The problem is not simply fossil fuel emissions, it’s fossil fuels — period,” Guterres told reporters last month in New York. “The solution is clear: The world must phase out fossil fuels in a just and equitable way — moving to leave oil, coal and gas in the ground where they belong — and massively boosting renewable investment in a just transition.”
Europe’s economy shows modest growth after months of stagnation as rate hikes weigh on businesses 2023-07-31 - FRANKFURT, Germany (AP) — The European economy grew modestly in the most recent quarter, breaking out of a months of stagnation or contraction as higher interest rates designed to fight inflation make it more expensive for households and businesses to borrow, invest and spend. The 20 countries that use the euro currency and their 346 million people saw 0.3% growth in the April-to-June period, the EU statistics agency Eurostat reported Monday. That’s an improvement over zero growth in the first quarter of this year and a slight decline in fourth quarter of last year, but not by much. A revision raised figures for the first quarter from a decline of 0.1%, wiping out two straight quarters of declining output. Inflation in the eurozone, meanwhile, continued its gradual decline, falling to 5.3% in July from 5.5% in June. Europe’s economic growth got a boost by 0.5% growth in France and 0.4% in Spain, where lower inflation has helped lift consumer spending power. The French figure, however, was increased by a one-off: the delivery of one very large manufactured item, a cruise ship. That statistical quirk flattered the French growth figure but does little to disguise weak demand for goods in the eurozone’s second-largest economy. The most growth was posted by Ireland at 3.3%. The country’s growth figures often show large swings due to major international companies locating their headquarters there. Europe’s largest economy, Germany, struggled in the second quarter, recording zero growth after two straight quarters of falling output as it grappled with high energy costs tied to Russia’s war in Ukraine. Europe is still struggling with the aftershocks of Russia’s invasion of Ukraine, with Moscow cutting off most of its natural gas to the continent, sharply raising prices for the fuel and the electricity it generates. In Germany, Europe’s manufacturing powerhouse, Vice Chancellor and Economy Minister Robert Habeck has proposed capping energy prices for industry with government help. The worst of the price spike is over, but costs are still higher than before the war began. Energy has faded as a main driver of inflation, but price rises are hitting Europeans when they shop for groceries, clothes and more, and the rebound for services companies such as hotels and restaurants that suffered during the COVID-19 pandemic has mostly run its course. Rebounding travel, especially in the Mediterranean countries that heavily rely on tourism, is expected to support growth in the third quarter as people flock to the beach for their summer holidays in Greece, Spain and Italy, despite recent heat waves and wildfires. Other than that, prospects for the rest of the year are muted. Another drag on the economy is the rapid series of interest rate increases that the European Central Bank has unleashed to knock down inflation. The ECB made its ninth straight hike Thursday, bringing its key deposit rate from minus 0.5% to 3.75% in just one year, a record pace since the creation of the euro in 1999. The result has been higher mortgage rates and canceled construction plans due to expensive or unavailable credit. The central bank’s lending survey shows the lowest level of business loans and credit lines since the statistics started in 2003. Bank President Christine Lagarde left open whether the bank will keep hiking rates at its next meeting on Sept. 14, saying the decision will depend on incoming inflation data at the time. Since the rate hikes began, inflation has steadily fallen from a peak of 10.6% in October to 5.5% in June, still well above the ECB’s 2% target. Bank officials say tough action now will spare even more painful restriction of credit later if inflation gets completely out of control.
Stock market today: European shares open mixed after Asia rallies on hopes for Chinese stimulus 2023-07-31 - BANGKOK (AP) — Shares were mixed in Europe after most Asian markets logged gains Monday on hopes for more stimulus from Beijing for the sluggish Chinese economy. Worries over China’s slowdown have tempered optimism recently over the possibility that inflation is cooling enough to get the Federal Reserve to stop hiking interest rates. Adding to pressure on the ruling Communist Party to reverse an economic slowdown, Chinese factory activity contracted in July as export orders shrank, a survey showed, A purchasing managers’ index issued by the national statistics agency and an industry group improved to 49.3 from June’s 49 on a 100-point scale but was below the 50-point level that shows activity contracting. “The PMI surveys suggest that China’s economic recovery continued to lose momentum in July,” Julian Evans-Pritchard of Capital Economics said in a commentary. “Looking forward, policy support is needed to prevent China’s economy from slipping into a recession, not least because external headwinds look set to persist for a while longer.” Germany’s DAX was up 0.1% at 16,481.74, while the CAC 40 in Paris gained 0.2% to 7,492.95. Britain’s FTSE 100 gave up 0.1% to 7,683.50. The futures for the S&P 500 and Dow Jones Industrial Average were nearly unchanged. In Asian trading, the Hang Seng in Hong Kong rose 0.8% to 20,078.94, while the Shanghai Composite index advanced 0.5% to 3,291.04. Tokyo’s Nikkei 225 index closed 1.3% higher at 33,172.22. In Seoul, the Kospi climbed 0.9% to 2,632.58. Australia’s S&P/ASX 200 edged 0.1% higher, to 7,410.40 and the SET in Bangkok was up 0.8%. The Sensex in India rose 0.4% to 66,419.66. Wall Street closed out another winning week on Friday, as the S&P 500 rose 1%. The Dow added 0.5% and the Nasdaq climbed 1.9% as Big Tech stocks led the market. If inflation is cooling enough to get the Federal Reserve to stop hiking interest rates, that might allow the economy to continue growing and avoid a long-predicted recession. Though critics say the stock market’s rally may have gone too far, too fast, hopes for a halt to rate hikes helped technology stocks and others seen as big beneficiaries from easier rates to rally. A report on Friday showed the inflation measure the Fed prefers to use slowed last month by a touch more than expected. Data also showed total compensation for workers rose less than expected during the spring. While that’s discouraging for workers, investors see it adding less upward pressure on inflation. The hope among traders is that the slowdown in inflation means Wednesday’s hike to interest rates by the Federal Reserve will be the final one of this cycle. The federal funds rate has leaped to a level between 5.25% and 5.50%, up from virtually zero early last year. High interest rates work to lower inflation by slowing the entire economy and hurting prices for stocks and other investments. In other trading Monday, U.S. benchmark crude oil gave up 5 cents to $80.53 a barrel in electronic trading on the New York Mercantile Exchange. It gained 49 cents to $80.58 on Friday. Brent crude, the international standard, shed 6 cents to $84.35 a barrel. The U.S. dollar rose to 142.43 Japanese yen from Friday’s 141.01 yen. The euro was at $1.1021, up from $1.1019. ___ AP Business Writer Joe McDonald in Beijing contributed.
This week: Starbucks, Amazon earnings; July jobs report 2023-07-31 - BREWING PROFITS Starbucks reports its third-quarter financial results after the bell on Tuesday. Analysts forecast that Seattle-based Starbucks earned 95 cents-per-share in the period on sales of $9.3 billion. In the same quarter a year ago, the retail coffee chain posted per-share profit of 84 cents on sales of $8.2 billion. In its most recent quarter, Starbucks enjoyed stronger-than-expected sales as demand in China began to recover. ONLINE RETAIL BELLWEATHER Amazon issues its second-quarter earnings report after the bell on Thursday. Wall Street is expecting the e-commerce giant to post profit of 35 cents per share on $131.4 billion in sales for the quarter. In the same period a year ago, Seattle-based Amazon lost $2 billion, or 20 cents per share, in the three-month period ended June 30. That loss was driven by a $3.9 billion write-down of the value of its investment in electric vehicle start-up Rivian Automotive. Amazon has since returned to profit the past three quarters. EYE ON JOBS The Labor Department on Friday issues its July tally of hiring by nonfarm U.S. employers. Economists forecast that U.S. employers added 200,000 jobs in July, which would be the fewest since December of 2020, but still a solid gain. In June, employers added 209,000 jobs and the unemployment rate ticked down to 3.6%, just above a half-century low. The labor market has mostly held up despite the Federal Reserve’s furious pace of interest rate hikes in the past year-and-a-half. Nonfarm payrolls, monthly change, seasonally adjusted: Feb.: 248,000 March: 217,000 April: 217,000 May: 306,000 June: 209,000 July (est.): 200,000 Source: FactSet
South Korean dog meat farmers push back against growing moves to outlaw their industry 2023-07-31 - PYEONGTAEK, South Korea (AP) — The dogs bark and stare as Kim Jong-kil approaches the rusty cages housing the large, short-haired animals he sells for their meat. Kim opens a door and pets one dog’s neck and chest. Kim says he’s proud of the dog meat farm that has supported his family for 27 years, but is upset over growing attempts by politicians and activists to outlaw the business, which he is turning over to his children. “It’s more than just feeling bad. I absolutely oppose these moves, and we’ll mobilize all our means to resist it,” Kim, 57, said in an interview at his farm in Pyeongtaek city, just south of Seoul. Dog meat consumption is a centuries-old practice on the Korean Peninsula and has long been viewed as a source of stamina on hot summer days. It’s neither explicitly banned nor legalized in South Korea, but more and more people want it prohibited. There’s increasing public awareness of animal rights and worries about South Korea’s international image. The anti-dog meat campaign recently received a big boost when the country’s first lady expressed her support for a ban and two lawmakers submitted bills to eliminate the dog meat trade. “Foreigners think South Korea is a cultural powerhouse. But the more K-culture increases its international standing, the bigger shock foreigners experience over our dog meat consumption,” said Han Jeoungae, an opposition lawmaker who submitted legislation to outlaw the dog meat industry last month. Prospects for passage of an anti-dog meat law are unclear because of protests by farmers, restaurant owners and others involved in the dog meat industry. Surveys suggest that one in three South Koreans opposes such a ban, though most people don’t eat dog meat anymore. Dogs are also eaten in China, Vietnam, Indonesia, North Korea and some African countries, including Ghana, Cameroon, Congo and Nigeria. Earlier this month, Indonesian authorities announced the end of dog and cat slaughter at an animal market on the island of Sulawesi following a yearslong campaign by local activists and world celebrities. The Tomohon Extreme Market will become the first such market in Indonesia to go dog and cat meat-free, according to the anti-animal cruelty group Humane Society International. South Korea’s dog meat industry receives more international attention because of its reputation as a wealthy, ultra-modern democracy. It is also the only nation with industrial-scale farms. Most farms in South Korea have more than 500 dogs, according to a dog farmers’ association. During a recent visit, Kim’s farm, one of the country’s largest with 7,000 dogs, appeared relatively clean but there was a strong stench in some areas. All dogs are kept in elevated cages and are fed with food waste and ground chicken. They are rarely released for exercise and typically are sold for meat one year after they are born. Kim said two of his children, age 29 and 31, are running the farm with him, and that business has been going pretty well. He said the dogs bred for their meat are different from pets, an idea opposed by activists. It’s difficult now to find dog meat restaurants in Seoul’s bustling downtown, though many still exit in the countryside. “I only earn one-third of the money I used to make. Young people don’t come here. Only ailing old people come for lunch,” said Yoon Chu-wol, 77, the owner of a dog meat restaurant in Seoul’s Kyungdong traditional market. “I tell my elderly customers to come and eat my food more frequently before it’s banned.” Farmers also face growing scrutiny from officials and increasingly negative public opinion. They complain that officials visit them repeatedly in response to complaints filed by activists and citizens over alleged animal abuse and other wrongdoing. Kim said more than 90 such petitions were filed against his farm during a recent four-month span. Son Won Hak, general secretary of the dog farmers’ association, said many farms have collapsed in recent years because of falling dog meat prices and weaker demand. He thinks that’s a result of activist campaigns and unfair media reports focusing on farms with inferior conditions. Some observers, however, say consumption of dog meat was already declining, with younger people staying away from it. “Quite honestly, I’d like to quit my job (as a farmer) tomorrow. We can’t confidently tell our children that we’re raising dogs,” Son said. “When my friends called me, they said ‘Hey, are you still running a dog meat farm? Isn’t it illegal?’” The number of farms across South Korea has dropped by half from a few years ago to about 3,000 to 4,000, and about 700,000 to 1 million dogs are slaughtered each year, a decline from several million 10 to 20 years ago, according to the dog farmers’ association. Some activists argue that the farmers’ estimates are an exaggeration meant to show their industry is too big to destroy. In late 2021, South Korea launched a government-civilian task force to consider outlawing dog meat at the suggestion of then-President Moon Jae-in, a pet lover. The committee, whose members include farmers and animal rights activists, has met more than 20 times but hasn’t reached any agreement, apparently because of disputes over compensation issues. Agriculture officials refused to disclose the discussions in the closed-door meetings. They said the government wants to end dog meat consumption based on a public consensus. In April, first lady Kim Keon Hee, the wife of current President Yoon Suk Yeol, said in a meeting with activists that she hopes for an end to dog meat consumption. Famers responded with rallies and formal complaints against Kim for allegedly hurting their livelihoods. Han, the lawmaker, said she “highly positively appraises” influential figures speaking out against dog meat consumption. Han said her bill offers support programs for farmers who agree to close their farms. They would be entitled to money to dismantle their facilities, vocational training, employment assistance and other benefits, she said. Ju Yeongbong, an official of the farmers’ association, said farmers want to continue for about 20 more years until older people, their main customers, die, allowing the industry to naturally disappear. Observers say most farmers are also in their 60s to 70s. Borami Seo, a director of the South Korea office of the Humane Society International, said she opposes the continued killing of millions of dogs for such a prolonged period. “Letting this silent cruelty to (dogs) be committed in South Korea doesn’t make sense,” Seo said. “(Dog meat consumption) is too anachronistic, has elements of cruelty to animals and hinders our national growth,” said Cheon JinKyung, head of Korea Animal Rights Advocates in Seoul.
China factory activity shrinks in July, adding to pressure to reverse economic slump 2023-07-31 - BEIJING (AP) — Chinese factory activity contracted in July as export orders shrank, a survey showed Monday, adding to pressure on the ruling Communist Party to reverse an economic slowdown. A purchasing managers’ index issued by the national statistics agency and an industry group improved to 49.3 from June’s 49 on a 100-point scale but was below the 50-point level that shows activity contracting. “China’s manufacturing PMI remained in contraction, albeit a softer pace, as the drag from the external sector deepened,” Erin Xin of HSBC said in a report. That puts “more pressure on Beijing to support growth through both fiscal and monetary measures.” Chinese leaders are trying to revive economic activity by promising to support entrepreneurs who generate jobs and wealth. But they have yet to give details possible tax cuts or spending and have avoided announcing a large-scale stimulus. Demand for Chinese exports weakened after U.S. and European interest rates were raised to cool record-breaking inflation. At home, consumers are uneasy about possible job losses and are putting off big purchases. Real estate sales, an economic engine, are weak after the government tightened control on the industry’s use of debt. An index of export orders weakened to 46.3 from June’s 46.4, well below the 50-point contraction level, according to the statistics bureau and the China Federation of Logistics & Purchasing. Economic growth slid to 0.8% over the previous quarter in the three months ending in June from 2.2% in the January-March period. That is equal to annual growth of 3.2%, which would be among China’s weakest in decades.
Japan's megabanks eye BOJ boost after solid first quarter 2023-07-31 - [1/2] Sumitomo Mitsui Banking Corporation's signboard is pictured at its branch in Tokyo, Japan, January 25, 2017. REUTERS/Kim Kyung-Hoon/File Photo Summary Companies SMFG, Mizuho both keep annual profit forecasts SMFG says end to negative rates would bring 30 bln yen boost Top banks revamp their businesses to withstand ultra-low rates TOKYO, July 31 (Reuters) - Two of Japan's megabanks reported solid quarterly profits on Monday amid hopes the Bank of Japan's (BOJ) nudge towards policy normalisation will herald a sea change in their business after years of being squeezed by rock-bottom interest rates. The central bank's relaxation of its cap on bond yields on Friday boosted the prospect of higher government bond yields creating a windfall for lenders, sending Japan's benchmark index of banking stocks (.IBNKS.T) to an eight-year high. Higher government bond yields will in the long run lift returns on bond holdings at major lenders, which have had limited options for where to park huge deposits and so flocked to higher-yielding assets overseas such as U.S. Treasuries. The tailwind comes as top banks revamp their businesses to withstand ultra-low rates at home by slimming domestic retail operations, beefing up their presence in Asia through acquisitions and ramping up U.S. investment banking. Sumitomo Mitsui Financial Group (SMFG) (8316.T) and Mizuho Financial Group (8411.T), Japan's second- and third-largest lenders by assets respectively, on Monday stuck to their full-year net profit forecasts, which point to their highest earnings since the mid 2010s. Both forecasts have not factored in the impact of the latest policy shift. "It might take a while till the BOJ ends its negative interest rate policy," IwaiCosmo Securities analyst Tomoaki Kawasaki said. "But the business environment for the Japanese lenders is improving." For April-June, SMFG reported a net profit of 248 billion yen ($1.75 billion), down 1.8% from the same period a year earlier but accounting for 30% of its annual profit forecast of 820 billion yen. Mizuho's net profit for the quarter jumped 53.9% to 245.19 billion yen, representing 40% of its annual profit forecast. Japan's biggest lender, Mitsubishi UFJ Financial Group (MUFG) (8306.T), will report quarterly earnings on Tuesday. Years of ultra-low interest rates in Japan have meant lenders have little margin for earnings from lending, which has typically translated into a discount for Japanese banking stocks. SMFG is trading at a price to book value of 0.7, meaning its shares are trading at a discount to the value of its assets. In comparison, U.S. bank JP Morgan (JPM.N) is trading at almost twice the value of its assets, according to Refinitiv data. The Japanese banks, however, say a full earnings impact will only be felt after the BOJ ends its negative interest rate policy, where it imposes a 0.1% interest rate on a portion of excess reserves banks park with the central bank. SMFG said it expects a policy rate increase to 0% would boost its annual net interest income by 30 billion yen. While the latest policy change does not necessarily hasten the end of negative interest rates, "normalisation of the policy will come into sight if stable inflation is confirmed," IwaiCosmo's Kawasaki said. ($1 = 141.7000 yen) Reporting by Makiko Yamazaki, Anton Bridge and David Dolan; Editing by Christopher Cushing and Mark Potter Our Standards: The Thomson Reuters Trust Principles.
Chinese firms ramp up investment in S.Korea to get US EV tax credits 2023-07-31 - SEOUL/SHANGHAI, July 31 (Reuters) - Chinese battery materials firms are ramping up investment in South Korea, announcing projects worth at least $4.4 billion this year to try to meet U.S. electric vehicle (EV) tax credit rules aimed at lowering reliance on China's supply chains. Five battery materials plants worth about 5.6 trillion won ($4.4 billion) in total have been announced this year by Chinese companies and local partners in South Korea, including battery firms POSCO Future M (003670.KS) and SK On, according to a Reuters review of project announcements. The deals follow the introduction of the U.S.'s Inflation Reduction Act (IRA), which requires at least 40% of the value of critical minerals used in an auto battery to be sourced from the United States or a free trade partner to qualify for a $3,750 tax credit per vehicle. The IRA, designed to wean the U.S. off the Chinese supply chain for electric vehicles (EVs), will also eventually bar tax credits if any EV battery components were manufactured by a "foreign entity of concern", a provision aimed at China. South Korea has a free-trade agreement with the United States that would likely make batteries manufactured in the North Asian nation and later installed in U.S.-manufactured electric cars eligible for the federal tax credits. But Kang Dong-jin, an analyst at Hyundai Motor Securities, cautioned that setting up South Korea-China JV battery firms could become more complex, as the U.S. Treasury Department has not yet provided a concise definition of "foreign entity of concern" and how it would be applied. That hasn't stopped Chinese companies from setting up a series of joint projects with South Korean partners. China's Ningbo Ronbay New Energy Technology (688005.SS) said last week that Seoul had approved its plan to add 80,000 tonnes in cathode materials production capacity to its South Korea facility that can currently produce 20,000 tonnes a year. The company said its products produced in South Korea are compliant with IRA requirements on key minerals and can take advantage of the benefits of tariff policies applying to exports to European and U.S. markets. "Chinese firms often sign deals with South Korean battery makers to diversify their own product portfolios as part of strategies to alleviate geopolitical risks in light of the IRA," a South Korean company official familiar with the matter told Reuters. The deal follows two separate battery materials joint ventures China's Zhejiang Huayou Cobalt (603799.SS) announced this year, one with Posco Future M and another with LG Chem (051910.KS), which owns battery cell maker LG Energy Solution (373220.KS). SK On and its supplier EcoPro Co (086520.KQ) also announced a joint venture with China's Green Eco Manufacture to make battery precursors in South Korea. POSCO Holdings (005490.KS) said last month it would cooperate with China's CNGR Advanced Material (300919.SZ) on nickel refining and precursor production in South Korea. South Korea is home to the world's three big battery producers - LG Energy Solution, Samsung SDI (006400.KS) and SK On - which together control nearly a quarter of the global EV battery market and supply all major automakers. ($1 = 1,274.0000 won) Reporting by Heekyong Yang in Seoul and Zoey Zhang in Shanghai; Editing by Miyoung Kim and Tom Hogue Our Standards: The Thomson Reuters Trust Principles.