Category Archives: Economy

By Harshita Mary Varghese

(Reuters) -Micron Technology forecast first-quarter results ahead of Wall Street estimates and reported fourth-quarter revenue growth that was the highest in more than a decade on the back of booming demand for its memory chips used in the AI industry.

The company’s shares, which have gained about 12% this year, were up nearly 14% after the bell.

Micron (NASDAQ:) is one of the only three providers of high-bandwidth memory (HBM) chips along with South Korea’s SK Hynix and Samsung (KS:), which has allowed the U.S. firm to cash in on demand for semiconductors that help power generative AI technology.

HBM is a space-saving, power-efficient type of dynamic random access memory chip, or DRAM, crucial for AI-focused graphics processing units, that aid in processing vast amounts of data.

“Demand from data center customers continues to be strong and customer inventory levels are healthy,” Micron CEO Sanjay Mehrotra said on a conference call with analysts.

The company said in June its HBM chips, used in the AI processors designed by Wall Street darling Nvidia (NASDAQ:), were sold out for the 2024 and 2025 calendar years with pricing already determined.

Micron expects to report record revenue of about $8.7 billion, plus or minus $200 million, in the first quarter and forecast a jump in gross margin to about 39.5% for the same period.

Analysts had expected revenue of $8.28 billion for the first quarter and adjusted gross margin of 37.7%, according to LSEG data.

The AI boom has also helped Micron cushion the hit from a memory chip inventory glut in PC and smartphone markets.

Personal computers infused with AI technologies are expected to have more memory chips, helping firms such as Micron.

AI PCs may have over 30% more DRAM and Microsoft (NASDAQ:)’s push to have users shifting to Windows 11 from an older version, may expand the market, especially for commercial PCs in 2025, said Summit Insights senior research analyst Kinngai Chan.

Micron’s results typically set the tone for the chip sector as it reports ahead of peers and serves a broad client base spanning the PC, data center and smartphone industries.

“HBM, high capacity memory and flash storage, each of these three product categories will be multiple billions of dollars in revenue in 2025,” Micron’s Chief Business Officer Sumit Sadana said.

For the first quarter, the company forecast an adjusted profit of $1.74 per share, plus or minus 8 cents, compared with analysts’ estimates of $1.65.

By Jamie McGeever

ORLANDO, Florida (Reuters) -China’s political and economic leadership are thought to have a keen sense of history, but Beijing’s tepid response to the unfolding property crash that’s strangling the country’s growth and spreading deflation is baffling.

The clear lesson from major housing crises that have occurred in recent decades is that cure and recovery only come following bold, decisive action in the form of massive monetary and fiscal stimulus.

Beijing is providing neither and instead taking a scattergun approach. 

The People’s Bank of China on Friday chose not to cut benchmark borrowing rates, but on Monday injected two-week cash into the banking system for the first time in months and at a lower rate too.

But in the words of the Institute of International Finance’s Gene Ma and Phoebe Feng, Beijing’s policy response has been “slow, timid, and sometimes very vague,” a far cry from the “big bazooka” that’s needed.

FALLING BEHIND

The impact of this muted response on China’s economy has been stark. Growth in 2024 is likely to fall short of the government’s 5.0% target, deflationary pressures are intensifying at an alarming rate, investment is collapsing, and credit growth is at a record low. 

Morgan Stanley economists are now forecasting nominal GDP growth of just 3.9% this year and next. For comparison, nominal U.S. GDP growth is currently running at an annualized pace of around 5.5%.

China’s stock market is also a notable laggard. As the rising tide of global monetary easing has lifted stock markets around the world to new highs, China has gone in the opposite direction. Shanghai’s blue chip index is down 15% since May, has nearly halved since February 2021, and is close to making new multi-year lows. 

In many cases, foreign capital is staying away or leaving. Chinese equity funds have attracted inflows in only two of the last 13 months, and foreign direct investment flows have turned negative, according to the IIF.

True, foreign investors have continued to participate in the country’s bond market rally. But the overall message is that investors are reluctant to invest in China until there’s a clear path to economic recovery.

And that’s nowhere in sight. 

TRILLIONS NEEDED

The property sector is pivotal to the crisis. Its implosion is damaging growth, financial stability and household wealth. And the deflation it’s fueling is affecting corporate profitability and investment, while increasing real debt burdens.

At its peak three years ago the property sector accounted for a quarter of China’s GDP. Since then, housing investment is down 30%, home sales have halved, and housing starts have plunged by two thirds, according to the IIF. 

Analysts at Jefferies reckon Beijing may need to spend at least 2 trillion yuan ($285 billion) this year to successfully implement its plan to reduce the country’s excess housing stock by purchasing unsold properties and converting them into social housing. And they estimate that up to 7 trillion yuan ($1 trillion) will be needed to get housing inventory down to more healthy levels. 

EXCESSIVE CAUTION

So why isn’t Beijing firing the proverbial bazooka? 

First, flooding the system with liquidity may not address the root cause of the crisis because China’s property bubble is a result of simple oversupply as much as debt-fueled leverage. 

A flood of stimulus could also weaken the exchange rate so much that capital flight out of the country accelerates. And deep rate cuts would wipe out banks’ already slender interest margins. Finally, China’s leaders have simply shown themselves to be more cautious than cavalier. 

But this policy paralysis has consequences. 

By failing to follow its global peers in aggressively cutting rates, the PBOC has helped lift the yuan to its strongest level in over a year. The last thing China’s sluggish economy needs is a buoyant exchange rate.

Beijing’s hesitancy may reflect its concern about repeating the mistakes of Japan, which spent decades in a deflationary and slow-growth funk after its housing bubble burst in 1990. House prices there still haven’t fully recovered. 

But taking an overly cautious approach could make this outcome more likely, not less.

WISHING AND HOPING

Many China bulls argue that Chinese assets are attractive because, when push comes to shove, Beijing will ultimately take the necessary steps to stimulate growth. How can investors ignore the world’s largest consumer of many key commodities – an innovative, competitive behemoth with a huge savings pool worth trillions of dollars? 

But bonds aside, Chinese assets are cheap for a reason. Lots of reasons. And thus far, Beijing has shown little appetite for the overwhelming monetary and fiscal stimulus experts believe is necessary. This could obviously change. But, for now, there’s little indication that it will.

(The opinions expressed here are those of the author, a columnist for Reuters.) 

(By Jamie McGeever; Editing by Andrea Ricci)

By Nandita Bose

WASHINGTON (Reuters) -U.S. Vice President Kamala Harris plans to roll out a new set of economic policies this week that aim to help Americans build wealth and set economic incentives for businesses to aid that goal, three sources with knowledge of the matter said.

The new policies, which have not been previously reported and could be announced in Pittsburgh on Wednesday, come as undecided voters continue to ask for more information about how Harris would help them economically if she were elected president in November, including those in critical swing states, the sources said.

Harris, speaking to reporters on Sunday after Reuters reported the expected rollout, said she would outline her vision for the economy in a speech this week.

She added that the plan is about investing in the aspirations and ambitions of the American people while addressing the challenges they face.

The rollout would follow heated debate in Democratic circles over whether releasing more economic policies so close to election day is a smart strategy.

“It’s not just about affordability, it’s also about showing (voters) they have a path to building wealth,” said one of the sources with direct knowledge of Harris’s economic plans, adding she wanted to show Americans how they can “get a foot in the door.”

None of the sources would provide specific details on the expected new policies, and the Harris campaign would not comment on any new proposals. However, Harris’ 2020 presidential run and President Joe Biden’s administration included plans with similar goals.

In her 2020 campaign, Harris proposed significant pay hikes for the millions of public school teachers, forcing companies to disclose their pay gap between men and women and penalizing those who are not narrowing it. The Biden and Harris administration have pushed to eliminate bias in home appraisals and use the over $700 billion federal contracting budget to buoy minority businesses.

Harris has released a basket of economic policies focused on the high cost of housing, taxes, small business expenses, childcare and goods. Her plans often build on Biden’s policies, like increasing the child tax credit and lifting the corporate tax rate to 28%.

Campaign spokesman James Singer did not comment on the story. He told Reuters that Harris “will continue to present her opportunity economy agenda to lower costs, make housing more affordable, and spur economic growth across America.”

Releasing new economic policy with less than 50 days left in a tight presidential election race could mean the new measures never reach crucial voters, some advisers acknowledge.

“Typically you’d see a campaign wrap up persuading voters by September and move to mobilizing people but this is not a typical campaign,” said a source with knowledge of the new plans, referring to Harris’ jump to the top of the ticket in late July. “We have to continue persuading and mobilizing folks at the same time until the very end.”

Republican Donald Trump’s economic proposals aimed at working-class Americans include eliminating taxes on tips and Social Security benefits, opening up federal lands to housing construction and deporting millions of immigrants to the country who Republicans say are driving up costs.

The former president has also proposed new across-the-board tariffs on goods not made in the U.S. that could raise costs for American consumers and inflation, but that is backed by a slim majority of voters.

Trump has tried to pin on Democrats inflation that popped globally as the COVID-19 pandemic shutdowns eased and has made the still-high cost of groceries, particularly bacon, a rally speech staple. From 2019 to 2023, the food Consumer Price Index rose by 25%, the U.S. Department of Agriculture reported.

HARRIS GAINS ON ECONOMY

Republicans have traditionally polled better on the economy than Democrats, and Trump beat Biden and then Harris on the topic earlier this year.

Some polls, however, are shifting in her direction.

A Financial Times-Michigan Ross poll this month showed 44% of registered voters trusted Harris’ economic stewardship compared with 42% who backed Trump, and Reuters/IPSOS polling in August showed her narrowing the gap on the economy.

The Federal Reserve’s decision to cut interest rates by half a percentage point last week, reflecting the belief that inflation risks have fallen, could lower some costs for consumers.

Some Harris supporters have urged the campaign to double down on the economic message that is already out there instead of rolling out new ideas.

“My recommendation is to do more show-and-tells. Rather than address this with endless white papers, go to grocery stores and apartment buildings and more,” said Donna Brazile, a longtime Democratic strategist.

“Inflation may have gone down, but the cost of living hasn’t changed. Some of this is post pandemic and that still must be addressed,” she said.

Others believe more economic policy is not a priority. Adam Newar, a money manager and Harris donor said “it’s a character election” and not a policy election.

“I’m not sure what more policy information actually brings to the table. She really has to continue articulating a vision, communicate that vision to people who really feel like they’ve been left behind,” Newar said.

Many of Harris’ proposals would require congressional approval, and would be unlikely to pass unless Democrats win both the House and Senate.

PARIS (Reuters) – Here are details of the main ministerial appointments after French President Emmanuel Macron’s office unveiled on Saturday the new cabinet that will report to Prime Minister Michel Barnier:

ANTOINE ARMAND, FINANCE MINISTER

A relative newcomer to politics, Armand, 33, was first elected to parliament in 2022 on the centrist ticket of Macron’s camp and was re-elected in July’s snap legislative election.

In the new parliament, he had been set to head the economic committee in the lower house until Barnier tapped him for the top job at the powerful Ministry of Economics and Finance.

Armand is no stranger to “Bercy” as the ministry is often called in France, having joined its elite corps of finance inspectors after graduating in 2018 from the prestigious Ecole Nationale d’Administration – a training college for future senior civil servants that Macron also attended.

He will be seconded by Laurent Saint-Martin on budget issues, a delicate portfolio that will report directly to the prime minister, as France struggles to contain a rising budget deficit and contemplates spending cuts and tax hikes.

BRUNO RETAILLEAU, INTERIOR MINISTER

A conservative senator since 2004, Bruno Retailleau, 63, is known for his hard-right views and is the most senior figure from his Republicans (LR) party to enter Barnier’s government.

Retailleau was a driving force behind the party’s shift to the right in an increasingly polarised political landscape, in particular on hot-button issues such as immigration.

As leader of the conservative group of senators, Retailleau has criticised Macron’s latest attempts to toughen immigration rules, calling for a much tougher stance that would include constitutional changes allowing welfare benefit cuts.

He has also urged tougher policing on left-wing and environmental protesters and opposed Macron’s push to add the right for women to pursue an abortion to the constitution.

JEAN-NOEL BARROT, FOREIGN MINISTER

Barrot, 41, is promoted to foreign minister after serving as junior minister for European affairs since February 2024. Before that he was Macron’s minister for digital affairs.

Barrot comes from a family with a strong political background. His father, Jacques Barrot, was a prominent French politician who served in various ministerial positions and as a European commissioner.

He provides essential political balance for the government, hailing from the centrist party of Francois Bayrou, the political veteran whose independent MoDem party Macron needs to keep on his side.

BENJAMIN HADDAD, EUROPE MINISTER

Haddad, 38, a fluent English-speaker with excellent contacts in Washington, DC, where he spent years working at a think-tank, was first elected to parliament in 2022 under Macron’s party colours.

He has been vocal on diplomatic issues and especially the war in Ukraine, having convinced tens of European lawmakers to sign a plea to the U.S. Congress to unlock aid for Ukraine at the end of 2023.

SEBASTIEN LECORNU, DEFENCE MINISTER

Lecornu, a Macron loyalist, remains in his post at the helm of the Defence Ministry.

A low-profile minister who started his career in conservative ranks, he was excluded from the Republicans after being named a junior minister in Macron’s government in 2017.

By Joe Brock, David Shepardson and Tim Hepher

(Reuters) -Boeing said on Friday the head of its troubled space and defense unit is leaving the company immediately, in the first management change under new CEO Kelly Ortberg.

Ortberg who took over in August said Ted Colbert would be leaving and Steve Parker, the unit’s chief operating officer, would assume Colbert’s responsibilities until a replacement is named at a later date.

“At this critical juncture, our priority is to restore the trust of our customers and meet the high standards they expect of us to enable their critical missions around the world,” Ortberg wrote in an email to employees. “Working together we can and will improve our performance and ensure we deliver on our commitments.”

Boeing (NYSE:)’s space business has suffered significant setbacks, notably NASA’s recent decision to send Boeing’s Starliner capsule home without astronauts that followed years of missteps. Starliner has cost Boeing $1.6 billion in overruns since 2016, according to a Reuters analysis of securities filings.

Colbert’s departure comes at a time when Boeing has been trying to save cash by announcing furloughs of thousands of white-collar workers amid a strike by more than 32,000 of its workers.

Boeing has also faced significant woes after a new Alaska Airlines 737 MAX 9 in January suffered a mid-air emergency after it was missing four key bolts.

Boeing in July agreed to plead guilty to a criminal fraud conspiracy charge and pay at least $243.6 million after breaching a 2021 deferred prosecution agreement. The government said Boeing knowingly made false representations to the Federal Aviation Administration about key software for the 737 MAX.

The FAA has tightened oversight of Boeing and barred it from expanding production of the MAX beyond 38 planes per month until it makes significant quality and safety improvements.

Parker was brought in to shore up industrial leadership and help fix loss-making programs with a new operating management role just under two years ago. He had previously headed Boeing’s bomber and fighter programs as well as its St Louis defense plants.

“Historically, Boeing held a superior reputation for our ability to manage programs, and we need to ensure it remains a key differentiator for us in the future,” Ortberg wrote in separate email to employees on Friday.

Ortberg added he had learned “more about the future investments we need to make to be competitive and define our future, as well as about some of the more near-term hurdles engineering faces with first-time quality and execution.”

Colbert, who joined Boeing in 2009 after working at Citigroup and Ford Motor (NYSE:), took the reigns at Boeing Defense and Space in April 2022 after the prior head of defense was ousted.

Boeing’s defense, space and security unit, one of its three main businesses, has lost billions of dollars in 2023 and 2022, which executives attributed in large part to cost overruns on fixed-price contracts.

Such contracts have high margins but leave defense contractors vulnerable to inflationary pressures that have dented U.S. corporate earnings in the last few years.

Boeing has lost more than $2 billion on its delayed program to deliver two heavily retrofitted Boeing 747-8s for use as U.S. presidential aircraft known as Air Force One.

Boeing’s shares closed down about 1% on Friday and have lost about 41% so far this year.

By Mariko Katsumura

SANBAGAWA, Japan (Reuters) – Benmou Suzuki’s dilapidated 420-year-old temple, located deep in the forest near a tiny Japanese mountain village, hardly looks like prized real estate.

Yet the monk was recently approached by two men, who said they were real estate brokers and wanted to know if he was interested in selling.

He suspects they weren’t really interested in the ornate building at the trailhead of a sacred mountain, but the special tax status that comes with running a religious property.

“There are people out there who want a temple, even a mountain temple like this. In fact, considering the value of the religious corporation status, this temple could fetch quite a lot of money,” said 52-year-old Suzuki.

As Japan’s population falls and interest in religion declines, there are fewer people to contribute to the upkeep of the country’s numerous temples and shrines. Suzuki’s Mikaboyama temple, for example, is located in Sanbagawa – an area three hours drive from Tokyo with only 500 residents and which also has three other Buddhist temples, one Shinto shrine and a church.

A surge in religious properties coming up for sale has Japanese authorities worried that prospective buyers are not interested in them for heavenly purposes. Rather they fear many are out to dodge taxes or possibly even launder money.

“It’s already a sense of crisis for us and the religious community,” said an official at Japan’s Agency for Cultural Affairs, which oversees religious sites.

Cases of temple or shrine properties being extensively repurposed have triggered public outrage. In Osaka, a temple sold in 2020 was later razed and dozens of graves were relocated to make way for a property development. In Kyoto, a case about a temple that was demolished and turned into a parking lot made headlines this year.

Owning a temple, shrine or church recognised as a religious corporation in Japan can confer sizeable tax benefits. Businesses under such corporations that offer religious services such as funerals do not have to pay taxes while other non-religious businesses also enjoy preferential tax rates. A wide range of undertakings are allowed from restaurants to hair salons to hotels.

Japan had about 180,000 religious sites with corporation status as end-2023, according to the agency’s data. The number of so-called inactive corporations – such as those with no religious events for more than a year – jumped by a third to more than 4,400.

When monks or priests die without a successor, the overseeing religious group will usually appoint someone to take over or voluntarily relinquish the site’s corporation status.

However, there are around 7,000 religious sites that operate independently of these groups and are considered easy to acquire, according to the agency and specialist brokers.

The cultural affairs agency said it has stepped up efforts to dissolve the corporation status of inactive religious sites to stop them from being targeted by dubious buyers.

And when big earthquakes hit, often damaging temples and shrines, agency officials visit religious groups in those areas, warning them about falling prey to such buyers.

Last year, 17 religious corporations were voluntarily dissolved and six were ordered to dissolve. The agency said the number would increase this year and next year as it ratchets up scrutiny.

It might seem easier for Japan to change its laws to more strictly control the criteria for purchasing religious sites. But the agency said the government is wary about amending laws related to religion as that could be seen as impinging on religious freedom which is guaranteed by Japan’s constitution.

Reuters checks of six websites specialising in brokering the sale of religious properties showed hundreds on the market. Most are only obliquely described online with brokers saying sellers prefer to conduct sales as privately as possible.

Osaka-based broker Takao Yamamoto told Reuters interest is surging. A religious corporation licence alone can fetch 30 million yen ($210,000), he adds. Some religious sites, especially those with profitable graveyards, are advertised for millions of dollars.

“Anyone can buy independent sites as long as you have money…even foreigners can buy them. Recently, a lot of Chinese people are trying to buy them,” Yamamoto said.

For his part, Suzuki says he has no intention to sell Mikaboyama temple and is working on ideas to raise funds to maintain it. “Temples are places for local people to gather and forge connections. We just can’t get rid of them,” he said.

By Marcela Ayres

BRASILIA (Reuters) – Brazil’s central bank kicked off an interest rate-hiking cycle on Wednesday with a 25 basis-point increase, as expected, and signaled more increases ahead to tackle a challenging inflation outlook driven by stronger-than-expected economic activity.

The bank’s rate-setting committee, known as Copom, voted unanimously to raise the benchmark Selic interest rate for the first time in over two years to 10.75%, in line with most forecasts.

While the U.S. Federal Reserve initiated its highly anticipated easing cycle earlier in the day, Brazil’s central bank began moving in the other direction and left the door open to larger increases.

“The pace of future adjustments of the interest rate and the total magnitude of the cycle that just started will be determined by the firm commitment of reaching the inflation target and will depend on the inflation dynamics,” Copom wrote in its policy statement.

Policymakers said the balance of inflation risks is now tilted to the upside, flagging a stronger-than-expected labor market and robust growth.

“The scenario, marked by resilient economic activity, labor market pressures, positive output gap, an increase in the inflation projections, and unanchored expectations, requires a more contractionary monetary policy,” they wrote.

Gustavo Sung, chief economist at Suno Research, said he expected two more rate hikes of the same size in November and December, bringing the benchmark rate to 11.25% at year-end.

The central bank had held its policy rate steady at 10.50% in June and July after a series of cuts since last year to bring it down from a six-year high of 13.75%. 

Expectations for a rate hike, the bank’s first since August 2022, firmed after second-quarter activity significantly exceeded forecasts, driven by a robust labor market and rising wages in Latin America’s largest economy.

However, bets on tighter policy had been building since late July, when central bank minutes indicated that policymakers would not hesitate to raise borrowing costs if needed amid growing upside risks for inflation.

Since then, the central bank’s communication has turned more hawkish, including prominent messaging from monetary policy director Gabriel Galipolo, who was confirmed as President Luiz Inacio Lula da Silva’s nominee to lead the central bank after Campos Neto’s term expires in December.

Galipolo has shown discomfort with the bank’s inflation models showing consumer prices surpassing the annual 3% target and indicated a rate hike was on the table.

Brazil’s 12-month inflation reached 4.24% in August.

The central bank raised its baseline inflation forecasts to 4.3% for this year and 3.7% for 2025, up from 4.2% and 3.6% previously.

For the first quarter of 2026, considered the relevant horizon for monetary policy, the projection was 3.5%, up from the previous 3.4%.

In all three cases, estimates are above the 3% target, which has a tolerance margin of 1.5 percentage points on either side.

(This story has been corrected to show that the last interest rate hike was in August 2022, not June 2022, in paragraph 6)