Day: March 29, 2024

By Jeff Mason

NEW YORK (Reuters) -President Joe Biden and his Democratic predecessor, Barack Obama, headlined a star-studded fundraiser with former President Bill Clinton on Thursday, offering a robust defense of the White House’s handling of the Gaza crisis as protesters interrupted the event.

Biden, who traveled with Obama on Air Force One to New York, took part in a discussion with Clinton moderated by “The Late Show” host Stephen Colbert at the iconic Radio City Music Hall in front of thousands of guests. Organizers say the event raised more than $25 million for Biden’s U.S. reelection campaign.

But the fundraiser was punctuated by several protests inside the massive auditorium, with attendees rising at several different moments to shout over the discussion, referencing Biden’s backing of Israel in the Hamas war that has killed more than 30,000 people in Gaza.

“Shame on you, Joe Biden!” one yelled.

Obama and Clinton offered a presidential perspective of the Gaza crisis that stressed the political realities of being in the White House.

A president needs to be able to support Israel at the same time as fighting for Palestinians to have more access to food, medical supplies and a future state, they said.

“It’s a lonely seat,” Obama said. “One of the realities of the presidency is that the world has a lot of joy and beauty, but it also has a lot of tragedy and cruelty.”

People “understandably, oftentimes, want to feel a certain purity in terms of how those decisions are made,” he said. “But a president doesn’t have that luxury.”

When a protestor inside the theater interrupted Obama, the former president snapped back: “You can’t just talk and not listen…That’s what the other side does.”

The pair of former presidents also defended Biden’s handling of the economy, which gets low ratings in national polls.

Clinton said Biden’s economic numbers have significantly outpaced Trump’s administration.

“I believe in keeping score,” Clinton said. “He’s been good for America” and deserves another term.

Before the event, the three leaders’ motorcade passed hundreds of protesters demonstrating against Israel’s war with Hamas in Gaza, another sign that some young voters and other progressives who voted for Biden in 2020 are furious about his staunch backing of Israel in its response to the Oct. 7 Hamas attacks.

LIZZO, $500,000 TICKETS

The event included musicians Queen Latifah, Lizzo, Ben Platt, Cynthia Erivo and Lea Michele performing. Some high-paying attendees had their pictures with the three presidents taken by celebrity photographer Annie Leibovitz.

Former President Donald Trump, Biden’s Republican challenger in November’s election, was in the New York area on Thursday as well, attending a wake for a slain New York City policeman.

Biden, 81, has faced concerns about his age and fitness for a second four-year term. Recent Reuters/Ipsos polls show his approval rating at 40% and in a tight race with Trump, 77, ahead of the Nov. 5 election.

The show of support from Biden’s predecessors was meant to demonstrate party unity and project fundraising strength.

Tickets for Thursday’s Biden event cost between $250 and $500,000, according to a Democrat familiar with the planning. More than 5,000 people were expected to attend.

Biden’s high-profile allies are seeking to shore up his support despite opinion polls showing tepid enthusiasm for the president and in contrast to a Republican Party where many major figures oppose Trump.

Biden showed flashes of humor at the event. He referenced President Harry Truman’s advice that if you wanted a friend in Washington, get a dog. Biden quipped that he got one and it bit a Secret Service agent. The president’s dog Commander left the White House last year after a series of biting incidents.

The event closed with each of the men donning aviator sunglasses, Biden’s trademark.

“Dark Brandon is real,” Biden bellowed, referencing a meme about himself.

TRUMP IN LONG ISLAND

Earlier on Long Island, east of New York, Trump attended a wake for Jonathan Diller, the policeman who was gunned down during a routine traffic stop earlier this week in the city.

“These things can’t happen. We need law and order,” Trump, surrounded by mourning uniformed officers, told reporters gathered outside a funeral home in Massapequa.

Trump has sought to make supporting police a focal point of his campaign, while criticizing law enforcement that targets him.

He faces four criminal trials for his efforts to undermine the 2020 election, his mishandling of classified documents and his involvement in a “hush money” scheme involving a porn star. He was fined hundreds of millions of dollars for overstating his net worth to lenders. He says he is innocent.

Biden has been routinely outraising Trump and is taking in more money than his rival in big donations and small donations under $200. Biden’s reelection effort raised more than $53 million in February and $10 million in the 24 hours following his March 7 address to Congress.

Trump aims to raise $33 million in an April 6 fundraiser, a source familiar with the Republican’s plans told Reuters.

A Trump campaign adviser said on Thursday the candidate won’t be able to match Biden’s totals, blaming the disparity on the Democrat’s “billionaire” supporters and painting a picture of a Trump campaign fueled by grassroots, working-class supporters.

By Lucia Mutikani

WASHINGTON (Reuters) -U.S. prices increased less than expected in February, with the cost of services outside housing and energy slowing significantly, keeping a June interest rate cut from the Federal Reserve on the table.

The report from the Commerce Department on Friday also showed consumer spending rising by the most in just over a year last month, underscoring the economy’s resilience. The United States continues to outperform its global peers despite higher borrowing costs, thanks to persistent labor market strength.

“Core services inflation is slowing and will likely continue throughout the year,” said Jeffrey Roach, chief economist at LPL Financial (NASDAQ:LPLA) in Charlotte, North Carolina. “By the time the Fed meets in June, the data should be convincing enough for them to commence its rate normalization process.”

The personal consumption expenditures (PCE) price index rose 0.3% last month, the Commerce Department’s Bureau of Economic Analysis said. Data for January was revised higher to show the PCE price index climbing 0.4% instead of 0.3% as previously reported. Goods prices rose 0.5% last month, boosted by a 3.4% jump in the cost of gasoline and other energy products.

There were also strong increases in the prices of recreational goods and vehicles as well as clothing and footwear. But prices for furnishings and household equipment, and other long-lasting manufactured goods were subdued.

In the 12 months through February, PCE inflation advanced 2.5% after increasing 2.4% in January.

Economists polled by Reuters had forecast the PCE price index gaining 0.4% on the month. Though price pressures are subsiding, the pace has slowed from the first half of last year.

Fed officials last week left the U.S. central bank’s policy rate unchanged in the current 5.25%-5.50% range, having raised it by 525 basis points since March 2022.

Policymakers anticipate three rate cuts this year. Financial markets expect the first rate reduction in June. Fed Governor Christopher Waller said on Wednesday, “there is no rush to cut the policy rate” right now, but he did not rule out trimming borrowing costs later in the year.

Most U.S. financial markets were closed for the Good Friday holiday, with the exception of the foreign exchange market. The dollar slipped against a basket of currencies on the data.

Excluding the volatile food and energy components, the PCE price index increased 0.3% last month. That followed an upwardly revised 0.5% gain in January. The so-called core PCE price index was previously reported to have advanced 0.4% in January.

Core inflation increased 2.8% year-on-year in February, the smallest gain since March 2021, after rising 2.9% in January. The Fed tracks the PCE price measures for its 2% inflation target. Monthly inflation readings of 0.2% over time are necessary to bring inflation back to target.

Services prices increased 0.3%, slowing after a 0.6% jump in January. The cost of housing and utilities rose 0.5%. There were also solid increases in the prices of recreation services as well as financial services and insurance.

But the cost of dining out and hotel and motel rooms was unchanged, while transportation services barely rose and healthcare increased marginally.

PCE services inflation excluding energy and housing gained 0.2% last month after surging 0.7% in January. Policymakers are monitoring the so-called super core inflation to gauge their progress in fighting inflation.

With inflation slowing consumers boosted their spending. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 0.8% last month. That as the largest gain since January 2023 and followed a 0.2% rise in January.

When adjusted for inflation, consumer spending rebounded 0.4% after dropping 0.2% in January. The increase in the so-called real consumer spending suggested that consumption likely retained most of its momentum in the first quarter, which bodes well for the economy’s prospects.

But much of the spending was funded from savings as growth in personal income slowed. The saving rate dropped to 3.6%, the lowest level since December 2022, from 4.1% in January.

India’s technology giant Infosys (NS:INFY) Limited is scheduled to announce its fourth-quarter results for fiscal 2024 and provide revenue guidance for fiscal 2025 on April 18, after market close. The announcement is set to significantly influence Infosys stock, according to a report by Morgan Stanley.

The research firm’s analysis presents three scenarios for Infosys following the announcement. The most likely scenario, given a 60% probability, suggests Infosys will guide for 3-6% year-over-year revenue growth in constant currency terms and set an EBIT margin range of 20-22%. This outlook is based on strong deal wins in fiscal 2024 and an expected recovery in the second half of the year.

In a less optimistic scenario, assigned a 20% probability, Infosys might project revenue growth of only 2-5%. This outlook would reflect ongoing constraints on discretionary spending and difficulties in achieving revenue from finalized deals. On a brighter note, with the same 20% likelihood, the company could expect a revenue growth of 4-7%, banking on an upswing in discretionary spending during the latter part of fiscal 2025. 

These scenarios imply varying impacts on Infosys stock price. The base case scenario could lead to a 4% appreciation, aligning with positive market reactions to the company’s steady performance. The pessimistic outlook might result in a 3% decline in stock value, while the optimistic scenario could boost the stock price by 11%.

Morgan Stanley has reiterated its Overweight rating on Infosys, with a price target of Rs 1750, indicating a 17% upside from its last close of Rs 1498.05 on March 28.

The firm cites Infosys’s strong execution and innovative service offerings as the basis for its positive stance but warns of risks including geopolitical tensions, regulatory changes, and currency fluctuations that could impact performance.

Infosys reported consolidated net profit for the quarter ending in December at Rs 6,106 crore, down 7% from Rs 6,586 crore the previous year. The company’s revenue from operations for the third quarter saw a modest increase of 1% to Rs 38,821 crore, up from Rs 38,318 crore in the year-ago quarter.

Bitcoin price fell slightly on Friday while most financial markets stay shut for a public holiday. The largest cryptocurrency by market capitalization is sliding along with risk-correlated currencies and settling back into the middle of the narrow range above the $70,000 mark where it’s been trading throughout the week. 

The rangebound trading comes amid tepid flows into the U.S.-based spot Bitcoin ETFs and increased outflows of Grayscale’s GBTC fund. Europe and U.S. stock markets will remain closed on Friday, March 29, in recognition of Good Friday.

Cryptocurrencies saw a modest rally earlier in the week, with Bitcoin (BTC) price soaring above $70,000 for the first time in ten days. This marks a rebound from recent downturns, scoring a more than 7% increase for the week. Ethereum (ETH) also enjoyed gains, rising by 6% in the same timeframe. 

Short-term intraday traders probably viewed the dip as a chance to buy into Bitcoin at an attractive entry point, creating a widespread sentiment that the worst of this downward correction is firmly in the past.

The positive momentum wasn’t limited to Bitcoin and Ethereum; major layer-1 blockchain tokens such as Solana (SOL) and Avalanche (AVAX) saw advances exceeding 10%. 

The comeback resulted in the liquidation of $195 million in leveraged derivatives positions across various cryptocurrencies, with around $129 million of these betting on falling prices. Bitcoin short liquidations amounted to $53 million, which is below the average daily total seen in the recent weeks.

The modest number of short liquidations despite the price increase indicates that few traders were betting against the market with leverage, expecting further downturns. The price jump this week may mark the end of the downturn cycle in the cryptocurrency market, which saw Bitcoin’s value fall below $61,000 from highs above $73,000. 

Bitcoin might be setting its sights on new record highs after it breaks out from a consolidation pattern it has formed on the daily chart. The upside scenario is supported by a number of central banks adopting a more dovish stance toward the monetary policy, which is expected to favor Bitcoin.

Despite the recent swings in the crypto market, analysts are still positive about Bitcoin’s future prospects.

Markus Thielen, CEO of 10X Research, recently posted an analysis on the X platform, hinting at a possible Bitcoin price rally. His analysis particularly focuses on Bitcoin’s performance history in April, suggesting the cryptocurrency might see a 12% increase.

Thielen points out that April has historically been a good month for Bitcoin, with six out of the last ten years showing strong price gains. 

Furthermore, the current fluctuations in Bitcoin’s value are being linked by some analysts to the pre-halving phase. Experts note that the pre-halving retracement, a pattern found in past data, highlights Bitcoin’s volatility, which often leads up to substantial price surges.

As the second quarter approaches, Citigroup equity strategists anticipate a shift in the US equity rally, predicting it will extend to more defensive market segments, especially those influenced by interest rates. 

The S&P 500 has overshot our 5100 year-end target reflecting soft landing and AI enthusiasm,” Citi strategists said in a note.

“… [Y]td price action has run valuations higher, implying a burden on fundamental growth follow through.”

Citi’s analysis suggests a modest overweight in growth sectors, despite downgrading the technology sector to market-weight due to mixed prospects within its subsectors. Specifically, the software segment, which includes giants like Microsoft (NASDAQ:MSFT), is retained at Overweight.

However, semiconductors, represented by companies like Nvidia (NASDAQ:NVDA), are kept at Market Weight. Finally, hardware, with Apple (NASDAQ:AAPL) as an example, is downgraded to Underweight, affecting the overall technology sector’s positioning.

Elsewhere, the consumer discretionary sector is elevated to Overweight, buoyed by upgrades in the auto sector. Retailers like Amazon (NASDAQ:AMZN) and the durables/apparel segment continue to be strong, reinforcing the sector’s bullish outlook. 

Conversely, financials are adjusted to Market Weight with a balanced view: banks retain an Overweight rating, but insurance, despite performing well in a hawkish Federal Reserve cycle, is downgraded to Underweight.

The strategists have also warned about the sustainability of the current market rally. 

“The Levkovich Index has just hit a “euphoria” reading,” strategists added.

The Levkovich Index is Citi’s sentiment gauge that follows everything from margin debt to short interest to the put-to-call ratio.

By Howard Schneider and Ann Saphir

WASHINGTON (Reuters) -The latest U.S. inflation data is “along the lines of what we would like to see,” Federal Reserve Chair Jerome Powell said on Friday in comments that appeared to keep the central bank’s baseline for interest rate cuts this year intact.

The personal consumption expenditures (PCE) price index data for February, which was released on Friday, “is what we were expecting,” Powell said, and even though the numbers showed less of a slowdown than last year, “you won’t see us overreacting.”

The data last month were “not as low as most of the good readings we got in the second half of last year, but it’s definitely more along the lines of what we want to see,” Powell said during an appearance at the San Francisco Fed where he was interviewed by Kai Ryssdal of public radio’s “Marketplace” program.

Powell’s comments were in line with his remarks after the Fed’s policy meeting last week, in which he said higher-than-expected inflation in January and February had not changed the sense that price rises would keep falling this year to the central bank’s 2% target.

U.S. Commerce Department data showed the PCE price index increased at a 2.5% annual rate in February, up from 2.4% in the prior month. The number excluding volatile food and energy prices rose 0.3% on a month-to-month basis, slightly faster than Powell anticipated when he said last week that February core inflation would be “well below” 0.3%.

Still, the Fed chief indicated the February report did not undermine the central bank’s baseline outlook.

Some details of the PCE data, economists noted, showed improvement in aspects of inflation that the Fed considers important, even as the headline numbers have shown little progress in the first two months of the year.

The central bank last week held its benchmark overnight interest rate steady in the 5.25%-5.50% range and also reaffirmed – narrowly – a baseline projection that the rate will fall by 0.75 percentage points by the end of this year.

The Fed is expected to hold rates steady, as it has since July of last year, at its April 30-May 1 policy meeting.

Policymakers by then will have received inflation and jobs reports for March, and the initial gross domestic product growth estimate for the first three months of the year.

While Fed officials have been careful to say they don’t put much weight on any single month’s data, the March readings could have an outsized bearing on their policy discussion if they confirm – or perhaps even more if they contradict – an anticipated job and wage growth slowdown and a cooling of housing inflation.

Economists polled by Reuters expect the March jobs report, which will be released next week, to show continued strong payroll growth, with 200,000 jobs added, but with annual wage growth, at 4.1%, hitting its slowest pace since June 2021.

Powell in recent weeks has had to reconcile expectations for rate cuts to begin this year with data showing improvement in the inflation number had slowed to start the year.

“We need to see more” progress on inflation before cutting rates, he said on Friday. “The decision to begin to reduce rates is a very, very important one … The economy is strong right now, and the labor market is strong right now. And inflation has been coming down. We can and we will be careful about this decision because we can be.”

Citigroup strategists expect the Federal Reserve to start cutting interest rates in June, the bank said after the Personal Consumption Expenditures (PCE) for February was relesed today.

Citi’s projections are now more in line with the Federal Reserve’s expectations for the upcoming easing cycle. In a research note, the strategists said they expect Chair Jerome Powell to maintain a dovish stance despite recent hawkish signals from other Fed officials.

The bank’s economists are closely monitoring inflation dynamics, with particular focus on the core PCE price index, the Fed’s favored inflation metric as it directly tracks how much Americans spend on less volatile items.

Core PCE inflation in February rose 0.26%MoM and was revised higher to 0.45% in January.

“We expect a stronger ~0.30% increase in core PCE in March given stronger medical and financial services,” Citi’s economists said in a separate note. 

Citi’s analysis follows remarks from Federal Reserve Governor Christopher Waller, who indicated that stronger inflation readings could be a barrier to kicking off rate cuts early. He outlined how the central bank could return inflation to its 2% target without the typically associated rise in unemployment.

That said, the contrasting perspectives within the Federal Reserve highlight the challenge of navigating between inflation risks and indicators of a cooling labor market. Despite recent increases in inflation data, Powell’s attention stays on the overarching theme of disinflation, indicating that he is ready to relax monetary policy further if inflation continues to moderate. 

Citi is also predicting a slowdown in job growth for March with estimates to create 150,000 new jobs, a decrease from the robust figures seen in previous months. This anticipated deceleration, together with additional signs of a softer labor market, underpins the case for upcoming rate cuts as a strategy to support economic stability. 

“We continue to expect officials will have enough evidence in inflation data to justify rate cuts starting in June, and that weaker labor market data will lead to 125bp total of cuts this year,” the team of analysts added.