producer

US wholesale prices jump 6.0% year-on-year in April, highest since 2022

BY ASAD HASHIM

  • Month-on-month prices rose by 1.4 percent, sharply higher than expectations and at their highest level since March 2022.
  • Wholesale prices in the United States rose sharply in April, lifted by a surge in energy costs related to the Iran war, registering their highest 12-month increase in more than three years.
  • Month-on-month prices rose by 1.4 percent, sharply higher than expectations and at their highest level since March 2022.
Wholesale prices in the United States rose sharply in April, lifted by a surge in energy costs related to the Iran war, registering their highest 12-month increase in more than three years.
The Producer Price Index (PPI) rose 6.0 percent for the 12 months ending in April, the Bureau of Labor Statistics (BLS) said on Wednesday, the highest level since December 2022.
Month-on-month prices rose by 1.4 percent, sharply higher than expectations and at their highest level since March 2022.
The world's largest economy has been battling stubbornly high inflation since the Covid-19 pandemic, with US President Donald Trump's signature tariffs and the US-Israel war on Iran piling pressure on prices.
Iran's retaliation to US-Israeli strikes has seen the Middle East engulfed in violence, with Tehran virtually blocking the vital Strait of Hormuz waterway through which a fifth of global energy supplies pass.
"Over 40 percent of the April advance in prices for final demand goods can be attributed to a 15.6-percent increase in the index for gasoline," the BLS said.
The increase was sharply up from March, when year-on-year PPI inflation was 4.0 percent. That figure, too, was fuelled by higher energy prices due to the Iran war.
The numbers were released a day after US consumer inflation also came in at a three-year high, rising 3.8 percent year-on-year in April.
Trump has made tackling high prices a key part of his political agenda, but has been unable to bring prices significantly lower -- other than for some commodities -- since returning to power last year.
Inflation will be a major political issue for voters heading into midterm elections in November, where control of both houses of the US Congress will be up for grabs.

Knock-on effects

Analysts have warned that a short-lived spike in energy prices could lead to a temporary bout of inflation, but if the surge is more sustained it could lead to higher prices of other goods.
On Wednesday, Grace Zwemmer, US economist at Oxford Economics said there were signs in the PPI data that this process had begun.
"There are also signs that higher energy costs are beginning to bleed through to other goods and services, like transportation costs, which will keep producer price inflation lifted in the coming months," she wrote in a note.
The average price of a gallon of diesel in the United States is up around 50 percent since the start of the war, according to the AAA motor club. 
Diesel is crucial not just to the road transport sector, but it also powers farm equipment and commercial shipping.
April's PPI data likely strengthens the case for the US Federal Reserve to hold rates steady for longer, said Ben Ayers, senior economist at Nationwide.
"With inflation still trending higher, we expect the hawkish wing of the FOMC to advocate for an extended pause in interest rates even with incoming Fed Chair Kevin Warsh likely to prefer to lower rates over time," he said.
aha/mjf

US

Nations drawing down oil stocks at record pace: IEA

  • "With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period," the agency said.
  • Countries are tapping into oil inventories and strategic reserves at a "record pace" due to the "unprecedented" supply disruptions caused by the Middle East war, the International Energy Agency said Wednesday.
  • "With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period," the agency said.
Countries are tapping into oil inventories and strategic reserves at a "record pace" due to the "unprecedented" supply disruptions caused by the Middle East war, the International Energy Agency said Wednesday.
Global stocks were drawn down by a further 117 million barrels in April, the agency said, after a 129-million-barrel drawdown in March following the US and Israeli launch of attacks against Iran.
"Rapidly shrinking buffers amid continued disruptions may herald future price spikes ahead," the IEA warned in its monthly report.
Tehran has effectively closed the strategic Strait of Hormuz to Gulf oil and gas exports, sending prices soaring and forcing nations to scramble for alternative supplies.
The IEA said in March that it would provide global markets with 400 million barrels from the emergency stocks of IEA members, of which around 164 million barrels have already been drawn.
"The pace of emergency stock releases picked up pace in April, with further volumes set to hit the market in the coming months," the agency said.
Fears of shortages are rising with the summer travel season approaching in the northern hemisphere, with airlines already warning of jet fuel shortages in a matter of weeks if supply disruptions persist.
"With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period," the agency said.

'Highly disturbing'

The release of reserves has helped calm volatility on markets, but is only making up for part of the lost production and these reserves are dwindling.
"Those of us who follow the oil situation did not need the IEA report to know we are losing a billion barrels of reserves and that we have less than half of that left before hitting the minimum operating levels," said Adi Imsirovic, an energy industry expert at Oxford University.
"It is highly disturbing," he added.
Surging prices are also weighing on the demand outlook as end users such as petrochemical and heavy manufacturers reduce usage.
The IEA now expects global demand to shrink by 2.4 million barrels per day in the second quarter, down from its forecast of 3.5 million barrels before the war erupted.
"Higher prices, a deteriorating economic environment and demand-saving measures will further weigh on global oil consumption," it said.
Meanwhile the OPEC oil cartel said it still believes demand will increase in 2026, by 1.2 million barrels per day.
nal/js-rl/sbk

inflation

Strong US economy's resilience to shocks tested by Iran war

BY MYRIAM LEMETAYER AND ASAD HASHIM

  • "The economy is resilient, but it's also kind of precariously perched," said Mark Zandi, chief economist at Moody's Analytics. 
  • If you look at the numbers, the United States economy seems to be doing surprisingly well despite massive successive shocks from the pandemic, Ukraine war, tariffs, and now the Iran war energy crunch -- but economists warn that resilience is precarious.
  • "The economy is resilient, but it's also kind of precariously perched," said Mark Zandi, chief economist at Moody's Analytics. 
If you look at the numbers, the United States economy seems to be doing surprisingly well despite massive successive shocks from the pandemic, Ukraine war, tariffs, and now the Iran war energy crunch -- but economists warn that resilience is precarious.
GDP growth came in at a robust 2.0 percent last quarter, unemployment is steady, the stock market is booming, and inflation -- while high -- is nowhere near its pandemic peak.
US President Donald Trump has pointed to these figures as proof his economic policies, including upending the international trade order with tariffs, are working.
"The economy is resilient, but it's also kind of precariously perched," said Mark Zandi, chief economist at Moody's Analytics. 
He pointed to concerns about job growth, often used as a proxy for economic activity.
While unemployment has remained steady, job growth has see-sawed wildly between expansion and contraction in the last year, with new jobs heavily reliant on a single sector: health care.
The US-Israel war on Iran has sent energy prices surging, after Tehran blocked the key Strait of Hormuz waterway through which a fifth of all global energy supplies normally pass.
The shock is being felt at the pump for consumers, but also for private sector companies as they see their input costs skyrocket.
"It wouldn't take much to push this resilient economy over the cliff into a downturn," said Zandi.
Excluding health care, analysts warn that the US economy has lost jobs over the last year. Zandi said there had not been mass layoffs, but that many companies were "right on the edge."
If the Iran war drags on, spiking energy prices further and snarling global supply chains, "at some point the economy is not going to be able to digest all the shocks," he said.
"I think recession risks are uncomfortably high," he added.

'Firing on all cylinders'

Claudia Sahm, chief economist at investment firm New Century Advisors, told AFP the economy had been surprisingly robust, but it was too early to predict the full effects of the Iran war.
She said the world's largest economy had come out of the pandemic "firing on all cylinders," and that strength had helped it weather subsequent storms, including the current energy shock.
"Some of the resilience just comes from the fact that we were on a pretty strong footing," she said.
For Sahm, the current scenario -- with high energy prices, tariffs and policy uncertainty -- is "unlikely to be enough to derail the economy."
The real issue, she said, would hit if there was a "crisis of confidence," particularly in new artificial intelligence (AI) technologies that are powering much of the optimism on Wall Street and in the private sector.
It is AI-related technology stocks that have powered the US stock market this year, despite recent turmoil due to the Iran war.
The Nasdaq Composite is up around 13 percent, the S&P 500 more than eight percent and the Dow more than three percent in that period.
But "the stock market isn't the economy," said Moody's Zandi, warning that money made in Wall Street disproportionately benefits higher-income households.

K-shaped economy

For working-class families, inflation -- especially of basics like fuel and groceries -- tends to define their experience of the economy.
In April, those numbers came in at multi-year highs, with fuel prices at the pump up around 51 percent since the war began, and grocery prices at their highest level since 2023. 
That inequality has given rise to what economists have begun to call the "K-shaped economy," where consumption for higher-income Americans is rising, but it is falling for lower-income people.
A recent study by the US Federal Reserve Bank of New York found that retail spending growth since 2023 has been driven by households making more than $125,000 a year.
Still, Sahm says that the American economy's buffers across the board are dwindling, and there is a limit to how much it can take.
"There's resilience," she said, but "it's not endless."
myl-aha/des

train

One trip, one ticket: New EU rules aim to ease train travel

BY UMBERTO BACCHI

  • Undertakings that hold at least 50 percent of a national market would also have to display on their websites all services run in their country by competitors -- and sell the related tickets if rivals ask them to.
  • The EU plans to force railway companies to sell rivals' tickets on their websites and share data with booking platforms, under new rules unveiled Wednesday aiming to boost train travel.
  • Undertakings that hold at least 50 percent of a national market would also have to display on their websites all services run in their country by competitors -- and sell the related tickets if rivals ask them to.
The EU plans to force railway companies to sell rivals' tickets on their websites and share data with booking platforms, under new rules unveiled Wednesday aiming to boost train travel.
Brussels said the move, fiercely opposed by operators, would make journeys more seamless, helping passengers to find, compare and buy tickets in one go.
"From Berlin to Barcelona by train. Today cross-country journeys mean several bookings and risks if you miss a connection. Let's change that," EU chief Ursula von der Leyen wrote on social media.
The European Commission wants to improve rail connection across Europe to cut carbon emissions from air transport.
But the goal has long rubbed up against a fragmented network broken into national systems that critics say create hurdles and push up costs.
Passengers often have to buy tickets from different operators to patch together a multi-country trip.
Almost 400 million people travelled internationally by air within the bloc in 2024, compared to about 150 million who took cross-border train trips, according to EU data.
To change that the commission proposed obliging rail operators to make their tickets available to all online platforms that want to sell them.
Undertakings that hold at least 50 percent of a national market would also have to display on their websites all services run in their country by competitors -- and sell the related tickets if rivals ask them to.
The Community of European Railways (CER) lobby group slammed the idea, which would impact dominant national firms like France's SNCF, Italy's Trenitalia and Germany's Deutsche Bahn, as "unprecedented and unjustified regulatory interventionism".
"I'm not aware of any case where somebody is obliged to sell the product of a competitor. Think about Lufthansa obliged to sell Ryanair" flights, CER head Alberto Mazzola told AFP.
Opposition from operators -- often publicly run national champions -- could hamper the plan's chances to become law as it is, as it needs approval from EU member states. 
Mazzola also argued that firms that invested in their ticketing platforms would have to open them to "free-riders", and the requirement to hand over data would benefit US-operated booking giants, tilting negotiating power in their favour and driving up ticket prices.
He added that cross-border rail travel accounted for only about seven percent of train trips in Europe because high-speed infrastructure was not always there, and not because of ticketing issues.
- 'Leap forward' - 
The proposal has more support in the European Parliament, which also needs to back it -- and prolonged negotiations on a compromise text between lawmakers and EU nations are likely. 
"With more competition on the railways, passengers will benefit from better service and lower prices," said Jan-Christoph Oetjen, a centrist European lawmaker.
EU transport chief Apostolos Tzitzikostas said the bloc expects the reform to result in a five-percent increase in passengers willing to take the train.
The plan will also affect non-EU countries that have rail deals with Brussels like Norway and Switzerland, he told a press conference in Brussels, adding he was hoping to see it become reality within two years.
Catriona Meehan of German booking platform Omio hailed a "welcome step" towards easier rail travel. 
"Too often, fragmented data and ticketing still make it harder than it should be to search, compare and book journeys, even where good services exist," she said.
The commission also proposed to update passengers' rights to regulate cases where they miss a connection having bought a single ticket.
Under the new rules the company responsible for the delay will have to re-route or reimburse travellers and provide assistance, including overnight accommodation and meals where necessary. 
Passengers left behind due to a disruption should also be allowed to hop on the next train.
The move comes as the Iran war has sent jet fuel prices soaring and raised the spectre of shortages during Europe's peak travel season.
Advocacy group Transport & Environment welcomed the reform as a "huge leap forward for rail passengers and climate friendly transport" but contended it did not go far enough.
To get more people on trains "major rail operators should be required to sell tickets across all available rail routes that passengers frequently fly or drive", not just the legs running through their country, it said.
Rail accounted for just 0.3 percent of EU planet-warming emissions from transport in 2022, compared to almost 12 percent for civil aviation, according to EU data.
ub/ec/pdw

Global Edition

Stocks waver, oil steady ahead of US-China summit as Iran talks stall

  • Pressure on Japanese debt is intensifying as the Middle East war sends oil prices spiralling, fuelling speculation that the Bank of Japan will increase interest rates.
  • Stock markets were mixed Wednesday and oil prices steadied but remained above $100 a barrel as investors awaited a high-stakes summit between the United States and China, and Middle East peace talks stalled.
  • Pressure on Japanese debt is intensifying as the Middle East war sends oil prices spiralling, fuelling speculation that the Bank of Japan will increase interest rates.
Stock markets were mixed Wednesday and oil prices steadied but remained above $100 a barrel as investors awaited a high-stakes summit between the United States and China, and Middle East peace talks stalled.
Oil prices surged earlier this week on signs that no breakthrough was in sight to resume crucial Gulf tanker and cargo traffic through the Strait of Hormuz, paralysed by the Middle East war.
The International Energy Agency warned that countries were tapping into oil inventories and strategic reserves at a "record pace", meaning further price volatility was likely.
Following surges for equities worldwide on the back of solid corporate earnings and hopes for a swift end to the Mideast conflict, investors were content to hunker down.
Wall Street indexes opened little changed after several weeks of hitting record highs despite the geopolitical turbulence, while in Europe, London and Frankfurt edged higher and Paris fell in afternoon deals.
"There is a calmer tone to markets on Wednesday," said Kathleen Brooks, research director at trading group XTB, adding that markets were boosted by a "no news is good news" approach.
The dollar firmed, while UK government bonds remained under pressure as Keir Starmer battled to remain prime minister, causing the country's borrowing costs to rise.
Traders are looking to China, where Trump landed Wednesday after saying he expected a "long talk" with his counterpart Xi Jinping about Iran.
The US president said he would ask Xi to "open up" China to American firms, adding that AI chip titan Nvidia's boss Jensen Huang was a last-minute invite among a host of top chief executives joining the trip.
Trump's visit to Beijing comes a day after US consumer inflation hit a three-year high in April, as the economic fallout of the Iran war rippled through the world's largest economy.
Soaring inflation could pile pressure on Trump to end the war, but he insisted that Americans' financial situation did not motivate him "even a little bit" to make a peace deal with Iran.
Iran's chief negotiator urged Washington on Tuesday to accept Tehran's latest peace plan or face failure.
Both sides have refused to make concessions and repeatedly threatened to resume fighting, but neither appears willing to return to all-out war.

Tech stocks in focus

Tokyo closed up 0.8 percent even as the yield on 20-year Japanese government bonds hit the highest level since 1997.
Pressure on Japanese debt is intensifying as the Middle East war sends oil prices spiralling, fuelling speculation that the Bank of Japan will increase interest rates.
But Seoul's stock market ended up 2.6 percent after the presidential Blue House distanced itself from calls for a social tax on artificial intelligence profits.
The tech-rich Kospi had plunged five percent Tuesday after a top official proposed a "national dividend" to redistribute excess corporate profits from artificial intelligence.
In China, tech behemoth Alibaba posted an 18-percent drop in net profit during its most recent fiscal year, weighed by domestic economic challenges and an expensive push into AI.
Another Chinese tech firm Tencent, however, posted a 21-percent jump in quarterly net profit as it also bets big on the AI sector.

Key figures at around 1345 GMT

Brent North Sea Crude: DOWN 0.4 percent at $107.38 a barrel
West Texas Intermediate: UP 0.3 percent at $102.46
New York - DOW: DOWN 0.5 percent at 49,526.18 points
New York - S&P 500: DOWN 0.2 percent at 7,385.89 
New York - Nasdaq: FLAT at 26,077.49 
London - FTSE 100: UP 0.4 percent at 10,304.95 
Paris - CAC 40: FLAT at 7,979.23
Frankfurt - DAX 30: UP 0.6 percent at 24,105.26
Tokyo - Nikkei 225: UP 0.8 percent at 63,272.11 (close)
Hong Kong - Hang Seng Index: UP 0.2 percent at 26,388.44 (close)
Shanghai - Composite: UP 0.7 percent at 4,242.57 (close)
Euro/dollar: DOWN at $1.1714 from $1.1745 on Tuesday
Pound/dollar: DOWN at $1.3515 from $1.3542
Dollar/yen: UP at 157.77 from 157.57 yen
Euro/pound: DOWN at 86.67 pence from 86.70 pence 
cms-ajb/bcp/js/rlp

banking

Warsh set to take over a divided Fed facing Trump assaults

BY ASAD HASHIM

  • The incoming Federal Reserve chair has promised to bring "regime change" at the central bank, which he has criticized for being too political and communicating too openly on its decision-making processes.
  • The US Senate is expected to confirm Kevin Warsh as Federal Reserve chairman on Wednesday, as President Donald Trump applies unprecedented pressure on the central bank to cut rates despite stubbornly high inflation.
  • The incoming Federal Reserve chair has promised to bring "regime change" at the central bank, which he has criticized for being too political and communicating too openly on its decision-making processes.
The US Senate is expected to confirm Kevin Warsh as Federal Reserve chairman on Wednesday, as President Donald Trump applies unprecedented pressure on the central bank to cut rates despite stubbornly high inflation.
The Senate will vote at 2:00 pm local time (1800 GMT), with Trump's Republicans holding a slim majority and expected to confirm his nominee to replace Jerome Powell.
Once known as a monetary "hawk," Warsh has since changed his tune in line with Trump's abrasive push for lower interest rates.
The incoming Federal Reserve chair has promised to bring "regime change" at the central bank, which he has criticized for being too political and communicating too openly on its decision-making processes.
But with inflation still above the Fed's long-term two-percent target -- and rising over Trump's Iran war -- Warsh is unlikely to convince fellow Fed rate-setting committee members to cut immediately.
That could lay him open to attacks from Trump, who has relentlessly lashed out at Powell over rate decisions.
"Warsh's biggest challenge will likely be dealing with President Trump," said David Wessel, senior fellow at the Brookings Institution. 
"The president does not respect the independence of the Fed and he wants interest rates to be lower."

Fed independence attacks

Trump's campaign of insults against Powell has been viewed by many as part of an unprecedented assault on the central bank's independence.
In January, Powell said a Justice Department criminal probe against him over cost overruns related to a building renovation project was intended to create pressure on monetary policy decision making.
That followed Trump's separate attempt to oust Fed Governor Lisa Cook from the board.
The criminal probe against Powell has since been dropped, as the Trump administration aimed to smooth the path for Warsh's nomination. The Supreme Court is due to rule on the legality of removing Cook.
Both moves were "unprecedented," said Kathryn Judge, a Columbia law professor who focuses on banking.
While Warsh is Trump's pick -- as Powell was nine years ago -- Judge said there was no reason to believe the pressure will ease.
"Fed officials have been put on notice that this president is willing to use all available tools to bully them into acceding to his demands," she said.

Economic challenges

Warsh is taking over as the world's largest economy continues to reel from repeated economic shocks.
The pandemic delivered a hammer blow to the Fed's inflation target, with CPI peaking at 9.1 percent in mid-2022. It has since come down, but US households have been battered by years of higher-than-expected price increases.
In April, year-on-year inflation came in at a three-year high of 3.8 percent, fueled in part by surging oil prices in the wake of the US-Israel war on Iran.
The Fed's other mandate is ensuring maximum employment. The unemployment rate has remained relatively firm at around 4.3 percent, but the steady number hides churn beneath the surface.
Job growth has been weak, see-sawing between expansion and contraction for months, with new jobs mainly driven by the health care sector.
The tumult has been partly hidden because there has been a significant drop in labor supply, driven by Trump's deportation drive and an ageing population.
The situation has put Fed policymakers in the difficult position of having to choose between dueling mandates: raise interest rates to combat inflation, or cut them to spur growth?

A house divided

It is here that Warsh faces his third major challenge: divisions on the Fed's rate-setting committee on the path forward.
At the last meeting, there was a rare outpouring of dissent, with three members declaring that the Fed should indicate a rate hike could be on the cards to combat inflation.
"One of Warsh's challenges is that the Fed does seem divided -- at times along partisan lines, which is a change from the past," said Wessel.
Added to that another wrinkle: Powell will be the first outgoing chair in more than 70 years not to leave the board at the expiration of his term as its head. 
aha/sms/des

bank

Kevin Warsh returns to Federal Reserve with 'regime change' agenda

BY ASAD HASHIM

  • "I am honored the president nominated me for the position and I'll be an independent actor if confirmed as chairman of the Federal Reserve," he said.
  • Kevin Warsh, the incoming chair of the US Federal Reserve, will return to the central bank with an ambitious reform agenda and the looming threat of intimidation by the man who nominated him: US President Donald Trump.
  • "I am honored the president nominated me for the position and I'll be an independent actor if confirmed as chairman of the Federal Reserve," he said.
Kevin Warsh, the incoming chair of the US Federal Reserve, will return to the central bank with an ambitious reform agenda and the looming threat of intimidation by the man who nominated him: US President Donald Trump.
Warsh was confirmed to a 14-year term on the Fed's board by the Senate on Tuesday, with a separate vote due to install him as the central bank's chief on Wednesday.
The 56-year-old native of upstate New York left his first term on the board prematurely in 2011, griping over policy differences.
Now, he returns to lead the Fed -- tasked with, among other things, managing US inflation and ensuring maximum employment -- with an agenda that includes changing how it makes decisions, communicates those moves and implements policy shifts.
He does so at a time of unprecedented political pressure on the Fed's independence, with Trump demanding lower interest rates to spur activity in the world's largest economy. 
Trump frequently criticized and insulted Warsh's predecessor, Jerome Powell, over a lack of rate cuts. His administration targeted Powell in a criminal probe and is still attempting to remove another Fed governor, Lisa Cook. 
At his confirmation hearing before the Senate banking committee, Warsh vowed to preserve the Fed's independence, saying he would "absolutely not" be the president's puppet.
"I am honored the president nominated me for the position and I'll be an independent actor if confirmed as chairman of the Federal Reserve," he said.

Fed criticism

Born in New York's state capital Albany, Warsh graduated from high school in that area before obtaining degrees from Stanford University and Harvard Law School.
He is married to Jane Lauder, a granddaughter of cosmetics legend Estee Lauder. Her billionaire father Ronald Lauder is one of Trump's longtime associates.
Warsh started his career at investment giant Morgan Stanley, specializing in mergers and acquisitions. 
He later joined then US president George W. Bush's administration, serving as a White House economic policy advisor from 2002 to 2006 before being nominated to the Fed's Board of Governors.
Warsh served on the board during the global financial crisis, and eventually left in 2011 over differences on how the central bank should tackle it. He has since worked on Wall Street and on the boards of various companies, including UPS.
"I saw the Fed and its people at their very best, but I also witnessed an institution that was tempted to play a larger role in the economy and society," Warsh said at his confirmation hearing.
That language echoes Trump, whose administration has called for the Federal Reserve to stay in its lane and has alleged the central bank has a credibility crisis.
In his first tenure at the Fed, Warsh was considered a "hawk" -- a policymaker who favors addressing the inflation side of the mandate, usually by raising interest rates.
In recent years, he has changed his tune, aligning with Trump's demands for lower interest rates despite the US economy facing stubbornly high inflation since the Covid-19 pandemic.
Warsh blames high inflation on "policy errors" by the Fed in 2021 and 2022.
He has called for "regime change" in policymaking, including changing the data the Fed bases its decisions on, removing forward guidance from its communications and encouraging more of a "good family fight" at meetings.
He also wants to shrink the Fed's balance sheet, preferring to use interest rates as the central bank's primary tool on both sides of its mandate.
He has argued that the Fed has strayed into politics, again echoing a key Trump talking point.

'Very smooth'

David Wessel, senior fellow at the Brookings Institution, said Warsh has outlined a wide-ranging agenda, but one should "watch what he does, not what he has said."
He added that Warsh will not simply be able to impose his will on the central bank, and will have to work with his fellow policymakers.
"He is very smooth, and generally good with the people, and that will serve him well in this endeavor as long as he doesn't move too fast or too radically," Wessel told AFP.
Kathryn Judge, a law professor at Columbia University, said existing divisions at the Fed will pose a "significant challenge" to Warsh.
"I think we really just have to wait and see," Judge said.
"It's been a long time since we've had a chair coming in who is seeking to chart a new course, rather than to build on the success of his predecessors."
bur-aha/sst/des/sms

technology

Chinese tech giant Alibaba posts profit drop amid AI drive

  • Alibaba, along with fellow Chinese tech titan Tencent, is reportedly in talks to invest in top AI startup DeepSeek, which in April released a long-awaited major new artificial intelligence model.
  • Chinese tech giant Alibaba said Wednesday that net profit dropped by nearly a fifth during its most recent fiscal year, weighed by challenges in the domestic economy and an expensive push into artificial intelligence.
  • Alibaba, along with fellow Chinese tech titan Tencent, is reportedly in talks to invest in top AI startup DeepSeek, which in April released a long-awaited major new artificial intelligence model.
Chinese tech giant Alibaba said Wednesday that net profit dropped by nearly a fifth during its most recent fiscal year, weighed by challenges in the domestic economy and an expensive push into artificial intelligence.
Alibaba, which runs some of China's biggest online shopping platforms, has seen its core e-commerce business squeezed by price wars and sluggish consumption in the world's second-largest economy.
The Hangzhou-based firm is ploughing tens of billions of dollars into AI, with its shareholders keen to see how the company will approach the tricky task of monetising these huge investments.
For the year ended March 31, Alibaba recorded a net profit of 105.9 billion yuan ($15.6 billion), a statement at the Hong Kong Stock Exchange said, down from 129.5 billion in the previous fiscal year.
That figure represented a year-on-year drop of 18 percent.
During the final financial quarter, revenue grew by three percent year-on-year to 243.4 billion yuan, the statement said.
"Alibaba's full-stack AI investments have progressed from incubation to commercialisation at scale," CEO Eddie Wu was quoted as saying in the statement.
During the most recent quarter, the firm "achieved accelerated breakthroughs across models, cloud infrastructure, and applications", Wu said.
Alibaba's open-source Qwen AI models are popular with programmers worldwide.
This week, the tech behemoth said it had integrated Qwen's agentic features -- which can carry out tasks for users -- across its hugely popular Taobao shopping app in China.
Wu said in Wednesday's statement that Alibaba sees "massive potential for agentic AI".

AI fervor

Bloomberg Intelligence analysts had said ahead of the earnings results that Alibaba "is likely to lean even harder into AI integration across its ecosystem in fiscal 2027".
The company will keep "expenditure high to spur user adoption", they said.
Alibaba, along with fellow Chinese tech titan Tencent, is reportedly in talks to invest in top AI startup DeepSeek, which in April released a long-awaited major new artificial intelligence model.
AFP had no immediate response from Alibaba on the reports, which said DeepSeek's funding round could value it at as much as $50 billion.
Meanwhile Alibaba's own AI offerings have been attracting attention for their high quality, with its "HappyHorse" video generator topping benchmarks when it was released in April.
Alibaba was previously in the crosshairs of an aggressive regulatory crackdown on the Chinese tech sector launched in late 2020 and attributed to worries in Beijing that top firms had become too powerful.
Jack Ma, the firm's charismatic co-founder who had spoken boldly about the shortcomings of China's financial and regulatory system, kept a low profile during the lengthy campaign.
His sudden reappearance in February 2025 during a meeting with President Xi Jinping and other business luminaries was a shock development that suggested a warmer stance from Beijing and sent Alibaba stocks soaring.
Ma is no longer an executive at Alibaba but is believed to retain a significant shareholding in the company.
The firm's shares at stock exchanges in both the United States and Hong Kong have struggled this year despite the global AI investment boom.
In other results posted to the Hong Kong Stock Exchange on Wednesday, tech sector peer Tencent reported a 21 percent jump in quarterly net profit.
The video game giant, headquartered in the southern tech hub of Shenzhen, has also funnelled substantial investment into AI in recent years.
kaf-ll-pfc/dhw/ami

Elumelu

Africa must drop 'victim mentality': mogul Tony Elumelu

BY AYMERIC VINCENOT

  • He also founded The Tony Elumelu Foundation that helps young African entrepreneurs.
  • Africans should welcome all foreign investors and put colonial hang-ups behind them, Nigerian businessman and philanthropist Tony Elumelu told AFP. Elumelu, 63, is one of Africa's wealthiest people, chairing banking and investment firms including Heirs Holdings, Transcorp and United Bank for Africa. 
  • He also founded The Tony Elumelu Foundation that helps young African entrepreneurs.
Africans should welcome all foreign investors and put colonial hang-ups behind them, Nigerian businessman and philanthropist Tony Elumelu told AFP.
Elumelu, 63, is one of Africa's wealthiest people, chairing banking and investment firms including Heirs Holdings, Transcorp and United Bank for Africa. 
He also founded The Tony Elumelu Foundation that helps young African entrepreneurs.
"What we need in Africa in the 21st century... we need massive private global capital coming into Africa," Elumelu told AFP on the sidelines of this week's Africa Forward Summit in Nairobi, co-hosted by France and Kenya.
"Anyone that can help us address this is welcome in Africa," he said, from the United States and France, to Middle Eastern nations, as well as Russia or China.
French President Emmanuel Macron recently chose Elumelu to join the Africa France Impact Coalition, aimed at promoting trade between French and African companies. 
France's colonial past means it remains a controversial partner in many parts of Africa.
Arrests were made this week in Nairobi after a small group of protesters tried to enter the summit, accusing France of "neo-colonialism".
Elumelu rejects the criticism. 
"We should stop this victim mentality," he told AFP.
"We should be cognisant of the history, our history, but more importantly, we should commit to the future.
"We should, to a large extent, let the past be. President Macron was not born 100 years ago, this is a new age. And I commit to his commitment to Africa, and I believe he's sincere," he added.
Elumelu's investment firms are involved in everything from hospitality and real estate to energy, agribusiness and financial services.
The urgent need now is better infrastructure, he said.
"What our young entrepreneurs need in Africa is improvement in access to electricity, creation of mass transportation system, security, and ease of doing business," he said. 
"These are the things that are important."
Africa has become a place of economic competition between multiple powers, including the United States, China, Europe, Russia, Turkey and Gulf monarchies.
"It is a good place to be at, as Africans, at this point in time," he said.
With the median age of Africans being under 20, Elumelu said the ultimate goal of development must be rapid job creation.
"They need jobs, they need improved access to electricity, they need to join the internet... the AI bandwagon," he said.
"What is important is providing this enablement, this infrastructure requirement, so that our young ones can take off."
ayv/jf/jcp/er/rbu/kjm

earnings

Nissan expects return to profit after huge loss

BY JULIEN GIRAULT

  • "We have moved beyond recovery and are entering a phase of growth," Espinosa said.
  • Nissan projected Wednesday a small net profit this year after posting a huge loss for the second year running, with the Japanese automaker saying it has "moved beyond recovery".
  • "We have moved beyond recovery and are entering a phase of growth," Espinosa said.
Nissan projected Wednesday a small net profit this year after posting a huge loss for the second year running, with the Japanese automaker saying it has "moved beyond recovery".
Like other Japanese carmakers, Nissan is being squeezed by US tariffs, the Middle East war and fierce competition from Chinese rivals, but it also has had its own problems.
The company, which is closing factories and shedding thousands of jobs, said it ended the 2025-26 business year 533 billion yen ($3.4 billion) in the red.
This followed an even more colossal loss in the previous year of 671 billion yen.
Operating profit in 2025-26 dipped to 58 million yen from 69.8 million yen the year before.
This year, Nissan predicted it would eke out a net profit of 20 million yen, an operating profit of 200 million yen and revenues of 13 trillion yen, up from 12 trillion yen.
"FY2025 marked a year of steady execution under Re:Nissan, where we strengthened our foundation and began to see tangible progress in our financial performance," CEO Ivan Espinosa said, referring to its restructuring programme.
"We have moved beyond recovery and are entering a phase of growth," Espinosa said.
Nissan has faced numerous speed bumps in recent years, including the 2018 arrest of former boss Carlos Ghosn, who later fled Japan concealed in an audio equipment box.
A merger with Japanese rival Honda had been seen as a potential lifeline, but talks collapsed when the company proposed making Nissan a subsidiary.
Bleeding red ink and having been slow to transition to EVs and hybrids, Nissan embarked in late 2024 on a painful restructuring effort to close factories and cut 20,000 jobs by 2028.

'Damage to brand power'

"Nissan's fundamental challenges lie in the decline of product competitiveness in North America, the rapid decline in sales in China, and the damage to its brand power," said Tatsuo Yoshida, analyst at Bloomberg Intelligence.
"These cannot be improved in the short term, and it is necessary to assess whether the results of product launches and sales normalisation will translate into actual profits," Yoshida told AFP.
Rival Honda is expected to report on Thursday its first operating loss since 1957, estimated at around 400 billion yen ($2.5 billion) for the fiscal year that ended on March 31.
This is due to an impairment charge of 2.5 trillion yen ($16 billion) after its electric vehicles strategy hit the skids.
Toyota, the world's largest carmaker by unit sales, forecast last week a 22-percent drop in net income this fiscal year.
"The major difference with Nissan is that while Nissan's product strength and brand power are significantly weak and recovery is not foreseeable, Honda's loss is a one-time, massive loss due to a change in strategy," Yoshida said.
"Its ICE (internal combustion engine) and HEV (hybrid electric) products are strong, and its brand power is high. Profitability in motorcycles and finance is good," he added.
Japan agreed to invest $550 billion in the United States by 2029 in return for slashing threatened tariffs of 25 percent to 15 percent.
The promises remain valid even after the US Supreme Court struck down US President Donald Trump's global tariffs in February and he imposed a new blanket 10-percent duty.
jug-stu/cms

politics

Fugitive financier sought in Malaysian fund scandal seeks Trump's pardon

  • Whistleblowers allege that Jho Low, a well-connected Malaysian financier with no official role, helped set up the 1MDB state investment fund and made key financial decisions before disappearing about a decade ago. 
  • A fugitive financier accused of involvement in a massive corruption scandal in Malaysia in which top officials looted billions from state fund 1MDB has sought a pardon from US President Donald Trump. 
  • Whistleblowers allege that Jho Low, a well-connected Malaysian financier with no official role, helped set up the 1MDB state investment fund and made key financial decisions before disappearing about a decade ago. 
A fugitive financier accused of involvement in a massive corruption scandal in Malaysia in which top officials looted billions from state fund 1MDB has sought a pardon from US President Donald Trump. 
Businessman Low Taek Jho, better known as Jho Low, is formally seeking a "pardon after completion of sentence," according to the US Department of Justice website.
Whistleblowers allege that Jho Low, a well-connected Malaysian financier with no official role, helped set up the 1MDB state investment fund and made key financial decisions before disappearing about a decade ago. 
Low, who has been indicted in the United States, has denied wrongdoing but remains at large. 
Malaysia's Trade Minister Johari Abdul Ghani, who chairs a task force seeking to recover assets linked to 1MDB worldwide, said the plea should be rejected and Low returned for trial.
Granting a pardon to the businessman is "the right of the US, but personally I think (the) US should help to bring back Jho Low to Malaysia," he told AFP via text message.
The 1MDB fund was launched by former prime minister Najib Razak in 2009, shortly after he became prime minister.
It is alleged that more than $4.5 billion was diverted from 1MDB between 2009 and 2015 by fund officials and associates, including Low.
Najib, who has been convicted in multiple cases, has been jailed and fined $2.8 billion for his role in the plunder. 
Najib's defence lawyers blamed Low and dubbed him the mastermind of the scheme.
Malaysia unsuccessfully sought the return of Low through extradition, and it was widely speculated in media that he was hiding in China. 
Trump was scheduled to arrive in China on Wednesday to meet with Chinese counterpart Xi Jinping.
The scandal shook Malaysian politics, contributing to the 2018 downfall of the ruling coalition that had governed since independence in 1957, and led to the convictions of two former Goldman Sachs bankers.
Investigators said top officials used their ill-gotten gains to splurge on assets worldwide, including a luxury yacht, high-end real estate, Monet as well as Van Gogh paintings and even to fund the Hollywood blockbuster "The Wolf of Wall Street". 
Actor Leonardo DiCaprio testified in court about Low's wild spending sprees and lavish parties.
The globe-spanning scandal also ensnared Pras Michel, a rapper in rap trio the Fugees, who was found guilty of helping Low funnel money from 1MDB into US politics.
sla/llk/mba/jm

conflict

'Short of blue-collar workers': Ukraine's battle for labour

BY ROMAIN COLAS

  • Synkov, who left Bakhmut -- captured by Russia in 2023 -- was still receiving "many offers" from companies struggling to find staff, even as wages surge.
  • After fleeing Russia's advancing army and resettling in the central industrial hub of Dnipro, Ukrainian worker Anatoliy Synkov had no trouble finding a job. 
  • Synkov, who left Bakhmut -- captured by Russia in 2023 -- was still receiving "many offers" from companies struggling to find staff, even as wages surge.
After fleeing Russia's advancing army and resettling in the central industrial hub of Dnipro, Ukrainian worker Anatoliy Synkov had no trouble finding a job. 
"Oh no! There's plenty of work," the 55-year-old told AFP, speaking over the drone of a conveyor line at his new employer, households goods producer Biosphere.
The former forester was hired in just one week -- a swiftness that demonstrates a major problem facing Ukraine's economy amid Russian invasion: severe labour shortages.
Synkov, who left Bakhmut -- captured by Russia in 2023 -- was still receiving "many offers" from companies struggling to find staff, even as wages surge.
From a pre-war population of around 40 million, hundreds of thousands of men have been drafted to fight -- many killed or wounded -- and some 5.7 million Ukrainian refugees still live abroad, according to the UN. 
Synkov's new employer has not been spared the toll of war.
A Russian missile hit a Biosphere warehouse in Dnipro in April 2025, killing one person and wounding eleven. 
The charred shell of the building still stands on the site.

Fewer candidates

At the start of 2026, 78 percent of Ukrainian companies belonging to the European Business Association (EBA) reported a shortage of skilled workers.
The war has exacerbated pre-existing factors: population decline since the collapse of the Soviet Union, and a mismatch between the education system and what employers need, economist Lyubov Yatsenko of the National Institute for Strategic Studies told AFP.
"We are short of blue-collar workers," as well as doctors, teachers and agricultural administrators, she said -- roles that are either low-paid or "not prestigious".
Biosphere's human resources director in Dnipro, Olena Shpitz, said the factory employs 500 people, down from 800 before Russia invaded in 2022. 
Around 100 of its former staff have joined the army and recruitment is a constant struggle.
"The number of candidates has dropped significantly," Shpitz said.
Roles that used to take a week to fill can now take six.
The company has started offering bonuses to employees who get their relatives a job. 
Shortages have also hit the booming military sector. 
"Sometimes the necessary specialists simply do not exist in sufficient numbers," a representative of Kvertus, a company manufacturing anti-drone jammers, told AFP.

Mobilisation reform

Paradoxically, deep labour shortages coexist with high unemployment.
Official statistics are not published during the war, but pollster Info Sapiens estimated a jobless rate of 15.5 percent in March 2026.
There is a big supply of "accountants, corporate economists, and lower-level managers," Yatsenko said -- but not enough manual workers.
She encourages retraining and better schemes to bring young people, refugees, veterans and older workers into the workforce.
Biosphere's Dnipro plant employs 19 veterans but wants government support to take on former soldiers and civilians with disabilities.
At the same time, tens of thousands of draft evaders are either not working or employed off-the-books.
A foreign economic official in Ukraine, speaking on condition of anonymity, told AFP resolving the issue would require complex reforms to mobilisation, the system of granting military exemptions, and a path to bring people in from the shadow economy.
"The main direction must be a more transparent and structured way to change between war service, being at the front fighting, and working in the economy very normally. There must be better rules to go back and forth," they said. 
President Volodymyr Zelensky has announced plans to allow for some demobilisation in the coming months, though no details have been published.

Women workers

Only one in eight companies consider foreign workers an option, according to an October 2025 poll, with many citing fears of language barriers and cultural and religious differences in hiring workers outside of Ukraine.
Meanwhile women have been pouring into the workforce in record numbers, with Kyiv opening up previously banned professions, like mining, to female employees.
The share of women at Biosphere's Dnipro plant has risen to about half since 2022.
"Women are the one thing that they rely on most right now to make it more long-term and sustainable," the foreign economic official said.
Unlike Synkov, many of the 3.7 million internally displaced people are unable to work due to trauma or skills that are not relevant in their new regions.
Synkov conceded it took him two years to process the "shock" of his forced exile.
Now he is sanguine.
"You have to live."
rco/ant/blb/asy/jc/yad

diplomacy

AI rivalry overshadows push for guardrails at Xi-Trump talks: experts

BY LUNA LIN WITH KATIE FORSTER IN TOKYO

  • Although little more has followed, Xi and Trump could "commit to some rhetorical signal" in Beijing as a basis for further cooperation, Zeng said.
  • Fears that artificial intelligence could help people design bioweapons or hack into national infrastructure are mutual concerns for Xi Jinping and Donald Trump, despite their countries' fierce rivalry over the technology, analysts say.
  • Although little more has followed, Xi and Trump could "commit to some rhetorical signal" in Beijing as a basis for further cooperation, Zeng said.
Fears that artificial intelligence could help people design bioweapons or hack into national infrastructure are mutual concerns for Xi Jinping and Donald Trump, despite their countries' fierce rivalry over the technology, analysts say.
As the leaders prepare for a rare summit in Beijing this week, policy experts have stressed the importance of US-Chinese discussions on steps to contain the risks, such as a hotline for de-escalation when an AI crisis hits.
But with China set on narrowing the United States' lead in the strategic sector, the stakes will be high.
"There is a kind of shared concern about where this AI arms race might be going," and if it could create an "out of control" scenario, said Michael Jinghan Zeng, a professor at City University of Hong Kong.
"Despite critical disagreements on a wide range of issues, there is also this kind of understanding from both sides" on the need for AI guardrails, he told AFP.
The White House recently accused Chinese entities of "industrial-scale" efforts to steal US technology, while Beijing blocked the acquisition of a Chinese-founded AI agent tool by tech giant Meta.
In 2024, Xi agreed with Trump's predecessor Joe Biden that humans must remain in control of the decision to fire nuclear weapons.
Although little more has followed, Xi and Trump could "commit to some rhetorical signal" in Beijing as a basis for further cooperation, Zeng said.

'Catastrophic risks'

The AI cybersecurity threat has been highlighted by Mythos, a powerful new model that US startup Anthropic withheld from public release to stop it from being exploited by hackers.
And "if a non-state actor uses an AI model to develop a biological weapon, that could pose catastrophic risks to both the United States and China," Chris McGuire of the Council on Foreign Relations wrote in a recent article.
"Over the long term, addressing these risks will require cooperation," McGuire said, cautioning that China's "willingness to make and abide by robust international commitments on AI safety is low".
Washington says the latest AI model from Chinese startup DeepSeek -- considered the country's most advanced -- is about eight months behind the top offerings from US companies.
To stop Chinese tech firms catching up too quickly, the United States bars them from purchasing the most cutting-edge chips made by California-based Nvidia.
China has boosted its domestic AI chip industry in response, and could be hoping to use its control over rare earths as leverage at the summit on Thursday and Friday.

'Intertwined'

Top US executives, including Tesla's Elon Musk and Apple's Tim Cook, will accompany Trump -- with Nvidia boss Jensen Huang a last-minute addition to the trip.
Chen Liang, founder of Strategic Times Consulting, told AFP he did not expect any "dramatic breakthroughs".
Trump's visit will merit attention if he and Xi manage to "shelve the most sensitive issues" while establishing "rule-based tracks" on points of cooperation, Chen said.
But competition is likely to remain stiff "in high-tech sectors like AI chips that directly involve the core interests of both sides".
Beijing has refuted accusations made by the White House of large-scale Chinese AI "distillation" of US rivals -- a practice often used by companies to create cheaper, smaller versions of their own models.
Meanwhile, China's top economic planning body has blocked Meta's $2-billion bid for China-founded, Singapore-based AI agent startup Manus.
The move, which followed a regulatory review, has been seen as a sign of China's growing oversight of its AI sector.
Yet "the talent, capital, and supply chains underpinning the field are deeply intertwined across the United States and China," said Grace Shao, a China AI analyst and author of the AI Proem newsletter.
"Any delusion of full decoupling isn't realistic on any near-term horizon", she told AFP.
"Leadership in the technology... will define the next decade of productivity and growth, so it's in everyone's interest that the two superpowers find common ground on sensible guardrails for AI."
kaf-ll/ami/hol

trial

Musk 'wanted 90%' of OpenAI, Altman tells feisty tech titan trial

BY BENJAMIN LEGENDRE

  • He said OpenAI had been founded with the belief that no one person should control artificial general intelligence (AGI), the hypothetical level at which AI is smarter than humans.
  • Elon Musk was obsessed with trying to control OpenAI, the artificial intelligence company's CEO Sam Altman said Tuesday at a blockbuster trial that saw him spar with lawyers representing the world's wealthiest man.
  • He said OpenAI had been founded with the belief that no one person should control artificial general intelligence (AGI), the hypothetical level at which AI is smarter than humans.
Elon Musk was obsessed with trying to control OpenAI, the artificial intelligence company's CEO Sam Altman said Tuesday at a blockbuster trial that saw him spar with lawyers representing the world's wealthiest man.
Altman is the latest in a parade of Silicon Valley megastars to take the stand in the case in which Musk is suing over OpenAI's pivot away from scrappy non-profit into the $850 billion juggernaut behind ChatGPT.
Musk -- the feted, if unpredictable, man behind SpaceX and Tesla -- claims Altman and co-founder Greg Brockman improperly used a $38 million injection he had hoped would sustain OpenAI as a research lab, developing the technology for the good of humanity.
"It does not fit with my conception of the words 'stealing a charity' to look at what has actually happened here," Altman told the court in Oakland, California.
OpenAI was founded as a non-profit in 2015, but established a for-profit subsidiary in 2019 as the AI race heated up.
Altman and others insist this was necessary to raise the vast sums of money from investors, including Microsoft, required to compete in a costly and difficult field.
Musk's legal case demands that OpenAI revert to non-profit status, a move that would impact its position in the global artificial intelligence race against Anthropic, Google and China's Deepseek.
OpenAI counters that Musk -- who is now also a competitor in the field with his xAI -- is motivated by petty revenge, having failed to seize majority control of the commercial entity.
The court has heard how, in 2017, the company's co-founders discussed the creation of the subsidiary with Musk.
Altman said Tuesday that the Tesla boss demanded a huge controlling stake.
"An early number that Mr Musk threw out was that he should have 90 percent of the equity to start," he told the jury.
"It then softened, but it always was a majority."
"The fact that Mr Musk was unwilling to commit in writing to something contractual where he would not have long-term control made me very uncomfortable," said Altman.
He said OpenAI had been founded with the belief that no one person should control artificial general intelligence (AGI), the hypothetical level at which AI is smarter than humans.
When Altman and Brockman thwarted Musk's attempts to dominate the company, the mercurial businessman walked away entirely, telling them the venture would fail without him.
"The thing that burned into my memory is when he told us we had a zero percent -- not one percent -- chance of success," Altman told the hearing.

Money

Musk's lawyers hit back, sparring with Altman over claims he is deceitful.
"Are you completely trustworthy?" Attorney Steven Molo asked. "Do you always tell the truth?"
"I believe I'm a truthful person," a tense Altman replied.
"It wasn't my question, sir," snapped Molo.
Altman was abruptly ousted as head of OpenAI in November 2023, accused of opacity by his own board of directors.
He was reinstated five days later after a company revolt, but has struggled to shrug off a reputation for dishonesty in Silicon Valley.
On Tuesday prosecutors from 10 US states demanded Altman be compelled to reveal potential conflicts of interest ahead of a mooted public offering for OpenAI next year.
Altman "has a history of self-dealing and serious conflicts of interest that have created significant risk for the company," the letter to the Securities and Exchange Commission seen by AFP said.
Musk's case has highlighted the mind-boggling sums of cash washing around AI companies as they forge ahead with a technology that is changing the way we live and work.
That includes the $30 billion stake that Altman's co-founder Greg Brockman was revealed to have in the company.
On Monday, Microsoft CEO Satya Nadella testified that he was "very proud" of his firm's canny investment in the commercial venture, which has seen an initial $13 billion become worth more than ten times that amount in just a few years.
An advisory jury is expected to reach a verdict on any actual wrongdoing by the week of May 18. 
Judge Yvonne Gonzalez Rogers will then make the final ruling on both liability and remedies after hearing the jury's opinion. She has indicated she will likely follow their advice.
bl-hg/jgc

Paramount

Paramount defends Warner bid amid California probe

  • Combined, Paramount and Warner Bros.
  • Paramount Skydance has defended its attempt to buy the legendary Warner Bros. studio, in a letter to California's top lawyer whose office is probing the $110 billion bid, US media reported Tuesday.
  • Combined, Paramount and Warner Bros.
Paramount Skydance has defended its attempt to buy the legendary Warner Bros. studio, in a letter to California's top lawyer whose office is probing the $110 billion bid, US media reported Tuesday.
The move comes amid growing calls for regulators to block the takeover, with creators in Hollywood fearing the highly leveraged buyout will mean job cuts and a drastically scaled back movie slate, with production going straight to streaming.
In a letter addressed to state Attorney General Rob Bonta, Paramount says it is deeply committed to producing films and showing them in cinemas.
"Theatrical runs increase awareness and anticipation through marketing and word-of-mouth, and then help convert that demand into viewing when the title later becomes available (and promoted) on the platform," reads the letter, sent on May 7 by Paramount's Chief Legal Officer Makan Delrahim, according to the news site Semafor. 
The new company "will have every incentive to get more films into wider distribution on more movie theater screens -- it is how it will compete for audiences across the entertainment ecosystem."
In the eight-page document, Paramount reiterates its pledge to release at least 30 films per year if the acquisition is approved, with a minimum 45-day exclusive theatrical window.
A bidding war for Warner Bros., and its valuable back catalogue erupted last year between streaming giant Netflix and Paramount, whose CEO David Ellison is the son of Oracle co-founder Larry Ellison, an ally of President Donald Trump.
A wary Tinseltown reluctantly coalesced around the Netflix bid, seeing it as the lesser of two evils, but Paramount's willingness to stump up ever greater sums eventually saw the streamer withdraw.
Still, hundreds of actors and directors have signed a letter opposing the merger, arguing it will crimp production in an already struggling industry.
Bonta previously announced that his office would closely scrutinize the mammoth transaction, which received final approval from Warner Bros. Discovery shareholders last week.
Combined, Paramount and Warner Bros. Discovery will encompass CNN, CBS, HBO, and Nickelodeon, as well as some of Hollywood's most valuable franchises, including "Harry Potter," "Game of Thrones," the DC Universe, "Mission: Impossible," and "SpongeBob SquarePants."
A spokesman from Bonta's office declined to confirm the existence of the letter.
pr/hg/mlm

stocks

Oil prices advance, stocks mostly fall on US-Iran deadlock

  • Markets are also optimistic about the upcoming US-China summit, Chetouane said, while noting that any additional tariffs after the meeting would be an unwelcome surprise.
  • Oil prices rallied and stock markets mostly fell Tuesday as markets digested the lack of progress towards Middle East peace and awaited a US-China summit.
  • Markets are also optimistic about the upcoming US-China summit, Chetouane said, while noting that any additional tariffs after the meeting would be an unwelcome surprise.
Oil prices rallied and stock markets mostly fell Tuesday as markets digested the lack of progress towards Middle East peace and awaited a US-China summit.
Iran's chief negotiator said Tuesday that Washington must accept Tehran's latest peace plan or face failure.
"The longer they drag their feet, the more American taxpayers will pay for it," Mohammad Bagher Ghalibaf said in a post on X.
Trump, on his way towards Beijing, said he expected a "long talk" with counterpart Xi Jinping about Iran, which relies on China as the top customer for its US-sanctioned oil.
But he also played down disagreements on Iran, saying that Xi has been "relatively good, to be honest with you."
"I don't think we need any help with Iran. We'll win it one way or the other. We'll win it peacefully or otherwise," Trump told reporters as he left the White House.
But the lack of progress means the Strait of Hormuz remained largely closed to tanker traffic. The international benchmark Brent North Sea crude and the main US contract, West Texas Intermediate, both rose more than three percent.
Meanwhile, the latest consumer price index data in the United States confirmed that high energy prices are stoking inflation, with the index recording the largest annual gain in nearly three years in April.
CPI rose 3.8 percent year-on-year, up from March's 3.3 percent figure, the US Bureau of Labor Statistics said.
Analysts see the report as dimming the odds for Federal Reserve interest rate cuts this year.
The inflation report weighed on Wall Street stocks throughout the session, but major indices finished well above session lows. The S&P 500 finished at 7,400.96, down 0.2 percent after earlier losing around one percent.
"The market remains calm," said Mabrouk Chetouane, head of global markets at Natixis, adding that investors believe Washington and Tehran will reach an agreement before too long.
Markets are also optimistic about the upcoming US-China summit, Chetouane said, while noting that any additional tariffs after the meeting would be an unwelcome surprise.
"Stability is essential for the capital markets," he said.
Europe's main stock markets ended the day in the red after losses for some major Asian indices.
In Britain, the yield on the country's 30-year bonds reached 5.814 percent Tuesday, the highest level since 1998.
The rise in yields reflects political uncertainty as Prime Minister Keir Starmer clings to power.
More than 80 of Labour's 403 members of parliament have now called for Starmer to quit immediately or to set out a timetable for his departure.
On Tuesday, more than 100 Labour members of parliament signed a statement backing their leader, highlighting the deep divisions within the beleaguered ruling party.
In South Korea, calls for a social tax on artificial intelligence profits largely dragged down the tech-rich Kospi index by five percent.
South Korea is riding a chip boom driving massive earnings for tech giants Samsung and SK hynix, which had sent the Kospi to record highs in recent weeks.

Key figures at around 2020 GMT

Brent North Sea Crude: UP 3.4 percent at $107.77 a barrel
West Texas Intermediate: UP 4.2 percent at $102.18 a barrel
New York - DOW: UP 0.1 percent at 49,760.56 points (close)
New York - S&P 500: DOWN 0.9 percent at 7,400.96 (close)
New York - Nasdaq Composite: DOWN 0.7 percent at 26.088.2 (close)
London - FTSE 100: DOWN less than 0.1 percent at 10,265.32 (close)
Paris - CAC 40: DOWN 1.0 percent at 7,979.92 (close)
Frankfurt - DAX 30: DOWN 1.6 percent at 23,954.92 (close)
Tokyo - Nikkei 225: UP 0.5 percent at 62,742.57 (close)
Hong Kong - Hang Seng Index: DOWN 0.2 percent at 26,347.91 (close)
Shanghai - Composite: DOWN 0.3 percent at 4,214.49 (close) 
Euro/dollar: DOWN at $1.1745 from $1.1783 on Monday
Pound/dollar: DOWN at $1.3542 from $1.3610
Dollar/yen: UP at 157.57 from 157.19 yen
Euro/pound: UP at 86.70 pence from 86.58 pence 
bur-jmb/jgc

trade

US appeals court halts order declaring Trump's global 10% tariff illegal

BY ASAD HASHIM

  • It argued that if it issued refunds on the 10-percent global tariff, only to have an appeals court uphold its position, it would be unable to pursue economic redress.
  • A US federal appeals court on Tuesday temporarily paused a ruling declaring President Donald Trump's global 10-percent tariffs illegal, granting a government request to suspend the decision pending appeal.
  • It argued that if it issued refunds on the 10-percent global tariff, only to have an appeals court uphold its position, it would be unable to pursue economic redress.
A US federal appeals court on Tuesday temporarily paused a ruling declaring President Donald Trump's global 10-percent tariffs illegal, granting a government request to suspend the decision pending appeal.
Trump imposed the temporary 10-percent duty in February, shortly after the Supreme Court struck down many of his global tariffs.
On May 7, the US Court of International Trade (CIT) blocked the tariffs from being implemented against two companies and the state of Washington. That decision was to take effect on Tuesday. 
The US Court of Appeals for the Federal Circuit on Tuesday issued a brief order that included an administrative stay on the CIT's order, setting a schedule for both sides to file briefs on the matter.
In its motion for a stay, the Trump administration argued that the CIT's decision should be stayed pending the full run of government appeals -- up to the Supreme Court, if necessary.
It argued that if it issued refunds on the 10-percent global tariff, only to have an appeals court uphold its position, it would be unable to pursue economic redress.
"Plaintiffs, conversely, can be made whole through refunds, including interest, if the tariffs are ultimately held unlawful and refundable," the government said.
The court, however, only granted an administrative stay for the period while the court considers the motions for a stay pending appeal.

Signature policy upended

The Trump administration has said the new tariff was meant to deal with balance-of-payments deficits, citing Section 122 of the Trade Act of 1974.
The 10-percent global tariff under Section 122 is valid until late July unless extended by Congress.
The Trump administration has also been pursuing other means to impose tariffs to replace those struck down by the Supreme Court.
US authorities have opened investigations into dozens of trading partners over forced labor and overcapacity allegations -- which could lead to fresh tariffs or other action.
Trump's sector-specific tariffs on goods like steel, aluminum and autos remain unaffected by these legal challenges.
The Supreme Court's striking down of the majority of Trump's tariffs was a blow to the Republican president, after he made the levies a signature economic policy.
Since the decision, businesses have rushed for refunds.
US Customs and Border Protection (CBP) estimated in March that more than 330,000 importers could be eligible for refunds after the Supreme Court's decision.
The tariffs that were struck down earlier, imposed under the International Emergency Economic Powers Act (IEEPA), collected approximately $166 billion in duties and estimated deposits.
On Tuesday, CNBC reported that businesses had begun to receive refunds, in line with a CBP timeline released earlier this month.
CBP did not immediately respond to an AFP request for comment.
aha/

consumer

US consumer inflation hits three-year high fuelled by Iran war

BY ASAD HASHIM

  • Diane Swonk, chief economist at KPMG Economics, warned that the Iran war's impact on the US economy was likely to get "worse before it gets better."
  • Consumer inflation in the United States hit a three-year high in April, with the economic fallout of US President Donald Trump's Iran war rippling through the world's largest economy.
  • Diane Swonk, chief economist at KPMG Economics, warned that the Iran war's impact on the US economy was likely to get "worse before it gets better."
Consumer inflation in the United States hit a three-year high in April, with the economic fallout of US President Donald Trump's Iran war rippling through the world's largest economy.
The consumer price index (CPI) rose 3.8 percent year-on-year, up from March's 3.3 percent figure, the US Bureau of Labor Statistics (BLS) said on Tuesday.
Affordability has been a key political concern for Trump, and the stubbornly high prices -- fuelled by energy costs and roiled supply chains due to the war as well as new US tariffs -- will pile pressure on his Republican Party ahead of November's midterm elections.
The US-Israel war on Iran has engulfed the Middle East in violence since late February, with Iranian retaliatory action targeting Washington's regional allies and virtually blocking the Strait of Hormuz.
Roughly a fifth of the world's oil and natural gas passes through the waterway under normal circumstances, and the blockade has sent worldwide energy prices surging.
In April, the US price index for energy rose 17.9 percent compared to a year ago, BLS data showed, by far the largest price jump for any category.
Food prices were up 3.2 percent in April over last year, the data showed, with groceries also rising at their highest rate since 2023.
Core consumer price index (CPI) inflation, which excludes volatile food and energy prices, came in at 2.8 percent year-on-year in April, up from 2.6 percent the month before.
A defiant Trump insisted on Tuesday that the inflation spike was "short-term."
"As soon as this war is over, which will not be long, you're going to see oil prices drop," he told reporters in Washington.

'Shock at the pump'

US consumers have been battered by years of higher-than-expected inflation, with policymakers struggling to achieve price stability more than five years after the pandemic began. 
Trump made bringing inflation down a key promise since taking office, but has made little progress in doing so. 
High fuel prices will be a core concern for voters. The average price of a gallon of regular gasoline has risen 51 percent since the start of the war, according to the AAA motor club.
Bernard Yaros, lead US economist at Oxford Economics, warned that high wholesale gasoline prices suggested that pump prices would again lift headline inflation next month.
"Consumers aren't only facing sticker shock at the pump, but also with their utility bills as electricity prices rose sharply last month," he said.
On Tuesday, Democratic Senator Elizabeth Warren slammed Trump over the latest inflation figures.
"Donald Trump promised to lower costs 'on day one.' Instead, he keeps raising them. First, his chaotic tariffs drove prices higher. Now, his war with Iran is pushing them up even more," she said in a statement.

'Worse before it gets better'

The US Federal Reserve has a long-term two-percent target for inflation and several policymakers at the central bank have indicated the possible need for interest rate hikes to address rising prices.
"Given that inflation is heading in the wrong direction and the labor market is holding up, it's very unlikely that the Fed will be able to lower interest rates any time soon," said Chris Zaccarelli of Northlight Asset Management. 
He added that investors may begin to price in rate hikes for next year.
Kathy Bostjancic, chief economist at Nationwide, said April's inflation figures were in line with expectations, but will likely "embolden" more Federal Reserve Open Market Committee (FOMC) policymakers to push for rate hikes.
"This would increase the hurdle for the Fed to cut rates later this year, despite Kevin Warsh coming on to lead the FOMC and being more inclined to argue for rate reductions," she said.
Trump nominee Warsh is due to be confirmed as a member of the Federal Reserve board by the US Senate on Tuesday, with his confirmation as its chief due later this week.
Diane Swonk, chief economist at KPMG Economics, warned that the Iran war's impact on the US economy was likely to get "worse before it gets better."
"The closure of the Strait of Hormuz is more than an energy shock; it is roiling supply chains around the world in ways that echo the disruptions we saw during the pandemic," she said. 
"That suggests we could continue to feel its effects well into 2027, even if the strait were to reopen tomorrow."
aha/mjf

bank

US Senate confirms Trump-nominee Warsh to Federal Reserve board

BY ASAD HASHIM

  • The Senate will hold a separate vote to confirm Warsh as the central bank's chair, taking over from incumbent Jerome Powell, whose term finishes at the end of this week.
  • The US Senate on Tuesday confirmed Kevin Warsh as a governor on the board of the Federal Reserve, clearing the way for him to take the reins of the central bank later this week as the world's largest economy faces inflation at a three-year-high.
  • The Senate will hold a separate vote to confirm Warsh as the central bank's chair, taking over from incumbent Jerome Powell, whose term finishes at the end of this week.
The US Senate on Tuesday confirmed Kevin Warsh as a governor on the board of the Federal Reserve, clearing the way for him to take the reins of the central bank later this week as the world's largest economy faces inflation at a three-year-high.
The Senate voted 51-45 to confirm Warsh's appointment to the board for a 14-year term, with the results largely along party lines.
The Senate will hold a separate vote to confirm Warsh as the central bank's chair, taking over from incumbent Jerome Powell, whose term finishes at the end of this week.
US President Donald Trump has frequently insulted and criticized Powell, demanding the central bank lower interest rates faster, despite significant economic headwinds.
US consumer inflation came in at its highest year-on-year level since 2023 on Tuesday, registering at 3.8 percent in April, with significant increases in both energy and food prices.
Warsh has backed lower interest rates, despite price increases having outpaced the Fed's long-term two-percent target for years.
The US labor market has also shown signs of weakness, with unemployment steady but job growth see-sawing between contraction and expansion for months. 

Fed divisions

The Fed typically uses interest rates as its main policy tool, increasing them to tame inflation or lowering them to spur economic growth.
Last month, a meeting of the Fed's rate-setting committee saw an outpouring of dissent, with three policymakers voting for a change in forward guidance language to indicate a rate hike could be as likely as a cut.
Decisions on the 12-member Federal Open Market Committee (FOMC) -- which consists of the seven Fed governors and five regional Fed presidents -- are made by a majority vote.
"It is a very hard moment for someone to take over at the helm of the Fed," said Diane Swonk, chief economist at KPMG. 
"There are no easy options: hold rates steady or cut and risk a more persistent, corrosive bout of inflation, or raise rates and add insult to injury to a labor market that looks better on paper than it feels to most workers."
Gregory Daco, chief economist at EY-Parthenon, said the April inflation figures would strengthen the hand of policymakers seeking to indicate a rate hike could be the Fed's next rate move.  

Attacks on independence

Warsh is due to be confirmed for a separate four-year term as Fed chair by the Senate in the coming days.
On the board, he will take up a seat vacated by Trump ally Stephen Miran, who was named as a governor in September to complete the unfinished term of Adriana Kugler, who resigned.
Warsh takes over the Fed as Trump has launched unprecedented attacks on the central bank's independence, initiating a criminal probe against Powell over a building renovation project and attempting to oust Fed Governor Lisa Cook.
The Justice Department dropped the Powell probe to clear the way in the Senate for Warsh's confirmation. The Supreme Court is due to rule on the legality of Trump's attempted ousting of Cook.
At his confirmation hearing last month, Warsh said he would "absolutely not" be a puppet for the president. 
At his last press conference as Fed chair, Powell announced that he would take the unusual step of staying on the board even after stepping down as its head.
He cited threats to the central bank's independence as the reason and promised to "keep a low profile" under Warsh.
aha/msp

bank

Kevin Warsh returns to Federal Reserve with 'regime change' agenda

BY ASAD HASHIM

  • "I am honored the president nominated me for the position and I'll be an independent actor if confirmed as chairman of the Federal Reserve," he said.
  • Kevin Warsh, the incoming chair of the US Federal Reserve, will return to the central bank with an ambitious reform agenda and the looming threat of intimidation by the man who nominated him: US President Donald Trump.
  • "I am honored the president nominated me for the position and I'll be an independent actor if confirmed as chairman of the Federal Reserve," he said.
Kevin Warsh, the incoming chair of the US Federal Reserve, will return to the central bank with an ambitious reform agenda and the looming threat of intimidation by the man who nominated him: US President Donald Trump.
Warsh was confirmed to a 14-year term on the Fed's board by the Senate on Tuesday, with a separate vote due to install him as the central bank's chief.
The 56-year-old native of upstate New York left his first term on the board prematurely in 2011, griping over policy differences.
Now, he returns to lead the Fed -- tasked with, among other things, managing US inflation and ensuring maximum employment -- with an agenda that includes changing how it makes decisions, communicates those moves and implements policy shifts.
He does so at a time of unprecedented political pressure on the Fed's independence, with Trump demanding lower interest rates to spur activity in the world's largest economy. 
Trump frequently criticized and insulted Warsh's predecessor, Jerome Powell, over a lack of rate cuts. His administration targeted Powell in a criminal probe and is still attempting to remove another Fed governor, Lisa Cook. 
At his confirmation hearing before the Senate banking committee, Warsh vowed to preserve the Fed's independence, saying he would "absolutely not" be the president's puppet.
"I am honored the president nominated me for the position and I'll be an independent actor if confirmed as chairman of the Federal Reserve," he said.

Fed criticism

Born in New York's state capital Albany, Warsh graduated from high school in that area before obtaining degrees from Stanford University and Harvard Law School.
He is married to Jane Lauder, a granddaughter of cosmetics legend Estee Lauder. Her billionaire father Ronald Lauder is one of Trump's longtime associates.
Warsh started his career at investment giant Morgan Stanley, specializing in mergers and acquisitions. 
He later joined former US president George W. Bush's administration, serving as a White House economic policy advisor from 2002 to 2006 before being nominated to the Fed's Board of Governors.
Warsh served on the board during the global financial crisis, and eventually left in 2011 over differences on how the central bank should tackle it. He has since worked on Wall Street and on the boards of various companies, including UPS.
"I saw the Fed and its people at their very best, but I also witnessed an institution that was tempted to play a larger role in the economy and society," Warsh said at his confirmation hearing.
That language has echoed Trump, whose administration has called for the Federal Reserve to stay in its lane and has alleged the central bank has a credibility crisis.
In his first tenure at the Fed, Warsh was considered a "hawk" -- a policymaker who favors addressing the inflation side of the mandate, usually by raising interest rates.
In recent years, however, he has changed his tune, aligning with Trump's demands for lower interest rates despite the US economy facing stubbornly high inflation since the Covid-19 pandemic.
Warsh blames high inflation on "policy errors" by the Fed in 2021 and 2022.
He has called for "regime change" in policymaking, including changing the data the Fed bases its decisions on, removing forward guidance from its communications and encouraging more of a "good family fight" at meetings.
He also wants to shrink the Fed's balance sheet, preferring to use interest rates as the central bank's primary tool on both sides of its mandate.
He has argued that the Fed has strayed into politics, again echoing a key Trump talking point.

'Very smooth'

David Wessel, senior fellow at the Brookings Institution, said Warsh has outlined a wide-ranging agenda, but one should "watch what he does, not what he has said."
He added that Warsh will not simply be able to impose his will on the central bank, and will have to work with his fellow policymakers.
"He is very smooth, and generally good with the people, and that will serve him well in this endeavor as long as he doesn't move too fast or too radically," Wessel told AFP.
Kathryn Judge, a law professor at Columbia University, said existing divisions at the Fed will pose a "significant challenge" to Warsh.
"I think we really just have to wait and see," Judge said.
"It's been a long time since we've had a chair coming in who is seeking to chart a new course, rather than to build on the success of his predecessors."
bur-aha/sst/des