(Reuters) – Shares of Tesla fell about 5% on Monday after key supplier Panasonic Holdings said it cut automotive battery production in the September quarter, cementing concerns of a global slowdown in electric-vehicle (EV) sales.

Panasonic said its production suffered from slowing uptake for high-end EVs in North America, echoing Tesla CEO Elon Musk’s comments from earlier this month that higher-for-longer borrowing costs would take a toll on vehicle demand.

“Panasonic’s warning of soft demand for Tesla’s Model S and Model X cars has many concerned that global economic outlook could be in worse-shape than initially believed,” said Edward Moya, senior market analyst at Oanda.

Earlier on Monday, General Motors reached a tentative deal with the United Auto Workers union, following deals by Ford Motor and Chrysler-owner Stellantis, and potentially putting an end to disruptions that some analysts had said could have given Tesla an edge.

Since the UAW strike began, Tesla shares have, however, fallen 34% compared with a 30% to 33% decline in shares of Ford Motor and General Motors, and a 33% rise in Stellantis’s shares.

Tesla investor Gary Black attributed the weakness in Tesla shares to chipmaker Onsemi’s bleak forecast.

“ON sells to automotive players with over 50% share of global EV sales, including 4 of the top 5 China EV makers,” he said in a post on social media platform X on Monday.

Onsemi CEO Hassane El-Khoury said the company’s top European clients were working to clear their inventory and noted that the company sees “increasing risk to automotive demand due to high interest rates.”

Weak demand will mount more pressure on Tesla’s gross margin. It contracted to 17.9% between July and September from 25.1% a year earlier due the EV maker’s rampant price cuts, which also triggered a price war in key markets such as China.

Tesla was trading at about 56 times its 12-month forward earnings estimates, compared with 5.6 times for Ford and General Motors’ 4.1, according to LSEG data.

(Reporting by Chavi Mehta in Bengaluru; Additional reporting by Akash Sriram in Bengaluru; Editing by Shinjini Ganguli)

By John Geddie and Yukiko Toyoda

TOKYO (Reuters) -The United States has started bulk buying Japanese seafood to supply its military there in response to China’s ban on such products imposed after Tokyo released treated water from its crippled Fukushima nuclear plant into the sea.

Unveiling the initiative in a Reuters interview on Monday, U.S. ambassador to Japan Rahm Emanuel said Washington should also look more broadly into how it could help offset China’s ban that he said was part of its “economic wars”.

China, which had been the biggest buyer of Japanese seafood, says its ban is due to food safety fears.

The U.N.’s nuclear watchdog vouched for the safety of the water release that began in August from the plant wrecked by a 2011 tsunami. G7 trade ministers on Sunday called for the immediate repeal of bans on Japanese food.

“It’s going to be a long-term contract between the U.S. armed forces and the fisheries and co-ops here in Japan,” Emanuel said.

“The best way we have proven in all the instances to kind of wear out China’s economic coercion is come to the aid and assistance of the targeted country or industry,” he said.

Asked about Emanuel’s comments at a press conference on Monday, China’s foreign ministry spokesperson Wang Wenbin said: “the responsibility of diplomats is to promote friendship between countries rather than smearing other countries and stirring up trouble”.

The first purchase of seafood by the U.S. under the scheme involves just shy of a metric ton of scallops, a tiny fraction of more than 100,000 tons of scallops that Japan exported to mainland China last year.

Emanuel said the purchases – which will feed soldiers in messes and aboard vessels as well as being sold in shops and restaurants on military bases – will increase over time to all types of seafood. The U.S. military had not previously bought local seafood in Japan, he said.

The U.S. could also look at its overall fish imports from Japan and China, he said. The U.S. is also in talks with Japanese authorities to help direct locally-caught scallops to U.S.-registered processors.

‘NOT A CHINA HAWK’

Emanuel, who was former U.S. President Barack Obama’s White House chief of staff, has in recent months made a series of blunt statements on China, taking aim at various issues including its economic policies, opaque decision-making and treatment of foreign firms.

That has come as top U.S. officials, including Secretary of State Antony Blinken, have visited Beijing in an effort to draw a line under strained ties.

Asked if he considered himself hawkish on China, Emanuel rejected the term and said he was a “realist”.

“I don’t consider it hawkish but just consider it realist and honest. Maybe the honesty is painful, but it’s honest,” he said.

“I’m all for stability, understanding. That doesn’t mean you’re not honest. They’re not contradictory. One of the ways you establish stability, is that you’re able to be honest with each other.”

He said China faced major economic challenges exacerbated by a leadership intent on turning their backs on international systems.

“The kind of loser in this is the youth of China. You now have a situation where 30% of the Chinese youth, one out of three, are unemployed. You have major cities with unfinished housing … you have major municipalities not able to pay city workers. Why? Because China made a political decision to turn their back on a system in which they were benefiting.”

The most recent official youth unemployment data from China, published in July before Beijing said it was suspending publication of the numbers, showed it jumping to a record high of 21.3%.

Emanuel said he was also keeping an eye on how China’s leadership responds to the recent death of former Premier Li Keqiang, a reformist who was sidelined by President Xi Jinping.

“What’s … interesting to me, that I think is telltale, is how they will be treating his funeral and how they’ll be treating comments about him,” he said.

“I do think that there’s kind of a section of China that sees what kind of policies he was pursuing as kind of the best of China. But that’s up for China to decide.”

(Editing by Robert Birsel)

The Bank of America Playing This Market by Buying Boomer and Selling Millennial 

High-interest rates are helping keep baby boomer savings accounts flush. Young Americans, on the other hand, are struggling with debt and sky-high mortgage rates and rents, which is pushing them even further away from home ownership. 

This is now driving new trade recommendations and suggestions from Bank of America, one in specific directed at taking advantage of the growing generational wealth gap and going long-term on old-folk shares. The narrative is to avoid those people whose wealth rides on the cash-strapped millennial. 

This means cruise ship lines and American Express Co. are in and millennial outfits like the self-styled next-gen fashion retailer, Revolve Group Inc. is out. Ohsung Kwon, BofA quantitative strategist, a millennial himself said, “Millennials are really feeling the impact of the hiking cycle. Boomers, not so much. We’re starting to see a big diversion between the two.”

The fault line is slowly bubbling underneath an economy that on the surface has somehow stayed surprisingly robust, largely because of a steady consumer-spending spree since the end of pandemic-mandated lockdowns. 

Who wins, who loses?

It’s likely there will be plenty of winners in sectors like entertainment and healthcare, where older folk tend to spend a lot of their funds, according to BofA. Home-improvement-based stock could also win big, as baby boomers are living way longer than prior generations and are starting to get reluctant to let go of houses with low mortgage rates. 

On the flip side, however, retailers that sell clothes, a sector heavily skewed toward young people, are facing heavy headwinds. 

The trend doesn’t look to slow down anytime soon with the US Federal Reserve intending to keep interest rates high for some time and the federal deficit that keeps surging putting pressure on bond yields. In turn, this ends up driving up what the US government will have to pay on Treasuries interest – which flows right back into investor pockets. 

Blanke Schein Wealth Management’s chief investment officer, Robert Schein, said, “Pre-pandemic, the empirical evidence was there supporting that boomers are doing better than millennials in regards to investments, retirement accounts, and home ownership. And post-pandemic, that divide, because of higher inflation and elevated interest rates, has gotten dramatically worse. The divide is just gigantic.”

For now, Bank of America argues that baby boomer asset ownership and spending is more than enough to keep market consumption going. BofA has a positive outlook when it comes to consumer spending and stocks in the United States.

By Ahmed Aboulenein

WASHINGTON (Reuters) – Most people will retain access to Pfizer’s Paxlovid and Merck’s Lagevrio COVID-19 oral antiviral treatments for little or no cost even after the U.S. government starts handing over their distribution to the commercial market next month, health officials said on Friday.

The government has been overseeing distribution of the treatments, alongside vaccines and tests, but has transferring that work to traditional commercial channels. Commercial ordering for the treatments is set to start on Nov. 1.

The U.S. government paid around $530 per course for Paxlovid, the most commonly prescribed at home COVID-19 treatment in the country, and made it available at no cost.

Pfizer said last week it had set the price for Paxlovid at nearly $1,400 per course before rebates and other discounts to insurers and pharmacy benefit managers are taken into account.

“The launch of these products, which is what’s going to happen on Nov. 1, is not going to bring sudden changes because there’s still an ample supply of federally-owned therapeutics with millions of treatment courses still in the field,” said a U.S. Department of Health and Human Services (HHS) official.

“Most people who need therapeutics will continue to be able to access the treatment they need at low or no cost, both during this transition, as well as after this transition to the commercial market,” he said on a call with journalists.

Providers will be able to order government-supplied Lagevrio until Nov. 10 and Paxlovid until Dec. 15, the official said, and the government is encouraging them to keep distributing the federal-owned supply they have at no cost until it expires or runs out.

Under an agreement with Pfizer allowing the return of 7.9 million courses, the credits for the returned doses will underwrite a program keeping Paxlovid free of charge for patients insured under the Medicare and Medicaid programs through the end of 2024, and to uninsured and underinsured patients through 2028, the official said.

Returns will begin on Nov. 15, the official said, and will be accepted through the end of the year. The government is recommending returns start in December enough time for the establishment of patient assistance programs and securing of commercially-labeled doses.

(Reporting by Ahmed Aboulenein; Editing by Marguerita Choy)

By Scott DiSavino

NEW YORK (Reuters) -Oil prices climbed about 3% to a one-week high on Friday on worries that tensions in Israel and Gaza could spread into a wider conflict that could disrupt global crude supplies.

Brent futures rose $2.55, or 2.9%, to settle at $90.48 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $2.33, or 2.8%, to settle at $85.54.

Brent’s premium over WTI rose to its highest since March, making it more attractive for energy firms to send ships to the U.S. to pick up crude for export.

For the week, Brent was down about 2% and WTI down about 4%.

Trading was choppy. Early in the session, oil prices soared by more than $2 a barrel after the U.S military struck Iranian targets in Syria. Then prices briefly turned negative as markets digested various reports on mediation talks between the militant Hamas group and Israel led by Qatar in coordination with the U.S.

“We are at the mercy of the next headline … and I think that’s kind of what we’ve been seeing today with the price swings,” said Phil Flynn, an analyst at Price Futures Group.

“You’d like to be trading the fundamentals, but you really can’t because you’ve got to be more worried about … what’s going to happen in the Middle East,” Flynn said. “No one wants to be short over the weekend.”

Israeli air and ground forces were stepping up operations in the Gaza Strip amid reports of heavy bombing of the besieged enclave.

A Hamas official, meanwhile, conditioned the release of hostages in Gaza on a ceasefire in Israel’s bombardment of the Palestinian enclave, launched after a deadly Hamas rampage into southern Israel nearly three weeks ago.

Several countries, including many Arab states, have urged Israel to delay a planned ground invasion that would multiply civilian casualties and might ignite a wider conflict.

RED LINES

Middle East developments have so far not directly affected oil supplies, but many fear disruptions of exports from major crude producer and Hamas backer Iran and others.

“(It) remains incredibly difficult even for the most knowledgeable regional watchers to make high conviction calls about the trajectory of the current crisis, as the red lines that could bring more players onto the battlefield remain largely indiscernible,” RBC Capital analyst Helima Croft said.

Goldman Sachs analysts retained their first-quarter 2024 Brent crude price forecast at $95 a barrel but added that lower Iranian exports could cause baseline prices to rise by 5%.

Prospects for oil demand were uncertain.

U.S. consumer spending surged in September but was seen cooling off in early 2024. Some economists believe the U.S. Federal Reserve is done raising interest rates to fight inflation, which can slow economic growth and reduce oil demand.

But, economists told Reuters they expect high inflation will continue to dog the world economy next year.

(Reporting by Scott DiSavino in New York, Natalie Grover in London and Florence Tan and Sudarshan Varadhan in Singapore; Editing by David Evans, Kirsten Donovan, David Gregorio and Jonathan Oatis)

(Reuters) – Insurance broker Aon reported a third-quarter profit on Friday that beat analysts’ estimates, helped by growth at its commercial risk solutions business.

There has been an uptick in companies spending on employee benefit plans encompassing health, retirement and investment management.

Revenue at Aon’s commercial risk solutions unit rose 7% to $1.59 billion in the quarter.

On an adjusted basis, the company earned $2.32 per share, compared with estimates of $2.21, according to LSEG data.

Aon’s total revenue rose nearly 10% to $2.95 billion.

(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Shounak Dasgupta)

By Tatiana Bautzer and Lananh Nguyen

NEW YORK (Reuters) – Major Wall Street firms said a dismal year of dealmaking appears to have hit a trough, and now some companies are looking to merge, offering hope that investment banking revenues could pick up after a disappointing third quarter.

Dealogic data showed that globally, investment banking revenue tumbled 16% in the third quarter from a year earlier. But lately, bankers have been sounding more positive on the transaction pipeline after Exxon Mobil and Chevron both announced acquisitions for more than $50 billion.

Those takeovers, alongside a nascent revival in initial public offerings (IPOs), should bolster investment banking revenues next year.

“This is going to happen in fits and starts a little bit, and so not all of those discussions are going to wind up in announcements, and not all the announcements will close,” Lazard CEO Peter Orszag told Reuters in an interview. There was “definitely … some difference relative to six to nine months ago” and that for mergers & acquisitions (M&A) the “market is bottoming out,” he said.

“Client discussions have been turning more constructive over the past several months,” said Orszag, who took the helm earlier this month. The independent investment bank on Thursday missed Wall Street estimates for third-quarter profit, as its advisory business reeled from a prolonged slump in dealmaking.

Morgan Stanley’s newly appointed CEO Ted Pick, who takes up the role in January, was similarly upbeat, telling CNBC on Thursday the “forward pipeline has gotten sequentially bigger with each passing month.” He said mid cap and large-cap M&A across industry groups were “seen as the most interesting part of the next cycle.”

Pick noted that given the three- to six-month lag before deals close, the forward pipeline is the relevant indicator.

Morgan Stanley lagged its peers in the third quarter. The lethargic dealmaking disappointed investors, sending shares more than 6% lower when results were announced on Oct. 18. On Thursday, shares rose 1%.

Global investment banking revenue stood at $50 billion in the first three quarters of this year, 20% below the same period in 2022, according to Dealogic.

CONSERVATIVE PREDICTIONS

Predictions for 2024 remain conservative given an uncertain economic environment. Wild cards include U.S. interest rates, inflation and conflicts in Ukraine and the Middle East.

Investment banking revenue will probably rise 5% to 10% next year for the largest banks, according to Mike Mayo, an analyst at Wells Fargo. Still, activity will remain subdued relative to a blockbuster year in 2021.

“It remains hard to predict when deal activity will sustainably rebound,” Citigroup CEO Jane Fraser told analysts on a conference call this month. The bank advised Exxon on its acquisition of Pioneer Natural Resources, announced earlier in October.

“We have begun to provide more leverage finance for key clients,” and companies are becoming more active in issuing debt, Fraser said, but the IPO outlook appears more fragile.

In further evidence of deal flow, activist investors have pushed for M&A in nearly half of all campaigns tracked by Barclays this year, despite tougher financing markets.

Last week, Engaged Capital called on apparel maker VF, which owns The North Face brand, to consider selling non-core assets. Starboard Value recommended that News Corp spin off its digital real estate division and Jana Partners called on Frontier Communications to sell itself.

At Bank of America’s earnings, expectations were broadly steady after investment-banking fees grew 2% in the third quarter, helped by deals from bankers serving middle-market companies.

“We basically doubled the size of that team, and we’ll double it again,” CEO Brian Moynihan told analysts, without specifying staffing numbers.

In Goldman Sachs’ recent earnings CEO David Solomon was more bullish than his peers, despite largely flat investment-banking fees in the third quarter.

“If conditions remain conducive, I expect the continued recovery for both capital markets and strategic activity,” he told analysts on a post-earnings conference call.

(Reporting by Tatiana Bautzer and Lananh Nguyen; additional reporting by Svea Herbst-Bayliss; Editing by by Megan Davies and David Gregorio)

By Aditya Soni

(Reuters) -Amazon.com rose 7% on Friday on a pick up in growth at its most profitable cloud business as it aims for a larger share of the booming artificial intelligence market in a race with Microsoft.

The e-commerce giant was on track to add almost $90 billion to its market capitalization based on its last traded share price of $128. Smaller cloud rival Microsoft rose 1.5%, while Alphabet was down about 1.3%.

Amazon CEO Andy Jassy said on Thursday the cloud business was stabilizing as large expansions with existing customers and first-time agreements were likely to aid growth in the final three months of the year.

He also touted the AI opportunity for Amazon Web Services (AWS), saying that he expected the technology to lead to “tens of billions of dollars in revenue over the next several years”.

Wall Street cheered the positive commentary for the business that brings in almost all of Amazon’s profit, but had slowed after the pandemic as customers cut costs.

“Tech investors can breathe a sigh of relief, Bernstein analysts said in a client note, adding that “AWS growth sounds ready to re-accelerate even without AI.”

About 26 brokerages raised their price targets on the stock, pushing their median view to $173, according to LSEG data.

Amazon shares have rallied about 40% this year, but they have lost nearly 8% in the past two days after Alphabet warned that cloud customers were curbing spending.

In the July-September period, Amazon posted its first quarter-on-quarter increase in cloud growth in nearly two years.

“Amazon Web Services optimization has stabilized, although growth fell slightly shy of our expectations,” Morningstar analyst Dan Romanoff said.

The 12.3% growth in AWS was slower than the 29% rise seen at Microsoft’s Azure cloud business, which had topped market estimates. Google Cloud grew 22.5% in the period.

Amazon trades at 38.49 times its 12-month forward earnings estimates, compared with Microsoft’s 27.85 and Alphabet’s 18.66.

To be sure, Amazon’s cloud business is larger than that of Microsoft and Google. But the e-commerce firm is seen as a laggard in the AI race that Microsoft is leading with its bet on OpenAI and focus on big clients that already use its services.

Amazon has tried to catch up by signing a deal in September to invest up to $4 billion in chatbot-maker Anthropic and rolling out its Bedrock AI service that has drawn thousands of customers.

“Generative AI is a massive catalyst that could re-ignite growth within the (AWS) franchise,” said Global X analyst Tejas Dessai. “We see some major partnerships secured in this quarter, as key towards driving that growth in the coming quarters.”

(Reporting by Aditya Soni in Bengaluru; Editing by Arun Koyyur)

LONDON (Reuters) – Investors have poured money into beaten-down, long-dated U.S. Treasuries and bruised tech stocks in recent days, BofA Global Research said in a note on Friday.

There were $5.6 billion of inflows to long-duration Treasury funds in the week to Wednesday, the largest on record, while inflows to short-term Treasuries slowed, according to the report, which cited EPFR data.

“The biggest flow story right now is money gravitating to extend duration in Treasuries,” BofA said.

The data indicates that fund managers, who expect bonds to bounce back when the long-awaited recession arrives, have kept buying, even as prices have dropped, which has pushed up yields.

Long-dated Treasuries have been selling off very heavily in recent months, and the 10-year U.S. Treasury yield – which moves inversely to its price – reached a 16-year high of 5.021% this week.

Analysts point to a range of factors that have weighed on Treasury prices. These include an increase in supply of government debt to fund deficits, reinforced by the Federal Reserve winding down its bloated balance sheet, and growing uncertainty, which means investors demand higher yields to hold long duration bonds – the so called term premium.

BofA said the bond bubble has now “popped” but expects prices to move sideways.

Tech funds also saw inflows of $2.0 billion in the week to Wednesday, their largest in eight weeks, which BofA attributed to investors “buying-the-dip”, given the sector’s recent declines.

Equities as a whole saw $2.1 billion in outflows, but energy funds saw inflows of $2.4 billion, the most in 18 months.

Higher oil prices following the outbreak of war in the Middle East have boosted energy stocks.

(Reporting by Alun John; Editing by Amanda Cooper and Mike Harrison)

(Reuters) -Rapid advances in artificial intelligence (AI) such as Microsoft-backed OpenAI’s ChatGPT are complicating governments’ efforts to agree laws governing the use of the technology.

Here are the latest steps national and international governing bodies are taking to regulate AI tools:

AUSTRALIA

* Planning regulations

Australia will make search engines draft new codes to prevent the sharing of child sexual abuse material created by AI and the production of deepfake versions of the same material, its internet regulator said in September.

BRITAIN

* Planning regulations

Governments and companies need to address the risks of AI head on, Prime Minister Rishi Sunak said on Oct. 26 ahead of the first global AI Safety Summit at Bletchley Park on Nov. 1-2.

Sunak added Britain would set up the world’s first AI safety institute to “understand what each new model is capable of, exploring all the risks from social harms like bias and misinformation through to the most extreme risks”.

Britain’s data watchdog said on Oct. 10 it had issued Snap Inc’s Snapchat with a preliminary enforcement notice over a possible failure to properly assess the privacy risks of its generative AI chatbot to users, particularly children.

CHINA

* Implemented temporary regulations

China published proposed security requirements for firms offering services powered by generative AI on Oct. 12, including a blacklist of sources that cannot be used to train AI models.

The country issued a set of temporary measures in August, requiring service providers to submit security assessments and receive clearance before releasing mass-market AI products.

EUROPEAN UNION

* Planning regulations

European lawmakers agreed on Oct. 24 on a critical part of new AI rules outlining the types of systems that will be designated “high risk”, and inched closer to a broader agreement on the landmark AI Act, according to five people familiar with the matter. An agreement is expected in December, two co-rapporteurs said.

European Commission President Ursula von der Leyen on Sept. 13 called for a global panel to assess the risks and benefits of AI.

FRANCE

* Investigating possible breaches

France’s privacy watchdog said in April it was investigating complaints about ChatGPT.

G7

* Seeking input on regulations

G7 leaders in May called for the development and adoption of technical standards to keep AI “trustworthy”.

ITALY

* Investigating possible breaches

Italy’s data protection authority plans to review AI platforms and hire experts in the field, a top official said in May. ChatGPT was temporarily banned in the country in March, but it was made available again in April.

JAPAN

* Investigating possible breaches

Japan expects to introduce by the end of 2023 regulations that are likely closer to the U.S. attitude than the stringent ones planned in the EU, an official close to deliberations said in July.

The country’s privacy watchdog has warned OpenAI not to collect sensitive data without people’s permission.

POLAND

* Investigating possible breaches

Poland’s Personal Data Protection Office said on Sept. 21 it was investigating OpenAI over a complaint that ChatGPT breaks EU data protection laws.

SPAIN

* Investigating possible breaches

Spain’s data protection agency in April launched a preliminary investigation into potential data breaches by ChatGPT.

UNITED NATIONS

* Planning regulations

The U.N. Secretary-General António Guterres on Oct. 26 announced the creation of a 39-member advisory body, composed of tech company executives, government officials and academics, to address issues in the international governance of AI.

The U.N. Security Council held its first formal discussion on AI in July, addressing military and non-military applications of AI that “could have very serious consequences for global peace and security”, Guterres said at the time.

U.S.

* Seeking input on regulations

The White House is expected to unveil on Oct. 30 a long-awaited AI executive order, which would require “advanced AI models to undergo assessments before they can be used by federal workers”, the Washington Post reported.

The U.S. Congress in September held hearings on AI and an AI forum featuring Meta CEO Mark Zuckerberg and Tesla CEO Elon Musk.

More than 60 senators took part in the talks, during which Musk called for a U.S. “referee” for AI. Lawmakers said there was universal agreement about the need for government regulation of the technology.

On Sept. 12, the White House said Adobe, IBM, Nvidia and five other firms had signed President Joe Biden’s voluntary commitments governing AI, which require steps such as watermarking AI-generated content.

A Washington D.C. district judge ruled in August that a work of art created by AI without any human input cannot be copyrighted under U.S. law.

The U.S. Federal Trade Commission opened in July an investigation into OpenAI on claims that it has run afoul of consumer protection laws.

(Compiled by Alessandro Parodi and Amir Orusov in Gdansk; editing by Kirsten Donovan, Mark Potter, Christina Fincher and Milla Nissi)