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(Reuters) - French farmers are blocking roads across the country to demand government action to address numerous grievances, as protests in the European Union's agricultural sector spread.
Here are some of the issues that have prompted the growing protest movement and how the government could respond.
WHY ARE FARMERS PROTESTING?
Farmers in France, the EU's biggest agricultural producer, say they are not being paid enough and choked by excessive regulation on environmental protection.
Some of their concerns, like competition from cheaper imports and environmental rules, are shared by producers in the rest of the EU, while others such as food price negotiations are more specific to France.
COSTS
Financially, farmers argue that a push by the government and retailers to bring down food inflation has left many producers unable to cover high costs for energy, fertiliser and transport.
A government plan to phase out a tax break for farmers on diesel fuel, as part of a wider energy transition policy, has also been a flashpoint, in an echo of tensions in Germany.
IMPORTS
Large imports from Ukraine, for which the EU has waived quotas and duties since Russia's invasion, and renewed negotiations to conclude a trade deal between the EU and South American bloc Mercosur, have fanned discontent about unfair competition in sugar, grain and meat.
Large imports are resented for pressuring European prices while not meeting environmental standards imposed on EU farmers.
ENVIRONMENT, RED TAPE
On the environment, farmers take issue both with EU subsidy rules, such as an incoming requirement to leave 4% of farmland fallow, and what they see as France's overcomplicated implementation of EU policy, such as in restoring hedges and arable land as natural habitat.
Green policies are seen as contradicting goals to become more self-sufficient in production of food and other essential goods in the light of Russia's invasion of Ukraine.
Rows over irrigation projects, as water resources become a focus in climate debate, and criticism about animal welfare and pollution in agriculture have heightened feelings among an ageing French farmer population as being disregarded by society.
WHAT MEASURES COULD THE GOVERNMENT TAKE?
The government, under pressure to defuse the crisis ahead of European elections in June and the annual Paris farm show next month, has postponed draft legislation on attracting more recruits to farming to add other measures.
The government has promised to simplify procedures for farmers. That could mean reduced waiting times for subsidy payments or farm project approvals, or easing paperwork and audits on environmental compliance.
The government could drop its plan to phase out the diesel tax break, though it has already softened the measure by staggering the move over several years and offering to re-invest the funds in farming.
Some changes would need EU approval, such as changing the rule on fallow land, and farmers warn any concessions may come too late for this year's production plans.
As in previous farming crises, the government could offer emergency aid. It has already pledged funds for wine producers hit by falling consumption and farmers affected by floods in the north and a cattle disease in the south, but may announce more money and quicker payouts.
Some Citigroup (C.N) employees who are being laid off this week in New York, part of one of the biggest job reductions at a bank since the financial crisis, are expected to be paid salaries through April, two sources with knowledge of the matter said.
In meetings with managers and human resources representatives this week, employees affected by the job cuts were given more details about the exit process, according to the two sources who declined to be identified discussing personnel matters. The arrangements may vary depending on individual circumstances.
Citigroup declined to comment.
Feb. 1 will mark the beginning of a 90-day notice period required in New York state, the two sources said.
Managers can determine whether employees who are being laid off can work through February and maintain access to the bank's equipment and systems.
Pay and benefits will be maintained through March and April for New York-based staff, the sources said, but access to company systems will be cut off during those months, one of the sources said. Staffers can apply for other jobs at the bank during the 90-day period.
Bonus payments for 2023 will be combined with severance packages, the sources said.
Earlier this month, the third-largest U.S. bank announced plans to reduce its headcount by 20,000 people over the next two years.
CEO Jane Fraser told managers in a call last week that about 5,000 employees would be let go as part of the reorganization, about 5,000 from divestitures and 10,000 in technology and operations, according to a source briefed on the call.
Argentina's largest union started a 12-hour strike on Wednesday with tens of thousands of workers demonstrating in the heart of Buenos Aires against tough economic austerity measures and reforms by new libertarian President Javier Milei.
The action, hitting sectors from transport to banks, is the biggest show of opposition to Milei's plans for spending cuts and privatization since he took office last month, pledging to fix an economy reeling from 211% inflation and crippling debt.
The strike was coordinated by the powerful umbrella union the General Confederation of Labor (CGT) and comes amid major scrutiny of Milei's two major reform pushes: an "omnibus" bill going through Congress and a "mega-decree" deregulating the economy.
"The first cut this government is making is to the workers," Pablo Moyano, leader of the powerful truckers union, said at the main union event in downtown Buenos Aires. "Their labor reform aims to take away workers' rights."
But even as the strikes, which started at noon local time, took a toll on transport, banks, hospitals and public services, Milei's government vowed to stick to its reform plans.
Local airlines said they had been forced to cancel hundreds of flights.
[1/11]A journalist, dressed as the "Joker", lies on the ground in front of police members during a one-day national strike, outside the National Congress, in Buenos Aires, Argentina, January 24, 2024. REUTERS/Agustin Marcarian Acquire Licensing Rights
The CGT had already used the courts to temporarily suspend some measures relating to labor in Milei's decree.
The omnibus bill was approved by a committee in the lower chamber of deputies early on Wednesday, one of many steps as it works its way through a divided Congress. It faces opposition from the powerful Peronist opposition bloc.
Milei, an economist and former TV pundit who pulled off a shock election win last year, is balancing stabilizing the South American country's economy and reducing a deep fiscal deficit with triple-digit inflation and with two-fifths of the population living in poverty.
The new government says the austerity measures are needed after years of over-spending that have left Argentina with huge debts to local and international creditors, including a shaky $44 billion deal with the International Monetary Fund.
"There is no strike that stops us, there is no threat that intimidates us," Milei's security minister and former presidential election rival Patricia Bullrich wrote on X.
"It's mafia unionists, poverty managers, complicit judges and corrupt politicians, all defending their privileges, resisting the change that society chose democratically."
Tesla (TSLA.O) CEO Elon Musk said on Wednesday Chinese automakers will "demolish" global rivals without trade barriers, underscoring the heat the U.S. electric vehicle market leader faces from the likes of BYD, who are racing to expand worldwide.
Musk's comments come after Warren Buffett-backed BYD (002594.SZ) - with its cheaper models and a more varied lineup -overtook Tesla as the world's top-selling EV company last quarter, despite Tesla's deep price cuts through 2023.
Chinese car companies were the "most competitive" and "will have significant success outside of China, depending on what kind of tariffs or trade barriers are established," Musk said on a post-earnings call with analysts on Wednesday.
"If there are no trade barriers established, they will pretty much demolish most other car companies in the world," he said. "They're extremely good."
Musk has reason to be concerned.
He sparked a price war last year to woo consumers hit with high borrowing costs, in turn squeezing Tesla's margins and worrying investors. On Wednesday, Musk warned Tesla was reaching "the natural limit of cost down" with its existing lineup.
Tesla plans to start producing a cheaper, mass market compact crossover codenamed "Redwood" mid-2025 to compete with inexpensive rivals, Reuters reported on Tuesday. Musk on Wednesday confirmed that Tesla expects to start production of its next-generation EV at its Texas factory in the second half of 2025.
But Chinese EV makers, adept at keeping costs in check with a stable supply chain, are moving fast. With rising competition and excess capacity in China, many are now working on rapidly expanding their foreign footprint.
SAIC Motor (600104.SS), for instance, has been placing orders for more vehicle vessels in its fleet to counter shipping costs as it looks to boost sales overseas.
"While automakers such as BYD and Nio are middle-of-the-pack with reliability, durability and safety, they enjoy high demand in China with innovation such as in-car technology and battery swapping," Spencer Imel, a partner at consumer insights firm Lansgton.
"That, we believe, will be an important ingredient and a differentiator in their future growth overseas," Imel said. He noted, though, that Chinese car companies still had extremely low brand awareness in the United States.
Musk's comments also come as the U.S. presidential election picks up pace. President Joe Biden has said China was determined to dominate the EV market and that he "won't let that happen".
Former President Donald Trump, who is again seeking the Republican nomination for president this year, has signaled that he would double down on stronger tariffs if elected, calling for a universal 10% tariff on all imports into the U.S. and revoking China's most-favored-nation trading status.
Musk on Wednesday said there was "no obvious opportunity" to partner with Chinese rivals but Tesla was open to giving them access to its charging network and licensing other technologies such as self-driving.
Europe has also taken a protectionist stance towards Chinese EV makers. Last year, the European Commission launched an investigation into whether to impose punitive tariffs to protect European Union producers against cheaper Chinese EV imports it says are benefiting from state subsidies.
Tesla (TSLA.O) expects to start production of its next-generation electric vehicle at its Texas factory in the second half of 2025, Chief Executive Elon Musk said on Wednesday, after warning of a sharp slowdown in sales growth this year.
But Tesla shares were down 6% in after-hours trading as Musk noted that ramping up production of the new vehicle would be challenging. Musk said it would take "a tremendous amount of new revolutionary manufacturing technology" required - a sign that any boost to Tesla's declining pace of growth would take time.
His projection followed a Reuters story earlier in the day saying Tesla had told suppliers to prepare for a June 2025 startup of a smaller crossover vehicle, critical for the automaker as it loses share to inexpensive EVs such as those made by China's BYD (002594.SZ).
"I'm often optimistic regarding time. But our current schedule shows that we will start production towards the end of 2025, sometime in the second half," Musk told analysts on a post-earnings call.
"We'll be sleeping on the line practically," he said, referring to Tesla's factory in Texas, where the new model will be first produced. That will be followed by Mexico and another factory outside North America to be decided later this year, he said.
The EV maker also warned of "notably lower" sales growth this year as it focuses on the new vehicle after it reported shrinking fourth-quarter gross margin.
Tesla said it was in between two growth waves: one driven by the release of Models 3 and Y in 2017 and 2020, respectively, and a second wave that would start with the next-generation vehicle platform.
Wall Street expects Tesla to sell 2.2 million vehicles this year, according to Visible Alpha. That would be up about 21% from 2023 but well below the long-term target of 50% that Musk set about three years ago. Tesla, however, did not reiterate that target on Wednesday.
After years of breakneck growth, Tesla is bracing for slowing growth and margins as EV demand softens and competition intensifies.
"If volume's going to be lower, then my guess is, Musk will probably cut prices and take share. Margins may continue to struggle for a while," said Gary Bradshaw, portfolio manager at shareholder Hodges Capital Management.
Cost of goods sold per vehicle declined sequentially in the fourth quarter, but Tesla cautioned it was approaching the "natural limit" of cost reductions on its existing vehicle lineup, underscoring the pressure on the company to launch its new lower-cost vehicles. BYD sold more EVs globally than Tesla in the fourth quarter.
Musk said Chinese automakers will have significant success outside of China. "If there are no trade barriers established, they will pretty much demolish most other car companies in the world."
[1/3]Tesla electric vehicles are lined up at a dealership in Durango, northern Spain, October 30, 2023. REUTERS/Vincent West/File Photo Acquire Licensing Rights
Tesla reported a gross margin of 17.6% for the three months ended December, compared with 23.8% a year earlier, and analysts' average estimate of 18.3%, according to LSEG data.
Automotive gross margin, excluding regulatory credits - a closely watched figure - dropped to 17.2% from 24.3% a year earlier, although it improved from 16.3% in the third quarter.
"Today's flat sales and substantially reduced margin results are further evidence that Tesla is losing its leadership advantage and its brand leadership has weakened," said Greg Silverman, global director of brand economics at Interbrand.
MORE PRICE CUTS?
Tesla started slashing the prices of its cars in late 2022, igniting a price war that singed U.S. rivals including Ford (F.N), who have all slowed EV production.
Musk said on Wednesday that Tesla's margins will depend on how fast interest rates fall.
Its shares, which have enjoyed the valuations of a technology company partly due to Musk's promise of self-driving cars, have fallen 16% so far this year, after doubling in 2023.
"I don't think the price cuts are over, mainly for the reason that demand for its electric vehicles is still weak," said Jesse Cohen, senior analyst at Investing.com.
Fourth-quarter net income more than doubled from the previous year to $7.9 billion, including a $5.9 billion non-cash gain related to deferred tax assets. Tesla said lower raw material costs and U.S. government credits helped lower cost-per-vehicle, but Cybertruck production and AI and other research projects increased costs.
On an adjusted basis, Tesla earned 71 cents per share in the fourth quarter, missing an average estimate from analysts at 74 cents, according to LSEG data.
Tesla's fourth-quarter revenue rose 3% to $25.17 billion, which marked its slowest pace of growth in more than three years. Analysts on average expected $25.62 billion, according to LSEG data.
South Korea's Hyundai Motor Co (005380.KS) on Thursday reported a 31% rise in fourth-quarter profit that missed analyst expectations due to unfavourable exchange rates as well as one-off costs related to the sale of its Russia plant in December.
Hyundai Motor, the world's No.3 automaker by sales with its affiliate Kia Corp (000270.KS), reported a net profit of 2.2 trillion won ($1.65 billion) for the October-December period versus a profit of 1.7 trillion won a year earlier.
That compared with a 2.9 trillion won average forecast by LSEG SmartEstimate, which is weighted towards estimates from analysts who are more consistently accurate.
In December, Hyundai Motor said it would take a 287 billion won ($219.2 million) loss on selling its plant in Russia, where operations have been suspended since March 2022.
Hyundai is targeting revenue growth of 4.0%-5.0% this year. It expects a 4.9% jump in North American vehicle sales but a 3.7% drop and 0.6% fall in vehicle sales in China and Europe, respectively.
It predicted an operating profit margin between 8.0% and 9.0% in line with last year.
"Hyundai Motor expects the business environment will remain difficult to predict, due to macro uncertainties centered on emerging markets and a downturn in the real economy," Hyundai Motor said in a statement.
Analysts noted that like other automakers, Hyundai is grappling with slowing growth due to a difficult economic environment, including high interest rates and inflation that have pushed vehicles out of the reach of some buyers.
"It appears that pent-up demand for vehicles from limited supplies has been disappearing as high interest rates eat away car buyers' willingness to purchase," said Lee Jae-il, an analyst at Eugene Investment & Securities.
Lee added that Hyundai Motor would likely manage its vehicle inventory level more tightly than previous years as pent-up demand has disappearing and excessive inventories would hurt its profitability.
Shares in Hyundai Motor were trading up 2.0% after it reported its earnings, outperforming 0.1 rise for the benchmark KOSPI (.KS11).The U.S. Federal Aviation Administration late on Wednesday tightened pressure on Boeing (BA.N)
by barring the troubled planemaker from expanding production of its best-selling 737 MAX narrowbody planes, following "unacceptable" quality issues.
The unprecedented decision looked set to deepen turmoil at Boeing even as the FAA also agreed to allow the 737 MAX 9, which was grounded after a mid-air blowout on an Alaska Airlines (ALK.N) jet on Jan. 5, to resume flying once inspections were completed.
The ability to resume flying was a relief to U.S. operators Alaska Airlines and United Airlines (UAL.O), which had been forced to cancel thousands of flights and aim to begin returning the planes to service on Friday and Sunday, respectively.
But the FAA decision to keep Boeing from expanding production will have wide-ranging effects across the industry.
Boeing is seeking to increase production of its single-aisle 737 MAX family to keep pace with demand and close a gap in the jet market with European planemaker Airbus (AIR.PA).
Analysts have expressed concerns that extra scrutiny of Boeing factories following the MAX 9 door plug blowout would temper production increases for the smaller and more widely sold MAX 8, a key source of cash for Boeing and many suppliers.
"We will not agree to any request from Boeing for an expansion in production or approve additional production lines for the 737 MAX until we are satisfied that the quality control issues uncovered during this process are resolved," FAA Administrator Mike Whitaker said.
"The quality assurance issues we have seen are unacceptable."
Clarifying the order, the FAA subsequently told Reuters: "That means Boeing can continue producing at the current monthly rate, but they cannot increase that rate."
Boeing said it would continue to cooperate "fully and transparently" with the FAA and follow the agency's direction as it took action to strengthen safety and quality.
The FAA offered no estimate of how long the limitation would last and did not specify the number of planes Boeing can produce each month.
In October, Boeing CEO Dave Calhoun said it planned to reach production of 38 MAX planes per month by the end of 2023.
Boeing's latest 737 master schedule, which sets the production pace for suppliers, calls for production to rise to 42 jets per month in February, 47.2 in August, 52.5 by February 2025 and 57.7 in October 2025, Reuters reported in December.
However, Boeing's own production pace can lag the supplier master schedule.
The FAA's decision could impact plans to stand up a new 737 MAX line in Everett, Washington, by mid-year 2024, following the end of production of Boeing's iconic 747 in the massive plant.
The line, set to be the fourth 737 line overall and the first outside Renton, is needed to meet strong demand.
Boeing declined to comment on any potential impact on the Everett line.
Once accused of being too soft on Boeing, the FAA has toughened oversight since earlier MAX crashes led to a worldwide grounding, but Wednesday's intervention opens new territory, experts said.
Jefferies analysts said the FAA halt to expansion seemed "restrictive" and lacked a definitive timeline.
"These actions (are) likely put pressure on any near-term production ramp, but appear to be more timing related," they added.
Some airlines could be "significantly" impacted by any freeze on higher production, a senior industry source said, though many in the industry have already factored in some delays as aerospace firms continue to recover from the pandemic.
United, for example, has 100 MAX deliveries scheduled for this year, according to a regulatory filing in October.
Boeing shares fell 2% in after-hours trading on Wednesday.
CHINA MAX DELIVERIES RESUME
The FAA announcement came hours after Boeing delivered its first 737 MAX to a Chinese airline since March 2019, ending an almost five-year freeze and granting a respite for strained trade relations between the world's two largest economies.
Boeing CEO Dave Calhoun faced questions from senators on the Alaska Airlines incident in a series of meetings on Wednesday on Capitol Hill. Senate Commerce Committee chair Maria Cantwell said she would hold hearings to investigate the root cause of Boeing's safety lapses.
"The American flying public and Boeing line workers deserve a culture of leadership at Boeing that puts safety ahead of profits," Cantwell said.
Calhoun said Boeing would restore public confidence in its airplanes.
"We don't put planes in the air that we don't have 100% confidence in," Calhoun told reporters.
The China delivery is a boost during a difficult period for Boeing following the mid-air cabin blowout during a nearly full flight. No one was killed in the incident, but regulators and industry insiders are applying new scrutiny to the planemaker's manufacturing and quality control processes as a result.
China is one of the fastest-growing aerospace markets, which the company projects will account for 20% of the world's aircraft demand through 2042.
It was China that first grounded MAX jets after a pair of crashes in 2018 and 2019 that killed nearly 350 people.
While safety bans have been lifted with existing MAX jets flying inside China, new deliveries had remained on hold.
A 737 MAX 8 registered to China Southern Airlines (600029.SS) left Seattle Boeing field in Washington state at 11:55 a.m. Pacific Time (1955 GMT) on Wednesday and landed in Honolulu almost seven hours later, flight data from FlightRadar24 shows, before its final destination in China.
Boeing declined to comment. China Southern and China's aviation regulator did not immediately respond to requests to comment.
Some investors are already gaming out how the U.S. 2024 presidential election could impact markets, as former president Donald Trump’s victory in the New Hampshire Republican primary brings him closer to a rematch with Democratic President Joe Biden
Any calculation of how stocks, bonds and currencies could react to the results of the November vote comes with caveats - especially since it’s early in the year and betting markets are split on which candidate will prevail. Most investors also believe drivers such as Federal Reserve policy, the economic cycle and corporate earnings will ultimately matter more for markets over the long term.
Nevertheless, expectations for politically fueled moves in asset prices around the 2024 vote are high among some strategists, with Goldman Sachs saying the election could be a “major market event.”
Sameer Samana, senior global market strategist at the Wells Fargo Investment Institute, said a second term for either Biden or Trump could heighten focus on issues they have already emphasized in their first term, such as tax cuts for Trump and environmental spending for Biden.
“Neither one has really changed all that much with respect to their philosophy and what their goals are. If anything they might lean harder onto them,” he said.
For now, the market’s spirits are high. After a wild two-year ride, the S&P 500 stands at an all-time record on expectations that the Fed will cut interest rates later this year while the economy remains resilient. Bets on Fed easing have also brought down Treasury yields, which move inversely to prices, from last year’s 16-year highs.
FOCUS ON TAXES
Lower taxes could give a broad boost to equity markets if Trump wins and succeeds in making his 2017 cuts permanent - though fears of a revived trade battle with China might counterbalance some of those gains, analysts at TD Securities wrote in a recent report. Trump has proposed to increase tariffs by 10% across the board to bolster U.S. manufacturing.
Tax cuts could also stir fears of growing budget deficits and weigh on Treasury prices by pushing up term premium - a measure of the compensation investors demand for holding long-term bonds, the firm wrote.
Rating agency Fitch last summer downgraded the U.S. government’s top credit rating, citing factors including expected fiscal deterioration in coming years.
A Biden win might mean higher corporate taxes, a possible negative for stocks, according to TD’s analysts. The degree to which either candidate is able to push through his respective policies could well depend on which party gains control of the House and Senate, they added.
Shares of solar stocks and other renewable energy companies - many of which have been pressured by higher interest rates - stand to benefit from a re-election of Biden due to his expected support of clean energy initiatives, said King Lip, chief strategist at Baker Avenue Wealth Management.
“With rates coming down and continued high government spending on these projects ... I think the clean energy industry can do quite well actually under a second Biden administration,” Lip said.
Analysts at Neuberger Berman, meanwhile, said a Republican sweep could trigger a "significant relief rally" for large-cap pharmaceutical companies that would be less likely to see drug price controls implemented as part of the Inflation Reduction Act.
"As a domestically focused sector, healthcare services could ... be a shelter from the trade policies of a Trump administration," wrote Joseph Amato, Neuberger’s chief investment officer, equities.
Some Trump-linked stocks have already seen sharp moves: shares of Digital World Acquisition (DWAC.O), the blank check firm set to take his social media platform public, soared on Monday after Florida Governor Ron DeSantis ended his 2024 presidential bid, though they have since pared those gains.
In foreign exchange markets, Goldman Sachs strategists said a Trump presidency could boost the U.S. dollar. Their analysis, which studied a period of dollar strength following Trump’s victory in the Iowa caucus on Jan. 15, “suggests that Trump’s trade and international agenda might ultimately be worth a further 5-10% of upside to the USD in the event of a Trump presidency,” they wrote in a Jan. 22 report.
Strategists warned, however, that markets may be slow to price in any possible outcomes this far from election day.
“The last few elections have really come down to the wire,” said Samana, of Wells Fargo. “I don’t see the market making big bets on either one unless it starts to look like it will be a runaway.”