Business

By Luc Cohen

NEW YORK (Reuters) -The brother of a former Coinbase Global Inc product manager pleaded guilty on Monday to a wire fraud conspiracy charge, in what U.S. prosecutors have called the first insider trading case involving cryptocurrency.

Nikhil Wahi, 26, admitted during a virtual court hearing before U.S. District Judge Loretta Preska in Manhattan that he made trades based on confidential Coinbase information.

Prosecutors say Ishan Wahi, the former product manager, shared confidential information with his brother and their friend Sameer Ramani about new digital assets Coinbase was planning to let users trade.

Nikhil Wahi and Ramani then allegedly used ethereum blockchain wallets to acquire the assets and traded at least 14 times before Coinbase announcements in June 2021 and April 2022.

Those announcements typically caused the assets to rise in value and generated at least $1.5 million in gains, prosecutors said.

“I knew that it was wrong to receive Coinbase’s confidential information and make trades based on that confidential information,” Nikhil Wahi told the judge.

He said he understood that his guilty plea meant he would eventually be deported from the United States and “lose everything that I have worked for.”

Nikhil Wahi had pleaded guilty last month, but changed his plea through an agreement with prosecutors. His sentencing will be in December.

Ishan Wahi has pleaded not guilty and is next scheduled to appear in court on March 22. Ramani, who was also charged, is at large.

Coinbase, which said it shared with prosecutors its findings from an internal probe into the trading, is one of the world’s largest cryptocurrency exchanges.

(Reporting by Luc Cohen in New York; Editing by Bernadette Baum and Mark Porter)

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By Laura Sanicola

NEW YORK (Reuters) -Oil prices settled higher on Monday, shaking off weaker demand expectations as supply concerns mount heading into the winter.

Brent crude futures settled up $1.16, or 1.3%, at $94.00 a barrel. U.S. West Texas Intermediate crude settled up 99 cents, or 1.1%, at $87.78.

U.S. emergency oil stocks fell 8.4 million barrels to 434.1 million barrels in the week ended Sept. 9, its lowest level since October 1984, according to data released on Monday by the U.S. Department of Energy (DOE).

U.S. President Joe Biden in March set a plan to release 1 million barrels per day over six months from the Strategic Petroleum Reserve to tackle high U.S. fuel prices, which have contributed to soaring inflation.

The Biden administration is weighing the need for further SPR releases after the current program ends in October, Energy Secretary Jennifer Granholm told Reuters last week.

Global oil supply is expected to tighten further when a European Union embargo on Russian oil takes effect on Dec. 5.

The G7 will implement a price cap on Russian oil to limit the country’s oil export revenue, seeking to punish Moscow over the invasion of Ukraine, while taking measures to ensure that oil could still flow to emerging nations.

The U.S. Treasury, however, warned that the cap could send oil and U.S. gasoline prices even higher this winter. [nL1N30I0BQ

The EU’s executive European Commission is due on Wednesday to unveil a package of measures to help power firms facing a liquidity crunch.

France, Britain and Germany on Saturday said they had “serious doubts” about Iran’s intentions to revive a nuclear deal. Failure to revive the 2015 deal would keep Iranian oil off the market and keep global supply tight.

In more bearish news for markets, China’s oil demand could contract for the first time in two decades this year as Beijing’s zero-COVID policy keeps people at home during holidays and reduces fuel consumption.

“The lingering presence of headwinds from China’s renewed virus restrictions and further moderation in global economic activities could still draw some reservations over a more sustained upside,” said Jun Rong Yeap, market strategist at IG.

U.S. domestic oil output is also set to rise in coming months. Oil output in the Permian Basin in Texas and New Mexico, the biggest U.S. shale oil basin, is due to rise 66,000 barrels per day (bpd) to a record 5.413 million bpd in October, the U.S. Energy Information Administration (EIA) said in its productivity report on Monday.

The European Central Bank and U.S. Federal Reserve, meanwhile, are prepared to increase interest rates further to tackle inflation, which could strengthen the U.S. currency and make dollar-denominated oil more expensive for investors.

“A strong dollar would serve as a reverse correlation to commodities priced in dollars, and would likely serve as a drag on upside gains in the energy market,” said Bob Yawger, director of energy futures at Mizuho.

(Reporting by Laura Sanicola in New YorkAdditional reporting by Noah Browning, Florence Tan and Jeslyn LerhEditing by Deepa Babington and Matthew Lewis)

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OMAHA, Neb. (AP) — Freight railroads and their unions are facing increasing pressure from business groups and the White House to settle their contract dispute before Friday’s looming strike deadline.

The pressure stems from concerns that halting railroad deliveries of raw materials and finished products that so many companies rely on would be, in the words of the head of the U.S. Chamber of Commerce, an “economic disaster.”

The White House confirmed President Joe Biden is following the talks closely, and, for the second time in the past week, Labor Secretary Marty Walsh sat down at the negotiating table Sunday to urge the parties to reach a deal. Walsh postponed a planned to trip to Ireland this week to remain close to the talks.

A Labor Department spokesperson said Monday that it’s crucial that the parties remain at the negotiating table and come to an agreement because “a shutdown of our freight rail system is an unacceptable outcome for our economy and the American people.”

Suzanne Clark, the head of the U.S. Chamber of Commerce, said Monday that “a national rail strike would be an economic disaster — freezing the flow of goods, emptying shelves, shuttering workplaces and raising prices for families and businesses alike.”

The chamber joined a number of other business groups, including a coalition of 31 agricultural shipping trade groups, in sending a letter to Congress urging lawmakers to be prepared to step in and block a strike if the two sides can’t reach an agreement by the end of the week. The chamber said if it comes to that, Congress should impose the terms recommended by a Presidential Emergency Board that Biden appointed this summer.

The Association of American Railroads trade group put out a report last week estimating that shutting down the railroads would cost the economy $2 billion a day.

The coalition negotiating on behalf of the nation’s biggest freight railroads — including Union Pacific, CSX, Norfolk Southern, BNSF and Kansas City Southern — has announced eight of the 13 tentative agreements needed to avert a strike by some 115,000 rail workers.

The deals that have been announced so far have closely followed the Presidential Emergency Board’s recommendations that called for 24% raises over five years, $5,000 in bonuses and one additional paid leave day a year. But the two biggest unions representing conductors and engineers have been holding out because they want the railroads to go beyond those recommendations and address some of their concerns about strict attendance policies and working conditions.

The railroads have said they would begin curtailing shipments of hazardous materials and some other goods Monday in advance of a possible work stoppage at the end of the week. That would ensure that containers of those dangerous goods aren’t left stranded along the tracks.

The heads of the Sheet Metal, Air, Rail and Transportation Workers — Transportation Division union that represents conductors, and the Brotherhood of Locomotive Engineers and Trainmen union that represents engineers, criticized that decision as a move to increase pressure on shippers and Congress to intervene.

The federal law governing railroad contract talks won’t allow a strike or lockout before Friday.

___

Associated Press reporter Josh Boak contributed to this report from Washington, D.C.

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By Kevin Buckland

TOKYO (Reuters) – The euro jumped to a more than three-week peak versus the dollar on Monday and sterling rose to the highest this month as European Central Bank officials pushed the case for further aggressive monetary tightening.

The greenback idled not far from a two-week low ahead of key U.S. inflation data this week that might allow the Federal Reserve to consider whether to slow the pace of rate hikes at its Sept. 21 policy meeting.

The rate-sensitive Japanese yen found its footing around the mid-142-per-dollar level as U.S. long-term Treasury yields paused their ascent below a nearly three-month high.

The euro leapt as high as $1.0130 early in the Asian day before last trading 0.19% stronger than Friday at $1.0066.

Sterling rose to $1.1681, and was last 0.24% higher at $1.1611.

ECB policymakers see a rising risk that the key rate will need to increase to 2% or more to curb record inflation, sources told Reuters.

In an interview with German radio over the weekend, Bundesbank President Joachim Nagel said that if the picture for consumer prices doesn’t change, “further clear steps must follow.”

The dollar index, which measures the currency against six major peers, was little changed at 108.82, holding close to those levels after falling back from a two-decade peak reached on Wednesday. It dipped to the lowest since Aug. 30 at 108.35 in the previous session.

Investors are wary ahead of Tuesday’s U.S. CPI report, even as Fed officials continued their hawkish rhetoric on Friday, the final day for such comments before a black-out period leading up to the Federal Open Market Committee’s deliberations.

Fed Governor Christopher Waller said he supports “a significant increase at our next meeting,” while St. Louis Fed President James Bullard reiterated his call for a hike of 75 basis points.

“Officials have clearly articulated the need for the FOMC to keep raising interest rates until there is compelling evidence that inflation is falling,” Commonwealth Bank of Australia strategist Joseph Capurso wrote in a client note.

“Regardless of the outcome of the CPI report, we judge the FOMC has much more work to do,” meaning more upside for the dollar over the short and medium terms, he said.

The dollar was flat at 142.71 yen, following its retreat from a 24-year zenith at 144.99 from Wednesday.

That came as the benchmark U.S. 10-year Treasury yield, which the currency pair often tracks closely, slowed an ascent that took it to the highest since mid-June at 3.365% last week. It was little changed from Friday at around 3.315% in Tokyo trading.

Meanwhile, Japanese officials again hinted at intervention, with a senior government spokesman saying in a local television interview that the administration must take steps as needed to counter excessive yen declines.

However, analysts doubt such a step would work without the backing of the Fed and other central banks, considering that the Bank of Japan is alone among developed markets in sticking to ultra-easy policy.

“A coordinated effort is needed and right now with major central banks fighting inflation through tighter policy, global official support for JPY seems unlikely,” Rodrigo Catril, a strategist at National Australia Bank, wrote in a note.

“If the BOJ really wants to stop JPY’s decline, then they need to make changes to their ultra-easy policy,” he added. “The pressure is building.”

Elsewhere, the Australian dollar edged 0.04% lower to $0.6844, while New Zealand’s kiwi added 0.11% to $0.6110.

Leading cryptocurrency bitcoin eased 0.85% to $21,650, finding its footing around that level after bouncing from a nearly three-month low at $18,540 last week.

(Reporting by Kevin Buckland; Editing by Shri Navaratnam)

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By Francesco Canepa

PRAGUE (Reuters) -European Central Bank policymakers see a rising risk that they will have to raise their key interest rate to 2% or more to curb record-high inflation in the euro zone despite a likely recession, sources told Reuters.

With inflation hitting 9.1% in August and seen above the ECB’s 2% target for two years to come, the central bank has been raising its interest rates at record speed and urging governments to help bring down energy bills that have ballooned since Russia invaded Ukraine.

The ECB raised its deposit rate from zero to 0.75% on Thursday and President Christine Lagarde guided for another two or three hikes, saying rates were still far away from a level that will bring inflation back to 2%.

Five sources close to the matter said many policymakers saw a growing probability that they will need to take the rate into “restrictive territory”, jargon for a level of rates that causes the economy to slow, at 2% or above.

The sources, who spoke on condition of anonymity because policy deliberations are private, said this would most likely happen if the ECB’s first inflation projection for 2025, due to be published in December, is still above 2%.

An ECB spokesman declined to comment.

The ECB currently sees inflation at 2.3% in 2024, though one source said an internal forecast which was presented at Thursday’s meeting put it closer to 2% after taking into account the latest gas prices.

Dutch central bank governor Klaas Knot and Belgium’s Pierre Wunsch were the first to openly talk about going into restrictive territory late last month, at a time when most of their colleagues felt interest rates just needed to go back to between 1% and 2%.

The sources said policymakers were bracing for a recession this winter and weaker economic growth next year than the ECB’s official projection of 0.9%. But some took comfort from the strong labour market, which should cushion the impact of the higher rates, they added.

At Thursday’s meeting, policymakers also began a discussion about the tens of billions of euros that the ECB is liable to pay out to banks on their excess reserves now that the deposit rate is positive again, the sources said.

Policymakers judged that current proposals, including one for a “reverse tiering system” that caps remuneration on some reserves, needed more work, the sources said. One added a decision might still come before the ECB’s next policy meeting on Oct 27.

(Editing by Andrew Heavens)

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(Reuters) – Walt Disney Co on Sunday sketched the contours of a plan for how the entertainment, theme parks and consumer products conglomerate will use technology to enhance storytelling for the next 100 years.

Speaking backstage at the company’s biennial D23 Expo fan convention with Reuters, Chief Executive Bob Chapek took great pains to avoid what he called the “M-word,” or metaverse, despite pushing the company in that direction last year.

Chapek described Disney’s vision for the metaverse as “next-generation storytelling.” He wants to use data gleaned from theme park visits and consumers’ streaming habits to deliver personalized entertainment experiences, including from the company’s Marvel and Lucasfilm studios.

“Disney is absolutely a lifestyle,” he told Reuters on Sunday in an interview at the convention in Anaheim, Calif. “The question is, how is our next-gen storytelling leveraging what we know about a guest uniquely in this Disney lifestyle, then serving up unique experiences.”

Entertainment and technology companies rushed to secure a position in the metaverse after Meta Platforms Inc CEO Mark Zuckerberg announced the future of his company would be devoted to creating a robust, three-dimensional, persisitent environment where users’ digital avatars would work, hang out and pursue their hobbies.

Well ahead of Meta’s announcement, Chapek, who oversaw the parks division before taking over the top job in 2020, has spent years preparing how to extend the theme park experience to people who will never visit one of the company’s six theme parks globally.

Disney started laying the groundwork in earnest to explore new forms of storytelling over the past year, as it appointed veteran media and tech executive, Mike White, to oversee the newly created Next Generation Storytelling and Consumer Experiences unit.

White has been charged with assembling the technological toolkit for Disney’s creative executives to employ.

He has also been brainstorming ideas for using augmented reality and other technologies to bring a new dimension to storytelling. Chapek cited one early example – an eight-minute augmented reality film that premiered this week on Disney+.

“This could be a real big catalyst for what’s going to show up there and, you know, five to 10 years,” said Chapek.

(Reporting by Dawn Chmielewski in Anaheim; editing by Kenneth Li and Stephen Coates)

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By Wayne Cole

SYDNEY (Reuters) – Asian share markets rallied on Monday on hopes a key reading on U.S. inflation will show some cooling, while the U.S. dollar was restrained by the risk of higher European interest rates and Japanese intervention.

Holidays in China and South Korea made for slow trading, while traders were unsure what implications Ukraine’s surprising success against Russian forces might have.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.5%, having bounced modestly from a two-year low hit last week. Japan’s Nikkei added another 1.1%, after rallying 2% last week.

Chinese blue chips firmed 1.3% ahead of retail and industry data due later in the week that may show some improvement in August after a disappointing July.

Wall Street looked to extend Friday’s bounce and S&P 500 futures edged up 0.1%, while Nasdaq futures gained 0.2%. EUROSTOXX 50 futures gained 0.7% and FTSE futures 0.3%.

Bulls are hoping Tuesday’s reading on U.S. consumer prices will hint at a peak for inflation as falling petrol prices are seen pulling down the headline index by 0.1%, according to a Reuters poll.

The core is forecast to rise 0.3%, though some analysts see a chance of a softer report.

“Arguably, with the economy having contracted through the first half, and household discretionary spending capacity under significant pressure, we are due a modest downside surprise,” said economists at Westpac.

“As such, we forecast +0.2% for core and -0.2% for headline,” they added. “If achieved though, it should not be assumed that October and beyond will see repeats, with volatility likely to persist.”

A soft number might revive speculation the Federal Reserve will only hike by 50 basis points this month, though it would likely have to be very weak to have a real impact given how stridently hawkish policymakers have been recently.

The market currently implies an 88% chance the Fed will hike by 75 basis points.

BofA global economist Ethan Harris fears that by focusing on actual inflation to determine when to stop, central banks may go too far. The bank has lifted its target for the federal funds rate to a range of 4.0-4.25%, with a 75bp hike in September and smaller rises thereafter.

“For investors, this means more pressure on interest rates, more weakness in risk assets and further upside for the super-strong dollar,” said Harris.

“In our view, these trends only turn when markets price the full fury of central bank hikes and we are not quite there yet.”

DOLLAR NOT DONE YET

For now, the dollar has run into some profit taking from a market that is very long the currency after a month of sustained gains.

So rapidly has the dollar risen on the yen that Japanese authorities are becoming increasingly vocal in protesting their currency’s decline, sparking speculation of intervention and putting pressure on the Bank of Japan to moderate its policy of yield curve control.

Japan’s government must take steps as needed to counter excessive declines in the yen, a senior government official said on Sunday, after it hit its weakest level against the dollar in 24 years.

That was enough to see the dollar hold at 142.74 yen and off last week’s top of 144.99.

The dollar index stood at 108.820, having reached as high as 110.790 last week.

The euro nudged up 0.5% to $1.0086, and away from its recent trough of $0.9865.

It was helped in part by a Reuters report that European Central Bank policymakers see a growing risk that they will have to raise their key interest rate to 2% or more to curb record-high inflation despite a likely recession.

Analysts at ANZ noted the dollar over the past month was up roughly 9% against the euro and the Chinese yuan, 12% against the British pound and 19% against the yen.

“The rampant USD is causing strain in developing countries, which are finding imports priced in USD more expensive,” they said in a note.

“With Fed speakers using every opportunity to hammer home a hawkish message and quantitative tightening looming, the USD is not about to dramatically turn.”

The ascent of the dollar combined with high bond yields has been a drag for gold, which was hovering at $1,714 an ounce after hitting a low of $1,690 last week. [GOL/]

Oil prices have also been trending lower amid concerns about a global economic slowdown, though cuts to supply did prompt a 4% bounce on Friday. [O/R]

Early Monday, Brent was down $1.29 at $91.55, while U.S. crude shed $1.28 to $85.51 per barrel.

(Reporting by Wayne Cole; Editing by Himani Sarkar and Ana Nicolaci da Costa)

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By Irene Wang and Tom Bateman

TOKYO (Reuters) – Bucking the age-old stereotype of hard-drinking college students, Manaka Okamoto considers the next day’s schedule before cracking open an alcoholic beverage.

“If I have to get up early, and I think ‘Oh, I should hold off on drinking,’ then I go for a non-alcohol drink to get a sense of alcohol when I’m drinking alone,” Okamoto, 22, said at a Tokyo restaurant. “And of course, when hanging out with friends who don’t drink, it’s nice to have something to toast with.”  

The popularity of low- and non-alcoholic drinks has risen worldwide, accelerated by the pandemic, which led many people to be more health conscious. The global market value for the segment rose to just under $10 billion in 2021 from $7.8 billion in 2018, according to researcher IWSR.

The effect has been especially pronounced in Japan, where the older population – which tends to drink more – is shrinking rapidly. Just 7.8% of Japanese people in their 20s were regular drinkers in 2019 compared with 20.3% of that age group in 1999, according to government surveys.

Facing a steady decline in revenue from alcohol sales, Japan’s tax office in July launched a contest seeking ideas on how to stimulate demand among younger people.

Japan’s major drinks makers are also looking outside the country for growth. The chief of domestic beer leader Asahi Group Holdings told Reuters last month he saw North America as a key market. Suntory Holdings Group is looking to expand its canned cocktail business there.

At home, the companies are coming up with new ways to improve the bar experience for non-drinkers.

On a recent afternoon in the entertainment district of Roppongi, groups of mostly young women gathered at a no-alcohol “beer garden” set up in the shadow of one of Tokyo’s tallest buildings.

Beer gardens are a summer tradition in Japan, but this one – promoted by Suntory and broadcaster TV Asahi – skipped the beer, offering patrons a lineup of mocktails and non-alcohol wine instead.

“Consumers are not enjoying just alcoholic beverages. We think they value more of the communication that’s generated when drinking or would like to enjoy the atmosphere of the place where they drink,” said Suntory general manager Masako Koura.

Competitor Kirin Holdings Co also offers non-alcoholic wines, cocktails and beer. The company said sales of its booze-free beer were up more than two-fold in the three months through June compared with a year ago.

In Shibuya, the newly opened Sumadori Bar – a play on the Japanese words for “smart drinking” – offers elaborate, sugary cocktails that can be made with no alcohol or up to 3%. It offers an environment where everyone can enjoy a drink together, said Mizuho Kajiura, chief executive of the Asahi-led venture.

Kajiura worked for two years in Indonesia and said his experience in the mostly Muslim nation gave him an appreciation for creating hospitable environments for non-drinkers.

“The aim of this bar is to value customers who cannot drink so that they can happily come here with people who do drink,” Kajiura said. “If other restaurants and bars can understand our aim, I think they would get more customers.”

(Reporting by Irene Wang, Tom Bateman, Akiko Okamoto, and Rocky Swift. Editing by Gerry Doyle)

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FRANKFURT (Reuters) – Munich Re said reinsurance rates were set to rise across the industry, caused by inflation, higher interest rates and a decline in capital to underpin underwriting activity.

In a statement on Sunday, the German group said reinsurance capacity, or the industry’s financial ability to take on risks, was on the decline while demand for contracts was growing, causing rates to trend higher.

“Reinsurance capacity declines as demand grows – further hardening of the market (is) apparent,” it said.

It added it was firmly on track to meet its 2025 strategy targets.

(Reporting by Ludwig Burger and Alexander Huebner;Editing by Elaine Hardcastle)

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By Leika Kihara

TOKYO (Reuters) -Japan’s government must take steps as needed to counter excessive declines in the yen, a senior government official said on Sunday, as the currency slides to its weakest level against the dollar in 24 years.

The comments from Seiji Kihara, the deputy chief cabinet secretary of Prime Minister Fumio Kishida’s government, are the latest to highlight authorities’ deep concern about the yen’s slide.

Kihara also said the government will consider “in the not so distant future” relaxing strict border measures to further open Japan’s borders to overseas visitors, such as by scrapping a cap on the daily number of entrants.

“As for excessive, one-sided currency moves, we will closely watch developments and must take steps as needed,” Kihara told a television programme, when asked about the yen’s recent falls.

The yen has been hammered against the dollar as investors focus on the widening divergence between the U.S. Federal Reserve’s aggressive interest rate hikes and the Bank of Japan’s (BOJ) pledge to maintain ultra-low rates.

“I won’t comment on monetary and interest-rate policy, as they fall under the jurisdiction of the BOJ,” Kihara said.

The government is considering scrapping the cap on visitors to Japan by October, the Nikkei newspaper reported on Sunday. The government would also remove current restrictions on visitors who are not on package tours, the Nikkei said without citing the source of its information.

“A weak yen is most effective in attracting inbound tourism,” Kihara said, adding that further steps must be taken to draw in more foreign tourists into the country.

Japan eased border controls from Sept. 7 by raising the ceiling for daily entrants to 50,000 and freeing entry for travellers on package tours without the need for guides.

Analysts say scrapping the ceiling and allowing more travellers would be crucial to attract foreign money and revive the fragile economy.

On how to finance an expected increase in Japan’s defence spending, Kihara said he would not rule out issuing government debt.

“Our goal is to drastically strengthen Japan’s defence by tapping various sources of revenue. We’ll be flexible on the funding and won’t rule out any options,” he said.

In a policy roadmap released in June, the government said it wanted to drastically increase defence spending “within the next five years,” highlighting Tokyo’s interest in boosting defence at a time of tension with its powerful neighbour China.

(Reporting by Leika Kihara; Editing by Cynthia Osterman, David Dolan, Elaine Hardcastle)

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