Business

By Arathy Somasekhar

HOUSTON (Reuters) -Oil prices rose more than $2 a barrel on Monday, extending gains as OPEC+ producers agreed to cut oil output targets by 100,000 bpd in October, according to a source.

Brent crude futures futures for November delivery rose $3.57 to $96.59 a barrel, a 3.8% gain, by 7:24 a.m. ET (12:24 GMT).

U.S. West Texas Intermediate crude was up $2.13, or 2.5%, at $89 after a 0.3% gain in the previous session.

U.S. markets are closed for a public holiday on Monday.

The chairman of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, said it would consider calling for an OPEC and non-OPEC ministerial meeting anytime to address market developments, if necessary.[nS8N2UD09H].

A source said OPEC+ would hold its next meeting on Oct. 5.

Russia, the world’s second-largest oil producer and a key OPEC+ member, does not support a production cut at this time and the producer group is likely to decide to keep output steady, the Wall Street Journal reported on Sunday, citing unnamed sources.

Oil prices have fallen in the past three months from multi-year highs hit in March, pressured by concerns that interest rate increases and COVID-19 curbs in parts of China could slow global economic growth and dent oil demand.

Lockdown measures in China’s southern technology hub of Shenzhen eased on Monday as new infections showed signs of stabilising though the city remains on high vigilance.

Meanwhile, talks to revive the West’s 2015 nuclear deal with Iran, potentially providing a supply boost from Iranian crude returning to the market, has hit a new snag.

The White House on Friday rejected Iran’s call for a deal to be linked with closure of investigations by the U.N. nuclear watchdog, a Western diplomat said.

(Reporting by Noah BrowningAdditional reporting by Florence Tan in Singapore and Emily Chow in Kuala LumpurEditing by David Goodman and Louise Heavens)

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VIENNA (AP) — OPEC+ oil producers cut supplies of crude to global economy as oil prices have fallen because of recession fears.

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NEW YORK (AP) — The Federal Trade Commission is investigating Amazon’s $3.9 billion acquisition of the primary health organization One Medical, a move that could delay the completion of the deal.

Both One Medical and Amazon received a request for additional information Friday in connection with an FTC review of the merger, according to a filing made with securities regulators by One Medical’s parent, San Francisco-based 1Life Healthcare Inc.

Amazon announced plans in late July to buy One Medical, a concierge-type medical service with roughly 190 medical offices in 25 markets. Last week, the e-commerce giant said it would shutter its own hybrid virtual in-home care service called Amazon Care, a One Medical competitor, because it wasn’t meeting customers’ needs.

The One Medical deal, the first to be announced under CEO Andy Jassy, was another push into healthcare for Amazon following its acquisition of the online pharmacy PillPack for $750 million in 2018. Groups calling for stricter antitrust regulations quickly urged the FTC to block the merger, arguing it would further expand the company’s massive market power.

An Amazon spokesperson declined to comment.

The FTC has already been investigating the sign-up and cancellation practices of Amazon Prime and has issued civil subpoenas in that case.

Last year, the company asked unsuccessfully that FTC Chair Lina Khan step aside from separate antitrust investigations into its business, arguing she would be biased. Khan was notable critic of Seattle-based Amazon and other Big Tech companies prior to assuming the chairmanship. As a Yale law student in 2017, she wrote an influential study titled “Amazon’s Antitrust Paradox.”

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By Caroline Humer

(Reuters) -Drugstore chain owner CVS Health Corp is in advanced talks to buy home-healthcare company Signify Health Inc for about $8 billion, according to a person familiar with the matter.

CVS is close to clinching the deal which could be announced as early as next week, after beating out other potential buyers including Amazon.com Inc and UnitedHealth Group Inc, who had also been circling Signify for a deal, the source said.

The source, who requested anonymity as the discussions were confidential, cautioned there is still no guarantee that CVS will reach a deal.

The Wall Street Journal reported the talks between CVS and Signify earlier on Friday.

CVS, UnitedHealth, Signify Health and Amazon.com declined to comment.

Signify has been exploring strategic alternatives since earlier this summer, sources familiar with the matter told Reuters previously.

Signify, which went public in early 2021, has struggled since its stock market launch and the company’s shares were trading below their IPO price before talks of the sale process were first reported in August.

New York-based private equity firm New Mountain Capital is a significant investor in Signify, having bought a stake in 2017.

Signify offers technology and analytics to help with at-home care for patients. Signify has said its services can help identify potential health risks and gaps in care.

For CVS, a deal with Signify would make strategic sense as it would help potentially improve care and reduce costs by ensuring patients receive the help they need after medical procedures to prevent new hospitalizations, among other things.

(Reporting by Caroline Humer in New YorkAdditional reporting by Leroy Leo and Praveen Paramasivam in BengaluruWriting by Anirban SenEditing by Shounak Dasgupta and Matthew Lewis)

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WASHINGTON (Reuters) – The Biden administration said on Friday it will keep tariffs on hundreds of billions of dollars worth of Chinese imports in place while it continues a statutory review of the duties imposed by former President Donald Trump.

The U.S. Trade Representative’s office said in a federal notice that it received requests from companies and other interested parties to maintain the “Section 301” tariffs imposed in 2018 and 2019. The comments were collected during the spring and summer.

Based on the 1974 trade law under which the duties were imposed, USTR will move on to a formal review of whether to keep the tariffs in place, a process that could take months.

The Biden administration had been considering whether to remove some tariffs as a way to reduce inflationary pressures.

Reuters reported last month that consideration of this move had been put on hold following China’s military maneuvers near Taiwan after House Speaker Nancy Pelosi’s visit to the island.

(Reporting by David Lawder; Editing by Chris Reese)

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(Reuters) – The U.S. Federal Trade Commission has begun a review of Amazon.com’s $1.7 billion takeover of robot vacuum maker iRobot Corp to decide if the deal violates antitrust law, Politico reported on Friday, citing people familiar with the matter.

The U.S. anti-trust body’s iRobot review is wide-ranging and would include both head-to-head competition and whether the deal would illegally boost Amazon’s market share in both the connected device market and the retail market in general, the report added.

Amazon declined to comment, while iRobot and the FTC did not immediately respond to a Reuters’ request for comment.

The e-commerce giant has steadily expanded its devices lineup with more speakers showcasing its Alexa voice assistant and with home security doorbells and cameras from Ring, which it acquired in 2018.

Amazon in August announced its all-cash deal of $61 per share to acquire iRobot, maker of the robotic vacuum cleaner Roomba.

The world’s largest online retailer is pushing to expand its stable of smart home devices as well as expanding the e-commerce giant’s virtual healthcare and adding brick-and-mortar doctors’ offices for the first time.

The online retailer in July had agreed to buy primary care provider One Medical.

One Medical on Friday said the U.S. anti-trust body had sought more information from the company and Amazon about the primary care provider’s $3.49 billion acquisition by the online retailer.

(Reporting by Mrinmay Dey in Bengaluru)

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(Reuters) – Citigroup Inc on Friday said it has slightly trimmed its mortgage workforce, due to an internal streamlining of functions.

Less than 100 positions were affected, according to Bloomberg News, which first reported the layoffs.

“We are doing our best to support each individual by helping them to find new employment opportunities within Citi or outside the firm,” a spokesperson for Citi said in a statement.

After hiring tens of thousands of staff between 2018 and 2020 to handle surging mortgage originations and refinancings driven by low interest rates, the mortgage sector is downsizing.

In June, JPMorgan Chase & Co started laying off employees in its mortgage business, with more than 1,000 being affected.

Wall Street bosses are also in a bind about whether to cut investment bankers or keep them on staff in hopes of a recovery from a brutal first half.

(Reporting by Nivedita Hazra in Bengaluru; Additional reporting by Juby A. Babu and Shivani Tanna; Editing by Lisa Shumaker)

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By Christoph Steitz and Caleb Davis

FRANKFURT/GDANSK (Reuters) – Russia has scrapped a Saturday deadline to resume flows via a major gas supply route to Germany, deepening Europe’s difficulties in securing winter fuel, after saying it had found faults in the Nord Stream 1 pipeline during maintenance.

Nord Stream 1, which runs under the Baltic Sea, had been due to resume operating at 0100 GMT on Saturday after a three-day halt for maintenance.

But Gazprom, the state-controlled firm with a monopoly on Russian gas exports via pipeline, said on Friday it could not safely restart deliveries until it had fixed an oil leak found in a vital turbine. It did not give a new time frame.

However, Siemens Energy, which normally services Nord Stream 1 turbines, said such a leak should not stop the pipeline from operating. It also said the Portovaya compressor station, where the leak was discovered, has other turbines for Nord Stream to keep operating.

“Such leaks do not normally affect the operation of a turbine and can be sealed on site. It is a routine procedure within the scope of maintenance work,” the company said.

Moscow has blamed sanctions, imposed by the West after Russia invaded Ukraine, for hampering routine operations and maintenance of Nord Stream 1. Brussels says this is a pretext and Russia is using gas as an economic weapon to retaliate.

“This is part of Russia’s psychological war against us,” tweeted Michael Roth, chair of the German parliamentary foreign affairs committee.

Siemens Energy said it is not currently contracted to carry out maintenance work on the line, but is on standby.

European Commission chief Ursula von der Leyen said earlier the EU should impose a price cap on Russian pipeline gas to foil what she said were President Vladimir Putin’s attempts to manipulate the market.

Russia has denied previous allegations of using gas as an economic weapon or manipulating the gas market.

The United States and Europe were collaborating to ensure enough energy supplies were available, a spokesperson for the White House’s National Security Council said on Friday.

“It is unfortunately not surprising that Russia continues to use energy as a weapon against European consumers,” the spokesperson added.

Wholesale gas prices have rocketed 400% since August 2021, hurting European industry and households as demand recovered from the COVID-19 pandemic and because of the Ukraine crisis.

“We see that the electricity market does not work anymore because it is massively disrupted due to Putin’s manipulations,” Von der Leyen said, adding that a gas price cap on Russian pipeline supplies could be proposed at the European level.

Former Russian President Dmitry Medvedev said Moscow would turn off supplies to Europe if Brussels imposed such a cap.

“There will simply be no Russian gas in Europe,” he wrote on the Telegram app in response to Von der Leyen.

Reduced deliveries via Nord Stream, alongside lower gas flows via Ukraine, another major route, have already left European states struggling to refill storage tanks for winter and prompted many to trigger emergency plans that could lead to energy rationing and stoking concerns about recession.

European Commission spokesman Eric Mamer wrote on Twitter that Gazprom had acted under “fallacious pretences” to shut down Nord Stream 1. “It’s also proof of Russia’s cynicism, as it prefers to flare gas instead of honouring contracts.”

Group of Seven finance ministers agreed on Friday to put a price cap on Russian oil exports. Moscow said it would halt oil sales to countries imposing the cap, adding that the move would destabilize oil markets. Russia is the world’s biggest exporter of crude and fuel combined.

‘BETTER PREPARED’

Germany’s network regulator said the country was more ready to cope with a disruption to Russian supplies, but households and companies had to cut energy consumption.

“It’s good that Germany is now better prepared, but now it’s down to each and everyone,” Klaus Mueller, president of the Bundesnetzagentur, said on Twitter.

Kremlin spokesman Dmitry Peskov suggested earlier on Friday there could be more disruptions to deliveries via Nord Stream 1.

“It’s not the fault of Gazprom that the resources are missing. Therefore, the reliability of the entire system is at risk,” he said when asked if more outages could be expected.

Gazprom Chief Executive Alexei Miller said on Wednesday that sanctions meant Siemens could not carry out regular maintenance.

EU governments have been preparing for the possibility that Russia stops deliveries completely, after Gazprom first reduced flows in June and then again in July.

This week’s maintenance was announced at short notice.

Germany, which is particularly reliant on Russian supplies, has been racing to fill its storage tanks before winter. That storage is now nearly 85% full, but Berlin says reaching a 95% target by Nov. 1 will be tough unless companies and households use less fuel.

The EU has exceeded its 80% target for storage to be full by Oct. 1, ready for when heating usage picks up, but that may not sustain Europe through the winter if Russia keeps the taps closed.

Some energy-intensive European companies, such as fertiliser and aluminium producers, have already cut output due to sky-high power prices, while some domestic consumers have reined in usage to save on escalating energy bills.

(Reporting by Felix Light and Nina Chestney in London, Caleb Davis in Gdansk, Christoph Steitz in Frankfurt, Timothy Gardner in Washington D.C., Liz Hampton in Denver; Writing by Edmund Blair; Editing by Carmel Crimmins, Richard Chang and Matthew Lewis)

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By Echo Wang and Manya Saini

(Reuters) -Yogurt maker Chobani is withdrawing its plans for an initial public offering in the United States after having delayed its listing plans earlier this year, marking the first high-profile casualty of the current slowdown in stock market flotations.

Chobani cited “current market conditions” in its decision to scrap its IPO. The move comes after the company delayed its plans for a stock market launch late last year and then again earlier this year, according to people familiar with the matter.

Volatile market conditions have forced investors to pull back from stock market launches, which have screeched to a halt due to market conditions that took a turn for the worse after Russia’s invasion of Ukraine.

IPOs in the United States are on track for their worst year in over two decades, according to Dealogic which tracks listing data going back to 1995. So far, companies have raised about $5.1 billion this year, compared to over $100 billion during the same period last year.

“Our focus remains on strong execution and driving profitable growth, and we continue to be excited about the future of Chobani,” Chobani said in a statement.

Last year, Chobani confidentially filed for an IPO that could have valued it at more than $10 billion, sources had told Reuters at the time.

FROZEN IPO MARKET

Several big names such as Reddit and ServiceTitan, which have already filed their IPO paperwork confidentially with regulators, have delayed their plans to go public this year. Others are waiting to see how some planned fall IPOs perform before they kick off their plans to go public, people familiar with the matter said.

Online grocery delivery company Instacart and Intel’s self-driving car unit Mobileye are among the only high-profile names that are still aiming to go public this year on U.S. exchanges.

IPO advisers and experts said that IPOs are hard to price at the moment as the Cboe Volatility Index, known as Wall Street’s “fear gauge”, currently stands above 20.

“The consumer staples sector has fared better than others (e.g. technology), but any IPO right now still needs to be best-in-class”, said Matt Kennedy, senior strategist at IPO research firm Renaissance Capital. “Chobani showed relatively modest growth, while margins lagged peers, and it operated under a heavy debt burden.”

Chobani, which means shepherd in Turkish, makes yogurt, oatmilk, and probiotic beverages. It was founded in 2005 by Hamdi Ulukaya, a Turkish immigrant to the United States who bought an old yogurt plant after taking a small loan.

Reuters reported in March that Peter McGuinness, Chobani’s former operating chief, will replace Pat Brown as the top boss at plant-based meat maker Impossible Foods.

(Reporting by Manya Saini and Praveen Paramasivam in Bengaluru, Echo Wang in New York; Editing by Anirban Sen and Lisa Shumaker)

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By Howard Schneider

(Reuters) – Federal Reserve officials have acknowledged that the battle against inflation will be paid for with lost jobs, and the U.S. central bank will need an unlikely combination of events to keep those losses to a minimum as interest rates continue to rise.

Economists assessing the trade-off facing the Fed estimate U.S. employment could drop by anywhere from a few hundred thousand positions to as many as several million before the Fed fixes the worst outbreak of inflation in 40 years.

The final tally will depend on how closely the economy follows patterns seen in recent decades, to what extent things like improved global supply chains help lower inflation, and how strict the Fed is in enforcing its 2% inflation goal.

With the central bank’s preferred inflation measure currently increasing at a more than a 6% annual rate, Joe Brusuelas, chief economist at RSM, a U.S.-based consulting firm, estimates it would take 5.3 million lost jobs and an unemployment rate of 6.7%, substantially above the 3.7% seen in August, to lower inflation to 2%.

“Can the Fed achieve a pure soft landing? … Probably not,” Brusuelas said, referring to a scenario in which monetary tightening slows the economy, and inflation, without triggering a recession. “It is difficult to envision a benign outcome.”

Data on August jobs, released Friday, gave the Fed a bit of a reprieve. U.S. firms added 315,000 jobs in August, a slowing from the blow-out half-million jobs added in July and a sign that some of the economy’s post-pandemic excesses may be moderating without giving way altogether.

In addition, the number of people in the labor force surged by nearly 800,000 to a new record high – a dynamic Fed officials have been banking on to ease wage pressures over time. Because many of those new entrants had yet to find a job, the unemployment rate rose to 3.7% from 3.5%, an increase Fed and other officials are likely to see as constructive since it indicates a greater supply of people willing to take jobs if offered.

“I don’t mind seeing an uptick in unemployment if we are getting more people into the work force. That is good for companies,” said U.S. Labor Secretary Marty Walsh. “We still hear the concerns” from firms about difficulties hiring workers, “but not as loud,” he said.

Fed officials hope the burden of fighting inflation falls less on employment than other parts of the economy, even as for months they’ve bemoaned the labor market’s current state as unsustainable.

The August jobs report did not ease all those concerns. Average hourly earnings continued to increase at a 5.2% year- over-year pace, the same as the month before.

Fed officials feel that needs to slow, with Cleveland Fed President Loretta Mester saying this week she felt wage growth would “need to moderate to around 3.25% to 3.5% to be consistent with price stability.”

‘UNPRECEDENTED’

Fed officials have been less specific about what will bring things into balance, with some of the working ideas requiring U.S. job markets to act differently than they have in the past.

Fed Governor Christopher Waller has pointed to the Beveridge Curve, which plots the relationship between job openings and the unemployment rate, to argue that the labor market could behave differently this time.

The current ratio of two job openings for each unemployed person is a record high. Typically when the job vacancy rate falls, the unemployment rate rises as it becomes harder for job seekers to find a match. But Waller argues the Beveridge Curve changed during the pandemic, and is in a place now that would allow job openings to fall sharply as the economy slows, relieving pressure on wages and prices, without much of a rise in unemployment.

“We recognize that it would be unprecedented for vacancies to decline by a large amount without the economy falling into recession…We are, in effect, saying that something unprecedented can occur because the labor market is in an unprecedented situation,” Waller wrote in a research note published by the Fed in late July.

Other soft-landing narratives also hang on history not repeating.

HELPING HAND

In June, for example, the median estimate among Fed officials was for unemployment to rise somewhat – but only to about 4.1% by the end of 2024, a slow and limited climb.

Updated projections are due to be released at the end of the Fed’s policy meeting on September 20-21. If, as expected, those projections show higher unemployment, the chances for a soft landing will confront an unpleasant historical fact: Once the U.S. unemployment rate increases beyond a certain amount, it tends to keep rising.

Since at least the late 1940s, even modest increases of half a percentage point in the unemployment rate from a year earlier – the magnitude of increase Fed officials have begun to hint at – have tended to spiral to jumps of 2 percentage points or more.

At the current labor force level of 164.7 million, that would translate into around 3.3 million fewer people employed – below some estimates but still high.

“Usually, once the labor market gets going downhill, it picks up speed and it goes” further downhill, said Claudia Sahm, a former Fed economist and founder of Sahm Consulting.

As a Fed economist, she developed the eponymous “Sahm Rule,” which says that once the three-month average unemployment rate rises half a percentage point from its recent low, the economy is already in recession. Given the oddities of the pandemic-era labor market, however, she’s open to an exception this time.

Sahm’s baseline is for a rise in the unemployment rate to around 4%, which would translate into a loss of fewer than a million jobs, but for the economy to avoid a recession.

A lot would have to go right to get that outcome.

The August jobs report shows how it could work: An unemployment rate driven higher by more people joining the labor force rather than by the rounds of layoffs seen during a recession.

The best outcome for the Fed “hinges on supply chains healing, more people coming back into the workforce, more price sensitivity by consumers,” Sahm said. “It’s a normalization of the economy.”

If that doesn’t happen, and labor market pain increases, the Fed would have options, including raising the inflation target from the current 2%. Brusuelas estimates that getting to a 3% inflation rate would cost 3.6 million fewer jobs than insisting on hitting the current target, with the unemployment rate rising by just over one percentage point from the current level.

So far, that’s not a conversation the Fed wants to have.

“We’ve communicated over and over and over again our commitment to achieve that 2% goal,” New York Fed President John Williams told the Wall Street Journal this week. “I think it’ll take a few years, but there’s no confusion … We’re absolutely committed to doing it.”

(Reporting by Howard Schneider; Editing by Dan Burns, Paul Simao and Andrea Ricci)

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