Business

(Reuters) – Danske Bank on Sunday reduced its full-year net profit outlook, hurt by rapidly rising interest rates and unfavorable financial market conditions.

Danske revised net profit to 10 billion to 12 billion Danish crowns ($1.64 billion) from the previous guidance of 13-15 billion crowns.

“… we revise our net profit guidance for the year based on significantly lower expectations for trading income and income from our insurance business,” Chief Executive Officer Carsten Egeriis said in a press release.

The company also slightly revised its cost guidance to around 25.5 billion crowns.

In April, the bank reported a lower-than-expected first-quarter profit, citing higher costs and turbulent financial markets.

($1 = 7.3037 Danish crowns)

(Reporting by Baranjot Kaur and Maria Ponnezhath in Bengaluru; Editing by Matthew Lewis)

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By Leika Kihara

TOKYO (Reuters) -The death of Shinzo Abe, namesake of Japan’s “Abenomics” policy, makes any immediate challenge to his legacy highly unlikely but could eventually allow Prime Minister Fumio Kishida to phase out Abe’s government spending and monetary stimulus.

In a rare act of political violence that shocked the nation, Japan’s longest-serving prime minister was gunned down on Friday while campaigning for Sunday’s parliamentary election, where his party’s coalition expanded their upper house majority.

Kishida is unlikely to do anything immediately that could antagonize lawmakers loyal to Abe, who led the biggest faction in Kishida’s Liberal Democratic Party (LDP) after stepping down as premier in 2020, analysts say.

But ultimately his absence and the LDP’s victory in Sunday’s election, helped by an Abe sympathy vote, could give Kishida political capital to change policy course.

Kishida’s LDP-led conservative coalition was set to increase its majority in the upper house in the election two days after Abe’s assassination.

People close to Kishida have said the premier and his aides want to move toward normalising fiscal and monetary policies and gradually whittle down the Abenomics experiment launched nearly a decade ago.

“There likely won’t be a quick reversal of Abenomics, or an exit from ultra-loose monetary policy,” said Koya Miyamae, senior economist at SMBC Nikko Securities.

“In the long run, however, the Bank of Japan must consider some form of tweak to its monetary policy given problems such as the weak yen,” he said. “That will mean former or incumbent BOJ executives will remain strong candidates as next central bank governor.”

Kishida, who belongs to a smaller LDP faction, remained under pressure from Abe and his supporters to maintain massive stimulus and choose a reflationist dove as the next Bank of Japan governor in April.

Abe’s absence could change the balance of power within the party, diminishing the influence of advocates of big government spending and ultra-loose central bank policies.

“Abe led a group of reflationist-minded ruling party lawmakers favouring big spending, so his absence will have a huge impact on the party’s power balance,” said Daiju Aoki, chief Japan economist at UBS Sumi Trust Wealth Management.

POWER BALANCE SHIFT

Backed by huge public support for his campaign to pull Japan out of chronic deflation, Abe deployed in 2013 his “three arrows” – aggressive monetary easing, flexible fiscal spending and a long-term growth strategy.

The BOJ’s massive stimulus, driven by Governor Haruhiko Kuroda, helped reverse a relentless yen rise that hurt Japan’s exporters, boost stock prices and improve business sentiment. Economists, however, criticized a lack of a credible growth strategy and reforms to help the economy shift sustainably into higher gear.

So far, Kishida has stuck with Abenomics, deploying big spending packages to cushion the economic blow from the COVID-19 pandemic and recently to soften the impact of soaring energy and raw material costs.

He has also endorsed the BOJ’s ultra-low interest rate policy, even as other central banks raises rates, sending the yen to two-decade lows.

“When we look at Japan’s gross domestic product, corporate profits and job conditions, it’s clear Abenomics has produced great results. What’s important now is to generate wage growth,” Kishida told a television programme on Sunday.

Eventually, Kishida may seek to dial back some of the radical monetary experiment put in place by Kuroda, which has strained financial institutions’ profits and crippled pricing in the bond market.

Kishida’s administration was forced to water down Japan’s budget-balancing commitment after fierce pushback from Abe and his allies. Abe’s death could pave the way for Kishida to focus more on efforts to rein in Japan’s government debt burden, the biggest in the industrial world.

“Abe was a flag-bearer of those who support fiscal expansion. Those people lost their driving force,” said Mikitaka Masuyama, professor at the National Graduate Institute for Policy Studies. “I would not say Kishida’s position within the party is rock solid, but he is now more likely than before to have better control over the party.”

While the BOJ is unlikely to reverse ultra-loose monetary policy anytime soon, the fading influence of pro-growth lawmakers could also affect Kishida’s choice of BOJ governor.

The prime minister has the final say in who will succeed Kuroda, handpicked by Abe to deploy a monetary bazooka to eradicate deflation, when his second five-year term ends.

Masayoshi Amamiya and Hiroshi Nakaso, career central bankers, are considered among strong candidates, with Amamiya seen as taking a more dovish stance than Nakaso – who had cautioned about the drawbacks of prolonged monetary easing.

“Abe was said to have favoured a reflationist-minded person head the BOJ. The change in the ruling party’s power balance could affect the choice of BOJ governor,” said Aoki of UBS Sumi.

(Reporting by Leika Kihara; Additional reporting by Kantaro Komiya and Daniel Leussink; Editing by Tomasz Janowski and William Mallard)

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BEIJING (Reuters) – China’s factory-gate inflation cooled in June to the lowest in 15 months, as strict anti-COVID measures hit demand and global recession fears triggered a selloff in ferrous metals, while consumer inflation rose to the highest in nearly two years.

The producer price index (PPI) rose 6.1% year-on-year, the National Bureau of Statistics (NBS) said on Saturday, after a 6.4% rise in May. That was a faster rate than expectations of 6.0% growth tipped in a Reuters poll.

The consumer price index (CPI) increased 2.5% from a year earlier, widening from a 2.1% gain in May and the highest in 23 months. In a Reuters poll, the CPI was expected to rise 2.4%.

The CPI stayed flat month-on-month, after the 0.2% drop in May, beating the 0.1% decline in a Reuters poll.

The world’s second-biggest economy showed some signs of recovery in recent months after a sharp COVID-induced slump, although headwinds to growth persist, including soft consumer spending and worries of any recurring waves of infections.

COVID-19 lockdowns were lifted in Shanghai and some other larger cities in June, but some areas have recently reported flare-ups in cases, which could slow or even stymie a recovery.

China is planning to set up a 500 billion yuan ($75 billion)state infrastructure fund to revive the economy, two people with knowledge of the matter have told Reuters.

Producer inflation has cooled this year after it registered a 26-year high in October because of a hike in raw material prices.

That contrasts sharply with soaring global inflation that has prompted major central banks in the rest of the world to raise interest rates.

In late June, the People’s Bank of China (PBOC) Governor Yi Gang pledged to keep monetary policy accommodative to support an economic recovery.

The pickup in consumer inflation follows a surge in pork prices and adds to pressure on the country’s policymakers to implement further supportive monetary policy, though the rates is still below the government target of an around 3% rise.

($1 = 6.7019 Chinese yuan)

(Reporting by Gao Liangping, Ellen Zhang and Ryan Woo; Editing by Christian Schmollinger)

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By Divya Rajagopal and Ismail Shakil

TORONTO/OTTAWA (Reuters) -A major network outage at one of Canada’s biggest telecom operators shut banking, transport and government access for millions all day on Friday, drawing outrage from customers and adding to criticism over Rogers Telecommunications’ industry dominance.

Nearly every facet of life has been disrupted, with the outage affecting internet access, cell phone and landline phone connections. Some callers could not reach emergency services via 911 calls, police across Canada said.

Canadians who work from home crowded into cafes and public libraries that still had internet access and hovered outside hotels to catch a signal. Canada’s border services agency said the outage affected its mobile app for incoming travelers. Retailers’ cashless pay systems went down; banks reported issues with ATM services.

Rogers said in a statement https://twitter.com/RogersHelps/status/1545586755189067777/photo/1 on Twitter that “our wireless services are starting to recover” and workers are trying to get people back online as quickly as possible.

In a separate statement https://about.rogers.com/news-ideas/a-message-from-tony-staffieri-president-and-ceo-at-rogers on its website, Rogers President and Chief Executive Officer Tony Staffieri apologized for the outage, saying: “Today we let you down. We can and will do better.”

He added that the company doesn’t have a timeline on when the networks will be fully restored, “but we will continue to share information with our customers as we restore full services.”

He said a credit would be applied to affected customers.

A spokesperson for Public Safety Minister Marco Mendicino said Friday evening that the outage was not the result of a cyber attack.

Rogers’ shares closed down 73 cents at C$61.54 ($47.53) on the Toronto Stock Exchange.

The disruption also made transport and flight bookings more difficult at the height of the summer travel season.

So far, Transport Canada has not received reports of direct safety or security impacts to any flights, marine or rail services as part of this outage, according to spokesperson Sau Liu.

The interruption was Rogers’ second in 15 months. It began around 4:30 a.m. ET (0830 GMT) and knocked out a quarter of Canada’s observable internet connectivity, said the NetBlocks monitoring group.

“Today we have let you down. We are working to make this right as quickly as we can,” Rogers said in a statement.

With about 10 million wireless subscribers and 2.25 million retail internet subscribers, Rogers is the top provider in Ontario, Canada’s most populous province and home to its biggest city, Toronto. Rogers, BCE Inc and Telus Corp control 90% of the market share in Canada.

Canadian Industry Minister François-Philippe Champagne in a tweet called the situation “unacceptable” and said he was in communication with telecom CEOs, including those from Rogers, Bell and Telus, to find a solution.

Canadian financial institutions and banks, including Toronto-Dominion Bank and Bank Of Montreal, said the outage disrupted services. Royal Bank of Canada said its ATMs and online banking services were affected.

A spokesperson for Vancouver International airport, among Canada’s busiest, said travelers could not pay for parking, use terminal ATMs or purchase items at airport retailers.

Air Canada, the country’s largest airline, said its call center had been affected. Airlines in Canada, like those in Europe and the United States, have been experiencing high call volume amid flight cancellations and delays due to pandemic staffing shortages.

Pop star the Weeknd on Friday evening announced that his tour stop at the Rogers Centre stadium had been postponed due to service outages affecting venue operations.

“I’m crushed & heartbroken. Been at the venue all day but it’s out of our hands because of the Rogers outage,” the singer wrote in a tweet.

COMPETITION

Critics said the outage demonstrated a need for more competition in telecom.

Earlier this year, Canada’s competition bureau blocked Rogers’ attempt to take over rival Shaw Communications in a C$20 billion deal, saying it would hamper competition in a country where telecom rates are some of the world’s highest. The merger still awaits a final verdict.

“Today’s outage illustrates the need for more independent competition that will drive more network investment so outages are far less likely,” said Anthony Lacavera, managing director of Globealive, an investment firm that had bid for a wireless provider involved in the Rogers/Shaw deal.

On Friday, some government agencies canceled services after losing internet access, including Canada’s passport offices and the telecoms regulator. The Canada Revenue Agency, the country’s tax collection body, lost telephone service.

‘CASH WILL BE KING’

Shops and restaurants in Toronto put “Cash Only” signs on their doors. Residents crowded into and around a nearby Starbucks coffee shop offering free Wi-Fi on an unaffected network.

“There’s tons of people here with their laptops just working away ferociously, the same as they would at home, because they’ve got no service at home,” said Starbucks customer Ken Rosenstein.

In downtown Ottawa, Canada’s capital, cafes including Tim Hortons were not accepting debit and credit cards and were turning away customers who did not have cash.

Michelle Wasylyshen, spokeswoman for the Retail Council of Canada, said outages would vary from one retailer to the next: “Cash will most certainly be king at many stores today.”

While the disruptions were widespread, several companies and transport points said their services were unaffected. The Port of Montreal reported no disruptions. The Calgary Airport Authority said it had “no major operational impacts.”

($1 = 1.2948 Canadian dollars)

(Reporting by Yuvraj Malik, Eva Matthews, Shubham Kalia and Maria Ponnezhath in Bengaluru; Katharine Jackson in Washington; Divya Rajagopal and Chris Helgren in Toronto; Ismail Shakil in Ottawa; Writing by Rami Ayyub, Aurora Ellis and Christian Schmollinger; Editing by Shinjini Ganguli, Jonathan Oatis, David Gregorio and Leslie Adler & Shri Navaratnam)

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By Abinaya V and Nia Williams

(Reuters) -Suncor Energy Inc said on Friday its chief executive, Mark Little, has stepped down after a string of fatalities at Canada’s third-largest oil producer.

Little was also stepping down as president and resigning from the board effective immediately, the Calgary, Alberta-based company said in a statement https://sustainability-prd-cdn.suncor.com/-/media/project/suncor/files/news-releases/2022/2022-07-08-suncor-energy-announces-ceo-transition-en.pdf?modified=20220708225627&_ga=2.68797265.116328003.1657326315-1599808855.1657326315.

Kris Smith, the company’s executive vice president of downstream will replace Little as interim CEO, while the board launches a search for a permanent replacement.

Little’s resignation comes a day after a worker was killed at Suncor’s oil sands base plant in northern Alberta. It was the second fatality at a Suncor site this year and the thirteenth since 2014.

“Suncor is committed to achieving safety and operational excellence across our business, and we must acknowledge where we have fallen short and recognize the critical need for change,” board chair Michael Wilson said in a statement.

Little, who became Suncor CEO in 2019 after serving as chief operating officer, has been under pressure to fix safety and operational issues. He told investors in February he took full responsibility for fatalities on Suncor sites and vowed to improve operations.

In April U.S.-based activist investment firm Elliot Management disclosed a 3.4% stake in Suncor and urged the company to install new board directors, overhaul management and begin a strategic review, noting that Suncor’s share price was lagging its peers.

Elliot’s public criticism increased scrutiny of Little’s performance as chief executive.

In 2020 Suncor was overtaken by rival Canadian Natural Resources Ltd as Canada’s most valuable energy company.

In addition to the fatalities, the company disappointed investors by making a major dividend cut in 2020, repeatedly missing production guidance and running into operational issues at its new Fort Hills oil sands mine that have delayed the project reaching full production capacity.

(Reporting by Abinaya Vijayaraghavan in Bengaluru; Editing by Sandra Maler and William Mallard)

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By Howard Schneider and Ann Saphir

WASHINGTON (Reuters) – By some early estimates, the U.S. economy, as measured by gross domestic product, may have shrunk in the three months from April through June. Add that to the decline from January through March, and that would be a contraction for two quarters in a row.

By an often-cited rule of thumb, that means the world’s largest economy is in recession.

But deciding when a recession has begun or predicting when one might occur is not straightforward.

The “two quarters” definition is handy for analysts, journalists and the general public. But it is not how economists think about business cycles, partly because GDP is a broad measure that can be influenced by factors like government spending or international trade.

Instead they focus on data on jobs, industrial production, spending and incomes – and job growth in particular remains strong in the United States, with U.S. employers hiring more than expected in June, and raising wages.

GRAPHIC: U.S. private employment set to achieve full recovery https://graphics.reuters.com/USA-ECONOMY/JOBS/gkvlgerkopb/chart.png

On the downside, personal consumption data for May, released last week, showed spending and disposable income dropped on an inflation-adjusted basis. That sparked a host of gloomy forecasts for June, and increasing speculation that a downturn is coming soon, if it is not here already.

The weeks ahead are likely to include pitched debate about the real health of the economy. Whether the U.S. is headed for a recession or already in one is a growing concern for corporate chief executives and their employees, the Federal Reserve, and the administration of President Joe Biden.

IS A RECESSION ALWAYS TWO CONSECUTIVE Qs OF FALLING GDP?

Usually, but not always.

For example, GDP in 2001, after revisions, fell in the first three months of the year, rebounded in the next three months and declined again in the fall.

Even though there were not two consecutive quarters of declining GDP, the situation was a defined as a recession, because employment and industrial production were falling.

GRAPHIC: Two quarters of decline? https://graphics.reuters.com/USA-ECONOMY/UNEMPLOYMENT/egvbkggxxpq/chart.png

The COVID-19 pandemic recession only lasted two months, economists determined afterward, from March to April 2020, even though the steep drop in economic activity over those weeks meant GDP shrank overall in both the first and second quarters of the year.

WHO DECIDES, AND HOW?

In the United States the official call is made by a panel of economists convened by the National Bureau of Economic Research, and sometimes comes a year or more after the fact.

The private non-profit research group defines https://www.nber.org/business-cycle-dating-procedure-frequently-asked-questions#:~:text=A%3A%20The%20NBER’s%20traditional%20definition,more%20than%20a%20few%20months recession as a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.”

The panel concentrates on things like jobs and industrial output that are measured monthly, not quarterly like GDP. It examines the depth of any changes, how long declines seem to be lasting, and how broadly any trouble is spread.

There are tradeoffs.

In the pandemic, for example, the depth of the job loss, in excess of 20 million positions, offset the fact that growth resumed quickly, leading the group to officially call the situation a recession in early June, before the end of the second quarter.

While each of three criteria – depth, diffusion, and even duration — “needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another,” the group says.

SO ARE WE IN A RECESSION NOW?

Almost certainly not. While the “two quarter rule” has caveats and exceptions, there has never been a recession declared without a loss of employment. Jobs are being added in the U.S. by hundreds of thousands monthly.

GRAPHIC: Job loss and recession https://graphics.reuters.com/USA-ECONOMY/UNEMPLOYMENT/gdpzygglkvw/chart.png

The pace will likely slow, but there would need to be a sharp reversal for the current path of job growth to turn into one that looks like recession.

Industrial production, another factor that figured prominently in declaring the 2001 recession, has also been rising steadily, at least through May.

Since 1950 the United States has not experienced a two quarters-in-a-row contraction in GDP that was not utimately associated with a recession, which could make the current “are we or aren’t we” debate even more contentious.

WHAT IS THE SAHM RULE?

One criticism of the NBER’s role as a recession arbiter is that its members take their time in order to avoid reacting to changes in jobs, production or other data that prove temporary. A closer to real-time recession indicator, called the Sahm rule after former Fed economist Claudia Sahm, is based on the unemployment rate.

It states that when the 3-month rolling average of the unemployment rate rises a half a percentage point from its low over the prior 12 months, the economy has entered a recession.

The Sahm rule shows no sign of a U.S. downturn. Instead, the unemployment rate has been below 4% and falling or stable since January. WHY DOES THE R-WORD MATTER?

Discussion of a recession, and predictions that the U.S. economy is headed into one, can have an impact on what happens next. CEOs, investors and everyday consumers make decisions on where and how to spend money based on how they think sales, profits and employment conditions will evolve.

Economist Robert Shiller predicted in June that there was a “good chance” the U.S. would experience a recession as a result of a “self-fulfilling prophecy” as consumers and companies prepare for the worst. “The fear can lead to the actuality,” he told Bloomberg.

WHAT IS A ‘SHALLOW RECESSION?’

Recessions come in many shapes. They can be deep but brief, like the pandemic recession which sent the unemployment rate briefly to 14.7%. They can be deep and scarring, like the Great Recession or the Depression in the 1930s, taking years for the job market to regain lost ground.

Economists and analysts have recently flagged the possibility that the next U.S. recession may be a mild one. Even the shortest and weakest recessions have trimmed payroll jobs by more than 1%, which would currently amount to more than a million and a half people.

WHAT IS A GROWTH RECESSION? Another idea discussed by some economists and analysts is a “growth recession,” in which economic growth slows below the U.S. long-term growth trend of 1.5 to 2 percent annually, while unemployment increases but not by a lot. This is the scenario mapped out by some Fed policymakers as the best case outcome of recent interest rate increases.

WHAT’S THE INVERTED YIELD CURVE LINK?

When the market rate for short-term borrowing exceeds that for a longer-term loan, it is known as an inverted yield curve, and seen as a harbinger of a recession.

Historically at least some part of the yield curve has inverted before every recent recession, and alarm bells started ringing when that happened on June 13.

Research from the Federal Reserve argues that the most widely followed yield-curve measure, the gap between yields on the two-year and the 10-year Treasury notes, doesn’t actually predict much of anything; a better

gauge is the gap between three-month and 18-month rates, which has not inverted.

GRAPHIC: Yield curve inversion https://graphics.reuters.com/USA-ECONOMY/UNEMPLOYMENT/akvezllkjpr/chart.png

WHAT IS THE BEAR MARKET LINK TO RECESSION?

The recent steep stock sell-off has also set off alarms. Nine of 12 bear markets, or drops of more than 20%, that have occurred since 1948 have been accompanied by recessions, according to investment research firm CFRA.

(This story refiles to fix date in dateline, no change to content of story)

(Reporting by Ann Saphir and Howard Schneider; Editing by Heather Timmons and Chizu Nomiyama)

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BERLIN (Reuters) – Electric carmaker Tesla will pause production for two weeks at its new manufacturing plant outside Berlin starting from Monday July 11, Handelsblatt newspaper reported on Friday, citing a top German union.

Employees at the company’s so-called Gigafactory in Gruenheide were informed about the production break some time ago, IG Metall union told the newspaper, adding that the break would be used to maintain the factory.

Tesla was not immediately available for comment.

(Reporting by Riham Alkousaa; Editing by Jan Harvey)

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OTTAWA (Reuters) – Montreal-based Quebecor Inc, through its unit Videotron, will intervene in the antitrust review of Rogers Communications Inc’s C$20 billion ($15.5 billion) purchase of Shaw Communications Inc, according to a notice posted Friday on the website of Canada’s competition tribunal.

($1 = 1.2940 Canadian dollars)

(Reporting by Ismail Shakil in Ottawa and Divya Rajagopal in Toronto)

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By Ananya Mariam Rajesh

(Reuters) -Levi Strauss & Co’s denim jeans and jackets were swept off the racks in the second quarter as people returning to work and social events stuck to the comfortable styles that had dominated during lockdowns.

That, along with higher prices, helped Levi’s trump results estimates and raise its quarterly dividend, sending its shares about 4% higher in extended trading.

Like its peers, Levi’s also hiked prices to counter surging costs of raw material and labor, but the company is yet to see much impact from that on demand as its loose-fitting clothes such as baggy jeans are still being snapped up.

“At the moment, a consumer is likely to decide to put their dollars towards (Levi’s product),” Jane Hali and Associates senior analyst Jessica Ramírez said, adding that there is a denim boom.

Still, revenue from Levi’s value brands including Signature were down mid-single digits in the quarter, signaling that lower-income consumers are starting to feel the pinch from rising inflation, Chief Executive Officer Charles Bergh said.

Those brands represent a small part of Levi’s total revenue.

In the quarter ended May 29, the Dockers and Denizen owner’s total revenue rose 15% to $1.47 billion, above analysts’ expectation of $1.43 billion, according to IBES data from Refinitiv.

Levi’s also reaffirmed its revenue and profit forecasts for 2022 and bumped up its quarterly dividend by 20% to 12 cents per share.

Net income fell 23% though, as the jeans maker recorded $60 million in charges related to the suspension of its operations in Russia.

Excluding items, the 169-year-old company earned 29 cents per share, beating estimates of 23 cents.

(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Devika Syamnath)

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(Reuters) – Tesla Inc CEO Elon Musk and an executive at one of his companies had twins last year, Business Insider reported this week, citing court records.

It is unclear whether the revelation about the relationship will affect Musk’s position at any of his companies. Musk did not respond to Reuters’ request for comments.

Several high profile leaders of U.S. companies have made headlines in recent years over relationships with employees. Below is a list of some of them:

Leader Company Year Details

Vince McMahon WWE 2022 Steps down

following

allegations

of a secret

$3 million

settlement

to hide

affair with

employee.

Jeff Zucker CNN 2022 Resigns

citing

failure to

disclose a

consensual

relationshi

p with a

colleague

Steve McDonald’s 2019 Dismissed

Easterbrook Corp over

employee

relationshi

p that

board found

“demonstrat

ed poor

judgment.”

[https://reut.rs/3yriH5Q

]

Brian Krzanich Intel Corp 2018 Resigns

after

investigati

on found

relationshi

p with

employee,

in breach

of company

policy [https://reut.rs/3NPdTgy

]

(Reporting by Ross Kerber in Boston; Editing by Sam Holmes)

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