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China an undisclosed focus as Biden courts African leaders By Reuters

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© Reuters. Reuters: US President Joe Biden speaks about inflation at the White House in Washington on December 13, 2022. REUTERS/Kevin LaMarque

Written by Michael Martina, Daphne Psalidakis, and David Brunstrom

WASHINGTON (Reuters) – When President Joe Biden speaks with African leaders in Washington on Wednesday, expect to hear about support for democracy, economic development and new financial commitments to a region that in recent years has fallen behind other U.S. priorities.

But there will likely be another unspoken message: The United States is a better partner for Africa than China.

Delegations from 49 countries and the African Union, including 45 African national leaders, are attending the three-day summit, which began on Tuesday, the first since 2014, where Washington will also tout its support for food security and climate change.

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It is part of a renewed push to strengthen ties with a continent where American interests are being challenged by China’s security ambitions and motivations for trade, investment and lending. By contrast, Beijing has held its high-level meetings with Africa every three years for more than two decades.

While Sino-American competition is an obvious backdrop, American officials have been reluctant to portray the gathering as a battle for influence. Washington has softened its criticism of Beijing’s lending practices and infrastructure projects amid calls from some African leaders for more US leadership.

To this end, Biden is expected to announce his support for the African Union to join the Group of Twenty of the world’s largest economies as a permanent member.

US Trade Representative Catherine Tay told her African counterparts on Tuesday that she wants to improve the US trade preferences program for the continent, and National Security Adviser Jake Sullivan said Washington would “bring resources to the negotiating table” and commit $55 billion to Africa over the next three years.

US State Department spokesman Ned Price told reporters Monday, avoiding a reference to China but using language reflecting Washington’s criticism of its behavior in Africa.

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China’s growth is picking up

China’s economic influence in Africa cannot be denied.

According to the Eurasia Group analysis, in 2021, the $254 billion China-Africa trade volume significantly exceeded the $64.3 billion trade between the United States and Africa. These figures are up from $12 billion and $21 billion, respectively, in 2002. China has also become an important creditor by offering loans on less stringent terms than Western lenders.

This led to Western accusations that China had plunged African countries into debt. Beijing’s ambassador to Washington, Chen Gang, dismissed the idea before the summit, citing a report that African countries owed three times as much debt as Western institutions, while noting that Chinese hospitals, highways, airports, and stadiums are “everywhere” in Africa. .

China remains the largest bilateral investor in the region, but new loan commitments to Africa have softened in recent years as pressure grows inside and outside China for its infrastructure investments to be more sustainable.

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Loans to Africa on the same scale as those made by China were not a viable option for the United States. Instead, US officials are emphasizing an approach focused on facilitating private investment.

Don Graves, the deputy secretary of commerce, said this week that American companies have brought in groundbreaking technologies and standards “instead of bringing in tens of thousands of our own workers,” a subtle criticism of longstanding practices by Chinese companies that have angered Africans.

Secretary of State Antony Blinken said Tuesday that the United States will announce investments for exchange programs for African students, and to support African entrepreneurs and small businesses.

It’s not just about economic clout — Washington has been wary of China’s efforts to establish a military foothold on the Atlantic coast of Equatorial Guinea.

For their part, many African leaders reject the idea that they need to choose between the United States and China.

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“The fact that both countries have different levels of relations with African countries makes them equally important for Africa’s development,” Taye Atski Selassie Amde, Ethiopia’s ambassador to the United Nations, told Reuters. “However, it should be known that each African country has the agency to determine its own relationship and best interests.”

(Additional reporting by Michelle Nichols in New York; Editing by Don Dorff and Leslie Adler)

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Economic

We need to pay more attention to skewed economic signals

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The writer is chair of Queen’s College, Cambridge and advisor to Allianz and Gramercy

Inflation was the dominant economic and financial issue of 2022 for most countries around the world, especially for advanced economies that have a consequential impact on the global economy and markets.

The effects have been seen in declining living standards, increasing inequality, increasing borrowing costs, stock and bond market losses, and occasional financial mishaps (fortunately small and so far contained).

In this new year, recession, both actual and feared, has joined inflation in the driving seat of the global economy and is likely to replace it. It’s a development that makes the global economy and investment portfolios subject to a wide range of possible outcomes — something that a growing number of bond investors seem to be aware of more than their equity counterparts.

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International Monetary Fund iYou will likely review soon Her economic growth forecasts again, predicting that “a third of the world will be hit by recession this year”. What is particularly notable to me about these worsening global prospects is not only that the world’s three major economic regions – China, the European Union and the United States – are slowing down together, but also that this is happening for different reasons.

In China, a chaotic exit from the wrong Covid-19 policy is undermining demand and causing more supply disruptions. Such headwinds to domestic and global economic well-being will continue as long as China fails to improve the coverage and effectiveness of its vaccination efforts. The strength and sustainability of the subsequent recovery will also require that the country more vigorously renew a growth model that can no longer rely on greater globalization.

The European Union continues to deal with energy supply disruptions as the Russian invasion of Ukraine continues. Strengthening inventory management and reorientation of energy supplies is well advanced in many countries. However, it is not yet sufficient to lift immediate constraints on growth, let alone resolve long-term structural headwinds.

The United States has the least problematic view. The headwinds to growth are due to the Fed’s struggle to contain inflation after mischaracterizing rate increases as fleeting and then initially being too timid to adjust monetary policy.

The Fed’s shift to an aggressive front-load of interest rate hikes came too late to prevent the spread of inflation in the services sector and wages. As such, inflation is likely to remain stubborn at around 4 percent, be less sensitive to interest rate policies and expose the economy to greater risk for accidents from additional policy errors that undermine growth.

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The uncertainties facing each of these three economic areas suggest that analysts should be more careful in reassuring us that recessionary pressures will be “short and shallow”. They need to be open, if only to avoid repeating the mistake of prematurely dismissing inflation as transient.

This is especially important because these diverse drivers of recessionary risk make financial fragility more threatening and policy shifts more difficult, including potentially Japan. Get out of interest rate control Policy. The range of possible outcomes is extraordinarily large.

On the one hand, a better policy response, including improving the supply response and protecting the most vulnerable populations, can counteract the global economic slowdown and, in the case of the United States, avert a recession.

On the other hand, additional policy errors and market turmoil can lead to self-reinforcing vicious cycles with rising inflation and rising interest rates, weakening credit and compressed earnings, and stressing market performance.

Judging by market prices, more bond investors are better understanding this, including by refusing to follow the Fed’s interest rate guidance this year. Instead of a sustainable path to higher rates for 2023, they believe recessionary pressures will lead to cuts later this year. If true, government bonds would provide the yield and potential for badly missed portfolio risk mitigation in 2022.

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However, parts of the stock market is still weakly bearish pricing. Reconciling these different scenarios is more important than investors. Without better alignment within markets and with policy signals, the positive economic and financial outcomes we all desire will be no less likely. They will also be challenged by the risk of more unpleasant outcomes at a time of less economic and human resilience.

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Economic

Macro hedge funds end 2022 higher, investors say, while many others take big losses By Reuters

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© Reuters. FILE PHOTO: Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York City, US, January 5, 2023. REUTERS/Andrew Kelly

By Svea Herbst Baylis

NEW YORK (Reuters) – Some hedge funds betting on macroeconomic trends have boasted of double and even triple-digit gains for 2022, while other high-profile companies that have long been on technology stocks have suffered heavy losses in volatile markets, investors said.

Rokos Capital, run by Chris Rokos and one of a handful of so-called global macro companies, gained 51% last year. Fund investors this week, who asked not to be identified, said Brevan Howard Asset Management, the company where Rokos once worked, posted a gain of 20.14% and Caxton Associates returned 16.73%.

Haider Capital Management’s Haider Jupiter Fund rose 193%, an investor said.

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Data from hedge fund research showed that many macro managers have avoided crumbling stock markets that have been rocked by rapid interest rate increases and geopolitical turmoil, including the war in Ukraine, to rank among the best performers in the hedge fund industry. The company’s macro index rose 14.2% while the general index of hedge funds fell 4.25%, its first loss since 2018.

Equity hedge funds, where the bulk of the industry’s roughly $3.7 trillion in assets are invested, fared worse with a loss of 10.4%, according to HFR data. And while that beat the broader stock market’s loss of 19.4%, some high-profile funds posted even bigger losses.

Tiger Global Management lost 56% while Whale Rock Capital Management ended the year with a 43% loss and Maverick Capital lost 23%. Coatue Management ended 2022 with a loss of 19%.

But not all companies that bet on technology stocks suffered. John Thaler JAT Capital finished the year with a 3.7% gain after fees after a 33% increase in 2021 and a 46% gain in 2020.

Sculptor Capital Management (NYSE::), where founder Dan Och is fighting the company’s current CEO in court over his salary increase, posted a 13% drop.

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David Einhorn’s Greenlight Capital, which bet that Elon Musk would be forced to buy Twitter, ended the year up 37% while Rick Sandler’s Eminence Capital rose 7%.

A number of so-called multi-manager companies where teams of portfolio managers bet on a variety of sectors also boast positive returns and have been able to deliver on their promise that hedge funds can deliver better returns in distressed markets.

Balyasny’s Atlas Fund (NYSE: Enhanced) gained 9.7%, while Point72 Asset Management gained 10%. Millennium Management gained 12% while Carlson Capital ended the year with a 7% gain.

Representatives for the companies either did not respond to requests for comment or declined to comment.

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German automakers point to easing supply chain problems

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Sales at BMW and Mercedes-Benz jumped in the final months of 2022 as the German premium auto brands indicated supply chain problems plaguing the industry were abating.

Automakers around the world have experienced parts shortages since the pandemic, especially semiconductors, leaving many of them with large fleets of incomplete vehicles that can’t be delivered to customers.

BMW and Mercedes each said their full-year vehicle deliveries fell last year by 4.8 percent and 1 percent, respectively, due to Suppliers Bottlenecks as well as lockdowns in China and the war in Ukraine.

But supply pressures eased in the last quarter of the year, as BMW recorded a 10.6 percent jump in sales, with 651,798 vehicles delivered, and Mercedes fulfilling 540,800 orders, up 17 percent from the same period in 2022.

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BMW He said the main effects of supply chain bottlenecks and continued lockdowns were felt in the first six months of the year, adding that “sales were steadily picking up in the second half.”

Mercedes boss Ula Kallenius told the Financial Times last week that the list of problems in the auto supply chain was declining, but added that long waits for cars would continue into 2023.

“One chip is enough to be vital [ . . .] Missing, and then you can’t finish the car, even if you have everything else.

Both brands recorded strong sales growth electric car. Mercedes, which last week announced a plan to build 10,000 charging docks, said EV shipments grew 124 percent to 117,800 last year compared with its predecessor.

Similarly, BMW reported strong growth in electric vehicle sales, with deliveries of fully electric vehicles doubling last year to 215,755.

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Analysts at Bank of America said that sales of electric vehicles, including hybrid cars, reached a historic peak last November, with 1.1 million units sold. They attributed this largely to the upcoming phase-out of customer subsidies in Germany.

Participate in Mercedes BMW and BMW prices held steady Tuesday morning as investors priced in an image of an improving showing.

Rolls-Royce, a subsidiary of BMW, announced Monday that sales have hit a 119-year record, driven by strong demand in the United States, its largest market.

The luxury brand has been largely unaffected by the semiconductor pressure, mainly because it makes relatively few compounds and therefore needs fewer chips.

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