(Reuters) – Michigan Governor Gretchen Whitmer on Wednesday warned that potential 25% tariffs on imports from Mexico and Canada suggested by President-elect Donald Trump could harm the U.S. auto sector, boost vehicle prices and benefit China.

The Democratic governor said in a speech in Detroit imposing tariffs would damage supply chains and slow production lines and would cut “jobs on both sides of the border. Think about this: 70% of all the auto parts we make in Michigan go directly to our neighbors…. The only winner in this equation is China. They would love nothing more than to watch us cripple America’s auto ecosystem all by ourselves. This is a matter of national security.”

By Fergal Smith

TORONTO (Reuters) – Canadian home sales took a breather in December but were still 10% higher in the fourth quarter compared to the third quarter as the Bank of Canada cut borrowing costs, data from the Canadian Real Estate Association (CREA) showed on Wednesday.

The fourth quarter increase stood among the stronger quarters for activity in the last 20 years outside of the pandemic, CREA said.

“The number of homes sold across Canada declined in December compared to a stronger October and November, although that was likely more of a supply story than a demand story,” Shaun Cathcart, CREA’s senior economist, said in a statement.

“Our forecast continues to be for a significant unleashing of demand in the spring of 2025, with the expected bottom for interest rates coinciding with sellers listing properties for sale in big numbers once the snow melts.”

The Bank of Canada has cut interest rates by 1.75 percentage points since June to 3.25% to support the economy.

Sales fell by 5.8% in December from November but were up 19.2% on an annual basis.

The industry group’s home price index edged up 0.3% on the month and was down 0.2% annually.

Investing.com — The latest U.S. Consumer Price Index (CPI) report has sparked a range of reactions from Wall Street analysts, with key implications for Federal Reserve policy and market expectations.

ING maintained its forecast of three rate cuts in 2025 but adjusted its timing, suggesting cuts may begin in June rather than March. 

“Focus on the blue bars, which are the MoM. We need to see them averaging 0.17% MoM (the black line) in order to be confident the annual rate of core inflation is on the path to the 2% target,” said the firm, noting that current inflation levels are “still running too hot for comfort.”

Morgan Stanley (NYSE:MS) interprets the softer-than-expected CPI figures as further evidence of disinflation, particularly within core services excluding housing. 

The bank expects a March rate cut, emphasizing the print’s support for the narrative that recent inflation acceleration was temporary. “ Weaker inflation should give the Fed more confidence that recent acceleration was just a bump,” said the bank.

Morgan Stanley foresees sequential inflation acceleration in January due to seasonality but anticipates a meaningful year-over-year decline.

Wolfe Research describes the CPI data as slightly softer than expected, projecting a modest 0.19% increase in December core PCE inflation, with a year-over-year rate of 2.8%. Wolfe expects two rate cuts in 2025, likely in May and September, suggesting the print helps counter overblown Fed hiking expectations.

Wells Fargo (NYSE:WFC) notes that while headline inflation was hot in December due to food and energy prices, the core CPI showed improvement. However, the bank remains cautious, pointing out that the inflation trend is still stubbornly above the Fed’s target. As a result, Wells Fargo now anticipates only two rate cuts in September and December, down from the previously expected three.

ANNAPOLIS, Maryland (Reuters) – U.S. inflation data for December indicates price pressures are continuing to ease, Richmond Federal Reserve President Thomas Barkin said on Wednesday after a government report showed that an important underlying measure of price increases had slowed last month.

The Consumer Price Index report for December “continues the story we have been on, which is that inflation is coming down towards target,” Barkin told reporters at a Maryland Chamber of Commerce event.

Investing.com — In an unexpected move, Bank Indonesia (BI) has trimmed its policy rate by 25bps, a strategy aimed at bolstering domestic growth.

Prior to this, BI had underscored its concentration on stability and the absolute level of the Indonesian Rupiah (IDR), leading to worries about the near-term growth outlook.

These concerns, coupled with fears of potentially diminished loan growth potential in 2025, amplified share price corrections from Emerging Market (EM) sell-off amid broader global macroeconomic concerns.

Despite lowering its 2025 Gross Domestic Product (GDP) growth forecast to a range of 4.7-5.5%, down from the previous 4.8-5.6%, BI anticipates that system loan growth will be sustained at 11-13%.

In response to the rate cut, Morgan Stanley (NYSE:MS) analysts commented that “uncertainties remain regarding the global macro outlook and therefore IDR stability.”

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

By David Shepardson

WASHINGTON (Reuters) – The U.S. Commerce Department said Wednesday it is imposing new export controls on biotechnology equipment and related technology because of national security concerns tied to artificial intelligence and data science.

Washington has raised concerns that China could use U.S. technology to strengthen military capabilities and help design new weapons through AI. The department said the laboratory equipment could be used for “human performance enhancement, brain-machine interfaces, biologically-inspired synthetic materials, and possibly biological weapons.”

The new export controls, which restrict shipments to China and other countries without a U.S. license, are for high-parameter flow cytometers and certain mass spectrometry equipment, which Commerce said can “generate high-quality, high-content biological data, including that which is suitable for use to facilitate the development of AI and biological design tools.”

This is the latest effort by Washington to restrict U.S. technology to China. On Monday, Commerce moved to further restrict AI chip and technology exports from China aimed at helping the United States maintain its dominant status in AI by controlling it around the world.

U.S. lawmakers have been considering a number of proposals to keep Americans’ personal health and genetic information from foreign adversaries and aim to push U.S. pharmaceutical and biotech companies to lessen their reliance on China for everything from drug ingredient manufacturing to early research.

Last week, U.S. lawmakers called on the Commerce Department to consider restricting the export of U.S. biotechnology to the Chinese military, citing concerns Beijing could weaponize it.

The Chinese Embassy in Washington last week said Beijing “firmly opposes any country’s development, possession or use of biological weapons.”

In August, U.S. lawmakers called on the Food and Drug Administration to ramp up scrutiny of U.S. clinical trials conducted in China, citing the risk of intellectual property theft and the possibility of forced participation of members of China’s Uyghur minority group.

By Hannah Lang and Chris Prentice

WASHINGTON (Reuters) – Top Republican officials at the U.S. Securities and Exchange Commission are poised to begin overhauling the agency’s cryptocurrency policies potentially as early as next week when President-elect Donald Trump takes power, said three people briefed on the matter. Among the measures commissioners Hester Peirce and Mark Uyeda are weighing are initiating the process that would ultimately lead to guidance or rules clarifying when the agency considers a cryptocurrency to be a security, and reviewing some crypto enforcement cases pending in the courts, two of the people said. Paul Atkins, Trump’s crypto-friendly pick for SEC chair and former agency commissioner, is widely expected to end a crypto crackdown led by President Biden’s Democratic SEC chair Gary Gensler, but it is unclear when the Senate will confirm him.

Gensler has said he will step down on Jan. 20 when Trump is sworn in.

As of next week, Peirce and Uyeda will hold the majority among the agency’s politically-appointed commissioners and are poised to get the ball rolling in the interim, the people said.

Like Atkins, the pair are crypto enthusiasts who have criticized Gensler’s tough stance on the industry and have in the past floated alternative crypto-friendly initiatives. Peirce and Uyeda were aides to Atkins when he was at the SEC from 2002 to 2008 and the three have a good relationship, according to one of the sources and several other former SEC officials. The three have discussed potential crypto policy changes, said the sources who declined to be identified discussing private policy plans.

Peirce, Atkins and their representatives did not respond to requests for comment. A spokesperson for Uyeda did not respond to a request for comment. Worried about fraud and market manipulation, Gensler’s SEC brought at least 83 crypto-related enforcement actions, suing multiple prominent companies like Coinbase (NASDAQ:COIN) and Kraken, agency data shows. In many cases, the SEC argued crypto tokens behave like securities and that the companies and their products should comply with SEC rules, although some allege fraud. In the first few days of the new administration, the SEC is expected to begin a review of those court cases and potentially freeze some litigation that does not involve allegations of fraud, said two of the sources. Some of those cases could eventually be withdrawn. Many of those defendants argue cryptocurrencies are more like commodities than securities and that it is not clear when SEC rules apply. They have called for the SEC to write new regulations which would clarify when a token is a security. Peirce and Uyeda are expected to kick off the early stages of that rule-writing process, likely with a call for industry and public feedback, the two sources said.

Reuters and others have previously reported that the SEC is also likely to quickly rescind accounting guidance that has made it prohibitively costly for some listed companies to hold crypto tokens on behalf of third parties.

Trump, who courted crypto campaign cash with pledges to be a “crypto president,” is also expected to issue executive orders urging regulators to review their crypto policies, Reuters reported. Bitcoin soared past $100,000 for the first time in December on excitement over the new crypto-friendly administration.

‘HELD ACCOUNTABLE’ Still, even with a head start, reaching an agreement on crypto regulations could take months or longer, as could resolving complex enforcement actions that hinge on the definition of a security. Dismissing dozens of enforcement actions would be unprecedented, and could set a risky precedent by politicizing the enforcement process, said Philip Moustakis, partner at Seward & Kissel and former SEC attorney. In some cases, the court may object, said other lawyers.

One option for the agency would be to re-open settlement negotiations, said Robert Cohen, a partner at Davis Polk who previously worked in the SEC’s enforcement division. Settlement talks, aimed at averting lengthy and public litigation, are the norm, but crypto companies say the SEC under Gensler has been unwilling to engage in substantive discussions. Cohen added the new SEC leadership would likely continue to take a tough line on crypto fraud. “I think the industry wants to see fraudsters or wrongdoers held accountable,” he added.

(Additional reporting and writing by Michelle Price; Editing by Nick Zieminski)

Investing.com — US health officials are preparing to prohibit the use of the artificial food coloring Red No. 3, which is found in a wide range of products including candy and cold medicine, Bloomberg News reported today.

This decision comes after the substance has been associated with cancer. An announcement regarding the ban is expected as early as Wednesday, the report added. However, the exact timing of the announcement may still vary.

This decision comes more than three decades after the Food and Drug Administration (FDA) banned the use of Red No. 3 in cosmetics. This move was made after studies discovered tumors in lab rats that were linked to the dyes.

Over two years ago, consumer and patient advocacy groups petitioned the FDA to remove the dye from the American diet.

Among the supporters of the ban on controversial dyes is Robert F. Kennedy Jr., the nominee for secretary of the Department of Health and Human Services by President-elect Donald Trump.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

PARIS (Reuters) – Any moves to pursue financial deregulation by the incoming U.S. administration would increase the risk of a financial crisis occurring one day, France’s central bank governor warned on Wednesday.

U.S. President-elect Donald Trump’s return to office has raised the prospect of radical changes to the U.S. regulatory framework built up over decades to oversee financial services and banking, as well as digital currencies.

“Financial deregulation as some people are calling for in the United States would be dangerous, including for the financial system itself,” Bank of France Governor Francois Villeroy de Galhau told the French Senate’s finance commission.

The potential next head of a U.S. banking regulator, Trevor Hill, outlined wide-ranging plans earlier this month for a lighter touch on the banking industry on matters ranging from capital reserves to cryptocurrency.

Hill said he expected U.S. regulators to reconsider efforts to impose new capital requirements on large banks under internationally agreed Basel III regulations, which have already stalled under the Democratic leadership.

Washington has dragged its feet on the new rules, which more than two-thirds of the countries belonging to the Basel Committee on bank regulations have already adopted.

While Basel III has helped keep the European banking system stable, Villeroy said regulators in Europe should consider “adjustments” to ensure that the sector remains competitive.

He added that adopting a light U.S. regulatory touch for non-bank financial actors such as various types of funds, venture capital, private equity as well as cryptoassets would also put financial stability at risk.

Investing.com – The European Central Bank should lower interest rates down to 2% by the summer if inflationary pressures cool as expected in the coming quarters, Governing Council member Francois Villeroy de Galhau said on Wednesday.

Speaking to French lawmakers, Villeroy argued the ECB’s current deposit rate of 3% is weighing on businesses and households, adding that the so-called neutral rate — the theoretical level which neither helps nor hinders activity — is 2%.

He said bringing down borrowing costs will bolster the financing of the economy and a drop in the household savings rate.

In December, the ECB cut interest rates by 25 basis points for a third straight meeting and signaled the likelihood of further easing in 2025 as the eurozone’s economy is struggling and inflation is nearly back at target. Policymakers are widely tipped to slash rates by a quarter of a percentage point once again when they meet again later this month.

Debate at the ECB has swirled around whether it is easing policy fast enough to support an economy that is at risk of recession, facing political instability at home, and grappling with the prospect of a fresh trade war with the United States.

While the Eurozone economy expanded faster than anticipated in the quarter ended in September, a slew of economic data points have suggested that it decelerated in the final three months of 2024. Official figures out of Germany on Wednesday showed that Europe’s largest economy contracted for a second straight year and shrank by 0.1% in the fourth quarter, pointing to lingering difficulties heading into 2025.

Meanwhile, Eurozone inflation came in at 2.4% in December, according to preliminary data. This pace is marginally above the ECB’s 2.0% medium-term goal, although the central bank’s recent projections see price growth falling back down to that level in a few months’ time.